Corporate Tax services in UAE

Tax Agent

Aim of Corporate tax in UAE:

The Ministry of Finance on January 31, 2022 announced the introduction of a Corporate Tax in the UAE with the aim of taking UAE businesses on a globally larger scale. With the developments in taxation policies and regulationsthroughout the world and to comply with transparency regulations in international trade, it is essential to develop andadopt best practices without increasing the regulatory burden on the businesses too much. Accordingly, the Ministry of Finance has decided to introduce the Corporate tax regime in UAE through which the tax will be levied on profits in financial accounts prepared by UAE enterprises in line with international accounting standards, with a few changes and exceptions. This will further increase the status of UAE as a major commercial and investment centrein global eyes. It will also effect and speed up the development and transformation in UAE to meet its strategicgoals effectively.

To get the business ready for the Corporate tax regime is going to be a major challenge for enterprises operating in UAE. Until now, the United Arab Emirates has been ranked as one of the most desirable locations for local businesses, multi-national corporations due to its zero-tax rate and lesser tax compliances. Nevertheless, the road forward is going to be impacted by the introduction of Corporate tax in the UAE. Therefore, in order to be prepared effectively to manage the challenge with the upcoming corporate tax in UAE, businesses must assess their present situation and make the required modifications to suit the needs of the Corporate tax regime.

What are covered in Corporate tax in UAE?

  • Businesses incorporated in Free zones and not operating or conducting business with the UAE
  • All businesses incorporated in UAE except those involved in the production of natural resources
  • Banking sector except branches of foreign
  • “Business Activities” covers the entire gamut of operations carried on by any legal body. Therefore, any income arising due to the activities carried on by a legal body is liable to the corporate tax framework in UAE.

What are not covered in Corporate tax in UAE?

  • Income from Dividends earned by overseas investors and qualified shareholdings obtained by a UAE firm (yet to be defined in the law)
  • Income arising due to interest, royalties, capital gains, and other investment gains earned by overseasinvestors
  • Qualifying intra-group transactions and reorganizations as far as the conditions are met
  • Income arising on account of natural resource exploitation
  • Profit of Branches of Foreign banks
  • Foreign businesses and individuals if there are no continuous or frequent business activity in the UAE
  • A DIFC or ADGM incorporated
  • Individuals having income generated from employment, real estate, investment in shares or other personal income not associated with UAE trade or business. However, business income earned by an individual holding commercial license and income earned by a freelance professional with permit will be subject to Corporate Tax in UAE.

What is the rate of Corporate tax in UAE?

The Corporate Tax rate in UAE have been classified into various slabs and a certain percentage of UAE corporatetax rate has been specified for each slab. Accordingly, for taxable income up to AED375,000, the tax rate is nil, and a 9% tax rate applies for taxable income over AED375,000. It may be pertinent here to note that AED375,000 =US$102,095. Further, Large Multinational corporations with consolidated global revenue exceeding € 750 million (AED 3.15 billion) subject to OECD Base Erosion and Profit-Sharing laws Pillar 2 of the BEPS 2.0 framework will be entitled to different rates.

Why Corporate Tax services in UAE is required?

With the introduction of a Corporate Tax in the UAE for financials years starting June 01, 2023, there is going to be a major change in business to continue to function smoothly during and post implementation. We, at Aviaan accounting provide Corporate Tax services in UAE to ensure smooth transition during this phase as well as post-implementation.

What are the kinds of Corporate Tax services in UAE?

  • Corporate Tax Implementation Assistance and guidance
  • Corporate tax compliance
  • Training on technical and functional issues relating to the implementation of Corporate Tax in UAE
  • Corporate tax advisory services

How will Corporate Tax Advisory Services benefit business:

  • Timely and accurate compliances with the corporate tax law
  • Effective tax planning
  • More focus on core business
  • Continuing professional support on CT

What support does Aviaan Accounting offer?

  • Provide advisory service and assistance for incorporation of the required changes under Corporate Tax regime into the business flow
  • Assessment of shortcomings in the system design and fixing it to suit the needs under Corporate Tax regime
  • Obtaining registration of the business, both individually as well from the whole group perspective
  • Assessment and computation of tax
  • Preparation of return and filing assistance
  • Assessment of transactions taking place inter-company and computation of arm’s length pricing on those transactions
  • Preparation of transfer pricing local file
  • Regular updates on amendments and new issues in corporate tax landscape
  • Efficient strategies and effective tax planning
  • Advisory services on following OECD Guidelines regarding arm’s length pricing for inter-company transactions.

How Aviaan accounting does it?

  • Impact Assessment of the applicability of Corporate Tax
  • Detailed Assessment of various regulations and other laws applicable to the organization upon introduction ofthe corporate tax regime
  • Implementation support upon introduction
  • Post implementation support for compliances

Let us see a detailed view on each of the above-mentioned points:

  1. Impact Assessment of the applicability of Corporate Tax – We, at Aviaan accounting offer impact assessment as a part of Corporate Tax services in UAE by thoroughly analyzing all the relevant transactions, events and occurrences of the business falling within the ambit of Corporate Tax. There are various kinds of Impact Assessment that is needed to be carried out to assess the applicability of Corporate Tax to the business.
    1. Impact at the business level:

      This is the pre-stage to implementation of corporate tax. Even before the implementation, relevant factors have to be taken into consideration on how the environment will change upon the implementation of CT regime. Points relating to exemptions, deductions and various other adjustments have to be kept in mind while assessing the impact of implementation of Corporate tax atthe business level.

    2. Impact at the Finance level:

      Assessing impact at the finance level includes financial planning, projections, budgeting and estimation of cash outflows of the business. This is to understand the solvency position of the business upon implementation of Corporate tax. Also, apart from maintaining the books of accounts,there should be appropriate documents maintained by the organisation in relation to tax computation & liability, transactions with related party, and determination of arm’s length pricing for inter companytransactions etc

    3. Impact at the Financial statement level:

      The implementation of Corporate tax will have a major impact on the preparation and presentation of financial statements since auditors now have to consider the effect of CT on computation of profits and disclosure of income tax in the financial statements.

    4. Re-structuring of accounting and other system process:

      With the Corporate tax regime coming into play, ERP systems that will facilitate for adjustment pertaining to applicability of Corporate tax on the business transactions will have to be developed or restructured.

    5. Impact on resource availability:

      Human resource is the strength and greatest asset of any organization in carrying out its operations smoothly and effectively. Therefore, every business must prepare itself to have sufficient persons having knowledge and understanding of the financial framework of the business, who canliaison with auditors and external consultants to ensure due payment of taxes and filing of electronic return under the Corporate tax regime.

  1. Detailed Assessment upon introduction of the corporate tax regime – Planning is one of the key factors in preparing the organization to cope up and transition over hassle-free upon introduction of the corporate tax. We undertake a detailed assessment of other laws and regulations applicable to the organization and howthey are impacted upon introduction of the corporate tax regime.
  2. Implementation support upon introduction – Once the Corporate tax law is passed, we provide guidance and offer assistance in matters relating to the registration of the business. Our team of experts ensure quick and efficient registration process so the businesses need not face any hassles or difficulties at the time the Corporate tax in UAE comes into effect.
  3. Post implementation support for compliances – We offer necessary assistance in preparation andcomputation of tax, necessary filings to be done for Our Corporate Tax services in UAE include advisory services, compliance services and representation services by our team of experts as part of postimplementation support for Corporate tax.

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