GCC Tax Theatre | UAE Corporate Tax | Serial: “The Tax Long Withheld” | Episode 04 | “Hissing of the Goose” | 20 February 2022

Gerry: “Hey Sam! How ya doing? Jo told me to meet you in the Finance department. ‘Said you need to understand stuff about UAE Corporate Tax?”

Sam: “Hey Gerry, long time! Yeah man, gotta get my head straight. See, I’ve been doin’ Accounting for Jo & Folks LLC and all .. and VAT came .. and you helped. I learned. ‘but now again..this new law is here and I’m trying to understand what this is all about.”?

Gerry: “No worries man. Good thing you’re not as uninformed about Accounting and law as our Jo is. I’ll explain Corporate Tax. Ya see, for an average Joe, Corporate Tax means a part of your company’s profits that must be paid to the revenue authority of a country by a company that is liable to pay tax on its income. Does that make sense?”

Sam: “Ok. Yeah. Cool. I’m just wondering… which other GCC country has this Corporate Tax?”?

Gerry: “Well! Uptill now KSA, Oman, Qatar and Kuwait have implemented Corporate Tax. Wanna know, how they define it?”

Sam: “Absolutely boss.”

Gerry: “OK. So…KSA describes it as “Income tax imposed in accordance with this Law” (Decree Article 1). Kuwait defines it as … lemme read it for ya, “Tax: The income tax imposed on any incorporated body under the provisions of Decree and this bylaw” (Regulations Article 1.13). Oh man! Oman has gone deep… I mean real deep :) .. it says here, “The tax charged on income under the provisions of this Law, and for the purposes of Articles (152), (154), (155), and (158), it includes additional tax and administrative penalties imposed under the provisions of Articles (156), (179), (180), and (181) of this Law;” (Decree Article 1.13). (the definition refers to a bunch of Articles? that you don’t need to bother about yet.)”?

Sam: “Hey hey hey… English please… English!” :)?

Gerry: “Haha … I know. I know. It's the same thing basically. ‘See, they got articles for everything. What they tried to say was that it’s tax charged on income - even the tax penalties. Don’t worry. Let me make ya happy. You know how Qatar defines it? The definition part in the law simply writes two words: “Tax: Income Tax” (Decree Article 1)... meaning in the Corporate Tax law wherever the words tax appear they mean Income Tax. ‘bet you liked that. Easy isn’t it!”

Sam (with frightful eyes): “I like Qatar’s tax law :(.”? …. Gerry: “Hahaha”

Sam: “So how is it different from VAT?”?

Gerry: “Well! This tax is fundamentally different from VAT. In VAT, the person who charges VAT to the customer acts as an agent of the government. VAT is not his tax. He is simply collecting it from the customer. You would immediately say, “What about the VAT that the same person pays to his suppliers?” Well! Think of? it as an advance payment, a loan to the tax authority- so to say - from your side. You recover this loan from the tax authority by not paying them the full amounts of money you collected from customers in the name of VAT. If you really think about it, in the end, you’re paying nothing to the government out of your own pocket for VAT. But that’s not the case for Corporate Tax. You do have to pay your money, a.k.a. Company profits - at least a chunk of it - to the government.?

Continued….

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The author, Muhammad Altaf Hussain, is the Global Tax Service Line Leader, Managing Partner of AJMS Oman and Chief HR Officer of AJMS Global (www.ajmsglobal.com). He may be contacted at [email protected].

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