Sharjah Introduces 20% Corporate Tax on Natural Resources Companies

The Sharjah government has introduced a 20% corporate tax on companies involved in extractive and non-extractive natural resource activities. This law, issued by Sheikh Dr. Sultan bin Mohammed Al Qasimi, Supreme Council Member and Ruler of Sharjah, aims to regulate the taxation of the natural resource sector.

Taxation on Extractive Companies

Firms engaged in raw material extraction—such as oil, metals, minerals, and aggregates—will be subject to:

1. 20% tax based on the taxable base determined by agreements with the Sharjah Oil Department.

2. Taxable base calculations will factor in total oil and gas production value, royalties, and other financial agreements.

3. Royalties, bonuses, and concession fees will be set through contractual agreements between companies and the Oil Department.

Taxation on Non-Extractive Natural Resource Companies

Companies involved in processing, refining, marketing, or distributing natural resources will also be taxed at 20%, with regulations including:

1. Taxable profits assessed annually, with financial adjustments as per the law.

2. Depreciation deductions set at 20% annually on non-current assets, with variations requiring approval from the finance department.

3. Loss carryforward is allowed indefinitely for tax adjustments in future periods.

Compliance, Record-Keeping, and Penalties

• Tax payment is required for renewing concession rights or commercial licenses.

• Records must be maintained for seven years to ensure tax accuracy and transparency.

• A 5% financial penalty applies if companies intentionally violate tax regulations for evasion purposes.

This tax policy aligns with Sharjah’s broader economic goals, ensuring financial transparency, revenue growth, and regulatory control over the natural resource industry.

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