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Boosting Compliance to Attract Investments in the UAE
  • NEWSLETTER,U.A.E

Boosting Compliance to Attract Investments in the UAE

The UAE has set benchmarks in the global business environment, being a preferred hub for investors. With a business-friendly regulatory framework, strategic location, progressive business strategies, and a thriving economy, the country attracts global investors. According to recent data, the UAE is placed in the third position among attractive emerging global economies. This speaks tons about its robust economic performance as the country recovered from post-pandemic challenges. Currently, hundreds of companies are seeking professional support for company formation in Dubai for foreign investors from established teams.

With a remarkable growth rate of 7.6% in 2022, the UAE stands out with its agility and resilience. This establishes its status as a dynamic economic hub in the Middle East. With a world-class infrastructure, including ports and airports, the country seamlessly facilitates business on a global scale.

The UAE revamped its company laws in 2020 as a strategic move to attract foreign investment. In most business sectors, the country allows 100% foreign ownership, although a few exceptions exist. These strategic reforms eliminated existing barriers for international investors, serving as a catalyst for market entry. The competitive business environment in the UAE now witnesses healthy competition between different sectors that were previously dominated by local entities.

Bilateral Trade Agreements to Foster Economic Diplomacy

The UAE has embraced a proactive stance towards global economic integration. It is carrying out a series of bilateral trade agreements with key partners worldwide. With these strategic partnerships, the country seeks to strengthen its investment inflow and trade volume. Eventually, this approach is laying the foundation for sustained economic collaboration.

Among noteworthy countries with which the UAE entered agreements are South Africa, Israel, India, and Turkey. Besides, it is participating in the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership), which marks its commitment to fostering mutually beneficial relationships on the international stage.

For instance, the Comprehensive Economic Partnership Agreement with India recorded a remarkable surge of 27.5% in bilateral trade within a year of its implementation. Besides, trade volume in the UAE soared to $599 billion (2.2 trillion dirhams) in 2022. This marks a robust 17% annual growth, spearheaded by strategic bilateral trade agreements across different sectors.

Economic Diversification and Technological Innovation

The UAE, in commemoration of its 50th anniversary, launched an ambitious agenda to foster economic diversification and innovation. Over the next decade, it has a targeted influx of $150 billion in foreign investments. The country has earmarked as many as 50 pioneering projects and initiatives in this context. These measures are diverse, ranging from streamlining visa regulations to fostering technological advancements and attracting talent in its key sectors.

Exploring Compliance Requirements and Regulatory in the UAE

While the UAE looks promising from a business perspective, organizations need to understand its regulatory norms for compliance. The dynamic regulatory landscape poses a challenge for investors as it undergoes legislative updates frequently. Particularly, SMEs with limited resources find themselves struggling due to the complex legal framework. In the end, every business aims to comply with the established norms to ensure transparency, and accountability, and to protect its stakeholders.

Particularly, the UAE has stringent norms under its Combating Financing of Terrorism (CFT) and Anti-Money Laundering (AML) laws. Therefore, foreign businesses expanding to the UAE need to adhere to mandates like meticulous record-keeping, comprehensive customer due diligence, and prompt reporting of suspicious transactions.

Empowering Labor Rights and Regulatory Oversight

In 2021, the UAE incorporated a number of reforms related to labor laws. Foreign businesses operating in the country need to adhere to the prescribed norms to combat issues like forced labor, discrimination, and harassment at worksites. These laws also secure certain privileges for employees such as maternity benefits, thereby fostering a more inclusive workforce. Notably, the Labor Market Regulatory Authority has been established in the UAE, which demonstrates the commitment of the country to empowering labor laws.
Balancing Innovation and Compliance to Attract Investors

As the UAE transforms into a focal point of innovation and entrepreneurship, businesses look forward to capitalizing on their growth opportunities. For foreign businesses expanding to the UAE, embracing a futuristic economic model is the need of the hour.

Thus, companies need to gain a comprehensive understanding of regulatory norms in the UAE and seek professional guidance to navigate the complex norms. Investing in local expertise is crucial along with strategic planning and execution of compliance strategies.

The IMC Group continues to be one of the leading business setup consultants in Dubai UAE. As businesses cruise along their path to growth and expansion, this team of experts remains steadfast in its commitment to empowering enterprises with strategic insights and tailored solutions.

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This Is Why Due Diligence Matters during Mergers and Acquisitions
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This Is Why Due Diligence Matters during Mergers and Acquisitions

Do you know why forward-thinking businesses in the UAE seek professional due diligence services during mergers and acquisitions? Beyond a formal procedure, due diligence continues to be a vital step that determines the integrity of the merged business entity. This explains why successful businesses seek professional due diligence support, revealing the strengths and downsides of the company under consideration.

A stringent due diligence process points out the opportunities and risks, thereby facilitating negotiations for the best terms and pricing. Eventually, it fosters confidence and trust, both of which are vital for the involved parties. It creates a positive business environment that strengthens the bottom line of the company.

How To Identify Red Flags in The Due Diligence Process?

Identifying the common red flags is worth it when it comes to something as crucial as due diligence.

1. Financial Inconsistencies

Discrepancies between financial records or incomplete documentation may indicate poor accounting practices or even potential fraud. Unless addressed on time, it can jeopardise the accuracy of financial records. Professional due diligence service providers stringently scrutinize missing invoices, tax returns, and receipts. They might also detect inconsistencies between unaudited and audited accounts. All these point to poor accounting practices, misinterpretation, or fraud.

For instance, target companies tend to inflate their revenue or refrain from disclosing all their expenses. They might also hide debts and or portray themselves as more solvent or profitable than they really are.

2. Legal Issues

The target company may have legal liabilities like pending lawsuits, unresolved intellectual property disputes, or regulatory violations against its name. Unless due diligence is carried out before the merger or acquisition, it can tarnish its reputation and financial stability.

3. Operational Challenges

With professional due diligence services, issues like high employee turnover, low customer satisfaction, or outdated technology may come to the surface. All these issues indicate operational inefficiency that may hinder the long-term sustainability or competitiveness of the company.

4. Quality of Earnings

The actual financial performance of the company may be distorted by aggressive revenue recognition practices, non-recurring revenue, or improper accounting policies. This leads to misinformed valuation assessments.

5. Unstable Markets

In unstable markets, due diligence is crucial to identify pressing issues like declining market share, sales, stiff competition, or changing preferences of customers. This points to market disruption, saturation, erosion, or reduced opportunities for growth.

6. Dependency Issues

With due diligence services, companies can identify dependency issues like heavy reliance on a few supplies or customers. Particularly, if these relations are unfavourable or unstable, business continuity may be disrupted.

7. Stability of Management

Changes in management or key personnel after acquisition may disrupt operational continuity. This calls for a comprehensive assessment process of succession plans and the leadership pipeline.

8. Cultural Issues

Cultural discord may arise from mismatched goals and visions within the organization. During the merger or acquisition, this can lead to discord, which can be detected through professional due diligence services at the outset.

Professional Due Diligence Services for Successful Deals

Now that you know the red flags, let’s check out how due diligence from professional teams can help you take proactive measures for successful deals.
1. Thorough Examination
Working with a professional team for due diligence, it’s imperative to gain expert insights and evaluate the target company comprehensively. This fosters a realistic undersigning of its strengths and weaknesses.
2. Transparent Communication
Clear and transparent communication fosters trust and transparency. With the underlying information fully disclosed, the involved parties can mitigate the risk of conflicts and unpleasant surprises down the line.
3. Alignment of Interests
Once both parties carry out due diligence to identify their common objectives, they can negotiate beneficial terms mutually. This lays the foundation for a fair and equitable deal. Both the stakeholders involved enjoy optimal benefits.
4. Preparing for the Integration

Finally, professionals can guide you through the post-deal integration process. This allows the firms to consolidate their resources, processes, and cultures.

The IMC Group continues to be a trusted partner, offering professional vendor due diligence services. Having a competent team of experts on your side can streamline your M&A process significantly.

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Middle East M&A Thrives with a Strong Outlook Amidst Resilience and Diversification
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Middle East M&A Thrives with a Strong Outlook Amidst Resilience and Diversification

In the dynamic landscape of the Middle East, the M&A market has yet again demonstrated significant resilience throughout 2023, despite facing formidable global economic and geopolitical challenges. The region performed steadfastly, largely steered by regional sovereign wealth funds (SWFs) and government-related entities (GREs). Leading organizations largely diversified their portfolios away from their reliance on hydrocarbons. Some of the prime sectors riding the growth trajectory and witnessing investment activity include fintech, healthcare, agribusiness, and renewable energy.

Looking ahead to 2024, indicators suggest a continuation of robust activity. However, there’s an increased potential for deal flow driven by investment platforms that were launched in the later months of 2023 or early 2024. These platforms will go a long way, enabling SWFs and GREs to extend their global investment footprint to nurture alternative investments. Naturally, forward-thinking organizations would be seeking M&A transaction advisory services in Dubai to remain on the right track.

Broader Investment Reach

SWFs and GREs, in recent years, have actively pursued broader and often more prominent investments in sectors like renewable energy and infrastructure. In developed economies, they have acquired significant stakes in key assets. In 2024, this trend is likely to persist, particularly with the geopolitical landscape impacting the deal flow. This will support oil prices in the Middle East.

Economies that are currently grappling with severe issues like high inflation rates, conflicts, interest rates, and geopolitical uncertainties will benefit from fresh opportunities. Several governments are actively engaging SWFs and GREs in the Middle East to invest in domestic assets and projects, aiming to bridge financial gaps beyond their own resources. Outbound M&A, involving global cross-border transactions, is poised to become a prominent trend.

Besides, investments are likely to pour into different industries like healthcare, technology, AI, fintech, nuclear, agribusiness, and renewable energy. In M&A activities, ESG (environmental, social, and governance) are likely to play a crucial role. Particularly, the UAE is working on its commitments made during COP 28 in 2023. This is evident from its launch of a $30 billion climate fund for investing in different ESG projects.

Inbound Investment and Favorable Regulatory Environment

Inbound investment is projected to remain active as Middle East governments focus on developing leisure, energy infrastructure, and tourism assets. These investments often take the form of joint ventures, with incoming partners providing vital technology or expertise. The legal and regulatory framework in the Middle East, influenced by principles from British and American systems, has seen an uptick in Middle East registered Special Purpose Vehicles (SPVs) used for investment purposes, both domestically and internationally. Businesses entering the Middle East or operating in the UAE are looking for transaction advisory services in Dubai for professional guidance.

Moreover, there has been an increased traction in M&A transactions backed by warranty and indemnity insurance. The London insurance market proved to be receptive to such initiatives, and this trend is likely to dominate 2024 too.

The Outlook for Middle East Regional and Outward-Bound M&A Activities

Both regional and outward-bound M&A appear promising in the Middle East although the performance in 2023 looks a bit subdued compared to expectations. GREs and SWFs are likely to play a significant role in a diverse range of M&A deals in 2024. The focus lies on technology, renewables, infrastructure, and healthcare.

The IMC Group continues to be a reliable partner for businesses seeking due diligence services in Dubai amidst increasing M&A activities.

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Trends and Predictions of Foreign Direct Investment (FDI) in the UAE For 2024
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Trends and Predictions of Foreign Direct Investment (FDI) in the UAE For 2024

The last few years have witnessed the UAE emerge as a major destination for FDI, attracting global players. While there was a major decline in FDI in 2022 due to socio-economic and geopolitical issues, the country continues to be one of the most stable investment destinations globally.

As per the World Investment Report 2023 (WIR) of 2022, FDI inflow in the UAE hit $22.7 billion, recording a 10% increment compared to the previous year and outperforming other Gulf countries. Forward-thinking businesses hire professional services for company formation in Dubai, eyeing the lucrative opportunities.

Major Investors and Sectors in the UAE

The UAE stands out as a major investment hub, attracting businesses amidst global uncertainties. The country leaves no stone unturned to enhance its financial inflow. Particularly, the UAE-India Comprehensive Economic Partnership Agreement (CEPA) has been facilitating trade and fostering stronger business ties. Entities in the UAE can benefit from a multiplicity of perks under the CEPA. For instance, the provisions include 0% customs duties on most of the tariff lines and preferential access for marketing that benefitted both nations. Bilateral trade between the two countries witnessed a 27.5% spike within one year after the CEPA was signed.

In the energy sector, the UAE has enhanced its involvement with China. In May 2023, the two countries signed three agreements with the nuclear energy organizations in China. FDI in the energy sector will be a strong foothold in the country.

International tech entrepreneurs also find the UAE a major hub for investment. The country boasts a progressive tech infrastructure, drawing a pool of investors. This goes a long way in rapidly scaling up businesses and seeking early exit routes. Thus, the Gulf country appeals to significant start-ups, which hosts three of the six unicorns in the Middle East.

The key investment sectors in the UAE are:

  • Greenfield Projects
  • Healthcare
  • Stock Markets
  • Renewable Energy
  • Real Estate

Opportunities of FDI in the UAE

The UAE has taken several strategic measures to attract FDI. These include waiving taxes and restrictions on capital repatriation, allowing the movement of free labor in the UAE, and incentives to foreign investors. The 2021 Commercial Companies Law (CCL) reforms further boosted FDI, enabling 100% foreign ownership of onshore entities in the UAE in certain sectors. Previously, the limit was fixed at 49%.

In the UAE, investment avenues are of three major types:

  • Positive list activities that allow 100% foreign ownership of onshore entities
  • Free zone entities in the UAE enjoying 100% foreign ownership
  • 51% Emirati-owned and 49% foreign-owned onshore businesses

In 2022, the Ministry of Economy in the UAE launched the NextGenFDI, a nationwide initiative to attract global businesses operating digitally. These businesses got their market entry and thus, they could launch their ventures and scale them within the UAE. NextGenFDI facilitated fast company incorporation, pacified banking services, helped in issuing bulk visas, and provided lease incentives for tech companies moving to the UAE.

Through Hub71, Abu Dhabi has established a unique tech ecosystem across the world to bring investors and founders together, grow tech companies, and scale them. A new license for start-ups, technology companies, and entrepreneurs was also introduced by the Dubai International Financial Centre at just $1,500 per year. UAE also established the Invest in Dubai platform, which investors found beneficial in procuring trade licenses to launch their businesses swiftly.

Key Threats for Investors in the UAE

Although the UAE appears to be an alluring destination for investors, considering the prime threats is worth it. A lot of new laws and regulations have become effective in the country. Global entities operating in the UAE find it challenging to understand and implement necessary tactics to adhere to the same. This turns out to be a time and cost-intensive process, which often alienates SME businesses, particularly the ones from other countries. The regulatory uncertainty in the UAE will test its attractiveness, particularly in comparison to established economies in Europe.

A greater capital inflow also puts the UAE at risk of illegal activities like financing terrorists and money laundering. Since 2022, the UAE has been on the ‘grey list’ of the Financial Action Task Force, which serves as a threat to foreign investment.

Key Predictions for 2024

  • M&A activities, along with projects driven by renewable and Greenfield sectors with sizable corporate restructuring and asset portfolio consolidations will pick up pace to do away with non-sustainable assets based on fossil fuels
  • A spike in M&A activities driven by the education and healthcare sectors is on the cards with a growth in the population in the UAE
  • The UAE will witness the establishment of start-ups focussing on digital and technological innovations
  • Established corporate companies in the UAE will be focussing on ESG ratings due to the country’s involvement in COP28
  • Foreign investors in the UAE will make the most of legal reforms and business platforms involving investment, data privacy, protection, and regulation
Professional Assistance for Setting up a Business in the UAE

While the FDI growth in the UAE may experience some moderation in 2024 and face challenges from regional competition and regulatory concerns, its strategic initiatives, diverse investment opportunities, and commitment to sustainability are likely to sustain its attractiveness to foreign investors. The IMC Group continues to be one of the most trusted business setup consultants in Dubai. With professional support, businesses can confidently adhere to new legal norms and establish their identities in the UAE.

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Exploring the Impact of Corporate Tax Changes in Mainland Entities and Free Zones in the UAE
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Exploring the Impact of Corporate Tax Changes in Mainland Entities and Free Zones in the UAE

As the UAE continues to solidify its position as a global business hub, recent changes in corporate tax laws have sparked significant interest among investors and corporations alike. As per the new regulations, businesses operating in free zones will be treated differently than the ones in the mainland. Entities often look out for corporate tax advisory in Dubai before finalizing whether to operate in the UAE’s free zones or the mainland. With professional support, businesses can embrace the right track while adhering to the fresh tax regulations in the country.

An Overview of the Regulatory Framework in the UAE

In the UAE, free zones operate under distinct regulations and legal systems separate from those governing mainland entities. With over 40 multidisciplinary free zones across the country, Dubai continues to be a hotspot for global businesses. Each zone has its own regulatory authority. For instance, the DMCC (Dubai Multi Commodities Centre), JAFZA (Jebel Ali Free Zone), and Masdar City Free Zone in Abu Dhabi have historically offered enticing benefits like full profit repatriation and 100% foreign ownership.

Traditionally, free zones guaranteed zero personal and corporate income taxes for as long as 50 years, which significantly attracted investors. However, the landscape has evolved with the implementation of the UAE’s Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. This led to the introduction of a 9% corporate tax, which became effective from June 1, 2023, although there were exemptions and considerations for businesses operating in free zones.

Mainland entities, on the other hand, are subject to the same rate of corporate tax of 9% on their taxable income exceeding Dh 375,000. They operate with strict restrictions, adhering to stringent reporting standards and can carry out businesses both internationally and domestically. Thanks to recent amendments to the Commercial Companies Law, these entities enjoy 100% ownership in some sectors that bridge the gap between free zones and mainland operations.

Tax Implications and Considerations

Under the new tax regime, free zone entities meeting specific criteria may still enjoy exemptions. According to Article 18 of the Corporate Tax Law, free zone entities in the UAE will be exempted from fulfilling certain conditions. These are referred to as Qualified free zone Persons (QFZPs). Here are the conditions to obtain the QFZP status.

  • Maintaining adequate substance in the country
  • Obtaining the qualifying income
  • The entity operating in the free zone shouldn’t have been elected to be subject to corporate tax
  • Adhering to the document requirements and transfer pricing rules
  • Satisfy any other conditions that the Minister in charge might prescribe

Qualified free zone Persons (QFZPs), adhering to regulatory requirements and maintaining a substantial presence within the UAE, can benefit from a 0% tax rate on Qualifying Income, with a 9% rate applied to other taxable income.

Adapting to the new regulatory landscape presents challenges for both free zone and mainland entities. It is imperative to ensure compliance with the intricate requirements and documentation to mitigate the risk of penalties and maintain operational efficiency.

With professional corporate tax advisory in Dubai, entities can make informed decisions when it comes to something as serious as taxation.

Avoid a AED 10,000 fine by Meeting UAE's Corporate Tax Deadlines. Contact us for Expert Tax Compliance Guidance and Protect your Business.
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Professional Tax Advisory Services in Dubai

While the new tax laws aim to harmonize regulations, they also present opportunities for entities to reassess their operational and tax structures. As MNCs explore these changes, strategic planning and compliance will continue to be the key to capitalize on emerging opportunities and mitigate risk strategically.

The IMC Group is a trusted team of professionals for complete corporate tax planning 2024. With experts available to guide you amidst the challenging corporate tax regime, you can comply with the prescribed norms.

Mainland entities will face the new corporate tax but with fewer operational restrictions than those imposed on free zone companies. They will also enjoy the corporate tax regime’s tax relief, allowing them to tap into benefits such as small business relief, business restructuring relief, and transfer within a qualifying group.

Adhering to new regulations might be challenging for both free zone and mainland entities, and it is crucial to navigate the complexities of the new tax law, ensuring compliance with the requirements and documentation to avoid penalties.

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Family Offices Surge in the Middle East, Bringing Fresh Opportunities
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Family Offices Surge in the Middle East, Bringing Fresh Opportunities

The Middle East is bracing up as a key player with highly esteemed family offices catering to UHNWIs (ultra-high-net-worth individuals). Leading players are set to infuse the economy of the UAE with a massive $500 billion investment in the next three years. This financial boost will dynamically boost the economic standing of the region, with family offices taking center stage in strategic wealth planning.

A recent study reveals a notable shift in the mindset of family office executives in the UAE. Currently, the focus has expanded beyond investments, unlike historical trends. Family offices in the Middle East are trying to establish a robust operational foundation. Thanks to the favourable regulatory environment in the UAE, family offices can carry out professional operations in the country, leveraging strategic advantages in the region.

Market Trends and Diversifying Portfolio

Wealthy families and individuals are turning to established single family office in Dubai to streamline their finances.

The demand for intergenerational wealth management has witnessed a significant surge in 2024. Families in the Middle East prefer hiring professional teams for successfully transitioning wealth, addressing taxation concerns, and optimizing inheritance. The present investment environment is defined by a wait-and-watch approach along with adequate caution. This demonstrates the need for strategic wealth preservation in the Middle East.

When it comes to innovative family office strategies, the investment landscape has witnessed a notable shift. Family offices currently prefer private credit and equity over public markets, eyeing more lucrative returns. Experts have noted a calculated and cautious approach from leading family offices. Some clients are ready to sacrifice the liquidity of their assets for better returns under uncertain market conditions.

The 3 Rs of Family Office Strategies - Rebuild, Retain, Regulate

The evolving sector of single family office is defined by 3 Rs: retain, and regulate. Top players in the industry are channelling their efforts towards recovering and retaining employees through innovative schemes and engaging with regulators proactively. The focus on transparency has been a priority, as experts recommend exercising caution against over-regulation that might jeopardise family offices from being established in the Middle East. This demonstrates the value of privacy and control.

Emerging Trends and Futuristic Investments

The UAE continues to attract wealthy families globally due to its favorable tax environment. Other factors contributing to this trend include sophisticated lifestyle amenities, a robust financial services sector, and the strategic location of the country. However, experts believe that family offices need to tactically balance growth, family values, and preserving wealth. Technology has a key role to play in this regard since family offices are embracing governance and institutionalization. Now, the focus has shifted significantly to cybersecurity measures and data security.

The report also points out a transformative shift in gender involvement in family businesses. In the Middle East, the role of women in the wealth management of families is being recognized formally. A large number of women have achieved leadership positions in this regard. This trend demonstrates a change in attitude, offering both genders equal opportunities for sponsorship and mentoring with updated regulations. According to the latest norms, gender diversity has been mandated on company boards.

As the UHNW population increases in the Middle East, the family office sector is witnessing substantial changes. From succession planning to diversified investment strategies and ESG considerations, the evolving landscape promises opportunities and challenges alike.

The IMC Group continues to be one of the established players in the Middle East. This consulting firm offers specialized and customized services to address the unique needs of each family office. Whether you need professional assistance in succession planning or personal holding company formation and management, the experts offer tailored solutions to individuals and families.

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UAE Corporate Tax Landscape in 2024: Why Branch Licenses Matter?
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UAE Corporate Tax Landscape in 2024: Why Branch Licenses Matter?

The new year 2024 marks a significant transition for businesses adhering to the January to December financial year in the United Arab Emirates (UAE). With the advent of corporate tax, even though the corporate tax returns are slated for submission in September 2025, it is prudent to conduct a preliminary review of key considerations. Successful businesses work closely with reputed corporate tax consultants in Dubai to ensure adherence.

Corporate Tax Registration Process

At the outset, businesses in the UAE need to get their entities registered to establish their legal existence. Thanks to the streamlined process of online registration, it takes little time to get your business registered with the regulatory authorities. Once recognized, businesses in the UAE are recognized as registered taxpayers. The fast process also allows ample time for authorities to review applications and provide feedback.

The Emaratax technology helps corporate tax registration align with the information submitted earlier for VAT. An early application helps in detecting potential loopholes in VAT registration. Fixing these information loopholes is crucial before businesses smoothly complete the corporate tax registration process.

Avoid a AED 10,000 fine by Meeting UAE's Corporate Tax Deadlines. Contact us for Expert Tax Compliance Guidance and Protect your Business.
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Knowing License Categories

For businesses operating in the UAE, the different categories of licenses present surprises since they are habituated to working under established category for years. Notably, branches of a UAE company, especially those spanning multiple emirates, are viewed as extensions of the main head office license and do not require separate registration. Obtaining additional licenses merely by appending ‘branch’ to the name may risk categorizing these licenses as separate entities, subjecting them to distinct regulatory requirements.

Businesses operating under multiple sole establishments or civil company licenses across emirates face similar challenges in the emirates. This challenge becomes particularly pressing for companies when they are coupled with separate VAT registrations. This explains why it’s imperative to identify the license category accurately. Businesses aiming to qualify for small business relief (SBR), particularly regarding financial resources, unified management, and shared bank accounts should focus on this crucial process.

Planning to Close the Company in 2024? Clarifications Await

Often, business owners seem to be reluctant to register for corporate tax, particularly when they consider liquidating their company in 2024. It is crucial to dispel the misconception that liquidating a company absolves it from tax obligations. Businesses need to register their commercial entity, submit a corporate tax return for the truncated financial year, and then commence the de-registration process. Any delays in compliance may attract penalties, including those on legal representatives.

Different tax authorities in the UAE need to coordinate on the matter. Therefore, obtaining corporate tax clearance might be a prerequisite for approving company liquidation, prioritizing the importance of timely compliance.

Tax Benefits for Free Zone Companies

Recent developments have granted commodity traders operating from non-designated zones a preferential tax rate of 0% on income generated on qualifying commodity trading. However, companies established in ‘designated zones’ continue to face complexities when it comes to their eligibility for preferential tax rates on direct/third-port shipments and ‘high-sea sales.’

Considering the ongoing debate, it’s important to determine the eligibility of your business based on its location and goods. Relying solely on public consultation documents may not be the logical approach. Free zone companies engaged in various qualifying activities must understand the scopes of inclusions and exclusions regarding their qualifying activities.

Adequate Substance: Ensuring Tax Benefits

For companies eligible for free zone tax benefits, maintaining adequate substance in the respective free zone is imperative. The restructuring required to meet substance requirements could be substantial. With the new era of tax regulations posing considerable challenges, businesses must be meticulous while planning. Inadequate planning or inexperience can lead to missed opportunities or penalties.

The IMC Group continues to be one of the trusted corporate tax consultants in Dubai. Businesses can reach out to these professionals for sound advice and remain on the right track amidst the evolving tax regulatory regime.

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All You Need to Know About the UAE Corporate Tax Compliance in 2024
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All You Need to Know About the UAE Corporate Tax Compliance in 2024

As the UAE braces up for a new era of corporate taxation in 2024, businesses operating in the country should equip themselves with the necessary procedures and knowledge to comply with the upcoming corporate income tax regulations. Successful enterprises and organizations seek corporate tax advisory in Dubai from established partners for adherence to the new policies. Let’s take a look at new corporate tax compliance requirements in the UAE in 2024 in this edition.

Register for Corporate Tax

In the UAE, the implementation of corporate tax is set to commence from the first financial year starting on or after 1st June 2023. All companies, including the ones operating in free zones, should register for corporate income tax, regardless of their existing VAT registrations.

The Emara Tax portal on the Federal Tax Authority’s (FTA) website facilitates this process, offering a seamless registration experience. The registration process is simple, and it won’t take more than 30 minutes to complete the process. A comprehensive video guide is available on the website for FTA to assist businesses. Even companies that have already registered for VAT and Excise Tax can complete their corporate tax registration through the portal.

Businesses that aren’t currently registered for Excise Tax or VAT first need to create a new user profile on Emara Tax. Next, they need to choose corporate tax registration and complete the application process. For your application to be successful, it’s imperative to furnish accurate information and update the supporting documents.

Necessary Documents for Corporate Tax Registration

The necessary documents to complete corporate tax registration of Legal Persons include:

  • An Emirates ID of the authorized signatory
  • Proof of authorization (POA/MOA) for the signatory
  • Trade license or business license
  • Passport

The FTA requires businesses to provide accurate percentages of shareholding that correspond to the actual holdings of the owners and align the date or incorporation with the commencement date of the company as per the MOA. Entities must also provide the tax period. Businesses willing to form a Corporate Tax Group have to register individually. They have to obtain a Tax Registration Number and apply to establish a Corporate Tax Group at a later date, according to FTA’s guidelines.

Maintaining proper accounting records

The corporate tax law in the UAE makes it mandatory for businesses to maintain specific accounting records. Companies must seek assistance from professional teams for compliant bookkeeping and accounting. Reputed tax consultants in Dubai can provide you with the necessary assistance and advice in this regard.

File a Corporate Tax Submission

This is a crucial step that businesses must complete once the first taxable period comes to an end. Even if your business qualifies for tax exemption, you need to file a tax submission with the FTA.
Avoid a AED 10,000 fine by Meeting UAE's Corporate Tax Deadlines. Contact us for Expert Tax Compliance Guidance and Protect your Business.
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Corporate Tax Rates Businesses Must Know

The corporate tax rates in the UAE are based on annual net profits.

  • Tier 1: For companies with annual net profits up to AED 375,000, no tax has to be paid
  • Tier 2: For companies with profits of more than AED 375,000, a 9% tax rate has to be paid
  • Tier 3: Large MNCs need to pay tax at a different rate as per OECD Pillar Two guidelines

Corporate Tax for Free Zone Companies

Contrary to common belief, free zone businesses aren’t completely exempted from corporate income tax. However, Qualifying Free Zone Persons may not have to pay tax once they fulfill criteria like making qualifying income, maintaining adequate substance, and adhering to the requirements of transfer pricing.

Relief for Small Businesses

If the revenue earned by your business is below AED 3 million per tax period, you can qualify for exemption from corporate income tax.
Calculating Taxable Profit
Taxable profit is calculated by deducting expenses related to business from revenue. Special rules apply for expenses such as interest, salaries, foreign branches, and entertainment.
Differentiating VAT and Corporate Tax
Businesses in the UAE collect VAT from customers while selling products or services. On the other hand, they pay corporate income tax on their annual net profits. Therefore, VAT-registered businesses should also register to pay income tax.
What are the administrative penalties?

Businesses in the UAE failing to adhere to corporate tax regulations may face administrative penalties ranging from AED 500 to AED 20,000 from 1st August 2023.

The FTA has launched an extensive awareness campaign to help the business community understanding the implications of corporate income tax. This educational initiative includes several workshops, sessions, and webinars to provide in-depth insights into the Corporate Tax Law. This will help foster a culture of self-compliance among businesses. Both taxpayers and the broader business community will benefit from this programme.

Notably, virtual workshops conducted in Arabic and English on ‘Corporate Tax Registration’ cover critical aspects, including the creation of a new user profile on the Emara Tax portal, necessary documentation, application procedures, and obtaining a UAE Corporate Tax Registration Number.

As a leading company providing corporate tax advisory in Dubai, the IMC Group continues to assist businesses comply with tax norms. With professional guidance, businesses can make conscious decisions to ensure tax compliance.

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A Comprehensive Guide to Purchase Off-Plan Property in Dubai
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A Comprehensive Guide to Purchase Off-Plan Property in Dubai

Planning to invest in off-plan properties in Dubai? As a forward-thinking investor, you would like to secure your investment. Successful investors habitually seek due diligence services in Dubai to ensure they remain on track with legalities. At the same time, it’s imperative to assess your ROI and secure your property at the lowest cost, besides benefiting from a favourable payment plan.

However, capitalizing on such lucrative opportunities calls for a deep understanding of the country’s regulatory framework regarding these dealings.

In this edition, we are going to explore the key guidelines mentioned in Dubai Law No. 13/2008 regarding Real Estate Registers. This will present you with a comprehensive roadmap for acquiring off-plan properties successfully in Dubai.

Key Aspects to Focus on While Purchasing Off-Plan Property

In the first place, you must be aware of the norms governing foreign ownership in freehold areas. The process starts with exploring the designated areas for foreign ownership. Under the existing laws in the UAE, these are referred to as freehold properties. As a foreign investor, you need to select a property located in a freehold area to legally secure your investment.

1. Registration and Compliance

In Dubai, it’s essential to register all off-plan property transactions in the Interim Real Estate Register. Failure to comply within the 60-day timeframe may jeopardize the validity of the sale or property transfer.

2. Acquiring the Land

Both primary and subordinate developers need to obtain the necessary land and approvals from competent authorities in Dubai before initiating or selling off-plan units. The property register must record the development.

3. Legal Due Diligence

Legal due diligence buying property in Dubai involves a verification process with the government authorities like the Real Estate Regulatory Agency or the Dubai Land Department. During this step, the property is registered in the presence of an escrow account while the necessary permits are obtained.

4. Transparent Application Processes

Property buyers need to follow the legal procedures meticulously as they apply to register an interim real estate unit. They should furnish the necessary documents and information as requested by the Land Department of Dubai.

5. Protecting the Rights of Buyers

Legal actions on registered off-plan units are facilitated, allowing for legal transfers, mortgages, or other actions under the law. Developers are strictly prohibited from imposing additional fees for selling or reselling completed or off-plan units. Any administrative expenses must obtain prior approval from the Land Department.

6. Completion and Registration Protocols

Developers are mandated to get the finished project registered in the property register. This ensures the seamless transfer of off-plan units into the name of the buyer as per the contractual requirements.
7. Stringent Contract Formalities
Brokers and developers should refrain from engaging in informal contracts without obtaining prior approval from competent authorities to uphold the integrity of off-plan property transactions. Under the regulatory framework, such contracts will be considered invalid.
8. In Cases of Violation
Article 11 of Dubai Law No. 13/2008 explains that developers should inform the Department of violations, if any. If the issue remains unresolved in the next 30 days, the Department will issue an official document verifying the completion percentage and agreement of the developer. Developers can request public auctions, maintain the contract, or cancel them based on the rates of completion. Full refunds will be necessary in case the project isn’t initiated or cancelled.
Seeking professional support for legal due diligence
For prospective investors, it’s imperative to understand the norms under Dubai Law No. 13/2008. The IMC Group continues to be one of the leading partners for developers offering legal due diligence services. With professional support on the side, developers can proceed with their ambitious investments with confidence.

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Effortless Corporate Tax Registration: Your Ultimate Guide to a Smooth Process!
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Effortless Corporate Tax Registration: Your Ultimate Guide to a Smooth Process!

Please consider us your allies, ensuring a smooth and compliant corporate tax journey. At IMC, we are committed to delivering indispensable insights, ensuring your readiness for the approaching fiscal year with confidence and compliance.

Essentials for Corporate Tax Registration:

Comprehending the Corporate Tax Law holds great importance, and we’re dedicated to assisting you in smoothly navigating this process. Here, we outline essential vital points to consider:
  1. Enrollment and Withdrawal: It’s highly recommended that all eligible taxable person register for Corporate Tax through the Federal Tax Authority (FTA) without delay. Non-residents earning income from the state have specific factors to note. Timely submission of a Tax Deregistration application is crucial to evade penalties.
  2. Financial Reports and Accounting Approaches: The significance of financial statements in assessing taxable income is paramount. Your choice between a Cash Basis or an Accrual Basis of Accounting depends on your revenue. Adherence to International Financial Reporting Standards (IFRS) and meticulous record-keeping are vital.
  3. Submitting Applications and Making Choices: Businesses aiming to capitalize on Corporate Tax Law provisions might need to apply or make specific elections. Determining when FTA approval is necessary for exemptions, joining tax groups, and specific relief applications is essential.
  4. Filing Taxes and Settling Payments: Corporate Tax functions through a self-assessment system. To prevent penalties, it’s crucial to submit tax returns and payments promptly, within nine months after the relevant tax period’s end. In the case of tax groups, the parent company takes charge of filing.

Key Dates to Mark in Your Calendar: (Registration Process Already started)

End of Financial Year Initial Reporting Period Date of Registration Deadline for Submitting Initial CT Return and Payment Deadline Initial Submission of Transfer Pricing Disclosure Form
Dec-23 Jan 2024 to Dec 2024 Registration Process Already started 30th Sep 2025 30th Sep 2025
Jun-23 Jul 2023 to Jun 2024 Registration Process Already started 31st Mar 2025 31st Mar 2025

Get Started on the Path to Smooth Tax Registration

Book Your Call Now

Required Documents for UAE Tax Registration

In the UAE, corporate tax applies to businesses with taxable income. The corporate tax rate stands at 0% for earnings up to AED 375,000 and 9% for earnings surpassing AED 375,000.

In readiness for corporate tax registration, individuals liable for taxation require the following documents:

  • Photocopy of a valid Trade License
  • The license-owning owner/partners must provide copies of their valid Passport and Emirates IDs
  • Power of Attorney (POA) / Memorandum of Association (MOA)
  • Contact information of the relevant individual and the company
  • Report on the annual financial audit

Reasons to Consider Why IMC?

Navigating the complexities of corporate tax can be daunting, which is where the IMC team excels. Armed with in-depth knowledge of the latest UAE Corporate Tax regulations, we will simplify the process for you.

Leverage our team’s extensive experience to ensure precise and punctual compliance with Corporate Tax Law. Entrust us with the finer intricacies while you focus on your core business operations.

Navigating the complex landscape of corporate tax registration in the UAE can be challenging. However, with our IMC expertise in taxation and regulatory compliance, we empower businesses to navigate these complexities confidently. Our commitment to you is to provide the necessary knowledge to ensure seamless integration into the UAE’s tax framework.

For any queries or further clarification, reach out without hesitation. Please consider us your allies, ensuring a smooth and compliant corporate tax journey.

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