Sharjah introduces 20% corporate tax: Sharjah Ruler Sheikh Sultan bin Mohammed Al Qasimi issued a law imposing a 20% tax on companies in extractive and non-extractive natural resource sectors, state news agency Wam reports.

What are extractive and non-extractive firms? Extractive natural resource firms are those involved in the extraction of natural resources like oil and gas, minerals, metals, and other aggregates, while non-extractive firms are those involved in the processing, refinement, and storage and distribution of those resources.

The details: Extractive firms will be taxed on their share of produced oil and gas value, as defined in agreements with the Sharjah Oil Department. Non-extractive firms will pay 20% annually on net taxable profits, with deductions allowed for asset depreciation and tax losses carried forward indefinitely.

How it works: Extractive companies pay taxes per Oil Department agreements. Non-extractive firms must declare and pay taxes within nine months after the financial year ends. Late payments incur 1% monthly penalties. Companies retain financial records for seven years and grant audit access, with liquidation requiring a final tax declaration within 90 days.

Audits and penalties: Sharjah’s finance department reserves the right to audit company records, and firms must settle tax discrepancies within 15 days of audit findings or face a 2% monthly penalty. Intentional tax evasion triggers a 5% fine on owed amounts.

Appeals process: Companies can challenge tax decisions within 20 days via the Oil Department for extractive firms or finance department for non-extractive firms. Unresolved disputes go to a tax committee, whose rulings are final, and tax payments are required before renewing licenses or commercial registrations.

Refresher: Sharjah’s Consultative Council (SCC) greenlit the draft law imposing corporate tax on extractive and non-extractive natural resource sectors last month, after the SCC reviewed the proposal in December 2024

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