Understanding the Requirements for Tax Compliance in Abu Dhabi
Tax compliance in Abu Dhabi is governed by the UAE's federal tax framework, overseen by the Federal Tax Authority (FTA). Businesses operating in Abu Dhabi must adhere to various tax obligations depending on their structure, income, and activities.
The primary taxes include Value Added Tax (VAT) and Corporate Tax. VAT, introduced in 2018 at a standard rate of 5%, applies to most goods and services. Companies must register for VAT if their taxable turnover exceeds AED 375,000 annually. They are required to file quarterly or monthly VAT returns, maintain proper records, and issue tax invoices as per FTA guidelines.
As of June 2023, the UAE has implemented a 9% Corporate Tax on net profits exceeding AED 375,000. All businesses, including those in Abu Dhabi, must register for Corporate Tax, keep audited financial records, and file annual tax returns. Free zone entities may benefit from a 0% rate on qualifying income, but must still meet compliance and reporting obligations.
Other taxes, such as excise tax, may apply to specific goods like tobacco and sugary drinks.
Failure to comply with tax regulations can result in significant penalties, so businesses should stay updated on FTA rules and consider consulting tax professionals for accurate compliance in Abu Dhabi.