Under the UAE corporate tax regime, partnerships are considered to be legal entities and thus liable to register and file for corporate tax. However, there are exceptions to this rule, some unincorporated partnerships will be exempt from corporate taxes under certain conditions. Different types of partners may also be subject to different levels of taxation depending on their business models or corporate structure.
To ensure compliance with corporate tax regulations and standards, it is important to seek expert tax advice from reputable tax consultants in the UAE. Top corporate tax advisors in the UAE implement streamlined tax solutions which combat intricate tax complexities. details of the corporate taxation system and advise you on which taxes need to be paid by your particular business model or structure.
Unincorporated Partnership
Partnerships in the United Arab Emirates are not corporate entities, but rather contractual arrangements between two or more individuals. As such, corporate tax legislation does not apply to partnerships and there is no requirement for partnership registration with any governmental authority. However, corporate law provisions may affect certain aspects of a partnership’s operations. However, a corporate tax rate may be applied to any profits earned by the partnership which will then be divided amongst its members as payments or dividends.
In most cases, partnerships are not required to prepare financial statements and are not subject to corporate taxation under UAE corporate law. Nevertheless, it is advisable to seek corporate tax advisory services to ensure that all taxation requirements are fulfilled. Individual partners in the partnership are taxed on their share of the profits generated by the partnership (income) and may also be subject to personal income tax depending on their place of residence. Dubai corporate tax regulations do not apply to partnerships as they do not constitute corporate entities.
Read more: Exemptions under Corporate Tax Law, UAE
Is UAE Corporate Tax Applicable to Unincorporated Partnerships?
Partnerships are a common corporate structure in the UAE. As such, it is important to understand how corporate tax laws apply to these businesses, particularly when they are unincorporated. The corporate tax regime in the UAE applies both to incorporated and unincorporated partnerships.
When an unincorporated partnership is deemed taxable by the UAE corporate tax regime, the individual partners are liable for corporate tax on their share of the profits. This corporate tax is based upon a progressive rate, which is determined by each partner’s level of income. Certain exemptions may apply to unincorporated partnerships under the corporate tax regime.
These include:
- Certain corporate structures/professions exempt from corporate tax, such as insurance companies and auditors
- Profits earned outside the UAE are generally not subject to corporate taxes
- A partnership can be exempted from corporate tax in UAE if all of its partners are individuals with no corporate status
It is important for businesses operating in the UAE, particularly unincorporated partnerships, to understand the corporate tax in the UAE regime in order to ensure compliance with local regulations. Experienced corporate tax consultants can provide guidance on corporate taxation and business filing requirements, allowing businesses to remain compliant and minimize their tax liability.
Read more: What expenses are deductible under UAE corporate tax?
An individual associated with an Unincorporated Partnership will be construed as:
- Carrying out the operations of the Unincorporated Partnership. The corporate tax regime under UAE will apply to all its activities as per law.
- Having a legal status, intention and purpose that reflects that of the Unincorporated Partnership. This also applies to any corporate tax matters as well.
- Possessing any assets that are owned by the Unincorporated Partnership. This also covers corporate tax filing, corporate tax compliance and corporate tax planning.
- Being part of any agreement to which the Unincorporated Partnership is a party.
Upon approval of the FTA, an unincorporated Partnership will be treated as a taxable entity: firms that are formed as partnerships will be required to register with the corporate tax authority and file corporate tax returns, subject to the same corporate tax rules and rates as corporate legal entities.
Seek the expert services of Top Tax Consultants in the UAE
To ensure compliance with the UAE corporate tax law and to avert fines for noncompliance, it is important for taxable persons to avail the services of top tax consultants in the UAE. Tax consultant Dubai assists to navigate and combat any tax complexities upon tax registration and filing. Thus, contact us today and we shall be happy to assist you!
Mohammad Alkhatim
Mohammad is a qualified Legal Consultant with over 5 years of experience gained in diverse intricate tax matters, he has high expertise in conducting tax negotiations and investigations with the Federal Tax Authority and other external Tax Bodies. He has vast experience in reviewing and drafting tax documents. Mohammad has also advised on a plethora of tax matters, he draws much attention to tax filing procedures and to offering professional investigations to underlining tax complexities.