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FTA Imposes Strict Penalties for Late Corporate Tax Payments Head
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FTA Imposes Strict Penalties for Late Corporate Tax Payments

The Federal Tax Authority (FTA) of the UAE has issued a firm reminder to businesses about the importance of timely corporate tax payments. In a recent announcement, the tax authority stated that companies failing to meet their tax obligations on time will face a hefty 14% annual penalty. This amount will be calculated on a monthly basis on the unpaid amount.

The FTA further clarified that the penalty will start accumulating the day after a company misses the payment deadline. The amount will compound each month, which can lead to significant consequences in case of non-compliance. Businesses are proactively seeking corporate tax consulting services in UAE from reputed professionals to ensure compliance and prevent penalties.

How the FTA Corporate Tax Penalty Adds Up Over Time

For businesses, late corporate tax payments may seem to be a minor issue. However, considering the monthly compounding nature of the penalty, the financial impact can be substantial. The tax authorities in the UAE have designed this penalty structure to ensure compliance. With this penalty now in place, businesses are likely to be more responsible with their corporate tax payments.

The unpaid tax amount will be immediately subjected to penalty once a deadline is missed. With each passing month, the unpaid amount of tax continues to accumulate penalties. This will exert significant financial strain on businesses, prompting them to make their corporate tax payments on time. Particularly, for companies operating with tight cash flow, these penalties can lead to significant additional costs. Therefore, making timely corporate tax payments is now a priority.

Why Tax Compliance Is Essential for Businesses

While businesses feel that paying corporate tax on time saves them from penalties, ensuring tax compliance also brings in other advantages.

Financial Stability

When businesses pay taxes on time, they can save funds as they need not shell out unnecessary penalties. This preserves their cash flow and ensures that funds are allocated towards business operations and growth.

Strengthening Reputation

Every business strives to maintain its credibility and reputation. Adhering to tax regulations demonstrates their commitment to authenticity. Therefore, businesses maintaining tax compliance gain the trust of investors, clients, and stakeholders, which positions the company as a reliable entity.

Long-Term Sustainability

Businesses avoiding penalties and maintaining a healthy relationship with tax authorities can enjoy long-term sustainability. These firms remain secure from sudden financial shocks that might have disrupted their growth plans.

Time Frame For UAE FTA Corporate Tax Registration

According to the Federal Decree-Law No. 47 of 2022 on Corporate Tax, commercial entities need to submit their payments for corporate tax within nine months after the end of the respective period. In case any business misses this deadline, automatic penalties will be triggered. So, every company needs to manage their tax obligations proactively. The new corporate tax system of the UAE has been extensively adopted. By December 2024, over 450,000 companies have already registered with this system. Some of the key aspects of the tax framework for businesses include:
  • 9% corporate tax rate for businesses earning over AED 375,000 annually
  • 0% tax rate for businesses earning below the AED 375,000 threshold

Businesses must strictly adhere to the time frame for UAE FTA corporate tax registration to remain compliant.

Professional Tax Advisory Solutions for Businesses

With the FTA enforcing a 14% penalty on unpaid taxes, businesses in the UAE must prioritize compliance to ensure their operational efficiency and financial stability. Delaying corporate tax payments can lead to significant economic consequences. The IMC Group continues to be a trusted advisory service provider for corporate tax-related issues. Their experienced team guides businesses through the compliance process, ensuring that they remain ahead of deadlines and avoid penalties.

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Golden Visa Program of the UAE Can Benefit Foreign Head
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How the Golden Visa Program of the UAE Can Benefit Foreign Investors

The UAE has been proactive in attracting foreign investors with its favorable visa programs. Particularly, the Golden Visa program of the country has transformed the nation into a premier destination for foreign investors. This visa program has been designed to offer long-term residency and financial security to skilled professionals and their families in the UAE. This program brings a plethora of benefits for the visa holders, including a strong business ecosystem, a tax-free environment, and lucrative real estate opportunities.

Originally, Golden Visa in Dubai was launched to attract entrepreneurs, investors, and highly skilled professionals. The goal was to make the UAE a prime destination for global talent and investment. Since its introduction, the Golden Visa has significantly evolved. Particularly, Dubai stands out as a leading hub for investors with its booming real estate market. Property value in this city has sharply risen, with 91 square meters of prime residential space costing around $1 million. This price is more than double, considering real estate values in cities like New York or Sydney. The strong rental returns, investor-friendly policies, and economic stability of the city further enhance its appeal.

What does the Golden Visa Program offer?

The Golden Visa program offers residency options to the holders in the country, and it can be renewed every five or ten years. One can obtain this visa without the need for local sponsorship, which ensures long-term security for investors, skilled professionals, and business owners. A broad range of professionals and businesses are eligible for this visa, including entrepreneurs, property investors, researchers, scientists, and specialists in different fields. With this visa program, the UAE demonstrates its commitment to innovation and economic diversification.

 Real estate investors in the UAE must invest at least AED 2 million (around $545,000) to qualify for a five-year renewable visa in the country. This program has significantly influenced the real-estate ownership pattern in the country. Currently, a greater number of investors are buying properties rather than renting them, which fuels the growth of the luxury and mid-tier property markets in the country.

Competitive advantage of the UAE with its Golden Visa Program

The Golden Visa program of the UAE gives professionals and entrepreneurs an edge, compared to similar residency programs in Malta and Portugal. For visa holders, key benefits include its tax-free income policies, stable currency, and a pro-business regulatory environment.

Also, Dubai consistently ranks among the top cities across the globe due to its ease of doing business. This makes it an attractive option for high-net-worth individuals and corporations.

Among the prime locations for real estate investment in the UAE are Downtown Dubai, Dubai Marina, and Palm Jumeirah. With high rental returns and a luxury lifestyle, the demand for properties in these regions continues to surge.

A report reveals that 43% of global HNWIs with over $15 million in personal wealth are looking to invest in properties in Dubai for personal use.

Investment Opportunities In The UAE Beyond Real Estate

While investing in real estate is one of the ways to obtain the Golden Visa, investors are also exploring other opportunities in sectors like innovation, healthcare, and technology. The strategic location and world-class infrastructure of Dubai make it a global hub for businesses. Naturally, entrepreneurs looking for access to the international market have Dubai on their radar.

 The Golden Visa program is properly aligned with the Dubai Economic Agenda ‘D33’. It reinforces economic growth, which reflects the long-term vision for economic growth and global leadership in the region. In 2024, the UAE welcomed around 6,700 new millionaires, further strengthening its status as a prime destination for high-net-worth families and investors.

Professional Support to Obtain Golden Visa in the UAE

As the UAE continues to shape itself for global investment with stability and business-friendly policies, professionals and investors are looking to work with professionals like the IMC Group for comprehensive support. The experts can help in identifying key investment opportunities in Dubai, besides providing assistance with obtaining the Golden visa. The Golden Visa program not only offers long-term residency but also serves as a strategic gateway to financial growth. The visa program has established the UAE as a strategic hub for investors looking for security and prosperity in the thriving economy.

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Key Insights from the MoF Update on UAE Family Foundations
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Key Insights from the MoF Update on UAE Family Foundations

The UAE has introduced a significant update regarding family foundations that is likely to reshape the way high-net-worth families manage their wealth and maintain their legacy.

The Ministerial Decision No. 261 of 2024, which has been in place from 1st June 2023, brings a host of transformative benefits to wealthy families. This decision simplifies governance and enhances tax relief, ensuring that such families experience greater flexibility. Interestingly, family foundations have emerged as an essential tool for wealth management in the UAE. Families looking to safeguard their assets and streamline succession planning must reach out to an established single family office in UAE to safeguard their assets and streamline succession planning.

What is a Family Foundation?

As per the UAE Corporate Tax Law, a Family Foundation is a legal structure like a trust or foundation that protects and manages the wealth of a family or an individual. These entities serve specific purposes, which include:

  • Holding, investing, and managing assets and funds.
  • Distribute resources for the benefit of charitable causes or individual beneficiaries.
Importantly, activities carried out directly by the beneficiaries, founder, or related individuals of the foundation don’t count as ‘business activity’ or ‘business’ for corporate tax purposes. Thus, family foundations can preserve wealth without facing any business-oriented tax obligations.

What are the key highlights of the MoF Update?

Let’s take a look at the key aspects of the MoF update.

1. Family Foundations Get Tax Transparent Status

The introduction of tax-transparent status for family foundations has been one of the outstanding features of the update. This provision simplifies tax treatment, the income of the foundation will be treated as if it belongs directly to its council members or founder. Families can eliminate the need to evaluate each individual asset holder. This simplified structure ensures clarity in tax reporting.

For families managing complex estates, this change reduces administrative burdens. Thus, they can focus on preserving wealth and expanding. Thanks to the tax-transparent status, compliance processes get streamlined, which provides an efficient and predictable framework for managing family assets in the UAE.

2. Income Treatment of Individuals

Historically, family foundations were eligible for corporate tax exemptions only on specific types of income. These include returns from investments or rental properties.

Now, under the new framework, income generated by fully owned entities of the foundations, including single family office in UAE, is treated as if it was earned directly by the council members or founders. This policy significantly enhances the flexibility of managing wealth, which allows families to enjoy tax advantages traditionally available to individuals.

3. Improved Succession Planning

For family foundations, succession planning is one of the most crucial aspects. The new provisions make this process even more efficient. Family foundations can focus on their long-term goal of preserving wealth as they qualify for tax transparency and exceptions. Consolidating assets within a foundation ensures a smoother transfer of wealth across generations. It also minimizes administrative complexities often associated with estate management and inheritance.

4. Integration with the Tax Framework in the UAE

The updated regulations in the UAE align with its broader corporate tax structure, treating them like unincorporated partnerships. This facilitates seamless navigation of the tax regime in the country, ensuring that founders benefit from favorable tax treatments while maintaining operational flexibility across jurisdictions.

Family foundations now enjoy a more stable and predictable regulatory environment, whether they operate within the DIFC, ADGM, or RAK ICC.

5. Asset Consolidation Incentives

The latest update on MoF provides a compelling reason to consolidate family assets under a foundation. Now, families can position a family foundation at the top of the ownership hierarchy to achieve tax neutrality across various underlying assets. This approach simplifies wealth management and strengthens the protection of assets. It also reduces the exposure to corporate tax. Now, families can manage different portfolios, including securities, real estate, and private investments.

Optimize Wealth Management with Professional Consultancy Solutions

As new opportunities open up for family foundations in the UAE, wealthy families would be looking for expert guidance to proceed further. Check out this comprehensive guide to setup single family office in UAE. The IMC Group continues to be one of the leading advisory service providers, helping family offices and foundations navigate the latest legal frameworks to achieve their goals. The professionals offer tailored solutions to help family foundations adapt to the MoF update on UAE Family Foundations. With expert advice, these organizations can capitalize on the fresh opportunities and protect the wealth for future generations.

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UAE to Introduce 15% Corporate Tax for Multinationals From 2025
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UAE to Introduce 15% Corporate Tax for Multinationals From 2025

As the tax regime in the UAE continues to evolve, the country is set to implement a significant reform in its corporate tax structure from 1st January 2025. Now, large multinational enterprises (MNEs) need to shell out a 15% Domestic Minimum Top-up Tax (DMTT), which has been increased from the existing 9% slab. This change in tax regime marks a notable shift towards the global tax standards proposed under the Pillar Two framework under the OECD in order to foster fairness and transparency in taxation. Large businesses are closely working with reputed corporate tax consultants in Dubai, UAE to ensure compliance.

Who will be Affected by the 15% Corporate Tax Policy?

The new tax policy in the UAE applies to MNEs with consolidated global revenues exceeding €750 million (approximately $793 million) in at least two of the four financial years preceding the tax year. As per the DMTT, such corporations must pay a minimum effective tax rate of 15% on profits earned within the UAE.

On the other hand, businesses falling below this threshold will continue to operate under the existing 9% corporate tax slab introduced in 2023.

Businesses operating in the free zones of the UAE remain exempt, which demonstrates the country’s commitment to maintaining its status as a global business hub.

With the DMTT in place, the UAE marks its proactive stance to participate in the global tax reform efforts initiated by the OCED. This initiative includes 136 signatory countries and aims to establish a minimum tax rate of 15% to curb tax avoidance. This would also ensure fair competition in all parts of the globe.

Incentives to Foster Economic Growth

The UAE is further exploring new corporate tax incentives to enhance its business environment. These incentives might come into effect in 2025 or later.

1. R&D Tax Credit

The R&D Tax Credit has been designed to promote innovation. This incentive offers a refundable tax credit of 30%-50% for eligible R&D activities that are carried out domestically. These activities align with the Frascati Manual guidelines established by the OECD, which encourages businesses to invest in advanced technologies.

2. High-Value Employment Tax Credit

This tax credit has been designed to reward companies that create substantial local employment opportunities. This is a refundable credit that applies to high-value employment costs, particularly for top executives and professionals who contribute significantly to the country’s economy.

These incentives demonstrate the consistent efforts taken by the government of the UAE to foster innovation and attract top-tier talent to strengthen its global competitiveness.

Implications for Multinational Enterprises

For MNEs operating in the UAE, the implementation of the DMTT poses both challenges and opportunities.

  • Higher tax obligations: Companies need to re-evaluate their tax strategies to ensure compliance with the new set of norms.
  • Strategic planning: Businesses can offset their tax liabilities through incentives like R&D tax credits which support innovation-driven growth.
With new corporate tax regulations in the UAE in place, businesses must consult experienced advisory professionals to adhere to the latest norms.

Why does the 15% Corporate Tax Rate Matter?

The adoption of the DMTT by the UAE is expected to deliver several strategic benefits.

  • Alignment with global tax trends: The new tax rate strengthens the position of the UAE as a trusted hub for global businesses, as it adheres to OECD’s global standards.
  • Higher revenue collection: According to the OEED, global revenues can increase annually by $220 billion with the new tax rate in place, which will benefit the UAE.
  • Fair competition: The 15% corporate tax rate for larger organizations eases up competition for smaller businesses in competitive markets.
  • Economic diversification: With fresh revenues pouring in through tax, the UAE will be better positioned to diversify into non-oil sectors like healthcare, education, and technology.
The introduction of the DMIT in the UAE reflects its forward-thinking approach to tax policy.

Consult Established Corporate Tax Consultants in Dubai

With the new tax norms effective from January 2025, businesses must prepare for this shift. Reputed corporate tax consultants in Dubai, UAE, like the IMC Group, can help large MNEs navigate the challenges ahead with confidence. Working closely with these professionals, large organizations in the UAE can evaluate their tax frameworks and identify potential areas of change. They can also leverage tax incentives to optimize their operations. With professional tax consultants, these businesses can stay informed on legislative developments and stay compliant.

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The UAE Golden Visa Unlock Long Term Opportunities in the Emirates
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The UAE Golden Visa: Exploring Long-Term Opportunities in the Emirates

As the UAE consolidates its position as one of the prime global business hubs, it continues to draw top talent with its strategically designed visa programs. In this edition, we are going to discuss the powerful UAE Golden Visa program, which has emerged as a transformative initiative.

The UAE government has come up with this visa to offer long-term residency to global tenants. While attracting top international talent, the country strives to foster an environment of innovation and inclusivity. This visa has been designed to attract professionals and entrepreneurs from various verticals, demonstrating the country’s commitment to build a world-class talent hub.

Overview of the Golden Visa Program

Introduced as a part of the vision of the UAE to enhance its global appeal, the UAE Golden Visa provides a long-term residency option for those looking to live, work, or study in the country. This program eliminates the need for an in-country sponsor and extends its benefits to family members. This makes it a highly attractive option for expatriates.

Key features of the Golden Visa of the UAE include:

  • Multi-year renewable residence permits for 5 or 10 years
  • The option to remain outside the UAE for more than 6 months while retaining residency
  • Sponsoring spouses and children with no restriction on age
  • Exclusive privileges like the option to sponsor unlimited domestic workers
  • The assurance for family members to continue residing in the UAE if the primary visa holder expires

A Strategic Vision for the UAE

Under the leadership of Sheikh Mohammed bin Rashid Al Maktoum, the UAE Cabinet has strategically aligned the Golden Visa with the social and economic goals of the country. The program streamlines regulations and expands eligibility categories to strengthen the position of the UAE as a global destination for talent. It also aims to make its market flexible and competitive. Recently, the eligibility criteria for this visa have been simplified, ensuring that applicants from various professional and academic backgrounds can seamlessly process the permit.

Who Can Qualify for the UAE Golden Visa?

The government has tailored the UAE Golden Visa for a wide range of applicants. Each category needs to meet specific needs in terms of professions or qualifications to be eligible for the permit. These include:

1. Investors

Investors can qualify for a 10-year Golden Visa by fulfilling one of the following criteria:

  • Depositing at least AED 2 million and confirming it through a letter from a recognized UAE investment fund
  • Having a valid industrial or commercial license, along with a memorandum of association with a capital of at least AED 2 million
  • An FTA letter stating that the investor contributed at least AED 250,000 annually in taxes

Additional requirements include ownership of the capital without having any loans and the proof of health insurance of the investors and their families.

2. Real Estate Investors (5-year renewable Golden Visa)

  • A valuation certificate from the land department of the Emirate to confirm the ownership of property worth at least AED 2 million or above 2-year visa for real estate investment of min 750k AED
  • The property must be purchased with a loan from an authorized local bank

3. Entrepreneurs (5-year golden visa)

  • A verification letter from an auditor in the UAE confirming that the project is valued at least AED 500,000
  • A letter from local authorities to validate the relevance of the project to technology or future sectors
  • Endorsement from a recognized business incubator for establishing the project in the UAE

4. Outstanding Specialized Talents

This category includes exceptional professionals like doctors, scientists, inventors, artists, athletes, and those specializing in engineering and science. Based on the field, the requirements vary.

5. Executive directors

  • A bachelor’s degree certified by the Ministry of Education
  • A minimum of five years of experience in the same role
  • A salary of at least AED 50,000 and a valid employment contract

6. Athletes

  • A recommendation from the relevant sports authority or council

7. Engineering and Science Specialists

  • A Bachelor’s or Master’s degree in a relevant field, approved by the Ministry of Education
  • A valid work contract in fields like AI, biotechnology, data science, etc.

8. Humanitarian Workers

Those dedicated to humanitarian causes can qualify for a 10-year Golden Visa. This category includes:

  • Members or employees of global or regional organizations with at least five years of service
  • Individuals honored with humanitarian awards
  • Those who have donated a minimum of AED 2 million to charitable organizations

9. Frontline Workers

Individuals working in essential services, including healthcare workers like nurses, lab technicians, and others who showed exceptional effort during emergencies like the COVID-19 pandemic, may be eligible for a Golden Visa. Their application must be supported by recommendations from relevant authorities.

Application Process Simplified

The UAE authorities have come up with the ‘One Touch’ Golden Visa service, which is a user-friendly platform to streamline the visa application and renewal processes. Applicants can use the ICP website or download the mobile app to access this service. Professional advisory experts can help you with a complete guide to ICP Smart Services in UAE.

Get Professional Assistance to Apply for the UAE Golden Visa

For skilled professionals and visionary entrepreneurs, the UAE Golden Visa opens the doors to a world of opportunities in the dynamic business hub. The country has introduced this forward-thinking approach to residency and global talent acquisition to attract prime talent from across the world.

Investors, entrepreneurs, or even students can apply for the Golden Visa. It is advisable to consult experienced visa advisory teams like the IMC Group to ensure a hassle-free path while obtaining this visa. Check out this guide to ICP Smart Services in UAE to gain further clarity on the Golden Visa application.

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The Evolution of Wealth Management in the Middle East
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The Evolution of Wealth Management in the Middle East

The transformation of the Middle East into a global hub for wealth management in recent years is a phenomenal development in the region. The growing affluent population and economic diversification in the Middle East largely define its position as a wealth management hub. Prominent financial centers like the DIFC (Dubai International Financial Centre), ADGM (Abu Dhabi Global Market), and KAFD (King Abdullah Financial District) are crucial to this transformation.

Naturally, this region has been drawing substantial international investment over the last decade. This growth is reshaping the financial position of the region, with wealth management firms adopting client-oriented strategies and advanced technologies to meet the demands of investors. Affluent families are consulting single family office in Dubai for professional wealth management and strategic investment guidelines.

Wealth Management Trends in the GCC

With the evolution of technology, wealth management practices in the region are evolving. This marks a shift towards client-centric approaches. High-net-worth individuals (HNWIs) and affluent expatriates are increasingly seeking professional advisory solutions that adhere to global standards.

According to recent studies, around 26% of the affluent to ultra-HNW investors in the UAE have changed their investment strategies over the last year. Some of the key drivers of this change include:

  • Higher capital allocation towards offshore investments
  • Adoption of more aggressive financial strategies
  • Confidence in reinvesting returns to grow wealth, with 58% of the investors planning to reinvest

As investors look out for specialized services, discretionary portfolio management, and Islamic finance solutions, reputed service providers are adapting their strategies in the GCC.

Opportunities and Challenges of Technological Advancements

Globally, technology has significantly revolutionized wealth management. The Middle East faces unique challenges in integrating digital solutions. Currently, many companies depend on fragmented systems for portfolio management, advisory services, and custody, which lead to inefficiencies.

Major Issues in Technology Integration

  • Redundant features: Many systems include excessive features that add complexity without delivering value.
  • Fragmentation: Disconnected platforms hinder seamless operations, affecting both front-office relationship managers and back-office processes.
  • Poor data integration: This creates inefficiencies, limits straightforward processing, and makes the systems prone to errors.

Relationship managers working in the front office often need to navigate multiple systems. This limits their ability to offer personalized advice. In the back office, manual intervention is still common, which raises operational costs and increases risks.

Moving Toward Unified Technology Platforms

Wealth management firms must adopt integrated platforms to overcome these challenges. These platforms significantly streamline operations and enhance the overall experience of clients. With unified systems, these firms gain a holistic view of client portfolios, which encompass services like investment management, advisory, and custody.

Investors in the UAE value clarity and transparency. When evaluating wealth management providers, 88% prioritize clear communication, and 84% emphasize effective task management. In this regard, digital portfolio visualization tools are particularly important, with 80% of investors in the UAE finding them essential to build trust.

The Role of AI and Data Analytics

Advanced technologies like AI and predictive analytics are significantly transforming wealth management practices in the GCC. Relationship managers often deploy these advanced tools to:

  • Provide proactive advice on investments
  • Streamline operational tasks through automation
  • Deliver deeper insights into the performance of portfolios, enhancing the trust and satisfaction of clients

As businesses adapt to these innovations, scalable platforms capable of integrating emerging technologies are likely to play a critical role in staying competitive.

Addressing Regulatory Complexities

The multi-jurisdictional regulatory environment in the GCC further complicates challenges for wealth managers. Different compliance standards across multiple countries call for robust systems that can adapt to diverse frameworks. Forward-thinking wealth management firms also need to contend with global competition as international players enter the region. This significantly elevates their standards and operational practices.

Considering these challenges, a unified and scalable platform is essential to address the complexities. This would enable wealth managers to meet regulatory requirements while delivering seamless services across borders.

A Bright Future for Wealth Management in the Middle East

The wealth management sector in the Middle East is on the path of growth trajectory and modernization. As the region diversifies its economy and attracts affluent investors, firms need to prioritize integrated technology. Along with client-centric strategies and adaptability to regulations, top wealth management firms can adhere to the latest standards and deliver valuable service to their clients.

The wealth management industry in the GCC must adapt to these changes to emerge as a global leader. Thus, these firms can set new benchmarks for personalized financial services largely driven by technology.

Professional Advisor Services for Single Family Offices in Dubai

Established companies like the IMC Group assist single family office in Dubai, providing comprehensive support throughout the process of establishing and managing the organization. This includes professional guidance on legal structuring, regulatory compliance, investment strategies, tax planning, and overall operational support. Single family offices can address their challenges with expert advisory solutions as they set up their establishment in the region.

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Amendments to the UAE VAT Regulations Important Things Businesses Shouldn't Miss Out
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Amendments to the UAE VAT Regulations: Important Things Businesses Shouldn’t Miss Out

The VAT Executive Regulations (VAT ER) in the UAE have undergone significant amendments, which can bring about significant implications for your business. The revised set of norms has come into effect from 15th November 2024. Businesses across different verticals are likely to be affected, while the consequences will be specific to the financial services industry.

In this edition, we have outlined the key amendments every business should know.

VAT Exemption for Financial Services

Under Article 42, the VAT exemption for financial services companies has been expanded. The revised provisions include:

  • Fund management services: This refers to services provided by a fund manager to licensed investment funds, like managing operations, investments, and performance.
  • Virtual assets: According to the revised norms, the exemption now covers the transfer and management of virtual assets like cryptocurrencies. These changes are retrospective and will affect transactions from January 1, 2018. These exemptions will simplify compliance and eliminate VAT invoicing obligations, but they can complicate input VAT recovery, particularly for fund managers. With professional VAT Consultancy Services in UAE from experts, businesses can simplify this process.

Zero-Rate for Export of Goods

Amendments have been made to Article 30, which clarifies the documentation requirements for exporting goods under a zero-rate VAT. The amendments offer a greater degree of flexibility, acknowledging that different export scenarios may require varying documents.

Now, businesses can retain customs declaration or the Bill of Lading as evidence for applying the zero rate. This will help organizations address challenges related to obtaining necessary documentation for exports.

Zero-Rate for Services and Transport

Changes have also been made to the zero-rate VAT application on services, particularly regarding international transportation and related services. These include:

  • Export of services: Certain services like installation of goods or real estate services don’t qualify for the zero rate any longer.
  • International transport: Only the international segment of transportation can be zero-rated unless provided by the original service supplier.
  • Transport-related services: The amendments clarified certain conditions for zero-rating services related to the operation or maintenance of different means of transportation.

Input VAT Recovery on Health Insurance

With the latest amendments now in place, businesses can recover input VAT on health insurance expenses for one spouse and three children under 18. This change is likely to mitigate the administrative burden companies used to experience previously while tracking input VAT on the health insurance of their employees.

Exemption for Supplies by Government Entities

According to Article 3 (bis), a new provision has been included to exclude certain transactions between government entities from VAT. These include:

  • Transfer or disposal of government real estate or buildings
  • The right to use or exploit these assets
Also, a new threshold of AED 250,000 currently applies to deemed supplies by government entities and charities. In case the VAT amount is below this mark, the transactions will not be subject to VAT.

Other Key Changes

Some of the other amendments that impacted different areas are:

  • Tax invoices: New timelines for issuing summary tax invoices (14 days after the calendar month)
  • Input VAT recovery: The amendment clarified how to calculate input VAT recovery entitlement, particularly for businesses with tax years shorter than 12 months
  • Composite supply rules: Clarifications on VAT treatment for supplies consisting of multiple elements
  • Profit margin scheme: Following the amendments, the “purchase price” now includes all related costs and fees beyond just the product price
  • VAT registration cancellation: The FTA can now cancel VAT registrations if businesses fail to meet certain conditions
Implications and Next Steps for Businesses
The latest amendments in the UAE are likely to affect businesses across several sectors. Therefore, businesses must review their operation and identify transactions affected by these changes. As the new set of norms is already in place since 15th November, businesses are coordinating with top companies offering VAT Consultancy Services in UAE, like the IMC Group. These experts will provide a detailed analysis of how the changes can affect a business and suggest practical steps for adaptation.

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UAE Businesses Get a Lifeline with Corporate Tax Grace Period
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UAE Businesses Get a Lifeline with Corporate Tax Grace Period

The Federal Tax Authority (FTA) has announced a grace period for corporate tax, providing businesses in the UAE with a window to file their taxes without incurring penalties. This initiative has been designed to ease the transition to the evolving tax framework in the UAE, fostering compliance and mitigating financial strain for its organizations.

The grace period extends from 1st January 2024 to 31st March 2025. This grants businesses ample time to address discrepancies or late submissions. Companies that correct their filings during this corporate tax period in UAE will avoid penalties. Moreover, if they had paid any penalties between 1st January 2024 and the end of the grace period, they would be eligible for refunds.

This initiative is based on Cabinet Decision No. (105) of 2021, which governs administrative penalty refunds. The decision demonstrates the commitment of the UAE to support businesses and ensure tax compliance. Naturally, businesses are reaching out to reputed corporate tax consultants in Dubai, UAE to optimize their filings and ensure compliance.

Why Businesses Must Stay Updated

While the grace period provides a window to resolve tax-related issues, businesses must remain vigilant when it comes to reporting their obligations. They need to communicate certain changes to the FTA within 20 business days to avoid penalties. These include updates like modification of the business address, change of manager, issuing new licenses, or changes in the legal structure of the company. Considering the complexity of these processes, businesses seek corporate tax advisory in the UAE to remain on the right track.

Failing to report these changes to the concerned authorities can result in fines of up to AED 10,000 per violation. However, the grace period provides a chance for businesses to make these updates without being concerned about penalties. With this additional window in place, businesses must act quickly to pay their pending taxes during the period.

Refund Opportunities for Taxes Already Paid

One of the most attractive features of the grace period for businesses is the opportunity to reclaim penalties they already shelled out in 2024. Organizations that have incurred fines due to errors in their filings or missed deadlines are eligible for refunds if they can resolve these issues within the grace period. Therefore, this measure alleviates the financial burden on businesses and acts as an incentive that the companies can capitalize on.

Businesses must seek expert assistance from companies providing corporate tax advisory in UAE to take full advantage of this provision. Within the grace period, they need to submit their refund requests promptly and provide all necessary documentation to the FTA.

Strategic Implications for Businesses

This initiative brings more than a temporary pause on penalties. It is a strategic opportunity for companies to strengthen their compliance frameworks. Businesses need to take proactive steps to align with regulatory requirements, which will keep compliance issues at bay in the future.

The decision of the FTA reflects its broader goal to create a fair and transparent tax environment. The grace period is simply not about rectifying past issues. It aims to foster a culture of accountability and compliance in the evolving corporate tax landscape in the UAE.

Steps to Ensure Compliance

  • Carry out a thorough audit: In order to make the most of the grace period, businesses must start conducting a thorough audit of their tax filings. Any discrepancies or missed deadlines need to be addressed immediately to avoid complications later. Companies must also report any recent changes in their business structure like change of address or issuance of new licenses.
  • Submitting a request for refund: Businesses that have already paid penalties need to submit a request for refunds. This will help them recover their losses.
  • Review and improve internal compliance processes: This is the ideal time to review and improve internal compliance processes. They need to invest in better systems and train their employee to remain compliant with tax norms and avoid penalties.

Seek Professional Assistance from Corporate Tax Consultants in Dubai

The grace period for paying corporate tax in the UAE is a lifeline for businesses operating in the country. With its provisions for penalty waivers and refunds, it offers a unique opportunity to resolve tax issues and correct errors. Businesses must reach out to one of the established corporate tax consultants in Dubai, UAE like the IMC Group to act promptly and ensure compliance. This grace period will allow companies to secure their financial health and position themselves for long-term success in the dynamic business environment in the UAE.

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The Crucial Role of Accounting and Compliance in the Corporate Tax Landscape in the UAE
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The Crucial Role of Accounting and Compliance in the Corporate Tax Landscape in the UAE

As global companies continue investing in the UAE, the importance of compliance comes to the spotlight. During the UAE Growth and Investment Forum, the panel discussion on Corporate Tax highlighted the importance for business owners to shift their mindset towards robust accounting and compliance practices. This is essential to optimize tax benefits amidst the evolving tax regulations in the country.

With new regulations shaping the corporate tax environment in the UAE, the importance of maintaining accurate financial records cannot be overstated. Naturally, forward-thinking businesses are consulting reputed teams of professionals for accounting services in Dubai. According to experts in the field, conscious effort towards internal discipline and proper financial practices is vital to ensure that businesses remain compliant. With the right guidance from tax consultants, they can also optimize their tax structures.

The Need for a Shift in Mindset

An expert speaking at the Forum pointed out that the tax environment in the UAE has significantly changed. He explained that businesses here never had any compliance for so long in the country. However, the need for a conscious shift in their mindset is evident. The days of operation without any structured tax laws are over. Therefore, businesses in the UAE need to adapt with proper accounting procedures in place. They must meticulously follow International Financial Reporting Standards (IFRS) to ensure adherence to standards and optimize their tax obligations.

Tax Regulations Growing Complex in the UAE

The rapid expansion of corporate tax regulations in the UAE is clear as businesses need to be well-informed and proactive. Another expert pointed out that the once concise 60 pages of corporate tax regulations have now grown to over 2,000 pages.

The FTA (Federal Tax Authority) has been actively releasing clarifications and updates, which makes it crucial for businesses to remain informed. The tax authority body has done a wonderful job in raising awareness through educational seminars. It has helped businesses understand the evolving corporate tax environment.

Smart businesses, particularly those operating in free zones, can potentially benefit from exemptions within this framework. However, it requires a clear understanding of the finer details of the law.

Striking the Right Balance

Businesses operating in the UAE need to understand the new corporate taxation laws accurately. The anti-abuse clause within the tax law is one of the major provisions. The FTA evaluates and identifies whether or not a transaction or arrangement contains any element to abuse tax norms. Therefore, businesses must make sure that their transactions are valid for commercial use and refrain from gaining undue tax advantages. Mistakes in this area can lead to serious legal or compliance issues. This demonstrates the need for meticulous tax planning and execution. Businesses must seek professional support from experts specializing in accounting and compliance services in Dubai to remain compliant.

Importance of Accurate Data Collection and Tax Planning

Businesses must allocate resources optimally to prevent potential pitfalls related to compliance. Top accounting firms use advanced tools and software to ensure compliance for their clients. For businesses, it’s crucial to restructure and classify their accounts correctly.

As the corporate tax environment in the UAE continues to evolve, robust accounting practices and compliance have gained unprecedented importance. The shift in mindset from informal to formal accounting and tax procedures, along with a deep understanding of the complex and growing regulations will help businesses optimize their tax benefits.

Established tax advisory professionals like the IMC Group provide reliable accounting and compliance services in Dubai to global businesses. With detailed tax planning and a disciplined approach to data collection, businesses can remain compliant with the new corporate tax norms in the UAE.

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Corporate Tax Regulations in the UAE and the Impact on Auditing Practices in 2024
  • NEWSLETTER,U.A.E

Corporate Tax Regulations in the UAE and the Impact on Auditing Practices in 2024

The UAE incorporated a new corporate tax framework in 2024 amidst booming global business in the region. The new policies directly affect businesses operating in the country, impacting the corporate earnings of foreign companies. Moreover, the reform reshapes the field of auditing, as companies need to comply with new standards of corporate tax.

As tax professionals adopt these changes, there’s a visible shift in their approach to helping their clients ensure compliance and meet higher standards for accuracy.

Established corporate tax consultants in Dubai, are proactive on the latest norms and assist forward-thinking businesses ensure compliance in the evolving financial environment.

Overview of the Corporate Tax Structure in the UAE

The new corporate tax policy was introduced in the UAE to ensure economic diversification. The new policy levies a tax of 9% on businesses when their profits exceed AED 375,000. This taxation affects a wide range of businesses, and the new policy also presented tax professionals with greater responsibilities.

Currently, auditing bodies in Dubai need to integrate these regulations into the scope of their policies to ensure businesses adhere to their tax system. The process involves an in-depth review of financial records and accurate tax reporting. Under these new regulations, businesses must maintain clear profit and loss accounts. Auditors need to play a crucial role in verifying compliance, thereby minimizing associated risks.

As Dubai continues to impose corporate taxation norms, accuracy and transparency in financial reporting have become essential. Now, auditors must ensure that the reports are thorough and that they adhere to regulatory requirements.

Emphasis on Financial Documentation

The importance has now shifted to detailed financial documentation as per the new tax obligations in Dubai. For businesses operating in the city, it’s imperative to present statements that show taxable income as per the regulations. This has led to a higher demand for tax consultancy services in Dubai to ensure compliance with the new tax standards in the UAE.

 Currently, tax professionals are channelling greater attention to verify that businesses in the UAE adhere to tax norms, scrutinizing all financial activities for accuracy. Naturally, the auditing process has grown more demanding as tax professionals aim to mitigate the risk of penalties arising from reporting discrepancies.

Moreover, companies now need to submit detailed financial reports like income statements. Transparency in these aspects is crucial to determining tax responsibilities. These financial documents detail revenue, expenditure, and net income, and need thorough scrutiny to prevent misreporting.

Shifts in Auditing Practices Following Tax Reform

With the introduction of stricter corporate tax norms in Dubai, auditing practices have undergone a visible shift. This shift also requires tax consultants to remain abreast with the latest regulatory updates as the corporate tax framework in Dubai continues to evolve.

With the introduction of stricter corporate tax norms in Dubai, auditing practices have undergone a visible shift. This shift also requires tax consultants to remain abreast with the latest regulatory updates as the corporate tax framework in Dubai continues to evolve.

The Role of Auditors in Supporting Compliance

The role of auditors is crucial in ensuring compliance with the tax environment in the UAE. They meticulously evaluate financial records to identify areas of potential non-compliance. Thankfully, leading tax professionals are aware of the latest norms on how to calculate corporate tax in Dubai, UAE. They assist companies in avoiding fines or other legal consequences.

Besides ensuring compliance, these consultants can also optimize tax reporting, which enables businesses to minimize their tax obligations lawfully. They analyze financial operations to facilitate accurate adjustments to tax liabilities. Thus, firms can shift to the new tax structure with professional support.

Professional Tax Consultancy Services from Industry Experts

 With new corporate tax norms implemented in the UAE, tax professionals are serving international businesses operating in Dubai as strategic partners to ensure compliance. They provide the necessary guidance to ensure compliance with the new requirements. Thus, these experts go a long way in mitigating financial risks effectively.

The IMC Group continues to be one of the leading corporate tax consultants in Dubai. Seasoned tax professionals and accountants in this proficient team understand the latest tax norms in the UAE and ensure compliance with the same. Businesses, therefore, can maintain accurate financial records to adhere to the norms in the evolving regulatory environment in the country. With professional tax advisory consultation and support, companies expanding to the UAE can remain compliant with corporate tax laws.

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