Sharjah Emirate introduces 20% corporate tax on companies

Sharjah, one of the emirates in the United Arab Emirates (UAE), has introduced a 20% corporate tax on companies engaged in extractive and non-extractive natural resources activities. Extractive companies focus on the extraction of raw materials such as oil, metals, minerals, and aggregates, while non-extractive companies handle separation, processing, storage, transportation, and marketing of these resources.

The new law, issued by Sheikh Dr. Sultan bin Mohammed Al Qasimi, sets the tax at 20% for extractive companies based on their share of the value of produced oil and gas, as defined in agreements with the Sharjah Oil Department. Royalties, bonuses, and annual rent for concession areas are determined by these agreements. For non-extractive companies, the 20% tax applies to net taxable profits for each financial year. Companies can deduct asset depreciation of up to 20% annually and carry forward tax losses to future periods. Depreciation methods must follow international standards and be approved during audits.

Tax payment is mandatory for renewing concession rights or commercial licenses. Companies must maintain financial records for seven years. A 5% penalty on the due tax amount will be imposed for non-compliance or intentional tax evasion.