New Corporate Tax Law in the U.A.E and how to file returns

 Under the UAE Federal Decree Law No. 7 of 2022 on Corporate and Corporate Taxation1 (the "Corporate Taxation Law"), the UAE imposes a federal corporate tax (CT) on the net income of companies. The tax will take effective  July 1, 2023 or  January 1, 2024, depending on which reporting period the company follows2. TT is applicable in all  emirates.

  CT speeds are as follows:
 
 0 percent of taxable income up to AED 375,0003
 9 percent of taxable income exceeding AED 375,000 

 Certain businesses and types of income  are exempt from CT, such as:  

1.  Companies involved in the use of natural resources
2.  Dividends and capital gains earned by the UAE company on its quota units
3.  Approved intra group transactions and reorganizations
4.  Salary and other income of an individual
5.  Interest and other income earned by an individual from bank deposits or savings schemes

 To register for corporate income tax in the UAE, you must follow these steps.
 
 Log in to the EmaraTax portal by clicking on e services.tax.gov.ae and entering your registered email address and password. If you do not have an account, you can register by clicking the Register button.  A list of taxpayers will appear, and if it is empty,  a new one must be created. Select a taxpayer from the list and click View to open the panel. Click Register in the Business Tax box on the Taxpayer panel. Fill in the required details of the application form and click on the "Submit" button. You will receive a confirmation email with your Tax Registration Number (TRN) and an account activation link. Click  the link and enter your TRN and password to access your account.  You can view and edit your profile, tax reports, payments, notifications and other services from your account control panel. The corporate income tax must be submitted and paid electronically through the EmaraTax portal before the deadline. You can also request exemptions, refunds or changes through the portal if you are eligible.  You can waive corporate income tax if you stop doing business  in the UAE or if you meet certain conditions. Through the portal one must submit a  request for removal from the register and pay all unpaid tax debts.
 The deadline for reporting and paying UAE corporate income tax  depends on the financial year of your business. You have time to register until the date of submission of the first tax return. The new UAE corporate income tax system allows taxpayers  to prepare for reporting and paying taxes within 21 months of the start of the financial year. For example, companies whose fiscal year begins on June 1, 2023 and ends on May 31, 2024  must file a corporate income tax return and make payments by February 28, 2025.

 How to report and pay corporate income tax in the UAE
 To declare and pay  corporate income tax in the UAE, you must do the following:
 
 Calculate your corporation tax  on a self-assessment basis by applying the rate applicable  to your net income or profit for your financial year.  Prepare and submit the corporate income tax  electronically through the EmaraTax portal before the deadline. You must provide information such as  TRN, financial year, taxable income, tax rate, tax payable, tax paid and any exemptions or deductions claimed.  Pay your corporate income tax debt electronically through the EmaraTax portal before the deadline. You can choose from several different payment methods such as credit card, debit card, e-dirham, direct debit or bank transfer.  You will receive a confirmation email and  receipt for your tax return and payment. You can also view and download your tax returns and payment history from your account dashboard.

Unemployment insurance for worker's in the United Arab Emirates

 Unemployment insurance system In September 2022, the UAE launched for the first-time unemployment insurance, which will become mandatory for all workers. Federal Decree No. 13 of 2022 on unemployment insurance together with Government Decision No. 97 of 2022 on the implementation and control mechanisms of the unemployment insurance system and Decision No. 60 of 2022 on the unemployment insurance system form this that new legal framework.

 Who does the new law apply to?

The new law applies to all employees of the private sector, state or federal government, except investors (job owners), domestic workers, contract workers, youth under 18 and pensioners. who joined a new employer. It was also clarified that the scheme does not currently apply to workers in UAE free zones, but may apply in the future. Is the insurance system mandatory? Yes, it is the employee's responsibility to sign up and pay the fees. All public and private sector employees must join the system. The system came to effective on January 1, 2023, and employee registration must be completed by June 30, 2023.

New employees hired after January 1, 2023 must register with the system within four months of receiving initial work permit approval and pass. or change their status as needed. Although the employee is responsible for paying and joining the system, the law requires institutions to encourage and direct their employees to join the system and pay insurance premiums on time.

Are there penalties for negligence? Yes, non-payment or non-payment of premiums within three months of the due date will result in termination of the scheme and the employee will be required to purchase a new policy/enact and pay for that policy and a penalty of AED 00. . has not joined (if the joining schedule is extended) or 200 AED if the employee has not paid the insurance premium for more than three months. Fines must be paid through Human Resources and Emiratization (MOHRE) approved channels. Fines not paid within three months can be collected through the wage insurance system, by deducting the service fee or through another system. Please note that new work permits will not be issued to workers until all fines have been paid. Resolution No. 60 2022, which determines the procedure for paying fines, is attached to the MOHRE procedural manual.

How much does it cost to take out insurance?

Currently, contributions are AED 5 per month for employees with a basic salary up to AED 16,000 (Class 1 contributions) and AED 10 per month for employees with a basic salary above AED 16,000 (Class 2 contributions). With commission-based pay, employees can choose a membership class. How can employees join the system? Employees can book online through Dubai Insurance. The employee's Emirates ID and mobile phone number must be provided. Subscription payments can be made through various channels including; On the Internet, ATMs, currency exchange companies and many others. Payments can be made once a month, quarterly, twice a year or once a year at the discretion of the insurer. Once completed, policy documents will be emailed.

Who is entitled to compensation? The law defines the following eligibility parameters: To receive compensation, the insured must have been insured for at least 12 consecutive months from the day of joining the insurance system, and he has not been fired or left his job for disciplinary reasons. Complaints cannot be lodged due to the strike. Insurance premiums must be paid according to the payment schedule. The insurer may not have a claim for compensation. Claims for compensation must not be made by fraud or misrepresentation. The complaint must be submitted within 30 days after the end of the employment or the decision of the labor court through the website of the insurance company, smart application or call center. The insured must be legally present in the United Arab Emirates when making a claim. The insurance company is obliged to respond to the claim within two weeks from the day of submission. How much unemployment is paid? The benefit is paid monthly, calculated at 60% of the insured's basic salary and up to a maximum of AED 10,000 per month for Class 1 premiums and AED 20,000 per month for Class 2 premiums for a maximum period of three months. the date of unemployment of the insured person by application, but a maximum of 12 months of benefits during the period of insurance in the United Arab Emirates. Additional benefits can be agreed with the insurance company. Payment of compensation stops if the insured transfers to a new employer during the right to receive compensation. Who are the insurers? The service providers are private insurance companies licensed by the central bank that meet the requirements for providing unemployment insurance issued by the government of the United Arab Emirates in consultation with the central bank or other government agency providing unemployment insurance services.

MOHRE published a list of insurance companies represented by Dubai Insurance Company which include:

•    Abu Dhabi National Insurance Company,
•   Al Ain Ahlia Insurance Company,
•   Emirates Insurance Company,
• Orient Insurance,
•   Oman Insurance,
•   National General Insurance Company and
• Orient UNB Takaful Company.

What can employers do?

 Although the onus is on the employee to obtain unemployment insurance, the law clearly states that facilities must encourage and direct their employees to join the system, and therefore employers should educate their employees about this new requirement and the timeline for compliance. Failure to do so can have a direct impact on the renewal of the employee's work permits, which in turn can cause administrative disruptions and burdens for the employer.

U.A.E Ministry of Finance issue decision on small business relief on Corporate Tax

The Ministry of Finance (MoF) has issued Ministerial Decision No. 73 of 2023 on Small Business Relief for the purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (Corporate Tax Law).

The decision is issued in accordance with Article 21 of the Corporate Tax Law, which treats the taxable person as not having derived any taxable income in a given tax period where the revenue did not exceed a certain threshold.

Small Business Relief is intended to support start-ups and other small or micro businesses by reducing their Corporate Tax burden and compliance costs. The Ministerial Decision on Small Business Relief specifies the revenue threshold and conditions for a taxable person to elect for Small Business Relief and clarifies the provisions of the carried forward Tax Losses and disallowed Net Interest Expenditure under the Small Business Relief scheme.

The Ministerial Decision on Small Business Relief stipulates the following:

1. Taxable persons that are resident persons can claim Small Business Relief where their revenue in the relevant tax period and previous tax periods is below AED3 million for each tax period. This means that once a taxable person exceeds the AED3 million revenue threshold in any tax period, then the Small Business Relief will no longer be available.

2. The AED3 million revenue threshold will apply to tax periods starting on or after 1st June 2023 and will only continue to apply to subsequent tax periods that end before or on 31st December 2026.

3. Revenue can be determined based on the applicable accounting standards accepted in the UAE.

4. Small Business Relief will not be available to Qualifying Free Zone Persons or members of Multinational Enterprises Groups (MNE Groups) as defined in Cabinet Decision No. 44 of 2020 on Organizing Reports Submitted by Multinational Companies. MNE Groups are groups of companies with operations in more than one country that have consolidated group revenues of more than AED3.15 billion.

5. In tax periods defined in the decision where businesses do not elect to apply for Small Business Relief, they will be able to carry forward any incurred Tax Losses and any disallowed Net Interest Expenditure from such tax periods, for use in future tax periods in which the Small Business Relief is not elected.

6. With regard to the artificial separation of business, the Ministerial Decision specifies that where the Federal Tax Authority (FTA) establishes that taxable persons have artificially separated their business or business activity and the total revenue of the entire business or business activity exceeds AED3 million in any tax period and such persons have elected to apply for Small Business Relief, this would be considered an arrangement to obtain a Corporate Tax advantage under Clause (1) of Article 50 regarding the general anti-abuse rules of the Corporate Tax Law.

All Cabinet Decisions and Ministerial Decisions issued relating to the Corporate Tax Law are available on the Ministry of Finance's website: www.mof.gov.ae

How to report minor incidents and crimes to Dubai Police

 Dubai Police has reminded you what to do if you have been involved in a minor car accident or need to report a crime. Through social media, authorities have urged residents to follow road safety rules and use the Dubai Police's official app to report minor road accidents. 

1st Police Eye: The Police Eye service was introduced a few years ago to allow residents to report crimes and help keep their community safe. The service is available through the Dubai Police app, website and police stations.
2. Smart Police Stations: These unmanned police stations in Dubai allow residents and tourists digital access to services 24/7 without human intervention. Minor motor vehicle accidents can be reported at stations where Police Eye also operate.
3. Computer crime: Cyber crime can be reported through Dubai Police's dedicated e Crime channel.Residents can access the website "www.ecrime.ae". A notice on the Dubai Police Department's website states that the service only applies to crimes committed within the geographic scope of the city of Dubai.
4.call center; Dubai Police Call Center can be used to report minor offenses by dialing 901. This number is intended for non-emergencies. It can be reached from outside Dubai by dialing 04-901

New U.A.E labor law changes Employment sector of Emirates

The Ministry of Human Resources and Emiratization (“MOHRE”) has approved a revision of UAE labor law and Federal Decree No. 33 of 2021, which establishes employment relationships and related implementing regulations pursuant to Council Decision No. 33 of 2021. 1 of 2022. (Collectively the “New Law”), which became effective on February 2, 2022 (the “Effective Date”).

  Fixed-term employment contracts only:

 The new law has abolished the concept of permanent employment or unlimited contracts and only fixed-term employment contracts (up to 3 years) can be concluded. Employers have until February 2, 2023 to convert all current permanent employees to temporary contracts.  Temporary contracts only. The new law abolished the concept of permanent contracts and only fixed-term contracts (up to 3 years) can be concluded. Employers have until February 2, 2023 to convert all current permanent employees to temporary contracts.

  Probation or Internship:

 While the probationary period has a maximum duration of six months, the new law now requires a minimum of 14 days' notice from anyone who intends to terminate the employment relationship during the probationary period and if the employee is employed by another employer domiciled in the UAE starts must offer at least   30 days in advance. In addition, the employer can ask the new employer for reimbursement of the costs of hiring the employee.

 Part-time work and flexible working arrangements 

 Some new alternative forms of flexible and a typical work have been introduced, including part-time work (with associated benefits), agency work (for specific project work), flexible work (where working hours and days can vary according to the needs of the employer) and job sharing (details from MOHRE not yet known) 

Working days and Hours

 Friday is no longer an obligatory rest day and employers are obliged to give their employees at least one rest day on each day of the week. The maximum working time remains eight hours per day/48 hours per week (assuming a six-day week) with a two-hour overtime limit, but there are potential exceptions to these requirements under the Executive Rules, which limit working hours to no more than 56 per week.

Annual leave:   Employees are now required to take annual leave in the accrual year and cannot carry unused days over to the next annual leave year unless the employer agrees (or in very limited circumstances where the employer has prevented the employee from taking leave during the accrual year). Unused days expire without compensation. The payment of vacation days not taken is only made in exceptional cases or in relation to the vacation days accrued in the year of termination of the employment relationship   and is only paid on the basis of the basic wage.

 Other leave

The new law expands and introduces various innovations:

Maternity leave: extension to 60 calendar days (45 days fully paid and 15 days half paid); this also applies if the employee suffers a miscarriage after 6 months.

Extraordinary leave: five calendar days in the event of the death of the employee's spouse and three calendar days in the event of the death of a parent or grandparent, child or grandchild, brother or sister of the employee.

Parental leave: five calendar days (for both parents) within six months of the birth of the child.

 Educational Leave: 10 calendar days per year to sit exams provided the employee has been employed for more than two years and is 

Study leaves: 10 calendar days per year to sit exams as long as the employee has more than two years of service and is studying at an accredited educational institution in the UAE.

Discrimination and equal pay: Workers are now particularly protected from discrimination in the workplace and the law prohibits discrimination based on race, colour, sex, religion, national origin, social status and Invalidity that would jeopardize the worker's equality of opportunity or prevent him or her from finding and keeping a job. While maternity and/or pregnancy are not listed as protected characteristics, employers are not permitted to fire (or threaten to fire) a female worker because she is pregnant or on maternity leave. In addition, the new law provides for equal pay for men and women for the same work.

Termination of Employment:

 Dismissal Without prejudice to the use of the term “limitation”, the new law provides that fixed-term employment contracts can be terminated for “good cause” during the contract period, provided that the notice period of the employment contract has expired. Termination without notice for reasons other than those relating to the employee's performance or conduct is now permitted. First, the notion of dismissal is now explicitly recognized as a valid ground for dismissal when the employer is insolvent or insolvent, or when there are economic or exceptional reasons. In addition, the compensation scheme for arbitrary dismissals (under the old law) has been significantly reduced, with compensation possibly only being available to workers in two, specific cases of dismissal, merely pointing out that it is still unclear how the labor authorities will do this Court will interpret new Prohibition on reducing or withdrawing premiums A former employee who resigned five years ago is entitled to a reduction in severance pay (permanent contracts) or is fired (fixed-term contracts). In addition, the termination without notices also led to the loss of the employee's tips. The new law eliminates them, so the employee is now entitled to termination pay regardless of the reason for the termination. (Note - until February 1, 2023 reduced severance pay for employees retiring from permanent contracts at that time)

 Payment of Service Termination Fees

Payment of all contractual and statutory dues must be made within 14 days of termination of employment or the employer may be fined from AED 5,000 to AED 1,000,000 by the MOHRE. The above summarizes the main points that have a significant impact on the contractual arrangements that retailers have with their employees. This requires a review of documentation templates, policies and procedures to ensure legal compliance with the new law and supporting regulations.