Subcategory One

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. 

 

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
Managing Partner of Alpha Pro Partners

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Corporation Tax Introduction

All businesses and individuals conducting business activities under a commercial license in the UAE will be subject to Corporation Tax.

Do I need to Comply with Transfer Pricing?

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

What is Group relief?

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

Key Corporate Tax Considerations for Small Business

On the 1st of June 2023, the corporate tax rate will be 9% of the net profit made by businesses in the AUE. In order to support small businesses and start-ups, the corporate tax rate will be ‘0’ % if the net profit is up to 3,75,000 AED.

Do I need to Pay Foreign Tax and Double Taxation?

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

Small Business Compliance Checklist

The new UAE Corporation Tax regime will require businesses to have comprehensive accounting and bookkeeping in place.

Go back to Corporation Tax Home

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

What we offer

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.

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