Corporate Tax Services & Advisory in Dubai, UAE
With its strategic location, world-class infrastructure, and business-friendly policies, Dubai has become a hotspot for international trade and investment. However, navigating the intricate web of corporate taxation in this dynamic business environment can be challenging.
Let’s explore the essential aspects of corporate tax services and advisory in Dubai, UAE, shedding light on the key considerations for businesses operating in this vibrant city.
A New Era of Taxation in Dubai
From the perspective of investors, Dubai is a significant business hub in the Middle East and a tax haven with several benefits. The taxation structure is excellent, particularly for businesspeople interested in conducting their operations in Dubai’s free zones, where there is no corporation tax. There are other exceptions in the oil and banking industries in the UAE, where the corporation tax rate is set at a maximum of 55%.
However, the UAE’s Ministry of Finance (MoF) announced the establishment of a Federal Corporation Tax (CT). Implemented on June 1, 2023, the UAE corporate tax system is going to impact businesses operating in the country. Keep in mind that tax rates for companies in the UAE vary from 0–9% based on their taxable income.
According to the Ministry of Finance in the UAE, the Corporate Income Tax rates are outlined as follows:
- There is no Corporate Income Tax applied to taxable income up to AED 375,000.
- For taxable income exceeding AED 375,000, a Corporate Income Tax rate of 9% is applicable.
- Large companies that satisfy certain criteria associated with Pillar Two of the OECD Base Erosion & Profit-Sharing Project, such as having global revenue surpassing 750 million or AED 315 billion, will be subject to a separate tax rate.
The purpose of Corporate Tax is to tax the net income or profit of corporations and other businesses. Through the implementation of the Corporate tax, the UAE aims to cement its position in the global market as the leading hub for businesses and investments, accelerate the development of the country, and reaffirm the country’s commitment to meeting international standards for tax transparency and preventing unauthorized tax practices.
Also Read - Understanding Corporate Tax in the UAE: 5 Essential Questions Answered
Who’s Affected by Corporate Tax and the Applicable Rates
Corporate Tax applies to different entities, such as UAE companies incorporated or effectively managed and controlled in the UAE, individuals conducting a business or business activity in the UAE, and foreign legal entities with a Permanent Establishment in the UAE.
UAE-incorporated companies like LLCs, PSCs, and PJSCs face Corporate Tax as resident persons. Foreign companies are considered resident persons for UAE Corporate Tax if they are effectively “managed and controlled” in the UAE.
Resident juridical persons are subject to UAE Corporate Tax on their income source from both the UAE and abroad, while non-resident persons are only subject to Corporate Tax on income from their Permanent Establishment in the UAE or income sourced in the UAE.
Who’s Exempt from UAE Corporate Tax Law
Some businesses or organizations are exempt from Corporate Tax. These include Government Entities, Government Controlled Entities specified in a Cabinet Decision, Extractive Businesses, and Non-Extractive Natural Resource Businesses.
Moreover, businesses involved in extracting the UAE’s natural resources and certain non-extractive activities subject to Emirate-level taxation are outside the scope of UAE Corporate Tax, provided they meet specific conditions.
Exemptions from UAE Corporate Tax also apply to the UAE Federal and Emirate Governments, wholly Government-owned companies, businesses engaged in the extraction of UAE natural resources, Public Benefit Entities, Investment Funds, public or private pension or social security funds, and UAE juridical persons wholly owned and controlled by certain exempted entities.
Having a good grasp of the UAE’s Corporate Tax system can help you plan effectively and take advantage of the opportunities offered by this attractive tax environment.
Also Read - UAE corporate tax: Small businesses can opt for tax relief and submit simplified tax return
Services of a Corporate Tax Services and Advisory
Corporate Tax Services & Advisory in Dubai, like in many other places, involves a range of services and consultations aimed at helping businesses manage their tax obligations efficiently and ensure compliance with local tax regulations. Here are some of the key functions and services that a Corporate Tax Services & Advisory firm or department in Dubai might provide:
Tax Planning: Assist businesses in developing tax-efficient strategies that help minimize their tax liability while remaining in compliance with UAE tax laws. This can include structuring business operations in a tax-efficient manner.
Tax Compliance: Ensure that businesses are up to date with all their tax filings and payments, including VAT (Value Added Tax) and other corporate taxes. This involves preparing and submitting accurate tax returns on time.
Tax Audits and Investigations: Represent clients during tax audits and investigations conducted by local tax authorities. Help clients gather and prepare the necessary documentation to support their tax positions.
Transfer Pricing: Assist multinational corporations in setting and documenting transfer prices for transactions between related entities to comply with transfer pricing regulations.
Tax Incentives: Identify and help clients take advantage of any available tax incentives, exemptions, or deductions provided by the Dubai government to promote specific industries or activities.
VAT Consultation: Provide guidance on Value Added Tax (VAT) compliance, registration, and reporting for businesses operating in Dubai, ensuring they meet VAT requirements.
Tax Strategy Development: Work with businesses to develop long-term tax strategies that align with their corporate goals and help them adapt to changes in tax laws and regulations.
Tax Risk Management: Evaluate and manage potential tax risks to help clients avoid penalties and legal issues related to non-compliance.
Mergers and Acquisitions (M&A) Tax Planning: Assist businesses in structuring mergers, acquisitions, and divestitures in a tax-efficient manner, including due diligence and post-transaction integration.
International Taxation: Advise multinational corporations on international tax matters, including double taxation treaties, withholding tax, and cross-border transactions.
Tax Training and Education: Provide training and educational sessions to clients' finance and accounting teams to keep them informed about changes in tax regulations and ensure accurate record-keeping.
Dispute Resolution: Assist clients in resolving tax disputes through negotiation, mediation, or litigation when necessary.
Dubai, like many other global business hubs, has its own unique tax laws and regulations, so Corporate Tax Services & Advisory in Dubai would specialize in helping businesses navigate the specific tax landscape. It's important for businesses operating in Dubai to stay informed about tax requirements and leverage tax services to ensure compliance and optimize their tax positions.
Benefits of Corporate Tax Services in UAE
In the UAE, businesses are required to comply with tax laws and regulations set by the government. Corporate tax services help companies navigate this new complex tax system and ensure compliance with tax regulations.
Expertise and Compliance
Navigating the intricacies of taxation in Dubai, UAE, requires in-depth knowledge of local laws and regulations. Corporate tax services firms employ experienced tax professionals who are well-versed in the UAE's tax landscape. This expertise ensures that businesses remain compliant with tax laws, reducing the risk of penalties and legal issues.
Tax Optimization
Tax professionals in Dubai can help businesses develop tax optimization strategies to minimize their tax liabilities legally. This includes taking advantage of tax incentives, optimizing corporate structures, and identifying deductions and credits that may apply.
Focus on Core Operations
Outsourcing tax-related tasks to experts allows businesses to focus on their core operations and strategic goals. This can lead to increased efficiency and profitability.
Risk Mitigation
Tax laws and regulations can change frequently. Corporate tax services providers stay updated on the latest developments, ensuring that their clients are aware of any changes that may affect their tax obligations. This proactive approach helps mitigate risks and ensures compliance.
Cost Savings
While it may seem counterintuitive, hiring corporate tax services can lead to cost savings in the long run. By optimizing tax strategies and avoiding potential fines and penalties, businesses can reduce their overall tax burden.
Procedure of Corporate Tax Services in UAE
Assessment of tax obligations: A tax consultant will review your business activities, financial records, and other relevant information to determine the taxes that your business is required to pay.
Tax planning: Based on the assessment, the tax consultant will advise on tax-saving strategies and opportunities to minimize your tax liability.
Preparation and filing of tax returns: The tax consultant will prepare corporate tax audited financial reports and file Corporate tax returns on behalf of your business, ensuring accuracy and compliance with tax regulations.
Payment of taxes: The tax consultant will ensure that your business pays its taxes on time and in the correct amount.
Representation in case of tax audits: In the event of a tax audit, the tax consultant will represent your business and provide support and guidance to ensure a smooth process.
Ongoing support and advice: The tax consultant will provide ongoing support and advice on tax-related matters to ensure that your business remains compliant with tax regulations.
Conclusion
Dubai, UAE, has undoubtedly become a magnet for businesses seeking growth and expansion opportunities. However, the complexity of the corporate tax landscape in the city should not be underestimated. Corporate tax services and advisory firms in Dubai play a crucial role in helping businesses navigate these complexities, ensure compliance, and optimize their tax strategies.
As Dubai continues to evolve as a global business hub, the demand for expert corporate tax services will only grow. Businesses operating in the city should proactively seek professional tax guidance to stay on the right side of the law and make informed financial decisions. Ultimately, with the right tax advisory partner, businesses in Dubai can focus on what they do best—driving growth and success in this thriving economic center.