GCC Tax Theatre | UAE Corporate Tax | Serial: “The Tax Long Withheld” | Episode 02 | "To Whom It May Concern" | 03 February 2022

For all episodes please click the links below:

Episode 1 | "...and Taxes are Inevitable":?https://lnkd.in/eBjZVE2D

Episode 2 | "To Whom It May Concern":?https://lnkd.in/eB6XjkVd

Episode 3 | "Make an Impact":?https://lnkd.in/ezcG2CU5

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After much awaiting in the evening, Gerry entered the bar and Jo waved at him …

Jo: “Hey Gerry, over here.”

Gerry: “Well well well … Corporate Tax over a drink! ‘never thought I’d see it come to this, hahaha…. So … Tell me … what’s going on in that troubled mind of yours about Corporate Tax?”

Jo: “Don’t even get me started man! On second thought … Let’s do get me started … I’ve got loads and loads of questions on what, why, when, how … I’m worried man … I …”

Gerry (cutting off in between) : “…Wo wo wo … hold your horses man! Let me take you through all your questions step by step … OK?”

Jo: (Nods in defeat without saying a word).

Gerry: “In the morning I told you about what is corporate tax, right? Now I’ll tell you whether you have to pay that at all or not.”

Jo: “All ears!”

Gerry: “Only those companies have to pay this tax, who are making more than 375 in the year. That’s three seventy five THOUSAND dirhams a year. OK?”

Jo: “My company makes a lot more than that. As a matter of fact, all my personal income is from that company itself, although I only get my share of the profits of Jo & Folks LLC… So does my 50% partner … We don’t have any other source of income except this corporate income… I’m worried, do I and my partner also need to pay corporate income tax … cuz our incomes are wholly and solely "corporate", i.e., from our company?”

Gerry: “I’m glad you asked this question. See, your income is your personal income. It is called dividends. In the eyes of law, you and your partner are distinct and separate from your company and all three of you have a separate personality. You are a person, your partner is a person and also YOUR COMPANY IS A PERSON. Your company’s income is the net profit that it earns. You and your partner’s incomes are the dividends that you receive from that third person called Jo & Folks LLC. And the good news is that corporate income tax has no concern with the incomes of natural persons such as you or your partner. Corporate income tax only applies to the incomes of legal persons like your company Jo & Folks LLC. You and your partners are safe. Capeesh?”

Jo has an ear to ear smile: “Your drinks today are on me bro. :D”

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(Looks like Jo and Gerry are going to be there in the bar for quite a long time to discover the truths about UAE Corporate Tax. We’re going to tell you everything they discuss. Don’t miss the next episode!)

The author, Muhammad Altaf Hussain, is a seasoned Tax practitioner, Managing Partner of an international consulting firm in Oman and their Chief HR Officer. He may be contacted by sending a message on LinkedIn.

Disclaimer:

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