Learn Corporate Tax Filing Best Practices for UAE Businesses
Learn Corporate Tax Filing Best Practices for UAE Businesses
All taxable persons are required to register for UAE Corporate Tax and obtain a Corporate Tax Registration Number as per the UAE Corporate tax law and following implementing decisions. The Federal Tax Authority may also request certain Exempt Persons to register for UAE CT.
The announced UAE CT regime introduces a tier system with 3 rates: All annual taxable profits that fall under AED 375,000 shall be subject to zero rate. All annual taxable profits above AED 375,000 shall be subject to 9% rate.
It is obligatory to comply with the corporate tax regulations for all eligible Taxable Persons in the UAE. This involves corporate tax registration, filing annual tax returns, and maintaining accurate accounting records. Moreover, the introduction of corporate tax in UAE is to meet the international tax standards.
The tax identification number (also known as TIN) is a 15-digit code provided by the FTA (Federal Tax Authority) of the United Arab Emirates. The code can be used by individuals and corporations in order to track taxes. In some countries, the TIN number is also used as a VAT identification number.
The Certificate of Incorporation is one of the most essential documents for starting a business in the UAE. The certificate (also commonly referred to as an Incorporation Certificate) is a legal document issued by a governing body or regulatory authority that recognises the formation of a company or corporation.
Corporate Tax will affect the businesses in the free zones of the UAE. However, the free zone businesses adhering to the regulatory requirements and not conducting business in the Mainland UAE would enjoy the corporate tax benefits. UAE Free Zones are required to register themselves and file corporate returns.
In summary, corporate tax and VAT are two different types of taxes imposed for revenue generation in the UAE. While corporate tax is a direct tax on company profits, VAT is an indirect tax levied as a percentage of value added at each stage of supply.
The business registration cost in UAE to set up a Limited Liability Corporation can be between AED 22,000 and AED 24,000. Similarly, the business registration cost in UAE to register a firm in the free zones starts is approximately AED 15,000.
Barring Bahrain, the UAE has introduced the lowest corporate income tax rate within the GCC region at a standard rate of 9%.
To register for Corporate Tax in UAE, businesses must be ready to submit the required documents. The process for corporate tax registration will be done online. The following documents required for Corporate Tax Registration in UAE.
• Copy of Trade License (must not be expired).
• Passport copy of the owners/partners/shareholders who own the license (must not be expired).
• Emirates ID of the owners/partners/shareholders who owns the license (must not be expired).
• Memorandum of Association (MOA) – Or – Article of Association (AOA).
• Concerned person’s contact details (Mobile Number and E-mail).
• Contact details of the company (complete address and P.O. Box).
• Corporate Tax Period.
Procedure to apply for Tax Registration Number (TRN) UAE is through FTA online portal. Tax Registration Number (TRN) is a unique number. Tax Registration Number or TRN is an dedicated number that has been issued to the company or individual that has been registered for VAT in UAE by the Federal Tax Authority (FTA).
Follow this step-by-step guide to register your company in Dubai from India:
• Finalize your business activities
• Register a unique trading name for your company
• Choose a business jurisdiction
• Draft the LSA/MOA
• Apply for a business license
• Apply for a business bank account
You must file for VAT return electronically through the FTA portal. Before filing the VAT return form, make sure you have met all tax returns requirements. At the end of each tax period, VAT registered businesses or the ‘taxable persons’ must submit a ‘VAT return’ to Federal Tax Authority (FTA).
Here is how you can minimize the amount of corporate tax your business is liable to.
• Take Advantage of Tax Exemptions and Incentives. …
• Properly Structure the Business. …
• Maintaining Financial Records. …
• Hire a Registered Tax Agent in UAE. …
• Timely corporate tax return filing and payments.
The TRN is also known as the Tax Identification Number (“TIN”), VAT Number, VAT ID, or VAT Registration Number.
AED 500 for all tax registrants and commercial activity. For Printed Certificates: Additional fees of AED 250 will be added for each requested hard copy certificate. Emirates ID, (EID filled must match the name on the card for verification).
The Corporate Tax Guide provides key considerations in determining whether a natural person should be subject to Corporate Tax: A natural person who conducts a Business or Business Activity in the UAE is considered a Taxable Person and a Resident Person as defined in the Corporate Tax Law.
Outsourced accounting characteristics: 1) It saves you time, 2) You get regular business profitability advice, 3)You have peace of mind that your finances are handled, 4) Your tax liability is reduced, 5) You can make more proactive financial decisions 6) Taken care professionally.
We take data confidentiality, copyright, and privacy very seriously, and ensure that any client-related information is not published, distributed, sublicensed, sold or disseminated to third-party at any cost.
Yes, Maintaining the books of accounts and necessary supporting relevant records of businesses are highly essential requirements for efficient management and control of the business operations. This may facilitate the right receipt and payment of money and other transactions entered by the corporate. Hence accounts maintenance in UAE is compulsory. It is mandatory for the businesses to take care of the books of accounts for a minimum of 5 years in accordance with the Federal Law No 2 of 2015 on Commercial Companies and therefore the UAE VAT law and relevant free port laws.
Yes, It is very beneficial. Accounting can Improve Cash Flow with these ways 1.Prepare cash flow projections 2.Keep detailed records of PDCs 3.Reduce expenses 4.Identify weak areas and streamline your accounts 5.Have budgets for everything 6.Double check numbers
Transitions are tricky, but preparing your business to switch to an outsourced accountant doesn’t have to be hard. Make your new financial partner is a good fit, plan ahead and be sure to budget enough time, set goals, and be mindful of potential obstacles.
A company’s accounting information must identify the backlog’s value, cost and revenue. These entries display the cost of the backlog inventory, the cost required to produce the inventory and the gross profit of the backlogged inventory. Backlog accounting gives you the full picture of your business along get prepared you for auditing.
Not really, but we can say that startups will chose Outsource Accounting instead of an employees. Yes, If you have a company than you can do the bookkeeping/accounting yourself but ask your self what else can be done with the time that you will be doing the accounting tasks. Can you be more productive towards your company and invest this time to help it get some traction and scale? When a business owner is no longer able to be involved in every aspect of a business, that is when the business begins to need more than bookkeeping. Most bookkeepers only know how to handle billing, collections, payroll, deposits, VAT, bank account reconciliation and basic financial statements. If you want to grow more with years of experiences, you definitely need to hire an outsourced accounting company which is having professionals.
Your business is unique. No two businesses are the same. And the opportunities and challenges you face will be particular to your company and your industry. So, tailored accounting will provide you custom accounting services as per your requirements.
We add value to clients Business with- Highly acknowledged Professional Team, Acknowledged with Accounting & Legislative updated, Equipped with the latest technology, Multi-layer Maker checker system, Abiding by Professional Ethics etc.
It is one of the compliance checks to verify a person’s VAT liability is correct by way of examining various records which are maintained by the taxpayer. A vat audit may be carried out at the taxable person’s business premises known as ‘field tax audit’ or in the offices of the FTA.
VAT refers to as Value Added Tax. It is levied on consumption of goods and services and is an indirect tax. VAT got implemented on 1st January 2018 by the UAE Government for businesses operating in UAE. VAT impacts end users i.e. consumers and has created a chaos among business enterprises due to lack of proper knowledge and understanding.
Maintaining VAT records is done for tracking up-to-date information regarding VAT filing and to avoid unnecessary tax payment. Any company registered under VAT Law shall maintain its book of records for a minimum period of 5 years. To do this, companies appoint VAT consultancy services like Horizon.
To avoid falling under the prospect of non-compliance of VAT, it is always better to conduct a Tax Audit review or a VAT health check-up in your organization. A VAT Audit review targets in finding out disparities in your organizational tax policies and appropriate procedures as per laws.
We have been providing all sorts of accounting and finance services since six decades and VAT is one of our core services. We have a significant number of clients who are satisfied with our approach and working on VAT, Excise tax calculations and problem solving. If you are looking for VAT consultants in UAE, then you can count on us. To start with the VAT calculation and filing, do contact us today. We are happy to serve you!
Are all businesses liable to register under VAT? No, only those businesses crossing the defined annual aggregate turnover threshold are liable to register under VAT. Based on the registration threshold, a business will either be mandated to register or as an option, a business can apply for registration or can seek exemption from VAT registration On this basis, VAT registration in UAE can be classified into the following: 1.Mandatory VAT Registration 2.Voluntary VAT Registration 3.Exemption from VAT Registration In UAE VAT, businesses whose annual turnover exceeds the mandatory registration threshold of AED 375,000 and the voluntary registration threshold of AED 187,500 are allowed to apply for VAT registration. Therefore, it is crucial for businesses to understand what type of supplies are considered in deriving the annual supplies turnover and how to calculate the VAT turnover for registration in UAE.
1. Failure to keep the required records specified by the tax procedures law and the tax law. AED 10,000 for the first time. AED 50,000 for each repeat violation. 2. Failure to submit the required records in Arabic when requested by the Authority. AED 20,000 3. Failure to submit a registration application within the timeframe specified by the tax law. AED 20,000 4. Failure to submit a deregistration application within the timeframe specified by the tax law. AED 10,000 5. Failure to inform the Authority of an amendment to tax records that needs to be submitted. AED 5,000 for the first time.
There are two types of Supplies in the UAE VAT, such as: 1.Exempted Supplies and Taxable Supplies. 2.Taxable Supplies has been further classified to zero-rated and standard/full rated.
The businesses can opt for voluntary VAT deregistration if the taxable supplies for the past 12 months do not exceed the Compulsory VAT registration threshold of AED 375, 000 but are above the voluntary registration threshold of AED 187,500. The penalty for failing to apply for a mandatory de-registration of VAT within the specified timeframe i.e. within 20 business days, from the occurrence of the event causing the tax payer entity to get eligible for tax deregistration, is AED 10,000.
Yes, you can claim the VAT refund of the expenses which you have incurred before registration. The thing is you should have proper tax invoice of the expenses and the expenses have been incurred for the taxable supplies.
After VAT registration there is liability to collect 5% VAT on the sales, issue Tax Invoice only. Filing of VAT return and payment of VAT on quarterly basis and comply all the applicable laws of VAT.
VAT registered taxable persons/businesses must issue a Tax Invoice when taxable goods or services are supplied in the UAE after the effective date of VAT registration. Federal Tax Authority has established certain rules regarding the type of invoice that may be issued when taxable goods or services are supplied and also regarding the timing of issuing such invoices. Once you know which invoice format will be issued for the business, you must include the minimum requirements for the FTA when filing your monthly VAT Invoice.
Federal Tax Authority (FTA) has issued guidelines for two types of Tax Invoices that can be issued for VAT purposes. 1.Simplified Tax Invoice- Simple VAT Invoices can be issued for supply less than AED 10,000. Simple VAT Invoices don’t require a VAT number and are usually for businesses in the retail industry. Detailed Tax Invoice- When a business supplies goods or services to another business for more than AED 10,000 then it needs to have a detailed tax invoice
In UAE VAT, any person conducting business is not allowed to have more than one Tax Registration Number (TRN), unless otherwise prescribed in the UAE Executive Regulation. Thus, even if you are operating via branches in more than one Emirate, only one VAT registration is required. With a similar objective, if two or more persons are related or associated parties in the businesses, they are allowed to apply for VAT group registration.
As per the VAT clarification No VATP021, the natural person can file for single VAT registration for each of his sole establishment businesses in the UAE.
Accounts and bookkeeping records maintained by taxable persons should be retained for a period of 5 years after the end of the tax period to which they relate for all businesses other than real estate. For real estate businesses, it is 15 years.
Zero rate supplies are taxable supplies for which VAT rate is 0%. Zero-rated supplies include: 1.Exports of goods and services to outside the GCC. 2.International and intra-GCC transport 3.Supplies for certain sea, air, and land means of transportation (such as aircraft and ships). 4.Supply of precious metals for investment (gold, silver, and platinum) 5.Newly constructed residential properties that are supplied for the first time within three years of their construction. 6.Supply of certain educational services and relevant goods and services. 7.Supply of certain healthcare services and associated goods and services. 8.Certain eatables (a standard list will be ratified across the GCC by the Financial and Economic Cooperation Committee) 9.The oil sector and the oil and gas derivatives sector (at the discretion of each member state)
Exempt supplies are not taxable supplies for the purpose of VAT. VAT is not charged on exempt supplies and the supplier cannot recover VAT paid on expenses incurred in making the exempt supplies. The following categories of supplies will be exempt from VAT: 1.Certain financial services 2.Residential properties 3.Bare land 4.Local passenger transport
1.E Dirham: Transaction fee of AED 3, If paying through master or visa card 2-3% on the payable amount. 2.E Debit: You can make payment directly to the FTA account using your retail or corporate bank account and the transaction fee is AED 10. This option is only available with some banks 3.International Bank Transfer: If you are outside the UAE and your bank is a member of SWIFT, then this option is available.
Interested financiers will find a number of positive reasons to invest in the UAE, These are the benefits: 1. Business environment 2. Tourism growth 3. Strategic location 4. Long-term infrastructure 5. Highly skilled workforce and many more.
In UAE, there are 3 type of company formation: 1. Mainland Company – The mainland company is the preferred kind of business entity to trade anywhere in UAE and GCC. A Limited Liability Company can be formed by a minimum of 2 and a maximum of 50 shareholders whose liability is limited to their shares in the business capital. If an expat is incorporating a mainland company in Dubai, UAE, then a local agent is mandatory. 51 % share of business will be owned by the local agent, hence choosing the right partner is crucial. Local agents usually act as sleeping partners and won’t be involved in the running of your business. They support to deal with ministries and the government for various legality. 2. Freezone Company – Free zones offer a vibrant, dynamic working environment and encourage foreign investment by providing 100 percent company ownership for all nationalities. The efficient business laws, easier labor and immigration procedures, exemption from personal taxes as well as import and export taxes, 100% repatriation of revenue and profits and 100% repatriation of capital and profits makes free zone most accommodating prospect to incorporate company business 3. Offshore company – An offshore company is a business entity that is formulated in a low-tax or no-tax jurisdiction for the purpose of legally minimizing the tax payment and gain confidentiality over one’s financial affairs. Important prime benefits are freedom of operations, confidentiality, and ease of running the business. The company can be incorporated under any of above head considering the purpose of incorporating company and nature of business.
1. Target to trade with other mainland companies 2. Wider Scope of Business 3. Work along with government bodies 4. Market Presence 5. Financially viable
1.Exemption from personal income tax and capital gain tax 2.100% ownership without the aid of UAE sponsor 3.Full repatriation of capital and profits from business 4.Minimal Import/Export duty 5.Zero percent corporate tax 6.No restriction on currency movements 7.Single window clearances for administrative services 8.Faster licensing and business set-up 9.Stable and transparent laws and regulations 10.Low start-up and operational cost 11.No visa restrictions for recruitment with liberal labour laws 12.Pre-built structures- offices, factories, warehouses and Business support services 13.Additional services such as sponsorship, on-site housing and labour assistance 14.Modern IT infrastructure with multi-tiered data centre 15.Easy access to air, rail and road transport systems
We can incorporate offshore companies without needing your physical presence. However, in the event of incorporation in the free zones and onshore jurisdictions, we can start the process without you but your presence will eventually be required. You are expected to sign formal incorporation documents at the notary public here in the UAE. However, if you were to provide us with a power of attorney, certified and attested by a UAE embassy or consulate abroad, we can complete the incorporation procedures without requiring you to visit the UAE.
1.51% Partner- 51 % share of business will be owned by any Emirati citizen appointed by the business as a partner as there is a rule that if an expat or a foreign company is incorporating a mainland company in UAE, then a local citizen as a partner is mandatory.As a foreigner investor, you own 49% of the shares and full control of the company as director. Profits are not divided as per the shares between the partners. 2.Local Agent- An Emirati citizen must be appointed as a local agent. However, the foreign investor retains full control of the company and 100% of the shares. Local agents usually act as sleeping partners and won’t be involved in the running of your business. They support to deal with ministries and the government for various legality.
An Outsourced CFO can help a company resolve challenges such as cash flow issues, raising capital, solving tight margins, implementing more efficient systems, or preparing for growth.
At Horizon Biz Consultancy – Outsourced CFO Services majorly include: 1). Creating long term fund raising strategy & implementing the same. 2). Participate and support in investor meeting. 3). Create diversification strategy and improve Sales and Profit. 4). Set up accounting, operation and Management information system to have better decision making. 5). Identify cost reduction areas and improve productivity in the operation areas. 6). Assist in Compliance and Risk management. 7). Local and Global Outsourcing Solutions. 8). Support in tax related matters.
Under the CFO services Dubai, we structure the process of preparing management reports. Once reports are ready it is equally important to study, analyze and discuss the same with executives, top management and investor to identify problems, pressure points and bottlenecks. Even if business is doing well, it is equally important to evolve and grow the business as per vision statement. It is quite important to verify and check the accounting records at regular interval to identify the mistakes or misinterpretation in terms of tax laws & representation as per Accounting Standards to make the financial legitimate for conducting Business Valuation at any moment of time required for fund-raising.
Our IFRS Advisory Services includes: IFRS adoption and implementation, GAP analysis, Impairment testing and modelling, Revenue Recognition Processes and Controls, Imparting Training to finance department, Preparation and development of reporting procedure.
IFRS can add a lot of benefits for your business: Transparency in reports, Improves accountability, Enhances reliability on financial statements, Improved decision making process, Makes VAT reporting easy.
Small businesses require expert assistance on the payroll. You cannot expect accuracy and quality from a makeshift arrangement. You need to decide faster and make a decision. There is no room for inaccuracy, at any cost. It can jeopardize entire operations, to say it right. Moreover, it is a stressful kind of work. You need dedicated team members working on it. By outsourcing payroll services, you can manage operations smoothly. You can expect things to be error-free have experienced members working on the project. They follow strict quality guidelines to cancel out any chances of inaccuracy creeping in.
Our payroll processing services includes:Payroll Register & Payroll Reconciliation, Indemnity Accrual Register & Pension Report, Cash/Bank Report & WPS Report, Overtime Details Report, Employee Loan Outstanding Report, Leave Balance Report. We perform various tasks to ensure accurate and timely paychecks and record-keeping compliance. Our well-defined outsourced payroll processing in UAE ensures seamless service with a strong emphasis on quality and accuracy.
Internal audit is an objective evaluation of an organization’s internal controls to effectively manage risk within its risk appetite. Companies are looking for risk-based internal audit plans to focus on critical areas.
A good internal audit process can be profoundly important to the survival and prosperity of any organization.Our process involves following steps-Planning, Fieldwork, Reporting, Follow up. Our internal audit services will benefit you in following ways-Identify and Manage risk, Add value and efficiency to operations, Develop successful strategies, Make smarter business decisions. Safeguard assets etc.
Tax Residency Certificate (TRC) is an official document issued by the Tax Authorities in the UAE. It was being issued by the Ministry of Finance till 11 November 2020. According to Cabinet Resolution No. (65) of 2020, from 14 November 2020, Tax Residency Certificate / Tax Domicile Certificate shall be issued by the Federal Tax Authorities on an application made by the resident (Individual or incorporated entity) of UAE.
The main purpose of the ESR is to comply and bring specific requirements for the entities incorporated in the UAE to demonstrate that the companies are carrying out the actual economic activity in the State.
All the Companies in UAE onshore and free zone those are generating income by conducted the following activities are required to comply Economic Substance Regulations: 1.Finance and Leasing Business 2.Fund Management activity and business 3.Bank related business 4.Insurance related business 5.Holding Company Business 6.Headquarters Business 7.Intellectual Property 8.Distribution and Service Center Business 9.Shipping Business
1.Professional License – To provide professional services with specific jobs. 2.Commercial or General Trade License – To do all types of trading business including exports, imports etc. 3.Industrial License – To do manufacturing or industrial work. 4.E-commerce license – To do online trading and selling of goods within UAE.