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Small Business Compliance Checklist

Corporation Tax Bookkeeping 

 

The new UAE Corporation Tax regime will require businesses to have comprehensive accounting and bookkeeping in place. Not doing so could lead to financial penalties (historically the FTA has been lenient with penalties, but naturally any and all penalties should be avoided as much as possible). Let’s take a look at the ways you can prepare your small business for the upcoming UAE Corporation Tax regime. 

Deductible Expenditure

 

As per the Corporation tax rules, businesses will need to ensure that their expenditure is wholly and exclusively for the purposes of the taxable person's business. No deduction is allow for the following:

a. Expenditure not incurred for the purposes of the Taxable Person’s Business.
b. Expenditure incurred in deriving Exempt Income.
c. Losses not connected with or arising out of the Taxable Person’s Business

 

Corporation Tax Software

 

The UAE is new to Corporation Tax, as such, businesses will require the assistance of powerful software implementation, such as Xero Accounting Software. 

Corporation tax software can support with accurate calculation of corporation tax along with keeping an audit trails of the adjustments required as per law.

 

Using a tax software which compliments your existing ERP system would be key. Having an API which connects to your system, pulls the data with one button and can calculation your tax due would save you time and money.

 

Accounting and Transactional Review

 

Businesses will need to stay on top of 

  • E-audits 
  • E-compliance 
  • E-assessments 
  • E-invoicing 

 

This, along with the various other essentials for good bookkeeping for your small business, requires experience to implement correctly. 

Businesses which are based in Freezones will need to ensure that they are able to take advantage of the tax free breaks from their freezone authorities. This would involve a transactional review along with a review of agreements.

There are likely to be transactions booked into the accounts which are allowable under IFRS and VAT but not allowed under corporation tax rules. A detailed review of these transactions along with disclosing them would be required.

Companies with related party transactions are likely require a transfer pricing document to be prepared and to be disclosed.

Having audited financial statements of your accounts would be ideal when calculating accurate tax returns. This means that your accounts have been reviewed by an independent third party and prepare as per IFRS.

With Alpha Pro, you will have access to our team of experts. We know the new UAE Corporation Tax inside and out and can give the guidance your business needs to be financially in control. 

Key contact

Rayhan Aleem, Founder and Managing Partner, Alpha Pro Partners
Rayhan Aleem
Managing Partner of Alpha Pro Partners

What is Group Relief?

Group relief is a relief from Corporate Tax. Businesses are able to create tax groups under the UAE corporate tax framework, which will go into force in June 2023.

Corporate Tax for Small Business

From the 1st of June 2023, the corporate tax rate will be 9% of net profits made by businesses in the UAE.

In order to support small businesses and start-ups, the corporate tax rate will be 0% of profits is up to the threshold of AED 375,000.

Corporation Tax Introduction

Corporate Tax (CT) is a direct tax levied on the net income or profit of corporations and other businesses.

Do I need to Comply with Transfer Pricing Rules?

Transfer pricing refers to the prices of goods and services that are exchanged between companies under common control.

Do I need to Pay Foreign Tax and Double Taxation?

Under the upcoming UAE Corporate Tax regime, foreign companies will be subject to the corporate tax rate of 9% on annual taxable income exceeding AED 375,000.

Corporate Tax application on Freezone companies

On 09 December 2022, the Ministry of Finance released Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. This law included the treatment of businesses on freezones as well as the mainland.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

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You have put your blood, sweat and tears into your business and you deserve a partner who understands. Our promise is that we will treat your business like our own.

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We are Xero Platinum Partners and are experts in using Xero. Xero is continuously making improvements and enhancements to its software and we believe it's the best accounting software available for your operational and accounting needs.

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Supporting your business with accounting, bookkeeping, and software implementation tasks

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In 2021, we supported our clients to grow their revenues by 98%. We work with 100’s of diversified clients and advise them on sustainable growth strategies.

UAE Corporation Tax Complian With Xero Experts

Key Highlights on UAE Corporation Tax 

  • UAE Corporation tax rate one of the lowest within the GCC region and along major economies
  • Tax applicable on profits above AED 375,000 and not below that
  • Standard Corporate Tax Rate is 9%
  • CT effective from 1 July 2023 from financial year 2023 ending on 30 June 2024
  • The financial year for businesses starting 1 January 2023 and ending 31 December 2023 will become subject to the tax beginning from 1 January 2024
  • Tax incentives offered to freezone businesses complying with all regulatory requirements will remain
  • Capital gains and dividends received by the companies in UAE from their qualifying shareholdings are also exempt from paying CT.
We care about your business

We Care

You have put your blood, sweat and tears into your business and you deserve a partner who understands. Our promise is that we will treat your business like our own.

Xero experts

We are Xero Platinum Partners and are experts in using Xero. Xero is continuously making improvements and enhancements to its software and we believe it's the best accounting software available for your operational and accounting needs.

Xero Accounting Software Experts
Supporting your business with accounting, bookkeeping, and software implementation tasks

Supporting your Growth

In 2021, we supported our clients to grow their revenues by 98%. We work with 100’s of diversified clients and advise them on sustainable growth strategies.

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