If there’s one economic factor that has shaped the UAE for the last 20-30 years, it’s the tax environment. Since the introduction of Corporate Tax in Dubai in June 2023, there has been a significant shift in the landscape. Now that we are a few years into this change, let’s take a closer look at how Corporate Tax is reshaping business strategies in Dubai.
This new tax regime imposes a 9% Corporate Tax on profits exceeding AED 375,000, which is a considerable departure from the previously tax-free environment that attracted so many international businesses. The implications of this change are wide-ranging and are reshaping business strategies across the country and, indeed, the world.
Businesses of all sizes and all origins are affected by these changes to UAE tax laws. The economic impact is felt far and wide. In order to understand the implications of these changes, we asked our tax experts a few hard-hitting questions to help you understand how these changes may affect your business.
The fewer the tax requirements, the easier the accounting process is. With these new requirements, businesses of almost all sizes will need to maintain accurate financial records and prepare financial statements regularly.
We see the challenges as a three-pronged problem:
Since this is the first time many businesses have been forced to maintain strict financial records, this may be accompanied by a steep learning curve. We imagine there will be an increased need for accounting and record-keeping assistance, and are prepared to help with that.
We also urge all business owners to register their business before penalties can start to accrue. There is no need to add costs onto what can already be a costly exercise!
We’ve noticed the biggest strategy changes in finance, affecting banks and other financial institutions, as well as those in Freezones, specifically businesses dealing with logistics, wealth management, treasury and other similar types.
One of our key business areas is Financial Advisory. We help businesses with timely registration for Corporate Tax, implementing and executing business policies to minimise tax, as well as filing their Corporate Tax with the correct authorities.
Yes, the first is that Freezones — despite their name — are not exempt from Corporate Tax in Dubai. Additionally, freelancers and small businesses with a revenue below AED 1 million do not need to register for Corporate Tax. And lastly, auditing is not required for all businesses in order to file their Corporate Tax returns. The need for an audit is related to the size of the business and its annual revenue, and is only required if revenue exceeds AED 50 million.
Aside from timely registration, maintenance of proper documentation, and preparing IFRS-compliant financial statements, we also recommend the following:
When implementing any financial strategies, we always recommend engaging with professionals like ourselves for oversight and advice to ensure your plans are reasonable, actionable, and legally compliant.
We provide businesses of all sizes and revenues with accounting and bookkeeping services that cover all the requirements of compliance with the new Corporate Tax regulations. Whether you need end-to-end assistance, or to consult with an expert on a specific part of the process, we can always help. Our services cover tax registration, monthly accounting and bookkeeping, preparation of financial statements and periodic filing of business taxes, leaving you free to run your business free from worry about Corporate Tax.
This is one of the bigger changes the UAE economic landscape has experienced in the last couple of decades, but with the right planning and actions taken at the right time, we are confident that it can be an easy one. Contact Swift today for assistance with accounting and bookkeeping, business structure changes, or filing those tax returns. We are ready and waiting to help.