SHARJAH: Sharjah has introduced a 20% corporate tax for businesses engaged in extractive and non-extractive natural resources. This new tax law, announced by Sheikh Dr. Sultan bin Mohammed Al Qasimi, Supreme Council Member and Ruler of Sharjah, applies to companies operating in both sectors within the emirate.
For extractive companies, the tax will be based on the taxable base, calculated according to agreements made with the Oil Department. This includes companies involved in oil and gas production, with tax rates determined by their share of the production value. Royalties, bonuses, and annual rents will also be calculated as per the agreements.
Non-extractive natural resource companies will also face a 20% tax, calculated based on their net taxable profits. They can deduct asset depreciation from the taxable base, with a depreciation rate of 20% annually. Tax losses can be carried forward to future periods, reducing the tax burden in subsequent years.
The law offers companies a deduction for any federal taxes they have already paid, ensuring that businesses are not double-taxed. Companies subject to this law must pay their taxes according to the agreements with the Oil Department or the finance department. Payments for non-extractive companies must be made within nine months of the financial year’s end. Late payments will incur a 1% penalty for every 30-day delay.
The finance department will conduct audits to ensure compliance, with penalties for discrepancies. A 2% penalty will be imposed for any outstanding tax following an audit, and a 5% penalty applies for intentional tax evasion.
This law aims to regulate corporate tax and encourage compliance in Sharjah’s growing business landscape.
