Sharjah Imposes 20% Corporate Tax on Natural Resource Companies
New Tax Law for Natural Resource Companies in Sharjah
Sharjah now imposes a 20% corporate tax on companies involved in natural resource activities. This law applies to extractive and non-extractive companies. The announcement was made on Thursday.
Extractive Companies and Their Tax Obligations in Sharjah
Extractive companies extract raw materials like oil, metals, minerals, and aggregates. These companies process and utilize resources for consumers. The taxable base depends on agreements with the Sharjah Oil Department. The tax rate is 20% of the company’s share from produced oil and gas. Royalties, bonuses, and rents depend on agreements with the Oil Department.
Non-Extractive Companies and Their Tax Obligations
Non-extractive companies handle the separation, treatment, refinement, processing, storage, transport, marketing, or distribution of natural resources. These companies also pay a 20% corporate tax. The taxable base depends on net taxable profits. Necessary adjustments include asset depreciation and tax loss deductions.
Asset Depreciation and Tax Loss Deductions
Companies can deduct asset depreciation from the taxable base. Non-current assets depreciate at 20% annually. Companies following international accounting standards can deduct depreciation with finance department approval. Tax losses can be carried forward to future tax periods without limitation.
Compliance and Penalties for Non-Adherence
Tax payment is necessary for renewing concession rights or commercial licenses. Companies must keep financial records for seven years. A financial penalty of 5% applies for intentional tax evasion violations. The finance department determines violations and imposes penalties accordingly.
Conclusion
Sharjah’s new tax law ensures transparency and accountability for natural resource companies. Companies must comply with tax regulations to continue operations in Sharjah.