Direct Tax

Staying compliant with digital services taxation can be a challenge, and not managing it effectively can disrupt your business operations. As businesses increasingly move online and e-commerce continues to grow, digital tax has become a crucial part of the tax landscape.

Withholding tax (WHT) is a form of income tax that is deducted at the source, meaning the tax is taken out of a payment before the recipient receives it. For example, an employer might deduct withholding tax from an employee’s salary. Withholding tax is often applied to payments made to overseas companies or non-resident individuals.

Transfer pricing refers to the price set for goods, services, intellectual property, or financial transactions between two related entities within a multinational group. According to the globally accepted arm’s length principle, the pricing for these transactions should be similar to what it would be if the same transaction occurred with an unrelated entity.

Tax residency refers to the country where you or your business are legally required to pay taxes on your income. If you hold a Tax Residency Certificate (TRC) in the UAE, you become a tax resident here. This means you will pay taxes in the UAE and can avoid paying taxes in another country, helping you avoid double taxation.

A Permanent Establishment (PE) is a situation where a business has a fixed place of operations in a foreign country, and it becomes subject to local taxes. If you regularly conduct business activities in more than one country, you may need to pay taxes in both the country where the business is based and the country where it operates.

A Foreign Tax Credit (FTC) allows businesses and individuals earning income from foreign sources to claim credits for the taxes paid to foreign countries. This credit helps reduce the amount of corporate tax you need to pay in the UAE and prevents double taxation on the same income.