Businesses are not allowed to carry forward or back any unutilized Foreign Tax Credit to other tax periods. The Federal Tax Authority (FTA) will not refund any unutilized Foreign Tax Credit. Corporate tax advisors in Dubai can provide you with further advice on unutilized foreign tax credits.
Tax Credits and Foreign Branch Profit Exemption
Under the proposed UAE corporate tax regime, the UAE resident persons will be taxable in the UAE on their worldwide income. However, certain foreign-earned income, such as that from qualified foreign shareholdings and foreign subsidiaries, will be free from corporate tax. In such scenarios, the UAE companies can opt for either of the following:
• Claim a foreign tax credit for taxes paid in the foreign branch country
• Elect to claim an exemption for their foreign branch profits
UAE Corporate Tax: What Should a Business Do Now?
The proposed UAE corporate tax regime is set to be effective in a few months, making the businesses start their compliance journey sooner. Preparing early will make the businesses ensure the UAE corporate tax compliance easy and happy-go-lucky. However, as of now, a clear guideline for claiming the tax credit is absent as the UAE corporate tax law is yet to be released.
Corporate tax advisors in Dubai expect the government to include detailed guidelines for claiming the tax credit in the upcoming UAE Corporate Tax Law. It is advisable for businesses to check their corporate structure and other aspects to ensure compliance with the tax. Corporate tax advisors in Dubai can help you with the process.
