Office 804, Park Lane Tower, Business  Bay Dubai, UAE

Corporate Tax Planning Services

UAE business sectors are abuzz with the noise of Corporate tax regime that was recently introduced by Federal Government, stating that along with VAT all businesses will have to adhere to Corporate Tax, with some exceptions as well. To be exact, the tax rates are 0% for taxable income up to AED 375,000 and 9% for taxable income above AED 375,000. Also known as “Business Profit tax” as it is levied on the net profit or loss of business, this regime has cemented UAE’s position internationally by complying with global standards yet at the same time has maintained its position as the most attractive investment opportunity for international investors.

Regime is becoming effective for financial years starting on or after June 1, 2023, with documentation basis same as being recorded for VAT. With introduction of Corporate Tax, it has become utmost need for every eligible business to have corporate tax planning in place to prepare and comply with the obligations. Best way to go around the need of hour would be to consult with providers of tax services as they’ll have expertise that goes into tax planning and will mold it tailored to what your business needs.

Tax Planning Significance

Tax planning consists of getting analysis done of the financial situation or structure that a business has in place to confirm that all the working aspects will eventually result in lowest tax payments possible. Your tax planning will be considered efficient if it’s consequences will lead into lower tax payments than previous payment. Every business constructing a financial plan needs to have tax planning as part of it for reaching integral results. As per federal authorities there are certain tax liabilities that are obligatory for individuals and businesses, but it is the expertise of tax consultancy providing tax services to minimize the payable income while adhering to legal and accepted measures.

Planning Corporate Tax

UAE Corporate tax will be applied to all commercial and business activities, other than the exemptions mentioned by FTA, but overall vast majority of corporate sector will be affected by the regime. Ideally, Corporate tax regime has been put in place to lower the compliance cost of business and compete globally, true essence of which can be obtained if businesses focus on fruitful corporate tax planning. The taxable entities are responsible for ensuring that tax return and supporting documents submitted are authentic, complete and in compliance with the UAE Corporate Tax Law. This can be achieved only if functional corporate tax planning has been done before time by the entities to avoid any discrepancy.

Distinct Characteristics of Corporate Tax Planning

Corporate Tax Planning and tax services provided in UAE will aid small to large sector entities in maintaining tax compliance. Tax advisories and consultants are able to extend their knowledge and experience that is specialized in making compliance easier for wide range of businesses. Generally, their tax services will consist of the following:

  • Supplying eligible tax optimization staying within legal framework
  • International tax planning services custom to the requirements of business operations
  • Managing tax risks
  • Keeping entities in touch with regular tax services updated
  • Ensuring accurate tax filing through reliable tax planning provided
  • Making use of legal exemptions in order to minimize tax liabilities for entities
  • Tax planning done in a way that brings out long term tax benefits as provided by the federal authorities

 
In order to do all of the above mentioned tax services, it is vital for service providers to have an elaborate understanding of the business they’re working with, only then it will be possible to deliver tax planning that is custom tailored to the requirements of the business. It should also be noted that a vital part of tax planning should be staying informed of the new legislations and having a keen understanding of them before they cause a negative impact on the business operations. This can be best achieved when tax services are provided from a global approach rather than just focusing on the limited legislation information at hand. Tax planning will turn out fruitful only if worldwide expertise is extended that meets the expectations and custom situations faced by businesses belonging to their respective industries.

Tax Return Filing

One of the major fragments of tax planning is tax return filing, which also goes out to be the vital part of corporate tax regime. Other than ensuring your tax services are in compliance with the standard regulations and are being dealt with efficiency, a business needs assistance with filing tax returns, which in case of corporate tax will be done annually. At this stage tax planning will include guidance on tax calculations, supplying tax planning advice along with preparation of relevant information documented and submitted as required by the law. Further understanding of tax planning in this matter can be found as below:

  • Review of the financial statements prepared, ensuring it is achieved as per international reporting standards
  • Identifying taxable adjustments in compliance with corporate tax regime
  • Preparation of adjusted financial records specifically for corporate tax purposes
  • Calculating adjusted earning before interest, tax, depreciation, and amortization
  • Finalize and file the corporate tax amount along with required supporting evidence
  • Having post filing tax services available for further assistance

Implementation of Tax Planning

After deciding on the route, you’d take that’ll best benefit your business, time comes for implementation of that plan and how it’ll get incorporated in the business activities. Ideally your planning will include talent mapping, identifying gaps within the expertise that already exists in the business and lastly addressing them head on with upskilling, training, or outsourcing whichever suits the industrial circumstances the best. Your tax planning can provide you assistance in implementing the beneficial structure of the entity that will further make your registration for Corporate Tax easier. It’ll also become easier for the business to understand arm’s length pricing and how or if transfer pricing will affect the nature of their business. Furthermore, tax planning is not just maximizing your tax returns, it can assist your need of modification of chart of accounts and whether there’s need for further training and understanding within the business to deal with corporate tax legislation.

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