Sharjah introduces new corporate tax on natural resource companies

Sharjah has implemented a new corporate tax law targeting companies involved in extractive and non-extractive natural resources. The law, issued by Sheikh Dr. Sultan bin Mohammed Al Qasimi, Supreme Council Member and Ruler of Sharjah, outlines taxation, payment procedures, audits, and penalties for businesses operating in the emirate’s natural resources sector.

Under the new law, extractive companies—those involved in oil, gas, and other resource extraction—will be subject to a 20% corporate tax based on their taxable base. This will be determined according to agreements between the Oil Department and the company, considering royalties, bonuses, and concession fees.

For non-extractive natural resource companies—such as those involved in quarrying, mineral processing, and water resource management—a 20% corporate tax will also apply. The taxable base is calculated from net taxable profits, with allowable deductions for asset depreciation and tax losses.

Tax payment and compliance regulations

Companies are required to pay taxes based on their agreements with Sharjah’s regulatory authorities. Extractive companies must submit payments to the Oil Department, while non-extractive companies must remit taxes to the Finance Department.

Payment deadlines are set for nine months after the end of the financial year, with penalties imposed for delays. Companies failing to pay on time will incur a 1% financial penalty for every 30 days of delay, while unresolved tax differences discovered through audits may result in a 2% penalty per month.

The Finance Department has the authority to audit financial records of companies subject to the tax law. Following an audit, companies will receive a report outlining their tax obligations. If outstanding amounts are identified, firms must settle them within 15 days to avoid penalties. Intentional financial violations, such as tax evasion, could result in an additional 5% penalty.

Dispute resolution and appeals process

The law provides companies with a structured appeals process. Extractive companies may file objections with the Oil Department, while non-extractive companies must appeal to the Finance Department. Firms have 20 days from receiving a tax decision to submit objections, with a final ruling issued within 15 days.

A specialized Tax Appeals Committee will be established within the Finance Department to review disputes. Companies must exhaust administrative appeal channels before escalating cases to competent courts.

Record-keeping and licensing conditions

Companies subject to the tax law must maintain financial records for seven years to ensure transparency and compliance. Additionally, payment of due taxes is a prerequisite for business license renewal or concession rights extension in Sharjah.

In the event of company liquidation, a final tax declaration must be submitted within 90 days of ceasing operations.

The law emphasizes strict confidentiality of tax declarations and financial statements, restricting access to audit and regulatory purposes only. Both the Finance Department and Oil Department are responsible for ensuring compliance while maintaining the privacy of company records.

With this new tax law, Sharjah aims to enhance fiscal transparency and economic sustainability while regulating the natural resource sector in line with broader economic diversification efforts.