With the new corporate tax regime in the UAE now in force, startups and SMEs are facing mounting operational and compliance challenges. The lack of expertise in handling tax and limited internal resources are among the key hurdles small businesses encounter. Conflicting financial priorities make it even more difficult for firms to remain compliant and resilient. In this scenario, a significant number of companies are seeking professional accounting and bookkeeping services in Dubai from established consultants.
As the government now levies a 9% tax on corporate profits, businesses must record every transaction accurately to maintain compliance. Without accurate tax filing, companies are exposed to penalties and legal consequences.
In this edition, we have outlined how SMEs and startups can ensure compliance with the corporate tax norms in the UAE.
Structured Compliance to Build the Foundation
Establishing a structured accounting framework defines the first step to comply with corporate tax norms in the UAE. Businesses need to file CT returns, which maintain financial records. Organizations must secure the Tax Registration Number (TRN), calculate the taxable income accurately, and submit returns through the EmaraTax portal within the stipulated deadline.
However, many firms fail to maintain accuracy, resulting in mistakes during corporate tax filing. Frequent errors include:
- Missing out on registration deadlines
- Misclassifying income or expenses
- Failing to document related-party transactions adequately
Tax Planning Throughout the Year
Choosing the Appropriate Tax Year
For businesses, it’s imperative to choose an appropriate tax year. Organizations must align the end of their financial years to the FTA deadlines to mitigate compliance risks. During FTA registration, businesses must document their tax period selection based on their Articles of Association or board resolutions.
Additionally, natural persons must use the calendar year. Any changes in period, particularly in the case of groupings or foreign tax credit claims, must be approved by the FTA and it must be supported by commercial justification.
Staying Updated on Evolving Rules
As tax policies continue to evolve, it’s crucial to stay updated with the latest norms. By 2025, businesses will need to assess whether they qualify as a Qualifying Free Zone Person or are eligible for small business relief. Organizations must verify qualifying activities and apply the correct methods for recognizing revenue. This approach can help companies optimize their tax positioning and ensure proper expense deductions.
Firms seeking professional accounting and bookkeeping services in Dubai from experts are better poised to remain compliant.
International Agreements and Transfer Pricing
The Double Taxation Avoidance Agreements (DTAAs) in the UAE significantly help businesses involved in cross-border operations. They are necessary to avoid double taxation and improve competitiveness. However, accurate documentation is necessary to maximize these benefits.
Meanwhile, companies engaging in related-party transactions must comply with Transfer Pricing guidelines in the OECD.
- Companies with revenues exceeding Dh200 million, or those that are part of MNCs with global turnover exceeding Dh3.15 billion, must maintain Master and Local Files.
- These companies also need to disclose their revenue if related-party transactions exceed Dh40 million total or Dh4 million per category.
The files must include the following:
- Agreements
- Functional analyses
- Benchmarking
- Demonstrate economic substance
Managing Liquidity for Tax Payments
Professional Corporate Tax Advisory Services in Dubai
It’s crucial for businesses in the UAE to perceive tax compliance as a strategic pillar for growth, not just a regulatory obligation. Non-compliance poses a significant financial risk and can jeopardize any business.
As small businesses and startups consider tax compliance as a core business strategy, they are seeking corporate tax advisory in Dubai from experienced professionals at the IMC Group. Treating tax compliance as a core business strategy can help organizations establish their resilience in the competitive environment.
