1. Deductions & Exemptions
Businesses can reduce their tax liability by utilizing allowable deductions, exempt income, and restructuring strategies.
- Allowable Deductions: Companies can deduct business expenses, depreciation, and interest payments to lower taxable income.
- Exempt Income: Certain types of income, such as qualifying dividends and capital gains, may be exempt from taxation.
- Restructuring Benefits: Businesses can restructure operations to optimize tax efficiency, including mergers, acquisitions, and asset transfers.
2. Transfer Pricing Compliance
Companies must maintain proper transfer pricing documentation and apply the arm’s length principle to transactions between related entities.
- Arm’s Length Principle: Transactions between related parties must be conducted as if they were independent businesses, ensuring fair pricing.
- Documentation Requirements: Businesses must maintain Local and Master Files to document transfer pricing policies.
- Compliance Standards: The UAE follows OECD transfer pricing guidelines, ensuring international tax compliance.
3. Group Relief & Loss Transfer
Companies within the same group can transfer losses and claim tax relief to optimize tax efficiency.
- Group Relief: Businesses can transfer assets and liabilities within a qualifying group without triggering tax liabilities.
- Loss Transfer: Companies with at least 75% common ownership can transfer losses between group entities to reduce taxable income.
- Tax Benefits: Intra-group transfers allow businesses to offset profits and losses, minimizing overall tax burden.