What are the Benefits of Corporate Tax
Corporate tax is a form of tax levied on the earnings of corporations. Corporate tax helps to develop new sources of revenue for the government as well as promote transparency within businesses. Corporate tax plays a vital role in funding the government and providing accountability for businesses. Corporate tax can also be referred to as corporate income tax, corporate profits tax, or corporate revenue tax. One of the main purposes of this type of taxation is to raise money for the government which helps to build the economy. The rate at which you pay corporate taxes varies country to country. CT rate in UAE is 0% if your taxable income is up to AED 375,000 and 9% if it’s above AED 375,000.
Corporate Tax Ensures Tax Fairness Among Businesses
Corporate tax ensures tax fairness among businesses by ensuring that all businesses are paying the fair amount of taxes. Corporate taxes ensure that there is a fair distribution of tax burden. It is a tax on the income or profits of corporations. Some countries use corporate taxes to fund their governments while other countries use them as revenue sources for other public services. In all events, it helps the countries to prosper and regulate local economies.
Corporate Tax Helps Keep the Economy in Control
Corporate taxes help to keep the economy in control. It can be used to stimulate or slow down the economy, improve it and reduce the deficits. It is one of the main sources of revenue for a country. Corporate tax is based on the amount of revenue that a company makes. If an entity reaches the taxable threshold, it is taxed by applying the relevant CT percentage on its profits.
Corporate Taxes have Certain Advantages over the Personal Taxes
Corporate taxes have certain advantages over the personal taxes of individuals and households. For example, corporate tax rates are more stable than those for personal income, which can fluctuate with a business cycle. In addition, corporate tax administration is easier than administering personal income tax because only one entity must be monitored instead of many individuals or households. As such, it is often considered less intrusive on businesses compared with personal taxes because they don’t require self-reporting by every single person involved in making decisions about how much money should be paid out each year. For the avoidance of doubt, personal/income taxes are not applicable in the UAE till date.
Corporate Tax Helps in Social Security and Reduces Public Debt
Corporate tax helps with social security and reduces public debt. Social security is very important for any country and for every person who lives in it. Social Security protects old age, disability, unemployment, loss of job or death so that people can live a better life without serious financial problems. Corporate taxes also help a country to reduce its debts. This is necessary because public debt is extremely damaging for any country or economy as it affects currency value and interest rates which directly affects the local businesses.
Corporate Tax Helps to Fund Public Services
Corporate tax provides the governments with funds to run public services such as healthcare, education, transport etc. These services are important for the economy and the general well-being of citizens. The funds generated through CT also help governments to provide specialist education to its citizens, such as, artificial intelligence, blockchain, digitization etc. which eventually paves the way towards a knowledge based economy. Countries with high specialist knowledge attract high foreign direct investments which in return create massive job and business opportunities.
Countries use corporate tax to protect their local industries from foreign companies. For example, a country may impose a high corporate tax on foreign companies as compared to local businesses. Similarly, the local businesses are sometimes subsidized by using the funds generated from corporate income tax. CT helps in the economic development as it provides incentives for businesses to invest and grow, which ultimately contributes to the economic growth of a country.
Hiring a Corporate Tax Advisor
An audit by a tax professional can help you avoid paying too much tax. It can also help you find any errors in your tax return, which may result in a refund. You may also find several legal ways to save taxes which you will otherwise end up paying unnecessarily. Push Digits Chartered Accountants is a well-known name in the UAE when it comes to taxation. Our comprehensive tax knowledge and experience dealing with multi-million dollar corporates will ensure your business is fully compliant with regulations governing corporate tax in the UAE. Contact us to find out more.