Sharjah: His Highness Sheikh Dr. Sultan bin Mohammed Al Qasimi, Supreme Council Member and Ruler of Sharjah, has enacted a new law imposing corporate tax on companies involved in both extractive and non-extractive natural resources within the emirate. The legislation outlines specific tax obligations and procedures tailored to these sectors.
According to Emirates News Agency, the law mandates a 20 percent corporate tax on extractive companies, calculated on the taxable base derived from the company's share of produced oil and gas. The taxable base is determined through agreements between the Oil Department and the respective company. Royalties, bonuses, and annual rent for concession areas will also be governed by these agreements.
Non-extractive natural resource companies are similarly subjected to a 20 percent tax based on their net taxable profits, after permitted deductions such as asset depreciation and tax losses. These deductions are carefully regulated, and any changes in accounting methods must be approved by the finance department.
The law also details tax payment procedures, requiring extractive companies to remit taxes to the Oil Department according to established agreements, while non-extractive companies must pay taxes to the finance department within a specified timeframe following the financial year. Penalties are imposed for late payments or discrepancies uncovered during audits.
The finance department retains the authority to audit company records to ensure compliance with the law. Companies are obligated to respond to audit findings and settle any outstanding tax differences promptly, with penalties applicable for delays or intentional violations.
The legislation provides for an appeals process through a dedicated committee formed by the finance department. Companies can object to tax assessments or decisions, but must first settle outstanding tax amounts. The committee's decisions are final, and unresolved disputes cannot be taken to court without first undergoing this process.
The law emphasizes the importance of tax compliance for renewing concession rights or commercial licenses and mandates the retention of financial records for a period of seven years. Confidentiality of company declarations and correspondence is protected, with access limited to audit and review purposes.
