The introduction of corporate tax in the UAE marks a significant shift in the business landscape, resulting in increased demand for corporate tax advisory services. Below is an overview of what those services typically include and some considerations for businesses operating in the UAE:
Overview of UAE Corporate Tax
- Tax Rate: As of June 1, 2023, a federal corporate tax of 9% applies to businesses with profits exceeding AED 375,000, with a 0% rate for those with profits below this threshold.
- Scope: The tax applies to all businesses in the UAE, except for certain categories which may be subject to different rates.
- Free Zones: Many free zones offer tax incentives, but businesses must carefully navigate the requirements to ensure continued benefits.
Corporate Tax Advisory Services
- Tax Compliance:
- Assistance in understanding and complying with local tax laws and regulations.
- Preparation and submission of corporate tax returns.
- Tax Planning and Strategy:
- Development of tax-efficient structures to minimize tax liabilities.
- Advice on the implications of business transactions, restructuring, and expansions.
- Transfer Pricing:
- Guidance on transfer pricing regulations and compliance, including documentation and reporting requirements.
- Assistance with transfer pricing policies to ensure alignment with international standards.
- Assisting in preparation of transfer pricing documentation in line with OECD guidelines and local regulations, which is critical for multinational entities operating in the UAE.
- Conducting benchmarking studies to ensure intra-group pricing is aligned with market standards and defendable in the event of audits.
- Tax Risk Management:
- Assessing and managing tax risks associated with business operations.
- Developing strategies to mitigate potential tax controversies or disputes.
- Audit Support:
- Support during tax audits, including preparation of necessary documentation.
- Representation before tax authorities during assessments and disputes.
- Specialized Consulting:
- Sector-specific advice for industries such as real estate, technology, finance, and manufacturing, addressing unique tax challenges and opportunities.
- Impact of International Taxation:
- Evaluation of the impact of international tax treaties and agreements.
- Guidance on the implications of foreign investment and cross-border operations.
- Change Management:
- Support in adapting to ongoing changes in tax legislation and policies.
- Training services for in-house teams on new tax requirements and best practices.
- Registration Support:
- Assistance with registration for corporate tax purposes, including obtaining tax registration numbers and understanding filing deadlines.
- Entity Structuring:
- Advising on the most tax-efficient business structures (e.g., LLCs, partnerships, free zone entities) that align with business goals while optimizing tax liabilities.
- Navigating Free Zone Benefits:
- Understanding how to simultaneously benefit from corporate tax exemptions in free zones while complying with the overall corporate tax framework.
Key Considerations
- Local Expertise: Engaging with advisors who have thorough knowledge of UAE tax laws and practices is crucial for compliance and strategy formulation.
- Documentation: Maintain comprehensive records of transactions and related documentation, which is vital for compliance and audit readiness.
- Non-Resident Taxpayers: Understanding the implications of tax for non-resident businesses and their exposure to UAE tax laws.
- Updates and Changes: Staying informed about changes in tax policy or regulations, which can impact both compliance and strategic planning.
Conclusion
Leveraging corporate tax advisory services in Dubai can be instrumental for businesses in navigating the complexities of the UAE’s corporate tax landscape. These services not only help in ensuring compliance but also in optimizing tax efficiency, thus allowing businesses to focus on growth and profitability.