Sharjah has introduced a 20% corporate tax on companies involved in both extractive and non-extractive activities related to natural resources, as announced on Thursday, reads a Khaleej Times report.
The law, passed by Sheikh Dr. Sultan bin Mohammed Al Qasimi, Supreme Council Member and Ruler of Sharjah, applies to companies engaged in the extraction, processing, and distribution of natural resources such as oil, metals, minerals, and aggregates.
Under the new legislation, extractive companies, which include those involved in raw material extraction, will be taxed based on their taxable base, determined by agreements made between the Sharjah Oil Department and the companies. These agreements outline the shares of produced oil and gas, along with royalty and participation rates. Additionally, annual rent and royalties tied to concession areas will also factor into the tax calculations.
For non-extractive natural resource companies, which include those involved in processing, transporting, and marketing natural resources, the 20% tax is levied on their net taxable profits after necessary adjustments. Companies can deduct asset depreciation and tax losses for future periods to reduce their taxable base.
The law stipulates that companies must maintain financial records and supporting documents for seven years to ensure accurate tax reporting. Furthermore, a 5% financial penalty will be imposed if any tax evasion is detected.
In addition to tax payments, companies must comply with tax regulations to renew their commercial licenses or concession rights in Sharjah. The law aims to streamline the tax process and ensure equitable taxation for businesses in the natural resources sector.
Bd-pratidin English/ Jisan
