Sharjah Ruler Introduces Corporate Tax Law For Natural Resources Companies

His Highness Sheikh Dr. Sultan bin Mohammed Al Qasimi, Supreme Council Member and Ruler of Sharjah, has enacted a law concerning corporate tax on natural resources in Sharjah. The law applies to companies involved in both extractive and non-extractive activities, outlining specific tax obligations for each sector.

The law mandates a 20% corporate tax for extractive companies. This tax is calculated based on the taxable base, which considers the company's share from produced oil and gas. Agreements between the Oil Department and the company define the mechanisms and schedules for this calculation.

Non-extractive natural resource companies are also subject to a 20% corporate tax. The taxable base for these companies is determined by their net taxable profits, with adjustments allowed for asset depreciation and tax losses. Depreciation of non-current assets can be deducted at a rate of 20% annually.

Companies must pay their due taxes according to specified procedures. Extractive companies pay to the Oil Department as per their agreements, while non-extractive companies pay to the finance department based on annual declarations. Payments must be made by the last day of the ninth month following the financial year.

If companies fail to meet payment deadlines, they face penalties. A 1% penalty is imposed every 30 days for late payments. The finance department has auditing rights over company records related to revenues under this law. After an audit, a report is prepared detailing any outstanding amounts owed by the company.

If audits reveal unpaid taxes, companies have 15 days to settle these amounts. Failure to comply results in a 2% penalty every 30 days until full payment is made. Intentional financial violations lead to a 5% penalty on total due taxes.

Companies can object to decisions or assessments by submitting requests within 20 days of receiving them. Extractive companies file objections with the Oil Department; non-extractive ones with the finance department. Decisions are issued within 15 days of filing an objection.

A committee reviews appeals against objection decisions. Companies must submit written appeals within 20 days of decision issuance. The committee's decisions are final, and disputes cannot proceed to court without prior appeal through this process.

Paying due taxes is essential for renewing concession rights or commercial licences in Sharjah. Companies must keep records supporting financial statements for seven years from issuance and ensure access for authorised representatives during audits.

If a company liquidates, it must file a tax declaration covering operations up to cessation within 90 days. Confidentiality of declarations and correspondence submitted under this law is maintained by both the finance department and Oil Department unless required for audit purposes.

With inputs from WAM