If you run a business in the UAE, it is the perfect time to understand new amendments in the UAE corporate tax system. Owing to changed tax laws and regulations, the companies need to plan their financial year accordingly. Businesses earning above AED 375,000 have to comply with corporate tax of 9% to avoid any financial losses and penalties. Now, the problem is that corporate taxes are complex for non-financial persons to understand. Fortunately, corporate tax consultants or corporate tax accountants resolve this problem like experts, and companies need to hire professional and expert tax firms in the UAE for a seamless corporate tax experience.
A corporate tax accountant or consultant agency ensures firms file accurate tax returns, comply with Federal Tax Authority (FTA) regulations, and take advantage of tax-saving approaches. In this blog, we will explore why it is essential for almost all companies operating in the UAE must hire a consultancy or tax accountant to maintain compliance and optimize their financial performance.
Understand Corporate Tax in the UAE
What is Corporate Tax?
A plain tax on corporations’ profits is known as corporate tax. To align with international corporate standards, UAE introduced it in June 2023. It applies to all corporations with an income threshold above AED 375,000.
Recent Corporate Tax Percentages in the UAE
The UAE government has set various tax percentages on business earnings. Businesses earning up to AED 375,0000 have to pay zero percentage tax annually. However, businesses with annual profits of more than AED 375,000 have to pay 9% corporate tax. While for mainland companies and tax-free zones, tax treatments are different.
Who is Eligible for Corporate Tax?
Since the UAE has set clear regulations for corporate tax, it includes all mainland companies that operate in the UAE. Tax exemption criteria are available for businesses running in tax-free zones, and it is necessary to meet the compliance requirements for tax benefits. And foreign businesses that generate their income from the UAE. At this point, it is important to check the business eligibility with certified tax accountants or firms.
Importance of Hiring Corporate Tax Consultancy or Tax Accountant
Corporate tax rules are complicated and require experts to understand. The good thing is that numerous expert tax accountants and tax consultants work in the UAE and offer their tax filing and tax return services. They assist in pinpointing opportunities that save tax and reduce liabilities, an ultimate goal of any successful business. They also provide advice on financial structuring and tax laws, and alongside corporate tax, ensure VAT compliance as well. Thus, provides a one-stop solution for all tax-related problems.
Therefore, a professional corporate tax agency or accountant can save companies from undue penalties and financial risks.
Benefits of Employing a Corporate Tax Accountant
- Since corporate tax accountants and consultants are experts, they assist companies in avoiding legal issues and penalties.
- Timely file corporate tax and its returns.
- Ensure compliance with the UAE corporate tax laws.
- Identify any discrepancies in the accounts, and assist in spotting exemptions and rebates that will eventually be a profitable move for the businesses.
- They offer valuable data insights into financial planning, cash flow, and operational costs, and assist in tax strategies to improve businesses’ financial decisions.
Professional tax accountants and firms can protect businesses’ cash by making them UAE tax law compliant.
UAE’s Corporate Tax Rules and Compliance
UAE Businesses should understand the following rules to be compliant:
- Every company that qualifies for the tax requirements needs to get registered with the FTA (Federal Tax Authority) for corporate tax.
- It is crucial to preserve correct business records, like yearly account statements minimum of five years.
- It is necessary to be vigilant about dates like deadlines, early dates, etc., to avoid tax penalties and other lengthy document processes.
- Companies that fail to comply with these corporate tax rules bear
- legal issues and severe financial penalties.
Common Corporate Tax Challenges in the UAE
Numerous businesses find it difficult to understand tax laws and often misinterpret them, leading to penalties. Such as missed deadlines, late tax filings, etc., result in fines. Also, many companies overlook financial planning and eventually pay corporate tax liabilities. Therefore, in the UAE, an expert tax accountant is the most crucial person for businesses to have in their finance team.
The Bottom Line
When considering a corporate tax consultancy or tax accountant in the UAE, companies must consider;
✔ Professional experience within the UAE territory
✔ They understand the complications of corp[rate tax law and know how to make businesses & VAT compliance
✔ They must demonstrate a proven record of corporate tax filing, returns, and tax planning
A professional tax accountant keeps companies tax-compliant and guarantees financial success. So, businesses operating in the UAE need tax accountants for seamless corporate tax processes.
