Foreign Tax Credit (Corporate Tax in UAE)

Foreign Tax Credit (corporate tax in UAE) The corporate tax liability, as stipulated by the relevant provisions, may be reduced by the Foreign Tax Credit applicable for the corresponding Tax Period.  The Foreign Tax Credit, as outlined in the Decree-Law, is limited to the amount of corporate tax owed on the pertinent income.  Any Foreign Tax Credit that remains unused cannot be transferred to future or past tax periods.  A Taxable Person is required to keep all essential documentation to support a claim for a Foreign Tax Credit. Our evaluation and findings. • If any customers located outside the UAE impose withholding tax on payments made to the company, the company will have the opportunity to claim a foreign tax credit in the UAE. This credit can be applied against the corporate tax owed in the UAE, corresponding to the amount of tax withheld in the foreign jurisdiction, up to the limit of the corporate tax liability in the UAE on that income. • To obtain the tax credit in the UAE, the company must retain the withholding tax certificate or any other relevant supporting documentation necessary for claiming the tax credit.