Overview
Corporate Tax Dubai is a new tax in Dubai and there are different taxation aspects for different businesses. Both the extractive and non-extractive natural resource sectors must deal with taxes as part of their business operations. For companies operating in these industries, the United Arab Emirates (UAE) Corporate Tax Law offers a thorough manual that outlines the taxation structure for both extractive and non-extractive activities. This blog will explain the main points of the Corporate Tax Guide (CTGEPX1), with a particular emphasis on the differences between businesses that deal with extractive resources and those that do not. Corporate Tax Consultants Dubai is beneficial in understanding the Dubai company tax and its applicability for different businesses.
Scope of Business Dealing with Extractive and Non-Extractive Natural Resources
Knowledge of Natural Resources
Water, oil, gas, coal, naturally occurring minerals, and other non-renewable, non-living resources that may be exploited from UAE territory are all considered natural resources for corporation tax purposes in the United Arab Emirates. Importantly, this definition does not include renewable resources like wind, solar, animal, or plant matter. Natural resources that are used in each Emirate are recognized as public property by the UAE Constitution.
Extractive Industries: Production and Exploration
The exploration, extraction, removal, or production and exploitation of natural resources in the United Arab Emirates is referred to as an extractive enterprise. This covers upstream operations such as mining, dredging, quarrying, and the extraction of oil and gas. These companies are run under licenses, concessions, or rights granted by local governments. Owners can be government agencies, private companies, or legal entities engaged in contractual joint ventures with local governments.
Business of Non-Extractive Natural Resources: Upstream and Downstream Operations
Activities pertaining to the separation, treatment, refinement, processing, storage, transportation, marketing, or distribution of natural resources are included in the non-extractive natural resource business. This refers to the midstream and downstream subsectors of the oil and gas industry up to the point of transfer to the end-user or customer. Non-extractive natural resource enterprises, like extractive industries, are governed by local government permits and may involve either fully or partially privately or government-owned corporations.
Additional Commercial Ventures
Companies that work with natural resources, whether extractive or non-extractive, may also engage in other economic ventures unrelated to their primary operations. These other company operations are treated by the Corporate Tax Law as distinct businesses that are subject to different reporting requirements and taxes.
Procedure for Natural Resource Utilization
Three stages usually comprise the process of using natural resources for commercial gain:
- The Upstream Method: Finding, obtaining, or generating resources—like minerals, oil, or gas—from their natural sources are the tasks of this phase.
- The Midstream Method: Midstream operations ensure a seamless flow of resources from extraction to distribution by acting as a link between the upstream and downstream processes. These activities include transportation and storage services.
- The Downstream Method: Post-production operations are part of the downstream process, which takes place close to the end-user or consumer. Within the oil sector, downstream operations include distribution centers for petroleum products, petrochemical facilities, distributors of natural gas, and oil refineries.
In summary
A precise structure for taxes is provided by the Dubai Corporate Tax Guide for companies in the UAE that deal with extractive and non-extractive natural resource industries. Businesses participating in these industries must comprehend the differences between extractive and non-extractive activities, as well as the unique reporting requirements for other commercial activities. Since the United Arab Emirates is still a major player in the world energy market, compliance with the Corporate Tax Law guarantees fair and transparent taxation for all parties engaged in the extraction of natural resources on its soil. You can get help from corporate tax consultants for this purpose, ebs Chartered Accountants are one of the leading in this field. For further information you can also get help from uaetaxgpt.ae.
FAQs
Who is exempted from corporate tax in UAE?
Public pension and social security funds in the UAE are exempt from Corporate Tax once an application has been made to and approved by the Federal Tax Authority.
Who is subject to UAE corporate tax?
The UAE has introduced a federal tax system that is applicable to all businesses and commercial activities operating within the seven emirates. However, there are certain exceptions: Businesses operating in the extraction of natural resources.
Who needs to register for corporate tax in UAE?
The Federal Tax Authority has left no room for ambiguity – all businesses operating in the UAE are obligated to register for corporate tax in 2024. This directive extends to enterprises, irrespective of their profitability or the duration of their establishment.
