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  • Difference Between Direct and Indirect Taxes

    Difference Between Direct and Indirect Taxes

    Direct taxes are paid by individuals or businesses directly to the government, while indirect taxes are levied on goods and services and paid by consumers. It’s crucial for eligible people to comply with the country’s tax laws and pay the applicable taxes. Understanding the distinction between Direct Tax and Indirect Tax is essential for taxpayers.

    Taxes serve as a significant revenue source for governments worldwide, collected in various forms such as income tax on salaries, sales tax on restaurant meals, toll fees for driving, or taxes on groceries at stores. As responsible citizens, we have a duty to fulfil our tax obligations and understand the different tax types we encounter. Broadly, taxes are categorised into Direct Taxes and Indirect Taxes. In this blog, Shuraa Tax will help clarify the differences between these two tax types.

    Understanding Taxes

    Taxes are compulsory financial charges or levies imposed by a government on individuals or entities to fund public expenditures and various governmental functions.  

    Most nations implement a tax system to finance public services, societal needs, and government operations. Taxes can be levied at a fixed percentage on personal income, or they may be progressive, increasing with higher income brackets.  

    Taxation is integral to a country’s economy, generating revenue for the government to invest in infrastructure, education, healthcare, public safety, and more. Additionally, taxes can shape economic behaviour by incentivising savings or investments through tax breaks and discouraging detrimental activities like smoking by imposing higher taxes on tobacco products. 

    In general, taxes can be categorised into two main types: 

    – Direct Taxes 

    – Indirect Taxes 

    Every tax is either direct or indirect. Taxation policies can vary widely between countries, making it essential for individuals and businesses to conduct thorough research, understand, and adhere to the best tax practices when earning income or running a business. 

    Understanding Direct and Indirect Taxes

    Differentiating between direct and indirect taxes is crucial as they each have distinct economic implications and impact individuals differently. Direct taxes directly influence a taxpayer’s disposable income, influencing their spending, saving, and investment choices. In contrast, indirect taxes can alter consumer behaviour by raising the prices of certain goods or services, potentially reducing their demand. 

    Direct Tax 

    Direct taxes are levies paid directly to the taxing authority by the taxpayer. For example, income tax is directly paid to the government by the taxpayer. Direct taxes cannot be shifted to another individual or entity. In most countries, the tax authority oversees all tax-related matters. 

    These taxes are generally based on an individual’s income or wealth; the tax amount is determined using a progressive tax system. This means higher-income individuals pay a higher percentage of their income in taxes. Common types of direct taxes found globally include income tax, property tax, and wealth tax. 

    Once the tax amount is calculated, the taxpayer is responsible for paying it to the government. Payment methods can vary, including electronic transfers, checks, or credit card payments. Failure to pay the owed tax can lead to penalties, interest charges, or legal actions. 

    Indirect Tax 

    Indirect taxes are levied on the consumption of goods and services. Unlike direct taxes, these taxes are not directly based on a person’s income. Instead, the taxpayer pays the tax indirectly as part of the purchase price of goods or services. For instance, when buying a candy bar, the price includes an indirect tax like a sales tax, which the store collects and forwards to the government. 

    Consumers often pay indirect taxes without realising it, as they are embedded in the prices of goods and services they purchase. Common examples of indirect taxes worldwide include sales tax, value-added tax (VAT), and excise duties. 

    Understanding these tax types is essential for individuals and businesses to manage their finances effectively and comply with tax regulations. 

    Direct Tax and Indirect Tax- Differentiation  

    Direct tax and Indirect tax are distinguished by their method of imposition and who ultimately shoulders the economic impact of the tax. Direct taxes are imposed on individuals or businesses based on their income, profits, or assets. In contrast, indirect taxes are imposed on goods and services rather than directly on individuals or businesses. These taxes are embedded in the prices of goods or services and are ultimately borne by the end consumer. 

    Here’s a breakdown of the differences between direct and indirect taxes:

    S.noDirect taxIndirect Tax
    1.Direct taxes are paid by taxpayers directly to the government, and the tax burden directly impacts the taxpayer.The burden of indirect taxes is passed on to the consumer indirectly, as they end up paying the tax through increased prices for goods and services.
    2.Examples include income tax, property tax, wealth tax, and corporate tax imposed on businesses.Examples include VAT, GST, and central excise duty. VAT is levied on product prices, while excise tax is on manufacturing and retail.
    3.Collecting direct tax, unless deducted at the source, like for salaried individuals, is complex. Tax avoidance is common for businesses, making identification and penalties challenging. Taxes on goods and services are included in the product price, making them unavoidable. Taxes are typically listed on consumer product packaging.
    4.Direct taxes help boost the economy and control inflation.Indirect taxes boost the economy but can cause inflation.
    5.Direct taxes apply to moderate to high-income individuals and businesses.Indirect taxes impact low-income individuals more than high-income ones.
    6.Direct taxes reduce income and discourage savings. Tax avoidance shifts the burden to a smaller part of society.Indirect taxes reduce personal consumption and encourage savings. Consumers are cautious with heavily taxed products.
    7.Direct taxes like income tax reduce socioeconomic inequality by funding societal welfare, benefiting everyone. Public transport is a prime example.Indirect taxes widen the wealth gap. The rich can afford quality essentials, while the poor may miss out on certain goods.

    Should Everyone Contribute to Both Direct Tax and Indirect Tax?

    Absolutely, eligible individuals and businesses should pay both types of taxes to finance public services and investments. Eligibility is determined by each country’s tax laws and income sources. Governments collect direct taxes on income and profits, and indirect taxes on goods and services. Regular tax payments are essential to avoid penalties.

    Which Taxes, Direct or Indirect, Are More Vital to the Economy?

    Both direct and indirect taxes contribute nearly equally to government revenue in advanced economies. They fund public services and investments and are structured to generate revenue effectively. In 2020, the International Monetary Fund (IMF) reported that direct taxes made up 50.6% of total tax revenues in advanced economies, while indirect taxes accounted for 49.4%. 

    What are the Direct Tax and Indirect Tax in the UAE? 

    In the UAE, the primary direct and indirect taxes include:

    1. Corporate income tax: A 9% tax on businesses will be implemented starting June 1, 2023.
    1. Value-added tax (VAT): On January 1, 2018, a 5% VAT was introduced on most goods and services.
    1. Excise tax: Tobacco and energy drinks are subject to a 50% excise tax, while carbonated drinks and alcohol are subject to a 100% excise tax.
    1. Customs duties: Applied to certain imported goods, with exemptions for some products.

    Tax Consultancy Services

    Tax consultants worldwide provide valuable insights into various direct and indirect taxes in the country, ensuring compliance with government regulations. Shuraa Tax stands out as a leading firm in the UAE, offering experienced tax consultants and agents to global clients. Our corporate tax specialists help businesses maintain tax compliance with local laws and regulations.  

    We also assist with tax-related tasks like registration, filing returns, and refunds to avoid penalties. Do you have questions about direct or indirect taxes? Shuraa is always ready to assist. Call us today at +971508912062 or email info@shuraatax.com.

  • ESR Notification and Reporting in UAE

    ESR Notification and Reporting in UAE

    In recent years, the UAE has implemented Economic Substance Regulations (ESR) to ensure that businesses operating in the country are conducting genuine economic activities. These regulations are aimed at preventing harmful tax practices and ensuring that businesses have a substantial presence in the UAE.

    Compliance with ESR is crucial for businesses operating in the UAE to avoid penalties and ensure transparency in their operations. Failure to comply with ESR can result in fines, suspension of licenses, or even the deregistration of the company. By understanding and adhering to ESR requirements, businesses can maintain their legal status and reputation in the UAE market.

    Therefore, we will guide you to understand ESR notification and reporting requirements. We’ll break down who needs to comply, what information needs to be submitted, and the deadlines involved.

    What is ESR (Economic Substance Regulations) in UAE?

    UAE implemented Economic Substance Regulations (ESR) to ensure businesses operating there have real economic activity. The ESR applies to companies registered in the UAE, including those in free zones, that conduct any of the designated “relevant activities.”

    ESR aims to prevent businesses from setting up shop in the UAE just to take advantage of its tax benefits without any substantial economic presence.

    Who Needs to Comply with ESR?

    Any business operating in the UAE that conducts any of the following “Relevant Activities” needs to comply with ESR:

    • Banking
    • Insurance
    • Lease-Finance
    • Investment Funds Management
    • Headquarters Activities
    • Shipping
    • Holding Companies

    There are also exemptions for certain types of businesses, so it’s important to check if your specific company falls under the ESR requirements.

    Companies engaged in these activities are required to submit an annual Notification to the authorities, including details about their activities.

    What is ESR Notification?

    An ESR Notification in the UAE is the first step for businesses complying with the Economic Substance Regulations (ESR). It’s essentially an initial form submitted to the authorities informing them of your activities.

    Purpose of the Notification:

    Informs Authorities: The notification acts as a flag to the UAE Ministry of Finance that you exist and are potentially engaged in relevant activities.

    Provides Basic Information: The notification allows you to submit preliminary details about your business operations, including the nature of your activities.

    Who Needs to Submit ESR Notifications?

    1. Relevant Activities

    Any UAE-based business, including those in free zones, that conducts one or more of the ESR-defined Relevant Activities is required to submit a notification. (These activities include banking, insurance, shipping, etc.)

    2. Regardless of Income

    Even if your Relevant Activity hasn’t generated income during a financial period, you still need to submit a notification.

    3. Exempt Entities

    There might be exemptions for specific circumstances or license types. It’s advisable to consult the official ESR guidance or a qualified professional for confirmation if you believe your case might be exempt.

    Information Required in the ESR Notification

    The ESR Notification in the UAE requires you to submit some basic information about your company and its activities. Here’s a general outline:

    1. Company Details:

    • Company Name and Commercial Registration Number
    • Legal Structure (e.g., Limited Liability Company)
    • Registered Address in the UAE
    • Contact Information (email and phone number)

    2. Financial Year

    This specifies the period covered by the notification.

    3. Relevant Activities

    You’ll need to identify which Relevant Activities (as defined by the ESR) your company undertakes. These can include banking, insurance, investment fund management, and others.

    4. Exemption Claim (if applicable)

    If your company believes it qualifies for an exemption from filing an Economic Substance Report, you can indicate that here. However, you still need to submit a Notification even if claiming exemption.

    Deadlines for submitting the ESR notification

    The ESR Notification needs to be submitted electronically on the Ministry of Finance (MoF) ESR portal. There’s no specific deadline mentioned, but it’s generally 6 months from financial year-end.

    It is recommended to file it as soon as possible after the end of your company’s financial year. This ensures you’re compliant and avoids any potential delays.

    What is ESR Reporting? What to Expect

    ESR reporting and notification are two separate steps in the UAE’s ESR process. ESR is a more detailed process that involves filing a full report demonstrating your company’s economic substance in the UAE. It goes beyond simply stating your activities.

    You’ll need to provide evidence that you have adequate employees, qualified personnel, physical office space, and incur expenses in the UAE to support the Relevant Activities you claim.

    ESR reporting is only mandatory for companies that generate income from their Relevant Activities.

    So, if your company falls under both these categories (Relevant Activity + Income), then you’ll need to file a full ESR report, along with the initial notification. Companies with no income from Relevant Activities still need to submit a Notification, but not a full report. 

    Economic Substance Test

    This is the core concept behind ESR reporting. It essentially assesses if your company has real economic value in the UAE and isn’t just using it as a shell for tax purposes. The report should demonstrate you’re conducting genuine business activities in the UAE, not just artificially shifting profits there. 

    Deadline for submitting an ESR report in the UAE 

    The deadline for submitting an ESR report in the UAE is within 12 months from the end of your company’s financial year. 

    Content of the ESR Report (Demonstrating Economic Substance) 

    The ESR report goes beyond just listing your activities. It’s your chance to prove you have a genuine business presence in the UAE for the Relevant Activities you undertake.  

    Here are some potential elements the report might require:

    1. Details of qualified personnel

    This demonstrates you have dedicated employees in the UAE managing the Relevant Activities.

    2. Physical office space

    Evidence of a physical office in the UAE where the activities are conducted is crucial. 

    3. Operating expenditure

    Demonstrating you incur expenses in the UAE related to the Relevant Activities.

    4. Nature and value of your core functions

    Explaining the specific activities performed in the UAE and their value creation.

    5. Details of any outsourced activities

    If you outsource part of the Relevant Activities, information about the service providers is needed.

    Shuraa Tax Guides Your Way 

    Ensuring compliance with ESR regulations in the UAE is crucial for businesses to avoid penalties and maintain good standing with authorities. It is essential to stay updated on ESR notification and reporting requirements to avoid any legal issues. For complex ESR matters, it is advisable to seek professional help from experts like Shuraa Tax. 

    At Shuraa Tax, our team of experienced accountants, auditors, and tax advisors in Dubai are here to help. For all your ESR and broader taxation needs, Shuraa Tax is your trusted partner. Contact us today at +971508912062 or info@shuraatax.com.

  • What is ICV Certification in UAE and How to get it?

    What is ICV Certification in UAE and How to get it?

    In today’s competitive business landscape, it is essential for companies to differentiate themselves and showcase their commitment to the local economy. One way to do this is by obtaining ICV (In-Country Value) certification in Dubai.

    ICV certificate in Dubai, UAE is a measure of the value that a company brings to the local economy through its operations and investments. By obtaining ICV certification, businesses can demonstrate their contribution to the development of the UAE and showcase their commitment to supporting local industries and businesses.

    The benefits of obtaining ICV certification are numerous. Not only does it provide a competitive edge in the market, but it also helps businesses build stronger relationships with local partners and stakeholders.

    So, let’s understand more about what ICV certification is, its purpose, and how businesses can obtain it.

    What is ICV Certification in the UAE?

    ICV (In-Country Value) Certification in the UAE is a program implemented by the Ministry of Industry and Advanced Technology (MoIAT) to assess a company’s contribution to the UAE economy. It essentially measures how much of a company’s operations benefit the UAE.

    In-Country Value (ICV) refers to the value a company creates within the UAE. This includes factors like:

    • Local spending on manufacturing and services
    • Use of locally produced goods
    • Investments within the UAE
    • Hiring and training Emirati employees

    Goals of the National ICV Program in the UAE

    The National ICV Program has several goals:

    1. Boost economic growth and diversification

    By encouraging companies to invest and operate locally, the program aims to stimulate the UAE’s economy and reduce reliance on specific sectors.

    2. Promote technology transfer and knowledge sharing

    The program incentivizes companies to bring their expertise and technologies to the UAE, which can benefit local businesses and the workforce.

    3. Create job opportunities for UAE nationals

    By prioritizing the hiring and training of Emirati citizens, the program aims to increase employment opportunities for UAE nationals.

    4. Support the development of local industries

    The program encourages companies to source goods and services from local suppliers, strengthening domestic industries.

    5. Attract foreign direct investment that contributes to in-country value

    The program seeks to attract foreign investment that benefits the UAE economy, not just the investing company.

    Who Needs ICV Certificate in the UAE?

    ICV Certification in the UAE isn’t mandatory for all businesses, but it’s highly recommended for specific sectors and situations.

    Mandatory:

    • All suppliers and contractors directly working with the Abu Dhabi National Oil Company (ADNOC) and its subsidiaries.

    Highly Recommended:

    • Businesses aiming to participate in government tenders and contracts, especially in sectors like oil & gas, construction, transportation, and healthcare.
    • Companies looking to establish a reputation for supporting the local economy and creating jobs in the UAE.

    What is an ICV Scores

    It’s a metric used to assess a company’s contribution to the UAE’s economy. The higher the score, the greater the perceived benefit the company brings to the country.

    Tiers and ICV Scores

    Tier 1 Suppliers: These are companies directly providing goods or services to government entities or program partners. Tier 1 suppliers typically need to declare their ICV score as a key part of the tender evaluation process.

    Tier 2 and Below: While not always mandatory, obtaining an ICV certificate in Dubai can be beneficial for these suppliers (companies supplying to Tier 1) to improve their competitiveness in tenders.

    During government tenders, companies submit bids. The ICV score becomes a factor considered alongside other bid criteria like price and technical expertise. A higher ICV score indicates a greater contribution to the UAE’s economy, making the bid more attractive and potentially increasing the chances of winning the tender.

    Factors That Contribute to ICV Score

    The ICV score in the UAE is a combination of several factors that reflect a company’s contribution to the local economy. Here are some of the key contributors:

    1. Manufactured Goods (for companies with an industrial license)

    The cost of goods manufactured within the UAE is a major factor. Local production creates jobs and boosts industrial development.

    2. Third-party spending (for companies without an industrial license)

    This refers to the company’s spending on goods and services procured from local suppliers. Prioritizing local vendors strengthens the domestic supply chain.

    3. Emiratization

    Hiring and training Emirati nationals is a significant contributor. The program aims to empower the local workforce and reduce dependence on expatriate labor.

    4. Expatriate Contributions

    While Emiratization is a focus, the overall size of the expatriate workforce is also considered.

    5. Investments in the UAE

    The net book value of a company’s assets in the UAE, like property, plant, and equipment, is a factor. This reflects the company’s long-term commitment to the country.

    6. Revenue from Outside the UAE 

    Earning revenue through exports demonstrates the company’s contribution to the UAE’s overall economic activity.

    How to Get an ICV Certificate in UAE? Step-by-Step Process

    Here’s a step-by-step process for obtaining an ICV Certificate in Dubai, UAE:

    1. Check Eligibility

    Verify if ICV Certification is mandatory for your sector or if you’re aiming for tenders that emphasize ICV scores. It’s generally recommended for businesses in government contracting, oil & gas, construction, transportation, and healthcare.

    2. Prepare Required Documents 

    Gather essential documents as per MoIAT guidelines, which may include:

    • Audited financial statements compliant with International Financial Reporting Standards (IFRS) – not older than 2 years.
    • Management accounts for new companies (less than 10 months old) – not older than 9 months.
    • Proof of local spending on goods and services procured from UAE suppliers.
    • Employee details highlighting the number of Emirati personnel.
    • Details on any investments within the UAE (property, plant, equipment).

    3. Select an ICV Certifying Body

    Choose an accredited ICV certifying body approved by MoIAT. They will handle the evaluation and certificate issuance.

    4. Complete the ICV Template

    Download the ICV Template from the MoIAT website and fill it out based on your company’s data and the provided guidelines. Ensure figures align with your financial statements.

    5. Submit for Evaluation

    Submit the completed ICV template and all supporting documents to the chosen certifying body. They will assess your company’s ICV score based on MoIAT criteria.

    6. Issuing the ICV Certificate

    Upon successful evaluation, the certifying body will issue your official ICV Certificate in Dubai. This typically takes a few weeks.

    Related Insights: How to Get ICV Certification in Qatar

    Benefits of Obtaining ICV Certification in the UAE

    Obtaining ICV Certification in the UAE offers several advantages for businesses, especially those looking to expand their operations or participate in government projects.

    1. Strong Advantage in Government Tenders

    Especially in sectors like oil & gas, construction, transportation, and healthcare, government tenders often prioritize companies with high ICV scores.

    2. Signals Commitment to UAE’s Development

    An ICV certificate showcases your company’s positive contribution to the UAE’s economic growth and diversification goals. This can attract potential business partners, investors, and clients.

    3. Long-Term Partnerships

    Building a strong ICV profile can lead to long-term partnerships and collaborations with government entities, major corporations, and other stakeholders in the UAE. 

    4. Improved Supply Chain Efficiency

    The focus on local sourcing encouraged by ICV can help companies optimize their supply chains and potentially reduce costs. 

    5. Potential Financial Incentives 

    The UAE government is also planning to introduce potential financial incentives like tax breaks or grants for companies with high ICV scores. An ICV certification positions you to benefit from such future programs.

    Get Expert Help with ICV Certification Today

    Now you know ICV certification is a crucial requirement for businesses in the UAE looking to participate in government contracts. It not only showcases a company’s commitment to supporting the local economy but also opens up opportunities for government contracts.

    While the application process may involve compiling documents and meeting specific criteria, seeking guidance from a qualified tax advisor can ensure a smooth and efficient experience. Shuraa Tax, a group of knowledgeable and qualified accountants, auditors, and tax advisors in Dubai, UAE, can assist you with understanding the ICV program, gathering the necessary documentation, and completing the application process successfully.

    Contact Shuraa Tax today at +971508912062 or info@shuraatax.com. to learn more about how ICV certification can benefit your business in the UAE.

    Frequently Asked Questions 

    1. How is the ICV Score Calculated for an ICV Certificate?

    Your ICV score is a combination of several factors that reflect your company’s contribution to the UAE economy. This generally includes: 

    • Economic Contribution
    • Workforce and Talent Development
    • Investment (property, plant & equipment)
    • Revenue from exports

    2. Is there an eligibility criterion to get ICV certification?

    ICV certification isn’t mandatory for all businesses. However, it’s mandatory for companies working directly with ADNOC (Abu Dhabi National Oil Company) and its subsidiaries must have ICV certification. Businesses aiming to participate in government tenders (especially in oil & gas, construction, transportation, and healthcare) are strongly encouraged to get certified.

    3. Can foreign companies obtain ICV Certification?

    Yes, foreign companies operating in the UAE can obtain ICV certification. The program encourages foreign companies to contribute to the local economy through local hiring, sourcing from UAE suppliers, and investing within the country.

    4. How long does the ICV certification process take?

    The processing time for ICV certification typically takes 7 to 14 working days, assuming you provide all the required information promptly to the certifying body.

    5. How long is an ICV certificate valid?

    The ICV certificate is valid for 14 months from the date your audited financial statements are issued. During this period, companies can apply for recertification with the same financial statements, but the validity remains 14 months from the initial issuance.

    6. What is the cost of obtaining ICV (In-Country Value) Certification in UAE?

    There isn’t a fixed price for obtaining ICV certification in the UAE. The cost typically varies depending on a few key factors such as company size, certifying body, and application complexity.

  • Top VAT Consultants in Abu Dhabi (2026)

    Top VAT Consultants in Abu Dhabi (2026)

    The Federal Tax Authority (FTA) gathers and manages taxes. It furnishes comprehensive laws, guidance, and explanations to aid commercial entities. The UAE government presented Tax (VAT) on January 1st, 2018. VAT consultants in Abu Dhabi constitutes an indirect tax imposed on the utilisation of products and services, knowingly influencing business operations. The keen risk, quantity, and difficulty of transactions must be better for taxpayers to fulfil tax compliance obligations.

    Since the inception of VAT in the UAE, Shuraa Tax has remained committed to delivering committed professional assistance to taxpayers. Our services include supporting businesses in their transactions, guaranteeing correct tax procedures, and undertaking conflicts. In this blog post, we aim to point you towards the leading VAT consultants in Abu Dhabi for 2026.

    How do Abu Dhabi’s VAT consultants assist businesses?

    VAT consultants are crucial partners for businesses directing the involved landscape of Value Added Tax regulations. These professionals offer services to safeguard compliance, provide expert advice, and optimise VAT-related processes. From assisting with initial registration and filing VAT returns to providing direction on complex transactions and pricing strategies, VAT consultants play a key role in helping businesses understand and manage their VAT obligations effectively. They provide custom-made solutions to ease risks, implement internal controls, and develop VAT strategies that align with the unique needs of each business.

    Moreover, VAT consultants keep well-informed of changes in VAT laws and regulations, guaranteeing that companies stay informed and adapt to growing requirements seamlessly. With their skill, businesses can confidently steer the difficulties of VAT, minimising tax liabilities and maximising compliance.

    Abu Dhabi’s Shuraa VAT Consultant Services

    VAT consulting services in Abu Dhabi boast expertise and exercise in the details of value-added tax in the region. The imposition of VAT on goods and services in Abu Dhabi falls under the jurisdiction of the Federal Tax Authority. In Abu Dhabi, businesses must register for VAT and submit VAT returns once their annual sales surpass AED 375,000. VAT consultants in Abu Dhabi offer a range of services, including:

    • VAT return filing
    • VAT audits
    • VAT consultations
    • Representation services

    Following to VAT regulations necessitates businesses to file monthly returns and furnish an audit report. VAT consultants in Dubai offer complete VAT legislation services.

    Top VAT Consultants in Abu Dhabi

    The foremost VAT consultants in Abu Dhabi include:

    Shuraa Tax

    Shuraa Tax is broadly recognised as a leading authority among VAT Consultant Services in Abu Dhabi, setting the industry’s standard for quality and reliability. With an established track record of excellence, they have established themselves as trusted advisors to numerous businesses across various sectors.

    What sets Shuraa Tax apart is its thorough understanding of the details of VAT law and its proactive approach towards helping businesses steer the difficulties of agreement. By staying well-informed of the latest developments and updates in VAT regulations, they guarantee that their clients are always well-informed and prepared to meet their legal obligations.

    Shuraa Tax is more than just a service provider; it is a trusted partner committed to empowering businesses to flourish in an ever-evolving regulatory landscape. With their firm dedication to excellence and client satisfaction, it’s no wonder they are consistently ranked among the top VAT consultants in Abu Dhabi.

    Deloitte & Touche

    Deloitte’s VAT consultants stand out for their deep understanding of the complex tones of VAT law. They possess a complete grasp of the legal framework and an acute awareness of the broader industry dynamics. By combining legal expertise with industry insight, they are uniquely positioned to offer custom-made solutions that address the specific needs and challenges businesses in Abu Dhabi face. Moreover, Deloitte’s VAT consultants recognise the growing importance of technology in determining the landscape of tax compliance.

    They leverage cutting-edge tools and methodologies to streamline processes, improve accuracy, and guarantee compliance with evolving regulatory requirements. This forward-thinking approach enables them to stay ahead of the curve and provide clients with innovative solutions that drive efficiency and effectiveness.

    In addition to their technical proficiency, Deloitte’s VAT consultants are known for their competence and professionalism. With a proven track record of bringing results, they see confidence in their clients and inspire trust through their dedication to excellence. As trusted advisors, they go above and beyond to provide personalised service and strategic leadership that helps businesses quickly steer the complexities of VAT compliance.

    KPMG

    KPMG, well-known as one of the top VAT consultants in Abu Dhabi, differentiates itself through its proactive leadership and meticulous execution in ensuring compliance with VAT regulations. Their approach goes beyond mere advisory services; they take the reins in supervisory businesses through the complexities of VAT compliance, offering comprehensive support at every stage of the process.

    By leveraging their extensive expertise and resources, KPMG assists businesses in steering the complicated web of VAT laws and regulations, thereby minimising the risk of legal issues arising from non-compliance. Their thorough understanding of the legal landscape allows them to identify and proactively address potential pitfalls, safeguarding businesses against costly penalties and disputes.

    In essence, KPMG’s role as a top VAT consultant in Abu Dhabi extends beyond mere compliance; they serve as strategic partners dedicated to supporting businesses in achieving their objectives while minimising risks and maximising opportunities in VAT. Their proactive approach and solid commitment to excellence make them a trusted ally for businesses seeking to direct the intricate landscape of VAT regulations with confidence and peace of mind.

    PricewaterhouseCoopers

    PricewaterhouseCoopers (PwC) stands at the forefront of driving change in tax laws, leveraging its significant influence to engage in discussions with tax officials and governments actively. Their proactive approach towards shaping tax legislation reflects their deep commitment to serving as thought leaders and catalysts for positive change in the tax landscape.

    PwC’s expertise in tax matters extends far beyond mere compliance; they possess an in-depth understanding of the intricacies of tax laws and regulations, allowing them to offer strategic insights and direction to their clients. By staying well-informed of the latest developments and trends in tax policy, PwC can anticipate changes and provide timely advice to help businesses adapt and thrive in an ever-developing regulatory environment.

     In essence, PwC’s proactive approach, coupled with its unmatched expertise and influence in the field of tax, makes it a trusted partner for businesses seeking to direct the intricacies of VAT compliance and taxation in Abu Dhabi. By easing up their insights and resources, PwC helps companies stay ahead of the curve and achieve their strategic objectives in a rapidly changing regulatory landscape.

    Ernst & Young

    Ernst & Young (EY), recognised as one of the foremost VAT consultants in Abu Dhabi, distinguishes itself through its innovative approach to VAT compliance. EY goes beyond traditional advisory services by leveraging cutting-edge practices and technologies to help clients transform legal compliance into a strategic advantage.

    EY’s innovative practices are designed to ensure adherence to VAT regulations and reveal hidden value within businesses. By adopting a forward-thinking mindset, EY helps clients identify opportunities to optimise their VAT strategies and improve overall business performance.

    EY’s commitment to innovation and client-centric approach sets them apart as a trusted advisor in VAT consultancy. By harnessing the power of innovative practices, EY enables clients to meet their legal obligations and seize opportunities for growth and innovation in an ever-changing business landscape.

    Reasons to Engage VAT Consultant Services in Abu Dhabi:

    • Employing top-tier methodologies for precise VAT calculations.
    • Making bespoke consulting solutions tailored to clients’ specific requirements.
    • Representative professionalism and proficiency in directing VAT regulations.
    • Conducting thorough reviews to assess the effects of VAT implementation on businesses.
    • Scrutinising business operations to ensure compliance with VAT regulations in Dubai, UAE.
    • Provided support during VAT audits and represented clients in dealings with VAT officials.
    • Supervising clients through VAT processes to streamline operations and ensure compliance with ease.

    Services Offered by Shuraa Tax VAT Consultants

    Below is the list of services that Shuraa Tax offers:

    1. VAT Advisory Services

    Providing tailored advisory services to address industry-specific needs, offering guidance on transactions and their tax implications. 

    2. VAT Return Filing Service

    Supporting UAE businesses in completing and filing VAT Return Form 201, including direction on reconciliation input and output VAT and computing tax liability. Leading reviews of previously submitted VAT returns to identify and rectify errors or omissions.

    3. VAT Registration

    We assist businesses in the VAT registration process, ensure compliance with regulations, and facilitate a smooth transition into the tax system.

    4. VAT Deregistration

    Supporting businesses in applying for VAT deregistration within the required timeframe to avoid potential penalties. Ensuring a seamless process for cancelling tax registration numbers.

    5. VAT Training

    Presenting customised training sessions for individuals and corporate entities on VAT laws and regulations. Leveraging the expertise of our professionals to provide complete training custom-made to specific business needs.

    6. VAT Transactions Advisory

    Providing guidance on industry-specific transactions, particularly for businesses with complex operations, products, or branches. Keeping abreast of recent developments to offer informed advice on VAT matters.

    Concluding Thoughts with Shuraa Tax

    This overview of leading VAT consultants has assisted you in determining the ideal VAT consultancy for your needs. For further insights into VAT consultancy or any tax and accounting inquiries, please don’t hesitate to contact us. Reach out today at +971508912062 or via email at info@shuraatax.com. We look forward to assisting you!

    Frequently Asked Questions

    Q1. What taxes apply to companies in Abu Dhabi?

    In Abu Dhabi, Value Added Tax (VAT) applies to most goods and services, while excise tax is levied on specific goods. Individual income tax is not imposed, but oil companies and foreign banks are subject to corporate tax.

    Q2. What services do tax consultants offer in Abu Dhabi?

    Tax consultants, well-versed in tax laws, act as advisors to clients, aiding in tax planning, compliance, and reporting.

    Q3. What factors should be considered when hiring a tax consultant? 

    When selecting a tax consultant, measuring their expertise in the relevant tax laws, cost-effectiveness, and industry-specific knowledge relevant to the business activities is essential.

    Q4. What are the key features of a tax accounting application?

    Choosing a tax accounting application hinges on ensuring compliance with applicable tax laws and enhancing efficiency in tax processes.

  • Dubai Import Tax: A Complete Guide for Businesses

    Dubai Import Tax: A Complete Guide for Businesses

    Dubai is one of the world’s top trade hubs, connecting businesses from all over the globe. Thanks to its strategic location, advanced ports, and strong infrastructure, Dubai plays a major role in international trade. In fact, Dubai’s total non-oil trade in 2023 was over AED 1.2 trillion, making it a prime destination for businesses looking to import goods.

    If you’re running a business in Dubai or planning to import goods into the city, understanding import taxes is essential. Dubai import tax system primarily revolves around two key components – Customs Duty & Value Added Tax (VAT). This essentially means the tax is applied to the total value of your goods, including their cost, insurance during transport, and freight charges.

    Taxes like customs duties and VAT (Value Added Tax) can affect your costs, pricing, and overall profitability. If you’re an importer or just starting out in the world of international trade, having a solid understanding of Dubai’s import tax regulations can help you understand the market more effectively and make informed decisions for your business.

    What is Dubai Import Tax?

    Import tax refers to the charges imposed by the government on goods brought into a country. Dubai import tax includes customs duties and Value Added Tax (VAT), which are levied on goods entering the emirate. These taxes are collected by Dubai Customs, the government agency responsible for regulating imports and ensuring compliance with trade laws.

    Types of Taxes Applicable to Imports in Dubai

    Dubai’s import tax system involves three main charges handled by the Dubai Customs department:

    1. Customs Duties

    Customs duties are taxes imposed on imported goods. In Dubai, the standard customs duty rate is 5% of the value of the goods, though rates can vary depending on the type of product. Certain goods, like alcohol or tobacco, may attract higher duties, while others may be exempt.

    2. VAT (Value Added Tax)

    VAT is a 5% tax applied to most goods and services in the UAE, including imported products. This tax is added to the value of the imported goods when they enter the country. Businesses importing goods must pay VAT at the point of entry but can reclaim the tax if they are VAT-registered and the goods are used for business purposes.

    3. Excise Tax

    In addition to customs duties and VAT, certain goods such as tobacco, sugary drinks, and energy drinks are subject to excise tax. This tax is meant to discourage the consumption of these products for health and environmental reasons and can significantly increase the cost of importing them.

    General Import Duty Rate in Dubai

    Customs duties, or import taxes, are fees levied by the government on goods imported into a country. The general import duty rate in Dubai is 5%. This is applied to the CIF value of the imported goods. CIF (Cost, Insurance, and Freight) value refers to the total landed cost of the imported goods. It includes three components:

    • Cost: The price you pay for the goods themselves to the seller.
    • Insurance: The cost of insuring the goods during transport from the seller to Dubai.
    • Freight: The cost of transporting the goods from the seller’s location to Dubai, including any loading and unloading charges.

    Essentially, the 5% import duty is calculated based on the total cost of acquiring and bringing the goods to Dubai, which takes into account the initial purchase price, insurance, and transportation expenses.

    How Import Duties are Calculated in Dubai?

    Here’s the formula to calculate the total Dubai import tax:

    Total Import Tax = Customs Duty + VAT

    Customs Duty = CIF value x Customs Duty Rate (e.g., 5%)

    VAT = (CIF value + Customs Duty) x VAT Rate (e.g., 5%)

    For example, you’re importing a shirt with a CIF value of AED 100 from a country that doesn’t have a special trade agreement with the UAE. Here’s how the import taxes would apply:

    Customs Duty: AED 5 (5% of AED 100)

    VAT: AED 5.25 (5% of AED 105, which includes the AED 5 customs duty)

    Total Import Tax: AED 10.25

    If the imported goods originate from a country with a free trade agreement with the UAE, a reduced or zero customs duty rate might apply.

    Dubai Import Tax Payment Process

    Paying import tax in Dubai involves a clear and structured process managed by Dubai Customs. Businesses must ensure that taxes are paid on time to avoid delays, penalties, or legal consequences. Here’s a step-by-step payment process:

    1. Register with Dubai Customs

    Businesses must first register with Dubai Customs and obtain a customs code. This is a mandatory requirement to import goods into Dubai. Registration can be completed online through the Dubai Trade Portal.

    2. Prepare and Submit Import Declaration

    Submit an import declaration for the goods through the Dubai Trade Portal or at customs offices. The declaration must include details such as the type of goods, their value, and relevant shipping information. Attach all required documents, including:

    • Commercial invoice
    • Packing list
    • Bill of lading/airway bill
    • Certificate of origin

    3. Calculation of Import Taxes and Duties

    Customs will review the import declaration and calculate the applicable customs duty (usually 5%) and VAT (5%) based on the declared value of the goods (Customs Value). If any exemptions apply, these must be documented and verified at this stage.

    4. Pay the Import Taxes

    After calculation, the business must pay the applicable taxes and duties. Payments can be made online through the Dubai Trade Portal or at Dubai Customs’ designated payment counters.

    5. Receive Clearance and Release of Goods

    Once payment is confirmed, customs clearance will be granted. The goods can then be collected or delivered to their destination.

    Exceptions to the General Import Duty Rate

    There are several exceptions to this general import duty rate in Dubai, including:

    1. Excise Goods

    These are specific products considered harmful or luxurious, and they are subject to a higher tax rate than the general rate. This additional tax is called excise tax, and it’s levied on top of any applicable customs duty and VAT. Here are some examples of excise goods and their typical excise tax rates:

    • Tobacco Products (including cigarettes): 100%
    • Energy Drinks: 50%

    It’s essential to note that these are just examples, and the specific excise tax rate can vary depending on the product category.

    2. Specific Goods with Different Duty Rates

    Certain goods have pre-defined customs duty rates that deviate from the general 5%. For example:

    • Alcohol: 50% customs duty rate.

    3. Free Trade Agreements (FTAs)

    Dubai has Free Trade Agreements with many countries. These agreements often involve reduced or eliminated customs duties in the UAE for goods originating from those partner countries. This promotes trade and strengthens economic ties between Dubai and its FTA partners.

    For instance, if you’re importing a garment from a country with a relevant FTA, the import duty might be lower than the general 5% rate, or even zero in some cases. 

    Import Tax Exemptions in Dubai

    Free Trade Agreements are the most significant way to achieve lower or zero import duties in the UAE. There might also be exemptions, or duty guarantees for specific situations like importing goods for exhibitions or re-export purposes. However, these typically involve procedures and guarantees to ensure the goods eventually leave the country.

    Dubai Customs allows exemptions for used personal effects and household items brought in by returning residents or newcomers. There are conditions to meet, such as proof of residency and quantities appropriate for furnishing a house.

    Most goods imported into Dubai’s Free Zones are exempt from customs duties, provided they are used within the Free Zone or re-exported to other markets. This exemption can significantly lower the cost of doing business for companies importing goods for storage, processing, or redistribution within the zone.

    Goods and Categories Exempt from Dubai Import Tax or VAT

    1. Basic Food Items

    Many basic food products, such as rice, bread, vegetables, fruits, and grains, are exempt from customs duties in Dubai. This is part of the government’s effort to ensure affordable access to essential goods for residents and businesses. However, there may be exceptions, so it is important to check the classification of specific items.

    2. Medicines and Medical Equipment

    Essential medicines and medical supplies are often exempt from both customs duties and VAT. These exemptions support Dubai’s healthcare system and facilitate the import of critical health-related goods. However, certain medical equipment may require specific certifications or approvals before being imported.

    3. Books, Educational Materials, and Publications

    Educational materials, such as books, scientific journals, and other publications, are generally exempt from VAT in Dubai. This exemption encourages the importation of educational resources and supports the growth of the education sector.

    4. Relief Supplies and Donations

    Goods that are imported for charitable or relief purposes are often exempt from taxes. This includes products sent by humanitarian organizations or in response to crises, such as food, clothing, and medical aid.

    How to Claim for Import Tax Exemption in Dubai, UAE?

    The procedure for claiming import tax exemption in Dubai depends on the reason for the exemption.

    1. Importing Personal Effects and Household Items

    This applies to nationals returning to Dubai or foreigners coming to reside in Dubai for the first time.

    You will need to submit the following documents at customs:

    • A packing list detailing the contents of the shipment
    • Proof of residence abroad for nationals
    • Proof of work and residency visa for foreigners

    2. Importing Industrial Inputs (Machinery, Equipment, and Raw Materials)

    This applies to businesses registered in the UAE. You will need to apply online through the Ministry of Industry and Advanced Technology (MoIAT) e-services platform. The process involves:

    • Registering or logging in to the platform
    • Completing the Customs Exemption Request Form
    • Paying any applicable fees
    • Downloading a copy of the application for your customs declaration

    In some cases, you can claim a refund or drawback on import duties in the UAE if they were overcharged due to errors in classification, valuation, or calculation of the duty. This typically involves a process of filing a claim with the customs authorities within a specific timeframe.

    Documents Required for Importing Goods to Dubai

    Proper documentation is essential for a smooth import process, avoiding delays, fines, or legal issues. Here are some key documents typically required for importing goods to Dubai:

    1. Commercial Invoice:

    • Description of the goods
    • Quantity and unit price
    • Total value of the shipment
    • Details of the buyer and seller

    2. Packing List:

    • Number of packages
    • Weight and dimensions of each package
    • Content descriptions

    3. Bill of Lading or Airway Bill:

    • Shipment details
    • Port of loading and discharge
    • Carrier information
    • Terms of transport

    4. Certificate of Origin:

    Issued by the exporter’s chamber of commerce, this certificate specifies the country of origin of the goods.

    5. Customs Code:

    All importers must register with Dubai Customs and obtain a customs code. This unique identification number is used for customs transactions and clearance.

    6. Insurance Certificate:

    This document proves that the shipment is insured during transit.

    7. Sales Agreement or Purchase Order:

    While not always mandatory, this document can help verify the transaction details between the importer and exporter, especially in cases of disputes.

    8. VAT Registration Certificate:

    If your business is VAT-registered, you may need to provide your VAT registration certificate to claim input tax credits on imported goods.

    Ensure all documents are translated into Arabic (if required) or accompanied by certified translations. Work with a professional at Shuraa Business Setup if you are unsure about compliance requirements.

    Let Shuraa Tax Be Your Guide!

    Importing goods into Dubai can be a great business opportunity, but understanding the Dubai import tax system is crucial for smooth operations and accurate cost calculations

    Shuraa Tax is here to simplify your UAE taxation journey. Our team of knowledgeable and qualified accountants, auditors, and tax advisors can provide comprehensive assistance with Dubai import tax, UAE VAT, tax management auditing, and accounting services across various Emirates.

    Contact Shuraa Tax today and let us handle the complexities, so you can focus on your business growth. Get in touch today at +971508912062. You can also drop us an email at info@shuraatax.com.

  • IFRS Advisory Services in UAE

    IFRS Advisory Services in UAE

    Following challenging accounting standards is critical when you increase your business abroad and manage significant transactions. The International Financial Reporting Standards (IFRS) are widely accepted rules for financial reporting included by many countries. Companies typically adopt these standards to guarantee compliance and maintain correct financial records.

    However, because these standards can change and cause confusion, it’s essential to have contact with IFRS Advisory Services. In this blog by Shuraa Tax, we explore the importance of these services and how Shuraa Tax can assist in guaranteeing compliance with IFRS regulations.

    What does IFRS Advisory mean?

    IFRS, or International Financial Reporting Standards, offers a fundamental framework for creating financial statements. These universal rules are used worldwide to guarantee financial statements are uniform, reliable, and can be compared easily. The International Accounting Standards Board (IASB) issues the IFRS framework. IFRS is a global language that fosters business transactions with credibility and transparency. Therefore, companies must adhere to IFRS guidelines to uphold effective and dependable financial reporting.

    Benefits of IFRS

    The following are the benefits of IFRS:

    • Improves transparency and comparability of financial information, assisting investors in making informed decisions.
    • Reinforces accountability by bridging the gap between capital providers and recipients.
    • Promotes economic efficiency by allowing global risk and opportunity recognition, enhancing capital allocation.
    • Increases reliability of financial statements through precise preparation and ethical practices.
    • Facilitates VAT compliance, particularly in jurisdictions like the UAE, where IFRS is mandatory for listed and LLC companies, ensuring credible VAT reporting.

    Key International Financial Reporting Standards

    Below are a few significant International Financial Reporting Standards (IFRS):

    IFRSs & IASs Objectives & Scopes
    IFRS 2 An organisation must recognise share-based payment transactions in its financial statements, such as granted shares, share options, or share appreciation rights.
    IFRS 3 Business Combinations cover accounting for when one company gains control of another through acquisition or merger.
    IFRS 5 This standard outline accounting for non-current assets designated for sale or distribution to owners.
    IFRS 6 Exploration and Evaluation of Mineral Resources standard permits entities new to the standard to use their existing accounting policies for exploration assets. It also changes how impairment testing is conducted for these assets.
    IFRS 9 Acknowledgement and Measurement categorise financial assets based on the business model in which they are held, and it is applicable across all industries.
    IFRS 10 Consolidated Financial Statements sets rules for preparing and presenting consolidated financial statements, mandating entities to include those they control.
    IFRS 14 Regulatory Deferral Accounts lets first-time adopters of IFRS continue accounting for ‘regulatory deferral account balances’ as per their previous GAAP, with slight adjustments.
    IFRS 15 Revenue from Contracts with Customers applies to all customer contracts.
    IAS 2 Inventories dictate how to account for various inventory types.
    IAS 16 Property, Plant, and Equipment govern the accounting for most types of such assets.

    Importance of IFRS

    Financial reporting standards are essential for global and international reporting as they provide consistent data, confirm economic efficiency, and aid investors in identifying opportunities and risks worldwide to improve capital allocation. IFRS provides general guidelines for preparing financial statements.

    It’s essential for the following reasons:

    1.     Starting consistent measures and recognition methods prevents manipulation, errors, and discrepancies in financial reporting.

    2.     With multinational corporations operating worldwide, a universal accounting standard improves the credibility of financial reports, facilitating international trade and economic growth.

    3.     IFRS ensures consistency in treating business activities, provides users of financial statements with clear explanations for item recognition, and enables accurate decision-making.

    Latest updates in the IFRS

    Stay updated on the latest developments in International Financial Reporting Standards.

    1.     IFRS 15 – Revenue from contracts with customers

    IFRS 15 centres on transferring control and identifying performance obligations. We evaluate how these obligations align with the requirements of IFRS 15, considering various revenue sources such as Trading, Construction, and Services. It offers a unified model for recognising revenue from all goods and services across diverse industries.

    Our IFRS advisory services will conduct an Impact assessment on IFRS 15, covering the following key areas:

    • Identifying customer contracts and performance obligations.
    • Evaluating whether obligations are fulfilled at a specific point or over time, based on IFRS 15 criteria.
    • Verifying contract cost recognition and transaction price allocation.
    • Determining the timing of revenue recognition.
    • Analyzing contract modifications for IFRS 15 compliance.
    • Assessing the need for significant estimate revisions.
    • Identifying areas requiring critical judgment and interpretation.
    • Recommending extensive disclosure requirements as per the new standard.

    IFRS 15 Substitutes 

    IAS 11 Construction contracts
    IAS 18 Revenue
    IFRIC 13 Customer loyalty programs
    IFRIC 15 Agreement for the construction of the real estate
    IFRIC 18 Transaction of assets from customers

    2.  IFRS 16- Leases 

    IFRS 16, issued by the International Accounting Standards Board, provides guidelines for lease accounting. Effective in January 2019, for most companies reporting under IFRS, it replaced the previous leasing standard, IAS 17, issued in January 2016.

    The impact of IFRS 16 standard:

    • Enhances transparency regarding companies’ lease obligations, assets, and liabilities.
    • Improves comparability between companies that lease and those that borrow to purchase assets.

    Our IFRS advisory services at Shuraa Tax for IFRS 16 – Leases will include:

    • Identifying lease contracts and assessing IFRS 16 applicability.
    • Reviewing any subleases.
    • Conducting lease accounting reviews as necessary.
    • Providing guidance on determining discount rates, lease terms, etc.
    • Assisting in preparing lease amortisation tables.
    • Offering guidance on transition methods.
    • Recommending changes to IT systems and processes to comply with IFRS 16 requirements.
    • Addressing disclosure requirements according to the standard.

    3. IFRS 9 – Finanqcial Instruments

    IFRS 9, issued by the International Accounting Standards Board (IASB), focuses on financial instrument accounting and replaces the IAS 39 Recognition and Measurement standard.

    The impact assessment for IFRS 9 will broadly include:

    • Categorising and measuring financial assets and liabilities.
    • Evaluating impairment of financial assets and liabilities using the three-stage damage model.
    • Applying IFRS 9 through practical expedients.
    • Addressing disclosure requirements as per the standard.

    Under IFRS 9—financial instruments, starting an impairment allowance is mandatory. It must be regularly assessed, and any changes in the allowance must be reflected in the profit and loss account.

    4.  IFRS 17- Insurance Contracts

    IFRS 17 mandates that insurance liabilities be assessed at their current fulfilment value, offering a standardized measurement and presentation method for all insurance contracts. It replaces IFRS 4 Insurance Contracts and related interpretations and applies to periods starting from January 1, 2023. Early adoption is allowed if IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial instruments are implemented.

    Other IFRS Advisory Services in the UAE include:

    • Developing Accounting Policies/IFRS Manual.
    • Conducting IFRS Training.
    • Providing Implementation Support for IFRS standards such as IFRS 16, IFRS 9, and IFRS 15, among others.

    Shuraa Tax IFRS Services

    Well-known for its exceptional IFRS consulting services across the UAE, Shuraa Tax assists clients comprehensively in financial reporting, preparing IFRS financial statement, analysing upcoming amendments, and more. Our IFRS advisory and consulting services include:

    • Assistance with IFRS adoption and implementation
    • Support for implementing complex standards
    • Conducting impairment testing and modelling
    • Ensuring compliance with revenue recognition processes and controls
    • Developing comprehensive reporting manuals
    • Formulating sustainability plans
    • Helping update IFRS accounting policies by standards changes or adoptions
    • Providing training and facilitating knowledge transfer processes.

    Why Choose Shuraa Tax Accounting?

    Implementing the new IFRS standards has posed significant challenges for companies in the UAE, particularly because many have delayed the process. This results in a concentrated workload towards the end of the year rather than being spread out. It also requires substantial efforts from the IT side. These new standards have led to discrepancies in income statement and balance sheet arrangements.

    At Shuraa Tax, our experienced professionals can provide superior IFRS advisory services for your business, ensuring alignment with global standards and compliance with tax regulations to relieve your business of tax burdens.

    In addition to offering IFRS advisory services in the UAE, Shuraa Tax efficiently manages CFO Services, Auditing Services, Accounting & Bookkeeping Services, Accounting Software Services, Due Diligence Services, and Tax Filing & VAT Consultancy services promptly and conveniently for our valued clients. Our customer-centric approach is highly regarded, and we guarantee exceptional service for your business.

    Require IFRS advisory services? Don’t hesitate to reach out to us. Shuraa Tax is here to assist you! Contact us today to learn more about our services. Reach us at +971508912062 or email us at info@shuraatax.com.

  • Corporate Tax Return Filing in UAE

    Corporate Tax Return Filing in UAE

    Corporate tax returns filing in the UAE is not just about fulfilling a legal requirement; it’s also about maintaining transparency and accountability within your business. The implementation of corporate tax in the UAE has been a significant development for businesses operating in the region. While the tax rates are relatively low compared to other countries, it’s still crucial for businesses to accurately file their corporate tax returns to ensure they are meeting their obligations to the government.

    By accurately reporting your financial information and paying the appropriate taxes, you are showcasing your commitment to operating ethically and contributing to the growth of the UAE’s economy.

    So, let’s thoroughly understand the process of filing corporate tax returns in the UAE and the other essential considerations you should know to keep your business running hassle-free in Dubai.

    What is Corporate Tax Return Filing in UAE?

    Corporate Tax Return Filing in the UAE refers to the process of submitting a report to the Federal Tax Authority (FTA) by taxable person, detailing your business’s income and expenses for a specific tax period. This report helps the FTA determine your taxable income and the amount of Corporate Tax you owe.

    All registered taxable persons must file a corporate tax return, even if they have no taxable income or qualify for a 0% tax rate.

    Who Needs to File Corporate Tax Returns in the UAE?

    In the UAE, most businesses will need to file corporate tax returns. This includes:

    1. Businesses and Individuals

    Any entity conducting business activities under a commercial license in the UAE, including both local and foreign companies.

    2. Free Zone Businesses

    Generally, even free zone entities must file, although Qualifying Free Zone persons with certain benefits may have exemptions (check with the specific free zone authority).

    3. Minimum Threshold

    Businesses with annual taxable income exceeding AED 375,000 are subject to corporate tax and must file returns. Those below this threshold pay 0% tax but may still need to register.

    A taxable person under the UAE corporate tax law is any business entity required to pay corporate tax. This includes residents (companies based in the UAE) and non-residents with a permanent establishment or deriving UAE-sourced income.

    Related Insights: How is Corporate Tax Different from Value-Added Tax in UAE?

    Entities Exempt from Filing

    Certain entities are exempt from corporate tax returns filing in the UAE. Examples of entities that may be exempt include:

    1. Public Benefit Entities

    Non-profit organizations established for charitable purposes may be exempt, subject to meeting specific criteria.

    2. Natural Resource Extraction

    Businesses engaged solely in extracting UAE natural resources might follow Emirate-level tax decrees instead.

    3. Investment Funds

    Certain investment funds that meet the conditions set out in the corporate tax law.

    It’s always advisable to consult with a Shuraa tax professional for specific guidance on your situation, especially regarding exemptions and free zone benefits.

    Deadlines for Corporate Tax Return Filing in the UAE

    The UAE offers businesses a generous window to file their corporate tax returns. The general deadline falls 9 months from the end of the relevant tax period. This applies to both resident and non-resident businesses operating within the UAE.

    The UAE operates under a self-assessment system for corporate tax. This means businesses are responsible for calculating, reporting, and paying their tax liability.

    Let’s consider a company with a financial year ending on December 31, 2025 (tax period January 1, 2025 – December 31, 2025).

    Adding 9 months to the end date (December 31, 2025) brings us to September 30, 2026.

    Therefore, this company would have a deadline of September 30, 2026, to file its corporate tax return for the 2025 tax period.

    Documents Required for Corporate Tax Return Filing

    Filing a corporate tax return in the UAE requires the submission of specific documents which typically include: 

    • Copy of Trade License (valid and unexpired) 
    • Emirates ID copies of Owners/Partners/Shareholders 
    • Passport copies of Owners/Partners/Shareholders 
    • Memorandum of Association (MOA), if required 
    • Financial Statements 
    • Records Supporting Deductions (Receipts, invoices, and other documentation for expenses) 
    • Taxable Income Calculations 
    • Details of Depreciation and Amortization 
    • Loan Documents (if applicable) 
    • Records of Exempt Income (if applicable) 

    How to File Corporate Tax Returns in the UAE?

    Filing corporate tax returns in the UAE involves several steps, from gathering the necessary documents to submitting the return online. Here’s a step-by-step process:

    1. Ensure Tax Registration

    Verify your company has a valid Tax Registration Number (TRN) issued by the Federal Tax Authority (FTA). If not registered, complete the registration process through the FTA’s online portal.

    2. Gather Required Documents

    Assemble the necessary documents (Company Registration Documents & Financial Documents). Ensure they are accurate, complete, and cover the relevant tax period.

    3. Prepare the Tax Return

    Utilize the official FTA corporate tax return forms, available online or through tax software providers. Carefully calculate your taxable income, considering all applicable deductions and exemptions as per UAE corporate tax regulations. Attach supporting documentation for claimed deductions and exemptions.

    Choose the appropriate tax period for which you are filing the return. Fill in the details:

    • Enter financial details, including revenue, expenses, and net profit.
    • Provide information on any adjustments to income (e.g., depreciation, provisions).
    • Enter details of related party transactions and any tax payments made.

    4. Submit the Tax Return

    Complete the declaration section, confirming that the information provided is accurate and complete. Click the ‘Submit’ button to file your corporate tax return with the FTA.

    5. Confirmation and Payment

    Upon successful submission, you will receive a confirmation receipt or acknowledgement from the FTA. If you have a tax liability, ensure timely payment of the corporate tax due. Payment details and deadlines will be provided on the FTA portal. 

    6. Maintain Records 

    Retain all documents used for tax return preparation for at least five years from the filing date, as the FTA may request them for audits or verification purposes.

    We highly recommend, getting expert assistance from professional like Shuraa Tax to ensure accurate and timely filing of corporate tax returns in the UAE.

    Penalties for Late Filing of Corporate Tax Returns in UAE

    Penalties for Late Filing of Corporate Tax Returns in UAE. The UAE enforces penalties for late filing of corporate tax returns. A penalty of AED 500 per month applies for the initial twelve months of delay.

    After the first year, the penalty increases to a steeper AED 1,000 per month or part thereof. There’s a maximum penalty cap, but the specific amount may vary depending on official pronouncements.

    These penalties are imposed to encourage timely filing and ensure tax compliance. Filing late can significantly increase your tax burden, so adhering to deadlines is crucial. The Federal Tax Authority (FTA) has the authority to waive or reduce penalties in specific circumstances. However, it’s best to avoid late filing altogether.

    Corporate Tax Return Filing Service in UAE

    Filing corporate tax returns is crucial for businesses in the UAE to stay compliant and avoid penalties. Given the complexity of tax regulations, seeking corporate tax return filing services in UAE is a good choice.

    Shuraa Tax offers top-notch corporate tax return filing services, with a team of dedicated experts ready to handle all your tax and accounting needs. Our tax consultants in Dubai will review your finances and help with tax planning and bookkeeping. Our professionals ensure that your tax returns are filed accurately and on time, helping you avoid any unnecessary fines and maintain a good standing with the authorities.

    Don’t stress about filing your corporate tax returns. Contact us today to learn how we can support your business with our reliable and comprehensive tax services.

    Frequently Asked Questions

    1. Is it mandatory to file corporate tax returns in UAE?

    Yes, filing corporate tax returns is mandatory for most businesses operating in the UAE. This includes local and foreign companies with a UAE commercial license. Individuals with a business exceeding AED 1 million annual turnover also need to file.

    2. What is the deadline for filing corporate tax returns?

    Businesses have nine months from the end of their tax period to submit their return and settle any corporate tax due.

    3. Should free zone entities file corporate tax returns?

    Generally, yes. However, Qualifying Free Zone persons with compliant activities and no UAE mainland business may be exempt. It’s recommended to check with the relevant Free Zone authority or a tax professional to confirm your specific requirements.

    4. What is the corporate tax rate in the UAE?

    The standard corporate tax rate in the UAE is a flat 9%. However, there’s a 0% tax rate for businesses with annual taxable profits below AED 375,000.

    5. Is there a Difference Between Taxable Income and Accounting Income?

    Yes, taxable income and accounting income are not the same. Accounting income reflects your company’s overall financial performance, while taxable income is calculated based on accounting income with adjustments according to UAE corporate tax regulations.

  • How is Corporate Tax Different from Value-Added Tax in UAE?

    How is Corporate Tax Different from Value-Added Tax in UAE?

    In Dubai’s bustling business landscape, the differences between corporation tax vs VAT are key pillars shaping companies’ fiscal strategies. While corporation tax levies a percentage on a company’s profits, VAT operates as a consumption tax applied at every stage of the supply chain. Going deeper into these variances is essential for businesses to guide the UAE’s tax framework efficiently. At the intersection of these intricacies lies Shuraa Tax, offering easy solutions to facilitate compliance and optimise financial outcomes. Join us as we examine the differences between corporation tax and VAT, disclosing insights to certify businesses in Dubai’s ever-evolving economic terrain.

    How Is Corporate Tax Different from Value Added Tax In UAE?

    The UAE serves as a central hub and preferred location for conducting business, offering its own unique set of regulations. It is essential for any entrepreneur aiming to establish a company in this vibrant environment to grasp the local laws, especially those related to taxation. Two significant taxes demand attention in the UAE: corporate tax and VAT. This blog aims to illuminate the definitions and disparities between these taxes, providing clarity for businessmen navigating the UAE’s intricate tax landscape.

    Introducing Corporate Tax

    In the past, the UAE operated as a tax haven, offering companies exemption from corporate tax. However, a significant change is underway as the UAE government prepares to implement corporate tax on business profits. This shift is heralded by the issuance of the Corporate Tax Decree Law by the Federal Tax Authority on December 9, 2022.

    The primary aim of this tax reform is to diversify the UAE economy away from its reliance on oil revenues. The government intends to achieve this transformative objective through substantial investments in technology and innovation, along with the introduction of corporate tax in Dubai and nationwide. 

    By expanding revenue sources beyond oil-related income, the introduction of corporate taxation is expected to boost state revenues, fostering greater economic stability and resilience.

    Additionally, the system includes exemptions for: 

    • Profits from intra-group transactions.
    • Profits from group re-organization.
    • Dividends from UAE companies.
    • Tips from foreign companies.

    Proposed Corporate Tax Rates and Regulations

    In the updated corporate tax framework, the proposed tax rates are outlined as follows:

    • If the net profit in one financial year is up to AED 375,000 the company is subject to a 0% tax rate.
    • If the net profit in one financial year is overreaching AED 375,000 then it is subject to a 9% tax rate.
    • Furthermore, Multinational Enterprises (MNEs) falling under Pillar 2 of the BEPS 2.0 framework will adhere to relevant authorities’ OECD Base Erosion and Profit-Sharing Rules.

    Understanding Value Added Tax (VAT) in UAE

    Value Added Tax (VAT) is a consumption-based tax levied on goods and services, operating as a standard fiscal tool adopted by over 150 countries worldwide. Introduced in the UAE on January 1, 2018, VAT applies to most transactions at a standard rate of 5%. Businesses are mandated to register for VAT if their taxable supplies and imports surpass the specified threshold of AED 375,000.

    VAT-registered businesses must file periodic VAT returns to the Federal Tax Authority (FTA). By diversifying revenue streams, VAT contributes to the government’s financial objectives outlined in the national budget.

    Specific sectors are exempt from Value Added Tax (VAT), including:

    • Specific financial services as outlined in VAT legislation
    • Residential properties
    • Bare land
    • Local passenger transport

    Difference between VAT and Corporate Tax

    The difference between corporation tax vs VAT lies in their tax structures. Corporate tax operates as a profit-oriented tax, while VAT functions as a consumption-based levy.

    Corporate tax is imposed on companies and settled by them directly, whereas consumers ultimately bear VAT by purchasing goods and services.

    VAT computation involves accumulating value at each production stage, whereas corporate tax in Dubai is computed based on profits.

    In corporate tax, businesses must report their profits and fulfill tax obligations based on the corporate tax scheme mandated by the government. Conversely, in the VAT system, companies are tasked with levying VAT on sales to customers and remitting it to the Federal Tax Authority (FTA).

    In summary, efficient business operations in the UAE necessitate a comprehensive grasp of diverse tax structures. Corporate taxes are set on profits, whereas value-added taxes are consumption-based, impacting consumers’ expenditures on goods and services.

    How Shuraa Tax Can Support You 

    Shuraa Tax has delivered exceptional tax advisory, accounting, and auditing services to clients for over a decade. With our seasoned team of experts well-versed in VAT and corporate tax laws, we can assist you in accessing tax benefits and ensuring the timely filing of VAT returns.

    Our dedicated team at Shuraa Tax offers comprehensive tax consultation to help you steer clear of tax evasion and its associated penalties. To explore our services further, reach out to our team today. Contact us at +971508912062 or email us at info@shuraatax.com.

  • VAT Refund Dubai for Tourists

    VAT Refund Dubai for Tourists

    Value Added Tax (VAT) is a consumption tax that is added to the cost of goods and services at each stage of production. While VAT is a common tax in many countries, tourists visiting Dubai will be pleased to know that they can actually get a refund on the VAT they pay on certain purchases.

    VAT refund in Dubai for tourist allows you to enjoy shopping in Dubai without having to worry about paying extra taxes. The VAT refund system in Dubai is designed to make shopping more enjoyable for tourists, and it provides a great incentive for visitors to shop and spend money in the city.

    So, if you’re too planning a visit and shopping in Dubai, explore the benefits of the tourist VAT refund in Dubai and understand how tourists can take advantage of this great opportunity.

    VAT in Dubai

    VAT stands for Value Added Tax. It’s an indirect tax levied on most goods and services at each stage of the supply chain. Businesses registered for VAT collect VAT from customers and then remit it to the government, minus the VAT they paid on their own business purchases (input VAT).

    This ensures the final consumer bears the burden of the tax.

    The standard VAT rate in the UAE is 5%. This applies to most goods and services.

    However, there are also two other categories:

    Zero-rated supplies: These have a 0% VAT rate. This applies to exports outside the GCC (Gulf Cooperation Council) countries, international transportation, some specific areas like healthcare and education, and the first supply of residential property within 3 years of completion.

    Exempt supplies: These are not subject to VAT at all.

    Tourist VAT Refund Scheme in UAE

    The VAT Refund Scheme in the UAE for Tourists is a program that allows visitors to claim back a portion of the Value Added Tax (VAT) they paid on eligible purchases made during their trip.  Basically, it’s a way for tourists to get some money back on the taxes they paid for goods.

    When you buy something in the UAE, there’s usually a 5% VAT added to the price.  This scheme lets you get some of that VAT back when you leave the country. This program is exclusive for tourists visiting the UAE, not residents or crew members departing.

    However, it’s not a full refund, you can get back 85% of the VAT you paid, minus a small service fee.

    Who is Eligible for VAT Refunds?

    Here are some general requirements to be eligible for VAT refunds in Dubai for tourist:

    • You must be a tourist visiting the UAE, not a resident or a crew member departing the country.
    • You must be 18 years old or older.
    • Your purchases need to be at least AED 250 (around $68 USD) per individual tax invoice (receipt) from a store participating in the VAT Refund Scheme.

    The scheme applies to most goods, but with some exceptions. Here’s what qualifies:

    • Goods that are unopened, unused, and in their original packaging.
    • Most store-bought items (electronics, clothing, etc.)

    Not Eligible:

    • Food and Beverages are generally not included in the scheme.
    • The program applies to goods, not services like restaurant bills or salon services.
    • Certain goods like basic necessities (fresh food) and local residential rents are already VAT-exempt and not eligible for further refunds.

    Please note you have 90 days from the purchase date to validate your Tax Refund Slip at the airport upon departure. You can claim your refund within one year from validating the Tax Refund Slip.

    The VAT Refund Process in Dubai for Tourists

    Here’s a step-by-step guide on claiming VAT refund in Dubai for tourist:

    1. Look for Participating Retailers

    Keep an eye out for stores displaying the “Tax-Free” or “Premier Tax Free” logo. These shops are part of the VAT refund program.

    2. Request a Tax Refund Slip

    When making a purchase above AED 250, ask the cashier for a Tax Refund Slip. This slip details your purchase and the VAT amount you paid.

    3. Validate Your Tax Refund Slip

    At departure from the UAE, head to a planet tax-free kiosk or manned desk at the airport before checking in your luggage and clearing security. You’ll need:

    • Your Passport
    • The Tax Refund Slip(s)
    • The Purchased Items (which may be inspected by customs)

    4. Receive your Refund

    You can get 85% of the VAT amount back, minus an AED 4.80 service charge per Tax-Free Tag. You can choose a cash refund (AED 35,000 maximum) or a credit card refund.

    5. Time Limits

    You have 90 days from the purchase date to validate your Tax Refund Slip at the airport, and one year from validation to claim your refund.

    VAT Refund at Dubai Airport Requirements

    Here are the VAT Refund requirements at Dubai Airport (and all UAE airports) for Tourists:

    • The original passport used for entry into the UAE.
    • The original Tax Refund Slips issued by participating stores for your eligible purchases. Ensure they’re complete and accurate.
    • You must have the original purchased items with you in their unopened, unused, and original packaging. Customs officials may request to inspect them.
    • You have 90 days from the purchase date to validate your Tax Refund Slips at the airport before departure.
    • Pack your purchases carefully to avoid any damage during travel that might affect the refund process.

    Locations to Recover VAT in UAE for Tourists

    These are the most common locations for VAT recovery. All major airports in the UAE have designated VAT refund points, including:

    • Dubai International Airport (all terminals have VAT refund points)
    • Abu Dhabi International Airport
    • Sharjah International Airport
    • Al Maktoum International Airport (Dubai World Central)
    • Al Ain International Airport
    • Ras Al Khaimah International Airport

    VAT refunds can also be claimed at some seaports in the UAE, but this is less common than airports.

    Read more: How to Claim VAT Refund in UAE 2026?

    Shuraa Tax Simplifies Your Dubai Experience

    Claiming a VAT refund in Dubai is a great way for tourists to save money on their purchases and make the most of their trip. By taking advantage of this opportunity, visitors can enjoy shopping in Dubai without having to worry about paying extra for taxes. The process is simple and straightforward, and the benefits are definitely worth it.

    Keep your receipts safe, ensure your purchases are unopened and in original packaging, and factor in the time needed for validation at the airport.

    If you need assistance with VAT refunds or any other business taxation needs in the UAE, don’t hesitate to consult Shuraa Tax. Our team of highly experienced tax consultants can ensure you maximize your benefits and minimize any tax burdens.

    So, relax, enjoy the sights and sounds of Dubai, and leave the tax complexities to us.

    Get in today at +971508912062. You can also drop us an email at info@shuraatax.com.

  • Withholding Tax in the UAE: A Guide for Business Owners in 2026

    Withholding Tax in the UAE: A Guide for Business Owners in 2026

    For entrepreneurs and business owners in the UAE, grasping the intricacies of withholding tax within the broader spectrum of corporate taxation is indispensable for adhering to the nation’s evolving tax laws. In December 2022, the UAE Federal Tax Authority made substantial progress by releasing a decree that specified the obligations related to withholding tax within the corporate tax framework of the United Arab Emirates.

    This exhaustive guide by Shuraa Tax aims to demystify corporate taxes, focusing on withholding tax. It delves into the latest legislation and its ramifications for business operations in the UAE. Whether navigating tax liabilities or aiming to optimise your tax strategy, this blog provides valuable insights and addresses any inquiries concerning the prevailing corporate tax landscape, particularly on withholding tax in UAE.

    Understanding Withholding Tax in the UAE

    Withholding tax in the UAE involves deducting a portion of an employee’s or contractor’s income at the source, typically by their employer or business entity. This deducted amount is an advance payment towards the individual’s annual income tax liability. If too much is withheld, the individual may be eligible for a tax refund, while insufficient withholding may lead to owing taxes when filing returns.

    Tax regulations and rates vary between countries, affecting collection methods. Globally, withholding tax rates typically range from 15% to 25%, applying to various income sources such as dividends, interest payments, and royalties. This practice ensures timely revenue collection for governments worldwide.

    Implications of Withholding Tax Regulations for UAE Businesses

    On December 9, 2022, the Ministry of Finance (MoF), working in conjunction with the Federal Tax Authority (FTA), introduced Federal Decree-Law No. 47, which outlines the current guidelines governing corporate tax (CT) and withholding tax in UAE. According to the decree, withholding tax is now set at 0%. These changes came into effect on June 1, 2023, and apply to all subsequent financial years.

    Income Sources Exempt from Withholding Tax

    Presently, withholding tax exemptions in the UAE encompass the following income sources:

    1. Income generated by a foreign company within the UAE that is not attributed to its Permanent Establishment (PE) in the country.
    1. Mainland-sourced income benefits from the Free Zone’s 0% corporate tax regime, excluding transactions conducted through an onshore branch.
    1. Dividends or other profit distributions issued by a Free Zone Person are subject to zero taxation for mainland shareholders. For instance, if a DMCC company distributes dividends to a resident of the JAFZA free zone, withholding tax is waived at a rate of 0%.

    Withholding Tax Versus Value-Added Tax (VAT)

    Certainly, here’s a comparison table between Withholding Tax and Value-Added Tax (VAT) in the UAE:

    Aspect Withholding Tax Value-Added Tax (VAT)
    Implementation Introduced earlier than VAT Implemented in 2018
    Taxation Scope Levied on certain types of income payments Charged on the sale of goods and services
    Collection Method Deducted at the source of income Added to the price of goods and services
    Taxpayer Responsibility Businesses pay tax on behalf of employees Companies collect tax from customers
    Government Role Ensures tax compliance and collection Collects tax revenue from businesses
    Tax Rate Variable, depending on income type and rate Fixed rate of 5%
    Registration Requirement Not applicable to most businesses Mandatory for companies exceeding the threshold
    Impact on Businesses Directly affects income payments and cash flow Affects pricing and profit margins

    This table outlines key differences between Withholding Tax and Value-Added Tax (VAT) in terms of implementation, scope, collection method, taxpayer responsibility, government role, tax rate, registration requirement, and business impact.

    Understanding Corporate Tax in the UAE

    Corporate Tax in the UAE has transformed its taxation landscape, positioning it as a leading jurisdiction with a progressive tax framework. This legislation profoundly influences business operations within the country. While all businesses and commercial activities in the United Arab Emirates are subject to corporate tax, various exceptions exist, notably for industries engaged in natural resource extraction, which remain subject to emirate-level taxation. Below, you’ll find detailed information on corporate tax regulations applicable to businesses and individuals.

    Related Insights: Withholding Tax in Saudi Arabia

    Entities Subject to Corporate Tax in the UAE

    Under UAE Tax Law, entities liable for corporate tax, referred to as “taxable persons,” encompass the following:

    • UAE companies and other corporate entities established and operated within the UAE.
    • Individuals conducting business or commercial activities within the UAE, subject to forthcoming Cabinet Decision regulations.
    • Foreign legal entities with a Permanent Establishment in the UAE are known as non-resident juridical persons.

    Entities Exempted from Corporate Tax in the UAE

    Specific business sectors or organisations are exempt from corporate tax owing to their significant societal and economic contributions to the UAE. These entities, known as Exempt Persons, include:

    • Government bodies.
    • Extractive and non-extractive natural resource businesses, subject to specific regulations.
    • Qualifying public benefit entities as defined in Article 9 of the CT Law.
    • Public or private Pension and Social Security funds.
    • Qualifying investment funds as specified in Article 10 of the CT Law.
    • Wholly owned UAE subsidiaries of governing organisations, government entities, qualifying investment funds, or public/private pension/social security funds are eligible for zero income tax under Article 18 of the CT Law.
    • Free zone persons meeting certain conditions outlined in Article 18.

    Types of Exempt Income

    When determining taxable income, the following expenses are exempt:

    • Dividends and other distributions received from either resident individuals or foreign holdings.
    • Participating interests, as Article 23 of the CT Law defines.
    • Income obtained by non-resident individuals from operating aircraft or ships during international transport, provided it meets the conditions specified in Article 25 of the CT Law.
    • Revenue generated from a permanent foreign establishment, following Article 24 of the CT Law.

    Corporate Tax Structure in the UAE

    The corporate tax regime in the UAE mandates that companies and commercial entities pay taxes on their net income. Here’s how the rates are structured:

    • A 0% tax rate is implemented on business profits up to AED 375,000. This measure is designed to bolster support for small businesses and startups.
    • For-profits exceeding AED 375,000 from their inaugural financial year onward, companies are subject to a 9% tax rate. This rate has been uniformly applied to all companies since June 1st, 2023.

    Advantages of Withholding Tax Implementation

    Tax regulations offer numerous advantages for governments and businesses, contributing to financial stability and regulatory compliance. Here’s a closer look at the key benefits:

    Regulatory Compliance Assurance

    Withholding tax ensures businesses adhere to local laws and regulations, shielding them from potential fines or penalties arising from non-compliance.

    Enhanced Accountability

    It holds foreign individuals accountable for income earned within the UAE’s borders, promoting transparency and tax adherence.

    Prevention of Double Taxation

    Withholding tax mechanisms efficiently monitor and collect taxes from non-residents, averting the risk of double taxation and related conflicts.

    Combatting Tax Evasion

    By deterring tax evasion, withholding tax contributes to additional government revenue and bolsters fiscal sustainability.

    Flexible Tax Management

    Withholding taxes often replaces income taxes, offering businesses greater flexibility in managing their tax obligations.

    Employee Incentives

    Withholding tax can serve as an employee incentive, allowing companies to deduct taxes from salaries and rewarding staff with bonuses or additional benefits.

    Benefits of Business Operations in the UAE

    Below are the benefits of Business Operations in the UAE:

    Business-Friendly Environment

    The UAE offers a conducive environment for business growth, characterised by pro-business policies and a vibrant economic culture, setting it apart globally.

    Favorable Tax Regime

    The introduction of a low corporate tax rate and exemptions for specific businesses and organisations demonstrates the UAE’s commitment to attracting entrepreneurs and companies worldwide.

    Tax Incentives

    These tax incentives reduce financial burdens on businesses, enhance profitability, and create opportunities for reinvestment, making the UAE an attractive destination for businesses.

    Strategic Geographical Location

    Situated as a gateway between Europe, Africa, and Asia, the UAE provides unparalleled access to international trade routes and global markets, bolstering opportunities for business expansion.

    World-Class Infrastructure

    The UAE boasts state-of-the-art infrastructure, including advanced transportation, logistics, and telecommunications facilities, facilitating seamless business operations and global connectivity.

    Investor Protection

    The UAE’s legal framework safeguards the interests of foreign investors, offering them security and confidence in their investments that contribute to a stable business environment.

    Stable Political Environment

    With a stable political environment and progressive regulatory policies, the UAE further enhances its attractiveness as a business hub, fostering growth and innovation.

    Economic Reputation

    These benefits collectively contribute to the UAE’s reputation as a leading global business destination, with low corporate tax rates and targeted exemptions playing a crucial role in its economic allure, driving growth and diversification.

    Expert Guidance for Your Business with Shuraa Tax

    The UAE government supports business growth through various initiatives, offering an ideal environment for expansion. To ensure compliance, stay informed on corporate tax law changes, including withholding tax rules in UAE. Reach out to our experienced accounting professionals for assistance.

    Shuraa Tax consultants simplify Dubai business setup and tax compliance. We provide comprehensive support from registration to obtaining licenses and securing tax residency certificates. Contact us at +971508912062 or info@shuraatax.com for expert advice and peace of mind in tax matters.

    FAQs

    Q1. What is withholding tax?

    Withholding tax is a form of income tax collected by the government from individuals receiving payments such as salaries, wages, commissions, dividends, interest, or royalties. It’s deducted at the source before payment to the recipient, depending on their earnings, tax requirements, and available exemptions.

    Q2. Is there a withholding tax in the UAE?

    Businesses in the UAE aren’t subject to withholding taxes, as their corporate income and profits are taxed at a 0% rate. For specific exemptions applicable to your business, seek advice from a corporate tax consultant or accountant.

    Q3. What are the Compliance requirements for withholding tax?

    Based on current guidance from the Federal Tax Authority, UAE-sourced income paid to non-residents may qualify for a 0% withholding tax rate, eliminating the need for tax withholding or related paperwork for UAE businesses or foreign recipients. For further compliance guidance, contact our team of specialist accountants.

    Q4. How is withholding tax calculated?

    Non-residents without a permanent UAE presence may be exempt from withholding tax if they receive no UAE-derived revenue related to their establishment. Withholding tax is standard for cross-border payments like dividends, royalties, and interests. UAE resident individuals are exempt from withholding tax for transactions among themselves.