Tax Compliance in Sharjah

Corporate Tax

Corporate tax is a direct tax levied on the taxable income of businesses operating in Sharjah, in line with the UAE corporate tax regime. A standard corporate tax rate of 9% applies to taxable profits exceeding the prescribed threshold, effective from 1 June 2023.

Certain entities, such as qualifying Free Zone businesses and small businesses meeting specified conditions, may be eligible for tax exemptions or a 0% corporate tax rate, subject to compliance with UAE tax laws.

Customs Duty

Customs duty in Sharjah is imposed on goods imported into the UAE. Generally, a 5% customs duty is charged on the CIF value of imported goods, which includes the cost, insurance, and freight.

Some goods may be exempt from customs duty based on UAE customs regulations or international trade agreements. While alcohol and tobacco products attract higher taxes, these are primarily covered under the UAE excise tax regime, with customs duty typically remaining at the standard rate.

Value Added Tax (VAT)

Value Added Tax (VAT) at the rate of 5% is levied across the UAE, including Sharjah, on the supply of taxable goods and services.

VAT is charged at each stage of the supply chain by VAT-registered businesses, referred to as taxable persons. These businesses are required to file periodic VAT returns with the Federal Tax Authority (FTA) and comply with all VAT registration, invoicing, and record-keeping requirements.

Property-Related Charges

Sharjah does not impose an annual property tax on residential properties. However, property buyers should account for other applicable charges, including property registration fees, transfer fees, and ongoing service or maintenance charges. These costs vary depending on the property type and location and are payable to the relevant authorities or developers.

Excise Duty

Excise duty is an indirect tax introduced in the UAE in 2017 and is applicable in Sharjah on goods considered harmful to human health or the environment. Excise tax is levied on specific products such as tobacco products, alcoholic beverages, carbonated and sweetened drinks, and electronic smoking devices and liquids, with rates ranging from 50% to 100%, depending on the category of excise goods.

Sound Mark

Sound marks are marks used for identifying or distinguishing a good or service through a distinctive sound. All names and sounds used by brands incorporating some form of audio element into their marketing and branding, like MGM lion roar, Nokia tune, and Intel jingle, are covered under the sound mark.

Colour Mark

A colour mark, which represents trade or service marks using one or more colours in a specific and distinctive manner, generally protects a brand's exclusive use of those colours. It further allows the company to claim exclusive rights to that colour for branding purposes within the country.

Hologram Mark

Hologram mark, which makes use of more advanced visual communication techniques, presents a company’ logo in contemporary forms. However, the hologram mark, which somehow covers the three-dimensional picture, is especially attached to add further security and protection to the brand name.

Smell Mark

Smell marks are trademarks granted to unique identities or distinguishing goods or services. The smell mark is granted to product lines where the fragrance plays a significant part in consumer experience or overall brand differentiation.

Planning

CFirstly, the Federal Tax Authority (FTA) determines the objectives of an audit and its respective scope.

Execution

Secondly, audit procedures will be carried out to meet the regulatory compliance for the smooth functioning of the businesses in Sharjah.

Conclusion

After the successful completion of the audit procedures, the audit findings should be documented accordingly.

Follow up

Taxpayer, after the finding of the audit, will have to implement corrective actions where it is necessary.