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  • Top 15 Audit Firms in Dubai, United Arab Emirates (2026)

    Top 15 Audit Firms in Dubai, United Arab Emirates (2026)

    Dubai has grown into a major hub for businesses from all over the world, from finance and real estate to tech and hospitality. With so many companies operating here, keeping financial records accurate and staying compliant with the law has become more important than ever. This is where audit firms come in – they help businesses make sure their finances are correct, transparent, and trustworthy. 

    In 2026, the rules around finance and reporting in the UAE are more detailed than ever. Companies need to follow federal laws, VAT regulations, and international accounting standards (IFRS), along with rules in special financial zones like the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM). 

    At Shuraa Tax, we help businesses manage their taxes and compliance smoothly. But we also know that choosing the right audit firm is a big part of staying on top of your financial responsibilities. That’s why in this blog, we’re sharing a list of the best audit firms in Dubai for 2026. 

    Top 15 Audit Firms in Dubai, UAE 

    Dubai is home to some of the world’s leading audit firms, offering a mix of global expertise and local insights. Here’s a closer look at the top audit companies in Dubai for 2026: 

    1. Shuraa Tax 

    Shuraa Tax is a UAE-based taxation and audit services provider that has been recognised among the top audit firms in Dubai for many years. The firm is known for its high reputation and deep local insights. Shuraa Tax is trusted by both local and international businesses for compliance and strategic guidance. 

    Shuraa’s in-depth understanding of federal laws, VAT, corporate tax, and free zone regulations allows them to provide practical, reliable, and tailored solutions for companies of all sizes. 

    Services Offered: 

    • Audit & Assurance: Financial statements audit, compliance reporting, IFRS advisory 
    • Tax Services: VAT registration, corporate tax advisory, and filing support 
    • Advisory Services: Business structuring, financial strategy, and regulatory compliance support 
    • Other Taxation Services: Payroll services, ICV certification, Liquidation report, and Bookkeeping & Accounting 

    Why Choose Shuraa Tax: 

    Shuraa Tax is a preferred choice for businesses seeking a local partner who understands UAE regulations, offers personalised services, and supports companies in achieving full compliance efficiently. They have helped hundreds of businesses establish smooth financial and compliance operations in Dubai. 

    2. Deloitte 

    Deloitte is one of the largest professional services networks in the world, known for its expertise in audit, consulting, tax, and advisory services. Founded over 175 years ago, it has built a reputation for combining global knowledge with local market insights. In Dubai, Deloitte works with a wide range of businesses, from multinational corporations to local enterprises, helping them navigate complex financial regulations. 

    Services Offered: 

    • Audit & Assurance: Ensures financial statements are accurate and compliant. 
    • Consulting: Business strategy, operations improvement, technology, and digital transformation. 
    • Risk Advisory: Internal controls, compliance, cybersecurity, and risk management. 
    • Tax Services: Corporate tax, VAT, transfer pricing, and global tax compliance. 

    Why Choose Deloitte: 

    Deloitte stands out for its strong industry-specific knowledge, innovative solutions, and a large team of professionals in Dubai who understand the UAE regulatory environment, including DIFC, ADGM, federal laws, and VAT compliance. 

    3. PricewaterhouseCoopers (PwC) 

    PwC is a global network of firms delivering audit, assurance, consulting, and tax services. With a presence in over 150 countries, PwC combines international expertise with deep knowledge of local markets. In Dubai, PwC has been helping businesses – both small startups and large corporations – ensure compliance, improve efficiency, and make informed financial decisions. 

    Services Offered: 

    • Audit & Assurance: Financial reporting, compliance audits, and risk assessment. 
    • Tax Services: Corporate tax planning, VAT advisory, and compliance support. 
    • Consulting: Business transformation, operations, strategy, and technology implementation. 
    • Advisory Services: Deals, mergers & acquisitions, and business valuations. 

    Why Choose PwC: 

    PwC is known for its client-focused approach, global best practices, and strong technology-driven auditing solutions. They help companies meet UAE regulations while offering insights to improve business performance. 

    4. KPMG 

    KPMG is a leading audit and professional services firm with a global network operating in more than 145 countries. With decades of experience, KPMG has built a strong presence in the UAE, working with companies of all sizes to manage risk, improve operations, and maintain compliance. 

    Services Offered: 

    • Audit & Assurance: External audits, IFRS reporting, and financial statement verification. 
    • Advisory: Business performance, risk management, and financial advisory. 
    • Tax Services: Corporate tax, VAT compliance, and international tax solutions. 
    • Digital & Technology Services: Data analytics, AI-based auditing, and cybersecurity advisory. 

    Why Choose KPMG: 

    KPMG is trusted for its integrity, quality, and commitment to understanding client needs. In Dubai, they combine international standards with local knowledge, making them ideal for businesses navigating both federal regulations and free zone requirements. 

    5. Ernst & Young (EY) 

    Ernst & Young (EY) is a global leader in assurance, tax, transactions, and advisory services. Their Dubai office supports businesses in the finance, technology, hospitality, and real estate sectors. 

    Services Offered: 

    • Assurance Services: Audit, IFRS reporting, and regulatory compliance. 
    • Tax Services: Corporate tax advisory, VAT, and global tax solutions. 
    • Advisory Services: Strategy, risk management, performance improvement. 
    • Transaction Advisory: Mergers, acquisitions, and business valuations. 

    Why Choose EY: 

    EY is recognised for its forward-thinking approach, leveraging technology in auditing, and helping clients understand the UAE’s evolving regulatory landscape, including DIFC, ADGM, and VAT compliance. 

    6. Grant Thornton 

    Grant Thornton is a globally recognised professional services network offering audit, tax, and advisory services. Their Dubai office focuses on helping growing businesses with compliance and financial strategy. 

    Services Offered: 

    • Audit & Assurance: Statutory audits, IFRS compliance 
    • Advisory Services: Business performance improvement, M&A support 
    • Tax Services: Corporate and indirect tax solutions, VAT advisory 

    Why Choose Grant Thornton: 

    Grant Thornton is appreciated for personalised service, sector expertise, and helping clients navigate UAE regulations efficiently. 

    7. BDO 

    BDO is a leading global network of public accounting firms with a strong presence in Dubai. They specialise in providing personalised audit and advisory services to small and medium-sized businesses as well as larger enterprises. 

    Services Offered: 

    • Audit & Assurance: Financial statements, IFRS compliance, internal audits 
    • Advisory Services: Business strategy, risk management, and corporate finance 
    • Tax Services: VAT, corporate tax, and international taxation solutions 

    Why Choose BDO: 

    BDO is known for a client-centred approach, flexibility, and the ability to combine global standards with deep local knowledge. 

    8. Crowe 

    Crowe is a global accounting and advisory network providing specialised audit and consulting services. In Dubai, they focus on helping mid-sized businesses and multinational clients ensure compliance and optimise operations. 

    Services Offered: 

    • Audit & Assurance: Financial audits, internal control reviews 
    • Advisory Services: Risk management, business transformation 
    • Tax Services: VAT advisory, corporate taxation, and global tax compliance 

    Why Choose Crowe: 

    Crowe is recognised for its innovative auditing techniques, strong client support, and in-depth understanding of UAE business regulations. 

    9. RSM UAE 

    RSM is a global network of independent audit, tax, and consulting firms, renowned for serving middle-market companies. They have experience working across industries, including real estate, retail, technology, and financial services. 

    Services Offered: 

    • Audit & Assurance: Statutory audits, IFRS reporting, and internal controls assessment 
    • Tax Consulting: VAT advisory, corporate tax planning, and cross-border tax solutions 
    • Advisory Services: Business strategy, risk management, mergers & acquisitions, and financial advisory 

    Why Choose RSM: 

    RSM UAE is trusted for delivering high-quality, practical solutions that meet global standards while addressing the unique requirements of the UAE market. 

    10. Moore Stephens UAE 

    Moore Stephens is an international accounting and advisory network with a long-standing reputation for professionalism and reliability. Their Dubai office helps companies of all sizes – from startups to established corporations- ensure compliance with UAE regulations while achieving business growth. They serve sectors such as hospitality, manufacturing, technology, and financial services. 

    Services Offered: 

    • Audit & Assurance: Statutory audits, IFRS reporting, and compliance checks 
    • Tax Services: VAT compliance, corporate tax planning, and advisory 
    • Advisory & Business Consulting: Business process improvement, financial management, risk advisory, and strategic consulting 

    Why Choose Moore Stephens: 

    Moore Stephens is recognised for its personalised approach, practical solutions, and deep understanding of both international standards and UAE-specific regulations. 

    11. Baker Tilly 

    Baker Tilly provides audit, advisory, and accounting services worldwide. In Dubai, they focus on helping businesses comply with UAE regulations and optimise performance. They have extensive experience serving sectors such as real estate, construction, technology, healthcare, and financial services. 

    Services Offered: 

    • Audit & Assurance: Statutory audits, financial statement reviews, and compliance audits 
    • Advisory Services: Business process improvement, corporate governance, risk management, and strategic planning 
    • Tax Services: VAT registration and filing, corporate tax advisory, and regulatory compliance support 

    Why Choose Baker Tilly: 

    Baker Tilly is known for its strong client relationships, practical advice, and ability to provide customised solutions that meet local regulations. 

    12. PKF UAE 

    PKF is an international network of accountancy firms providing auditing, accounting, and advisory services. Their Dubai office specialises in supporting SMEs, startups, and mid-market businesses across multiple industries such as real estate, manufacturing, and services. 

    Services Offered: 

    • Audit & Assurance: Financial statement audits, IFRS compliance, and internal control reviews 
    • Tax Services: VAT advisory, corporate tax support, and regulatory compliance 
    • Advisory Services: Business strategy, financial planning, and risk advisory 

    Why Choose PKF: 

    PKF UAE is recognised for its practical solutions, strong local expertise, and commitment to assisting businesses with the UAE regulatory framework efficiently while maintaining global standards. 

    13. Protiviti Middle East 

    Protiviti is a global consulting and internal audit firm providing specialised audit, risk, and advisory services. Their Dubai office focuses on helping businesses improve governance, risk management, and compliance. Protiviti has experience across sectors, including financial services, technology, energy, and healthcare. 

    Services Offered: 

    • Internal Audit & Risk Management: Assessing internal controls, operational risks, and compliance 
    • Advisory Services: Corporate governance, process improvement, and cybersecurity advisory 
    • Financial & Regulatory Compliance: Ensuring adherence to UAE laws, IFRS, and industry regulations 

    Why Choose Protiviti: 

    Protiviti is valued for its deep risk management expertise, innovative audit approaches, and ability to deliver tailored solutions for complex business environments. They help companies enhance internal processes while ensuring compliance. 

    14. Mazrouei & Co. Chartered Accountants 

    Mazrouei & Co. is a UAE-based audit and accounting firm with extensive experience in serving local and regional businesses. They specialise in financial audits, accounting services, and advisory services for companies operating in Dubai’s mainland and free zones. Their expertise spans sectors like real estate, trading, manufacturing, and professional services. 

    Services Offered: 

    • Audit & Assurance: Statutory audits, IFRS reporting, and internal control assessments 
    • Tax Services: VAT advisory, corporate tax support, and regulatory compliance 
    • Advisory Services: Business structuring, financial planning, and corporate governance 

    Why Choose Mazrouei & Co.: 

    Mazrouei & Co. is recognised for its personalised service, practical solutions, and strong understanding of UAE-specific regulations. They are a trusted partner for businesses seeking reliable auditing and compliance support in Dubai. 

    15. TMF Group UAE 

    TMF Group is a global firm providing accounting, tax, audit, and corporate services. In Dubai, they specialise in helping international and local companies manage compliance, reporting, and corporate governance. TMF Group serves clients in industries such as finance, real estate, manufacturing, and professional services. 

    Services Offered: 

    • Audit & Assurance: Financial statement audits, statutory compliance, and IFRS advisory 
    • Tax Services: VAT, corporate tax, and advisory services for UAE and international regulations 
    • Advisory Services: Business setup support, risk management, and corporate governance 

    Why Choose TMF Group UAE: 

    TMF Group UAE stands out for its global reach combined with strong local expertise. Their structured approach helps companies ensure compliance, streamline operations, and make informed financial decisions. 

    How to Choose the Right Audit Firm in Dubai for your Business? 

    Choosing the best audit firm is one of the most important decisions for your business in Dubai. Here’s a guide to make the selection easier. 

    1. Checklist: What to Evaluate 

    When evaluating audit firms, consider these factors: 

    • Reputation & Track Record: Look for firms with a proven history of reliable audits and satisfied clients. 
    • Fees & Value: Compare fees but also assess the value you’re getting – cheaper isn’t always better. 
    • Technology & Tools: Modern firms use digital audit tools, data analytics, and automated reporting for accuracy and efficiency. 
    • Sector Experience: Ensure the firm has experience in your industry—real estate, tech, retail, or financial services. 
    • Global vs Local Expertise: Global firms bring international standards; local firms offer deep UAE-specific insights. 
    • Audit Philosophy: Some firms focus on compliance only, while others provide advisory insights to improve business performance. 
    • Turnaround Time: Check how quickly they can complete audits and reports, especially if you have deadlines. 

    2. Questions to Ask Potential Audit Firms 

    Before signing on, ask these questions to understand their capabilities and approach: 

    • Have you worked with companies in my industry? 
    • How do you stay up-to-date with UAE regulations, VAT, corporate tax, and IFRS? 
    • What is your audit process and timeline? 
    • How do you handle communication and reporting with clients? 
    • Can you provide references or case studies from similar businesses? 
    • Do you offer advisory services in addition to audits? 

    3. Red Flags to Watch Out For 

    • Lack of Local Knowledge: Firms unfamiliar with UAE regulations may cause compliance risks. 
    • Hidden Fees or Unclear Pricing: Always clarify costs upfront. 
    • Poor Communication: Delays, unclear answers, or unresponsiveness indicate potential issues. 
    • Limited Technology Use: Manual audits may take longer and be prone to errors. 
    • No References or Reviews: A firm without verified client feedback should be approached cautiously. 

    Partner with Shuraa Tax – One of the Best Audit Firms in Dubai 

    As we’ve seen from the list above, Dubai has some of the best audit firms in the world – each with its own strengths. Global firms like Deloitte, PwC, and KPMG bring years of international experience and strong systems, while local experts like Shuraa Tax stand out for their personal approach and deep understanding of UAE laws and business practices. 

    When choosing an audit partner in Dubai, think about what your business really needs. The right firm will not just help you stay compliant, it will also guide you in improving your financial health, managing risks, and planning smarter for the future. 

    If you’re looking for a reliable partner who knows Dubai inside and out, Shuraa Tax is a name you can trust. We’ve been among the top audit firms in Dubai for many years, known for our honesty, accuracy, and expert local insights. 

    At Shuraa Tax, we offer complete financial and tax support, including: 

    Reach out to Shuraa Tax today for all your taxation and compliance needs in the UAE. 

    📞 Call: +(971) 44081900
    💬 WhatsApp: +(971) 508912062
    📧 Email: info@shuraatax.com

    Frequently Asked Questions 

    1. Why do companies need auditors in Dubai? 

    Auditors play a key role in keeping your business financially sound and compliant. Here’s how they help: 

    • Ensure financial statements are accurate and transparent 
    • Verify compliance with UAE accounting and tax laws 
    • Identify financial risks and irregularities 
    • Strengthen internal controls and financial management 
    • Build trust with investors, banks, and stakeholders 
    • Support long-term business growth and decision-making 

    2. How to choose the right audit firm in Dubai? 

    Consider reputation, industry experience, UAE regulatory knowledge, services offered, fees, technology use, and communication. Firms like Shuraa Tax combine local expertise with a full range of audit and taxation services. 

    3. What services do audit firms in Dubai typically provide? 

    Most firms offer audit & assurance, tax services (VAT, corporate tax), and advisory services like risk management, business strategy, and regulatory compliance. 

    4. What is the difference between a local and an international audit firm? 

    International firms bring global expertise, standards, and credibility, while local firms have in-depth knowledge of UAE regulations, free zones, and industry-specific compliance needs. 

    5. How often should businesses in Dubai get audited? 

    Most companies are required to have an annual statutory audit, though certain sectors may need quarterly reviews, internal audits, or specific regulatory checks depending on their license and free zone requirements. 

    6. How much does hiring an audit firm in Dubai cost? 

    Costs vary based on company size, complexity, and services required. While global firms may charge higher fees, local firms like Shuraa Tax offer competitive pricing with personalised service and deep UAE expertise. 

  • Tax Audit in UAE: How to Be Prepared for the Audit

    Tax Audit in UAE: How to Be Prepared for the Audit

    Facing a tax audit in the UAE? While it might sound daunting, it’s crucial to remember – preparation is key! Think of it like a friendly financial checkup to ensure your business aligns with the ever-evolving tax regulations of the UAE. Recently, the introduction of Corporate Tax has added a new layer to the compliance landscape, making it even more important to be proactive.

    A tax audit in UAE is conducted by the Federal Tax Authority (FTA) to determine if taxpayers have accurately reported their income and paid the correct amount of taxes.

    The FTA aims to prevent tax evasion and promote voluntary compliance, which ultimately contributes to the growth and development of the country.

    At Shuraa tax, we help ensure that you are fully compliant and prepared for any potential audit. Here we will provide you with valuable insights and practical tips on how to be prepared for a tax audit in the UAE. We will explain everything about Tax or VAT audit in the UAE, audit process, and provide advice on how to maintain accurate records and documentation.

    But first let’s understand – What exactly in Tax audit.

    What is Tax Audit in UAE?

    A tax audit in the UAE, often referred to as a VAT audit, is a process conducted by the Federal Tax Authority (FTA) to verify a company’s compliance with tax laws and regulations. This typically involves examining business records and financial statements to ensure accurate VAT reporting and payment.

    In recent years, the UAE tax landscape has undergone significant changes with the introduction of Value Added Tax (VAT) in 2018. This has increased the importance of tax audits as businesses and individuals need to adapt to the new tax regime and ensure their compliance with the law.

    Purpose of Tax Audit

    The main purpose of a tax audit is to:

    1. Verify compliance

    Ensure companies are correctly calculating and paying their taxes, including VAT and Corporate Tax (if applicable).

    2. Identify errors

    Detect any errors or discrepancies in tax reporting that could lead to underpayment of taxes.

    3. Maintain fairness

    Ensure a level playing field for all businesses by making sure everyone complies with the tax laws.

    4. Overall tax liability

    The audit aims to determine the correct amount of tax a company should be paying and identify any potential discrepancies.

    Who Can Expect a Tax Audit?

    While the FTA can select any company for an audit at any time, certain characteristics increase the likelihood of being chosen. Here’s who can expect a higher chance of facing a tax audit in the UAE:

    1. VAT registration

    All businesses registered for VAT are subject to potential VAT audit in the UAE.

    2. Corporate Tax

    Companies exceeding AED 50 million in revenue in a relevant tax period must undergo mandatory audits.

    3. Repeated inaccurate tax filings

    Consistent errors in calculations or reporting raise red flags for the FTA.

    4. Non-compliance with regulations

    Ignoring specific tax rules or deadlines increases the risk of an audit.

    5. Irregularities in financial reporting

    Suspicious inconsistencies or unexplained discrepancies in financial records attract scrutiny.

    6. Companies in high-risk industries

    Sectors with a history of tax evasion or complex transactions might be subject to more frequent audits.

    7. Companies with complex business structures

    Holding companies, subsidiaries, and intricate international operations involve higher scrutiny due to potential complexities in tax obligations.

    How to be Prepared for Tax Audit?

    Being prepared for a tax audit in the UAE is crucial, regardless of whether your company falls into a high-risk category or not. Here are some key steps you can take:

    1. Maintain accurate and complete records

    Keep all financial records, including invoices, receipts, bank statements, and accounting ledgers, organized and readily accessible. Maintain copies of all tax returns, payments, and correspondence with the FTA.

    2. Understand the relevant tax laws and regulations

    Familiarize yourself with the specific VAT or Corporate Tax (if applicable) laws and regulations that apply to your business. Stay updated on any changes or amendments to these laws.

    3. File your tax returns accurately and on time

    Double-check all calculations and information before submitting your tax returns. Meet all deadlines for filing and avoid any late penalties. Maintain copies of submitted returns for your records.

    4. Review of VAT Returns

    Businesses registered for VAT in Dubai must submit their returns electronically through the official FTA portal. This crucial process involves detailing sales, purchases, and calculated VAT amounts (both output and input) within designated fields of the online form.

    To achieve meticulous and timely filing, consider partnering with Dubai’s leading VAT consultants like Shuraa Tax for comprehensive tax audit services in Dubai.

    What are the Records to Be Maintained for A Tax Audit?

    The specific records you need to maintain for a tax or VAT audit in the UAE depend on several factors, including whether you’re registered for VAT, subject to Corporate Tax, and the type of audit you’re facing.

    • Invoices and receipts
    • Bank statements for the relevant period, both personal and business accounts
    • Accounting ledgers
    • Cash registers and POS records, including daily summaries and receipts
    • Inventory records
    • Copies of all filed tax returns, including VAT returns and Corporate Tax returns
    • Records of all tax payments made to the FTA
    • Copies of all communication exchanged with the FTA, including audit notices, inquiries, and responses
    • Supporting documents for expenses
    • Details of Goods imported
    • Contracts and agreements related to your business activities
    • Asset registers
    • Salary slips and payroll records
    • Specific Industry Requirements

    This is not an exhaustive list, and the specific requirements might vary depending on your situation. It’s highly recommended to consult with a qualified auditor or tax consultant in Dubai who can advise you on the specific records you need to maintain based on your unique circumstances and ensure you comply with all FTA regulations.

    Tax Audit Procedure in the UAE

    1. Notifications

    The FTA usually informs the company about the audit at least five days before the scheduled date. This notification includes details like the audit schedule, location, involved parties, and reason for the audit (if any).

    2. Opening Meeting

    The auditor(s) and the company representatives meet at the designated location and time. The auditor explains the audit scope, timeline, and required documents.

    3. Information Gathering

    The auditor examines various documents, including:

    • Financial statements
    • Tax returns
    • Invoices and receipts
    • Bank statements
    • Supporting documentation for claimed expenses and deductions

    The auditor may also:

    • Interview key personnel
    • Inspect assets on-site
    • Request additional information or documents

    4. On-site Audit

    The FTA auditor(s) will visit the company’s premises or a mutually agreed location. They may:

    • Review records and documents
    • Interview employees
    • Inspect assets
    • Request additional information

    5. Post-Audit

    The auditors will prepare a draft report outlining their findings and any potential adjustments to the company’s tax liabilities. The FTA will issue a final report with their conclusions and any adjustments to tax liabilities. If you disagree with the findings, you can appeal the report to the FTA.

    Penalties for Non-compliance

    The FTA in the UAE imposes various penalties for VAT and Tax non-compliance identified during an audit. These penalties aim to encourage accurate reporting and discourage intentional tax evasion.

    Late filing of VAT return: AED 1,000 for first offense, AED 2,000 for repeat offenses within 24 months.

    Incorrectly filed VAT return: AED 3,000 for first offense, AED 5,000 for repeat offenses.

    Underpayment of tax:

    • 2% penalty on unpaid tax amount due immediately after the deadline.
    • 4% penalty on unpaid tax amount due on the seventh day following the deadline.
    • 1% daily penalty on remaining unpaid tax starting one month after the deadline, capped at 300%.

    Failing to register for VAT when required: AED 20,000.

    Failing to pay tax on behalf of another person: 2% penalty on unpaid tax amount due immediately, followed by 4% monthly penalty and capped at 300%.

    Failing to comply with FTA requests: Up to AED 20,000 per offense.

    These are just some of the main penalties, and the specific amount may vary depending on the nature and severity of the non-compliance.

    Know more about: VAT Penalties in the UAE and how to avoid it

    It’s crucial to consult with a qualified tax professional for accurate and personalized advice.

    Do’s and Don’ts for a UAE Tax Audit

    • Maintain accurate and organized financial records, tax documents, and supporting documentation for at least 5 years.
    • Consider digitizing records for easier retrieval and accessibility during an audit.
    • Understand and correctly apply different VAT rates (5%, 0%, exempt) for various transactions.
    • Double-check all calculations for input and output VAT, ensuring accuracy.
    • Ensure all exempt and zero-rated transactions are properly recorded and reported.
    • Claim input VAT only for eligible expenses and have supporting documentation.
    • Register for VAT if your taxable supplies exceed AED 375,000 annually.
    • Notify the FTA promptly of any changes in your business activities or tax status.
    • Stay updated on the latest VAT and Corporate Tax regulations, especially changes or amendments.
    • Consider consulting a qualified tax consultant or auditor, especially for complex situations.

    Read more: Stock Audit Services in Dubai

    Secure Your Tax Future with Shuraa

    Being prepared for a tax audit in the UAE is crucial for individuals and businesses. It is essential to have all necessary documents and records organized and readily available. However, taxation in the UAE, especially with recent changes, can be complex.

    Seeking tax consultation and advice from a reputable consultant, such as Shuraa Tax, can be extremely beneficial in ensuring compliance with tax regulations and optimizing tax strategies.

    Our team of specialists offers comprehensive VAT, tax management, tax audit service, accounting services, and more across Dubai and other Emirates. We go beyond just compliance, providing insights and strategies to optimize your tax position and ensure long-term financial health.

    Don’t wait for an audit to seek guidance. Contact Shuraa Tax today at +971508912062. You can also drop us an email at info@shuraatax.com. Remember, peace of mind in tax matters is invaluable. Let us help you achieve it.

  • How to Apply for UAE VAT Reconsideration

    How to Apply for UAE VAT Reconsideration

    If you run a business in the UAE, you’re probably already familiar with VAT (Value Added Tax). Introduced in 2018, VAT is a 5% tax applied to most goods and services in the country. It’s managed by the Federal Tax Authority (FTA), and staying compliant is a must for all registered businesses. 

    But what happens if the FTA makes a decision you don’t agree with – like rejecting your VAT registration, imposing a fine, or assessing tax incorrectly? That’s where UAE VAT Reconsideration comes in. It’s a process that allows you to formally ask the FTA to review and possibly reverse a decision. 

    Knowing how VAT reconsideration works can really help protect your business. Whether you’re facing unexpected penalties or think a mistake was made on your tax status, applying for reconsideration could make all the difference. 

    However, timely and accurate submission of a reconsideration request is essential, as the FTA stipulates specific procedures and deadlines for such appeals. 

    What is VAT Reconsideration in the UAE? 

    VAT Reconsideration enables taxpayers to challenge specific decisions made by the FTA concerning VAT issues. This could include disagreements over VAT registration rejections, penalties imposed, or assessments made. By submitting a reconsideration request, the taxpayer seeks a re-evaluation of the FTA’s decision, providing justifications and supporting documents to substantiate their case. 

    The FTA is responsible for reviewing reconsideration requests submitted by taxpayers. Upon receiving a valid request, the FTA examines the details, assesses the justifications provided, and determines whether the original decision should be upheld or amended. 

    Legal Basis for UAE VAT Reconsideration 

    The right to request a VAT reconsideration is grounded in the UAE’s tax legislation. Specifically, Article 27 of the Federal Decree-Law No. 7 of 2017 on Tax Procedures allows any person to submit a reconsideration request to the FTA regarding decisions issued by the Authority. This provision ensures that taxpayers have a legal avenue to seek redress and promotes accountability within the tax system. 

    When Can You Apply for VAT Reconsideration? 

    You may consider applying for UAE VAT Reconsideration in the following scenarios: 

    1. VAT Registration Issues 

    If your application for VAT registration or deregistration is rejected—despite meeting the threshold or fulfilling the required conditions, you can request the FTA to review its decision. This is common for new businesses or those closing operations.

    2. Penalties and Fines

    If you have been issued penalties for late submission of returns, failure to pay VAT on time, or other compliance issues—and you believe these penalties were applied unfairly or due to reasonable circumstances, you can apply for reconsideration. 

    3. Tax Assessments 

    If the FTA has assessed a higher VAT liability than expected—perhaps due to misunderstanding or errors in your submitted returns, you can request a reassessment with supporting documents.

    4. VAT Refund Claims

    If your claim for a VAT refund has been partially or fully rejected and you believe you’re entitled to the full amount, a reconsideration request allows you to challenge the decision. 

    5. Voluntary Disclosure Rejections 

    If you’ve tried to correct an earlier VAT return using a Voluntary Disclosure and the FTA rejected it or imposed a penalty, you can request a review if you have valid justifications or supporting evidence.

    6. Errors in Administrative Decisions

    Sometimes the FTA may issue decisions that are based on misinterpretation, incomplete data, or technical errors. If you believe any administrative decision has been made unfairly or incorrectly, you have the right to appeal.

    7. Input Tax Rejections

    If the FTA has disallowed part or all of your input tax claim (for example, claiming VAT on expenses), and you believe the expenses were eligible, you can file for reconsideration with clear documentation and reasoning. 

    8. Tax Grouping Application Denied 

    If your request to form a VAT tax group with other related companies has been rejected by the FTA, despite fulfilling the conditions, you can seek a review of this decision. 

    Timeframe for Filing 

    It’s crucial to act promptly. You must submit your reconsideration request within 40 business days from the date you received the FTA’s decision. Missing this deadline may result in your request being rejected. 

    This extension from the previous 20 business days was implemented through amendments to the UAE Tax Procedures Law. After receiving your reconsideration request, the FTA is required to review and issue a decision within 40 business days, and notify you of the outcome within 5 business days of issuing the decision.  

    If you remain dissatisfied with the FTA’s decision, you may escalate the matter to the Tax Disputes Resolution Committee (TDRC) within 40 business days of receiving the reconsideration decision. 

    Eligibility Criteria for UAE VAT Reconsideration 

    To apply for VAT reconsideration in the UAE, certain conditions must be met. The Federal Tax Authority (FTA) only accepts requests from individuals or businesses that are directly impacted by a tax-related decision. Here’s who can apply:

    1. Registered Taxpayers

    Any individual or business that is registered for VAT with the FTA. 

    2. Applicants Affected by an FTA Decision 

    If the FTA has issued a decision that directly impacts you or your business, such as a rejected registration, a fine, or a denied refund—you are eligible to apply. 

    3. Authorized Representatives 

    A tax agent or legal representative authorized to act on behalf of the taxpayer may also file the reconsideration request. 

    Requirements for Filing a Reconsideration Request 

    To submit a reconsideration request, the following criteria must be met: 

    Timeframe 

    The request must be filed within 40 business days from the date of notification of the FTA’s decision. 

    Language 

    All applications and supporting documents must be submitted in Arabic. 

    Documentation 

    Provide all relevant documents supporting the request, such as factual and legal grounds, tax advice received, and any other pertinent evidence. 

    Submission Platform 

    Requests should be submitted through the FTA’s e-services portal. Registered users can access the “Registered Reconsideration” tab, while non-registered users should use the “Non-Registered Reconsideration” tab. 

    How to Apply for UAE VAT Reconsideration? 

    If you disagree with a decision made by the Federal Tax Authority (FTA) regarding VAT matters, you can request a reconsideration. Here’s how: 

    Step 1: Log in to the FTA e-Services Portal 

    • Visit the official FTA website: www.tax.gov.ae 
    • Click on “e-Services” and log in with your registered username and password. 
    • If you don’t have an account, you will need to register first to access the services. 

    Step 2: Access the Reconsideration Section 

    Navigate to the “Reconsideration” tab on your dashboard. 

    Choose the appropriate option: 

    • Registered Reconsideration: For VAT-registered users. 
    • Non-Registered Reconsideration: For users not registered for VAT. 

    Step 3: Initiate a New Reconsideration Request 

    Click on “New Reconsideration Request.” 

    Fill in the required details, including: 

    • The FTA decision reference number. 
    • The category of your request (e.g., penalty, registration). 
    • A detailed explanation of why you believe the decision should be reconsidered. 

    Step 4: Attach Supporting Documents 

    Prepare and upload the necessary documents, such as: 

    • A formal letter explaining your case (must be written in Arabic). 
    • A copy of the FTA’s original decision you’re disputing. 
    • Business trade license, Emirates ID, or any other identification documents if applicable. 
    • Additional documents supporting your position (e.g., payment proof, VAT returns, invoices, or any correspondence with the FTA). 

    Step 5: Review and Submit 

    Carefully review all entered information and attached documents. Confirm that all details are accurate. Submit the reconsideration request. 

    Step 6: Await FTA’s Response 

    The FTA will review your application and typically respond within 45 business days. You will be notified of the outcome via your registered email or through the e-Services portal. 

    For a hassle-free process, consider using professional VAT reconsideration services in UAE to ensure everything is submitted correctly and on time. 

    Documents Required for VAT Reconsideration Application 

    When submitting a VAT reconsideration request to the UAE Federal Tax Authority (FTA), it’s essential to provide specific documents to support your application. 

    Detailed Explanation Letter: 

    A comprehensive letter in Arabic outlining the reasons for requesting reconsideration. Include factual and legal grounds, referencing relevant laws or FTA guidelines.  

    Supporting Evidence: 

    Documents that substantiate your claim, such as: 

    • Contracts or agreements related to the transaction. 
    • Invoices, payment receipts, or bank statements. 
    • Correspondence with the FTA or other relevant parties. 
    • Any other documentation that supports your case. 

    Copy of the FTA Decision: 

    The official decision issued by the FTA that you are contesting.  

    Identification Documents: 

    • For individuals: A copy of a valid passport or Emirates ID. 
    • For businesses: Trade license, VAT registration certificate, and any other relevant business documents. 

    Authorization Letter (if applicable): 

    If a representative is submitting the request on your behalf, include a notarized Power of Attorney or authorization letter. 

    Translation of Documents: 

    All documents must be submitted in Arabic. If original documents are in another language, provide certified Arabic translations. 

    Make VAT Reconsideration Simple with Professional Support 

    Filing for UAE VAT reconsideration is essential if you disagree with a decision from the Federal Tax Authority (FTA), such as a fine, penalty, or VAT registration issue. It’s essential to submit your application on time and make sure everything is accurate to avoid any delays or problems. 

    Getting professional help can make the process a lot easier. Tax consultants like Shuraa Tax can help you write your justification letter in Arabic, ensure all your documents are in order, and present your case clearly to the FTA. With the right support, you’ll have a better chance of resolving your issue quickly. 

    If you need assistance with VAT reconsideration, feel free to reach out to Shuraa Tax. Our team of experts is ready to guide you and make sure everything is handled properly so you can focus on running your business. 
    Contact us today for personalised assistance: 

    📞 Call: +(971) 44081900 

    💌 WhatsApp: +(971) 508912062 

    📧 Email: info@shuraatax.com 

    Frequently Asked Questions 

    1. What are VAT penalties and reconsiderations in Dubai? 

    VAT penalties are fines imposed by the Federal Tax Authority (FTA) for non-compliance, such as late returns or payments. Reconsideration is the process of requesting the FTA to review and possibly reverse a decision or penalty. 

    2. Can I apply for VAT penalty reconsideration in Dubai? 

    Yes. Both registered and non-registered individuals or businesses affected by an FTA decision can apply for reconsideration within 40 business days of receiving the decision. 

    3. How do I apply for VAT reconsideration? 

    Submit your request through the FTA’s e-Services portal. Registered users should use the “Registered Reconsideration” tab, while non-registered users can access the “Non-Registered Reconsideration” section. 

    4. What is the deadline to submit a reconsideration request? 

    You must file the reconsideration request within 40 business days from the date you were notified of the FTA’s decision. 

    5. Can I request a penalty waiver along with the reconsideration? 

    Yes. You can submit a penalty waiver request alongside your reconsideration application if you believe the penalty was unjust or due to valid circumstances. 

    6. What happens if I’m not satisfied with the FTA’s reconsideration decision? 

    If you’re dissatisfied with the outcome, you can escalate the matter to the Tax Disputes Resolution Committee (TDRC) within 40 business days of receiving the reconsideration decision. 

  • Penalty for Late Payment of VAT in UAE

    Penalty for Late Payment of VAT in UAE

    VAT (Value Added Tax) was introduced in the UAE on January 1, 2018, at a standard rate of 5%. It applies to most goods and services, with some exemptions. Businesses must register for VAT if their taxable revenue exceeds AED 375,000 annually. Those earning between AED 187,500 and AED 375,000 can register voluntarily.

    Paying VAT on time is crucial to avoid penalties and maintain a good standing with the Federal Tax Authority (FTA). VAT Late payments can lead to financial fines and disrupt business operations. It’s essential for companies to stay compliant by meeting deadlines and keeping accurate tax records.

    Failure to comply with VAT payment deadlines can result in significant penalties. As of 2026, the structure for VAT late payment penalty in UAE is as follows:

    • 2% penalty on the unpaid amount immediately after the due date.
    • 4% additional penalty if the tax is not paid within seven days after the due date.
    • 1% daily penalty, starting from one month after the due date, up to a maximum of 300%.

    To avoid this penalty for VAT late payment, businesses should set reminders, maintain proper records, and seek expert tax assistance.

    Understanding VAT in UAE

    Value Added Tax (VAT) is a consumption tax levied on most goods and services within the country. Businesses registered for VAT collect the tax at a rate of 5% on their taxable supplies and account for it to the Federal Tax Authority (FTA).

    Consumers ultimately bear the cost of VAT as a 5% increase in the price of goods and services they purchase.

    Here are some key points about VAT in UAE: 

    • The general VAT rate is 5% on most goods and services.
    • A 0% VAT rate applies to exports, international transportation, certain medical and educational services, and the first supply of residential real estate.
    • Some goods and services are completely exempt from VAT, such as financial services, local passenger transport, and bare land.
    • Businesses with taxable supplies exceeding AED 375,000 in the past 12 months or expected to exceed that amount in the next 30 days must register for VAT.
    • Voluntary registration is possible for businesses exceeding AED 187,500.

    Who Needs to Pay VAT in UAE?

    • Mandatory Registration: Businesses with taxable supplies and imports exceeding AED 375,000 per year must register for VAT.
    • Voluntary Registration: Businesses earning between AED 187,500 and AED 375,000 can register voluntarily.
    • Foreign Businesses: Non-resident businesses providing taxable goods or services in the UAE may also need to register and pay VAT.

    Late Payment of VAT in UAE

    Late payment of VAT in the UAE occurs when a registered business fails to pay their due VAT amount to the Federal Tax Authority (FTA) within the specified timeframe. This timeframe is typically 29 days from the end of the tax period.

    Late payment of VAT in the UAE can have several negative consequences for businesses, including:

    1. Penalties

    The FTA imposes steep VAT late payment penalty in UAE. These penalties are calculated as follows:

    • Immediate Penalty: A 2% penalty on the unpaid tax amount is applied immediately after the due date.
    • One Month Later: An additional 4% penalty is levied if the tax is not paid within seven days after the due date.
    • Daily Penalty: A 1% daily penalty accrues on the outstanding amount starting from one month after the due date, up to a maximum of 300% of the unpaid tax.

    2. Administrative Fines

    In addition to penalties, the FTA may impose administrative fines for non-compliance, such as late submission of tax returns or failure to maintain proper records.

    3. Reputational Damage

    Repeated late payments can damage a business’s reputation and relationships with clients and suppliers.

    4. Legal Action

    In extreme cases, the FTA may take legal action against businesses with significant outstanding VAT amounts.

    Deadline for VAT Payment in UAE

    The FTA assigns businesses a monthly or quarterly VAT filing schedule based on their annual turnover:

    Quarterly Filing: Most businesses file their VAT returns every three months.

    Monthly Filing: Large businesses with high turnover may be required to file VAT returns every month.

    VAT returns and payments must be submitted by the 28th day of the month following the tax period. If the deadline falls on a weekend or public holiday, payment should be made on the last working day before the due date.

    VAT Violations and Penalties in UAE

    The VAT penalties in the UAE can be severe, depending on the nature of the violation and the frequency of offenses. Here are some of the common violations along with their penalties in 2025:

    VAT Violation  VAT Penalty in UAE
    Failure to Register for VAT  AED 10,000
    Late Submission of VAT Return  – First offense: AED 1,000
    – Repeated offense within 24 months: AED 2,000
    Late Payment of VAT  – 2% of the unpaid tax immediately after the due date
    – 4% additional penalty if the tax is not paid within seven days after the due date
    – 1% daily penalty on the outstanding amount starting one month after the due date, up to a maximum of 300% of the unpaid tax
    Failure to Maintain Proper Records  – First offense: AED 10,000
    – Repeated offense within 24 months: AED 50,000
    Failure to Issue Tax Invoice or Credit Note  AED 5,000 per missing document
    Submission of Incorrect Tax Return  – First offense: AED 3,000
    – Repeated offense within 24 months: AED 5,000
    Failure to Submit Required Records Upon FTA Request  AED 20,000
    Failure to Notify FTA of Charge of Tax Based on the Margin  AED 2,500
    Not Displaying Prices Inclusive of VAT  AED 15,000
    Failure to Comply with Procedures for Transfer of Goods in Designated Zones  The higher of AED 50,000 or 50% of the tax unpaid on the goods as a result of the violation
    Tax Evasion Up to 300% of the tax evaded

    Please note VAT late payment penalty in UAE may vary depending on the specific nature and severity of the violation. It is recommended to consult with a tax professional such as Shuraa Tax for accurate and up-to-date information.

    Late VAT Deregistration Penalty in UAE

    UAE businesses are required to apply for VAT deregistration within 20 business days if they no longer meet the criteria for VAT registration. Failing to do so results in penalties imposed by the Federal Tax Authority (FTA).

    Late VAT Deregistration Penalties:

    • Initial Penalty: A fine of AED 1,000 is imposed if the deregistration application is not submitted within the stipulated 20-business-day period.
    • Recurring Penalty: An additional AED 1,000 is charged for each month the delay continues, up to a maximum of AED 10,000.

    Common Reasons for Late VAT Payment in UAE

    Several reasons may contribute to the late payment of VAT in the UAE. Some common factors include:

    1. Cash flow issues

    Businesses may struggle to pay their VAT on time if they are experiencing cash flow difficulties due to slow sales, unexpected expenses, or other financial challenges.

    2. Accounting errors

    Mistakes in calculating or recording VAT can lead to late payments.

    3. Lack of awareness

    Some businesses may not be fully aware of their VAT obligations and deadlines, resulting in unintentional late payments.

    4. System failures

    Technical issues with the FTA e-Services portal or a business’s internal accounting software can sometimes delay VAT payments.

    VAT Fines Discount in UAE

    VAT Fines Discount in the UAE refers to various incentives offered by the Federal Tax Authority (FTA) to encourage timely VAT compliance and reduce the financial burden on businesses facing penalties. These discounts apply specifically to administrative penalties, not the actual VAT liability you owe.

    There are currently two main ways to access VAT Fines Discounts:

    1. Penalty Redetermination Scheme

    This scheme allows for a significant reduction of previously imposed administrative penalties. You can get 70% of your past fines waived by paying only 30% of the original amount. The business must have a clean record of VAT compliance.

    2. Early Payment Discount

    The FTA offers a 5% discount on late payment penalties if the outstanding VAT amount is paid within 15 days of the due date. This discount can be combined with the penalty redetermination scheme for potentially significant savings.

    How to Avoid VAT Fine for Late Payment

    Avoiding late VAT payments in the UAE can save you from unnecessary penalties and maintain good standing with the Federal Tax Authority (FTA).

    Here are some key strategies to keep in mind:

    • Familiarize yourself with the VAT registration threshold, filing deadlines, and record-keeping requirements.
    • Maintain accurate records of your taxable supplies and input VAT to accurately calculate your VAT liability each month.
    • Mark your calendar with important deadlines for filing and payment to avoid missing them.
    • Utilize accounting software or platforms to automate VAT calculations, filing, and payment wherever possible.
    • Take advantage of the 5% discount offered by the FTA for early VAT payments.
    • Ensure your accounting system accurately reflects all VAT transactions and calculations.
    • Before submitting your VAT return, carefully review your calculations and ensure they are correct.

    And most importantly, seek professional advice!

    Choose Smart Compliance with Shuraa Tax

    Timely VAT payments are crucial for businesses in the UAE to maintain compliance and ensure their financial well-being. VAT late payment penalty in UAE can significantly impact a company’s bottom line.

    Therefore, it is highly beneficial to seek assistance from a leading tax consultant like Shuraa Tax. With our team of knowledgeable and qualified accountants, auditors, and tax advisors in Dubai, we offer comprehensive VAT solutions to businesses of all sizes.

    From registration and filing to consultations and dispute resolution, we guide you through every step with expertise. We help you understand your obligations, minimize risks, and optimize your VAT compliance to ensure your business operate seamlessly and efficiently.

    Call us Today and get your queries answered in no time. Let’s simplify taxation together.

    📞 Call: +(971) 44081900

    💬 WhatsApp: +(971) 508912062

    📧 Email: info@shuraatax.com

    Frequently Asked Questions

    1. What is the penalty for late VAT registration in the UAE?

    Businesses that fail to register for VAT within the required timeframe are subject to a penalty of AED 10,000.

    2. How much is the penalty for late VAT payment?

    The penalty structure for late VAT payment is as follows:

    • 2% of the unpaid tax immediately after the due date.
    • 4% additional penalty if the tax remains unpaid after seven days.
    • 1% daily penalty on the outstanding amount starting one month after the due date, up to a maximum of 300%.

    3. Are there penalties for incorrect VAT return submissions?

    Yes, submitting an incorrect VAT return can result in a penalty of AED 3,000 for the first offense and AED 5,000 for subsequent offenses.

    4. Can VAT penalties in the UAE be waived or reduced?

    The Federal Tax Authority (FTA) may consider waiving or reducing penalties under specific circumstances. Businesses must submit a request through the FTA’s e-services portal, providing valid reasons and supporting documentation for the non-compliance.

  • A Guide on Accounting Standards in UAE

    A Guide on Accounting Standards in UAE

    In today’s globalized business world, accounting standards play a crucial role in ensuring transparency, accuracy, and comparability in financial reporting. As the UAE continues to establish itself as a major player in the global economy, understanding and adhering to these accounting standards in UAE is of utmost importance for businesses operating in the country.

    Also, the recent introduction of corporate tax in the UAE has further emphasized the importance of adhering to accounting standards. With the implementation of tax laws, businesses are now required to maintain accurate and up-to-date financial records in line with internationally recognized accounting principles.

    Understanding these standards is essential not only for ensuring compliance with tax regulations but also for making informed business decisions and attracting potential investors. So, let’s get started.

    What Exactly is Accounting Standards?

    Imagine a world where every company recorded their finances differently, using their own unique methods and definitions. It would be a chaotic mess, with investors and creditors left scratching their heads, unable to compare or trust financial information.  

    This is where accounting standards step in, acting as the shared language of financial reporting. 

    Accounting standards are a set of established rules, principles, and procedures that dictate how financial transactions and events are recorded, measured, presented, and disclosed in financial statements. Think of them as the grammar and vocabulary of the accounting world, ensuring consistent and comparable reporting across businesses. 

    Types of Accounting Standards

    1. International Financial Reporting Standards (IFRS) – The most widely used global accounting standards 
    1. International Financial Reporting Standards for Small and Medium-sized Entities (IFRS for SMEs) 
    1. Generally Accepted Accounting Principles (GAAP) 
    1. Cash Basis Accounting – A simpler method where revenue is recognized when received and expenses when paid. 
    1. National Accounting Standards – Some countries have their own national accounting standards that may coexist with international standards. 

    UAE Regulatory bodies governing accounting standards

    1. Emirates Securities and Commodities Authority (ESCA)

    ESCA is the primary regulatory body for the financial markets in the UAE, including listed companies and their financial reporting practices. ESCA issues Accounting Standards and pronouncements in line with international best practices and IFRS.

    2. International Financial Reporting Standards (IFRS)

    The UAE has adopted IFRS as its national accounting standards, with some minor modifications for local specificities. This signifies the UAE’s commitment to global financial transparency and comparability. 

    Accounting Standards in the UAE

    The core accounting standards in UAE are largely based on International Financial Reporting Standards (IFRS), with some minor modifications for local specificities. These standards are issued by the Emirates Securities and Commodities Authority (ESCA), the primary regulatory body for the financial markets in the country. 

    A. International Financial Reporting Standards in UAE

    In the UAE, the introduction of corporate tax has made IFRS (International Financial Reporting Standards) the mandatory language of financial reporting for most businesses. 

    Mandatory for the Majority:

    • All businesses exceeding AED 50 million in annual revenue must comply with full IFRS. 
    • This ensures transparency and comparability of financial statements for investors, creditors, and tax authorities. 

    Key Concepts:

    • IFRS focuses on providing relevant and reliable information for decision-making, emphasizing accrual accounting, fair value measurement, and the going concern principle. 
    • This means transactions are recorded when they occur, not just when cash is exchanged, and assets and liabilities are valued at their current market prices. 

    B. IFRS for SMEs in the UAE

    It’s a condensed version of the full International Financial Reporting Standards (IFRS), tailored specifically for the needs of smaller businesses. If your business in the UAE has annual revenue below AED 50 million, you automatically qualify to use IFRS for SMEs for your financial reporting. 

    It provides reduced disclosure requirements and less complex accounting rules compared to full IFRS. This makes compliance easier and less time-consuming. 

    C. Cash Basis Accounting for Specific Cases

    In limited circumstances, businesses with revenue under AED 3 million or under specific exemptions may be allowed to use cash basis accounting. This method records transactions only when cash is received or paid out, but it may not accurately reflect the true financial position of the business. 

    D. Local GAAP for Exempt Entities

    Some entities exempt from corporate tax may be allowed to use local Generally Accepted Accounting Principles (GAAP). However, this is rare, and most businesses will still need to comply with IFRS or IFRS for SMEs for tax purposes. 

    E. Role of the UAE Ministry of Finance and Federal Tax Authority

    While the International Accounting Standards Board (IASB) sets IFRS, the UAE Ministry of Finance and the Federal Tax Authority play a role in interpreting and applying these standards within the UAE context. They may issue guidance or clarifications on specific issues relevant to the UAE market or tax regulations. 

    Who Needs to Follow Accounting Standards in the UAE?

    With the introduction of corporate tax in the UAE, understanding who needs to follow accounting standards has become crucial for businesses. Under the UAE Corporate Tax Law, a “Taxable Person” is any entity that carries on a “Taxable Activity” within the UAE. This includes, but is not limited to: 

    • Companies incorporated in the UAE 
    • Branches of foreign companies 
    • Individuals carrying on a business 
    • Joint ventures, partnerships, and trusts 

    Even if you are exempt from using IFRS or IFRS for SMEs, you still need to maintain accurate financial records and comply with other relevant accounting and tax regulations. 

    Seeking professional advice from qualified accountants or tax advisors is highly recommended to ensure proper compliance of accounting standards in Dubai or UAE and optimize your tax reporting. 

    Key Accounting Principles in the UAE

    While the UAE doesn’t have its own set of “Key Accounting Principles” like some countries, several important principles underly the application of International Financial Reporting Standards (IFRS) and other accounting frameworks within the UAE context.  

    1. Accrual Basis Accounting

    Records transactions when they occur, not just when cash is exchanged, providing a more accurate picture of the company’s financial health. 

    2. Going Concern Principle

    Assumes the entity will continue operating in the foreseeable future, affecting various valuation and recognition aspects. 

    3. Fair Value Measurement

    Assets and liabilities are valued at their current market price as opposed to historical cost, enhancing transparency and reliability. 

    4. Matching Principle

    Expenses are recognized in the same period as the revenue they are incurred to generate, ensuring accurate income presentation. 

    5. Prudence Principle

    Requires cautiousness in reporting, recognizing expenses and potential losses promptly but holding off on recognizing potential gains until they are realized. 

    Corporate Tax Law in the UAE

    Corporate Tax is levied on the Taxable Income, which is broadly defined as the net profit before tax calculated in accordance with IFRS or IFRS for SMEs. Certain adjustments may be required to align with the tax provisions. 

    The standard corporate tax rate is 9% for taxable income exceeding AED 375,000. Income below this threshold is exempt from tax. Businesses operating within designated free zones may have different tax treatments depending on their specific agreements and activities.  

    In general, no withholding tax is applied to dividends or other distributions paid out of Taxable Income. Taxable Persons are required to file tax returns annually with the Federal Tax Authority. Penalties may be imposed for non-compliance with the law and associated regulations. 

    Take the First Step with Shuraa Tax by Your Side

    Understanding and complying with accounting standards in the UAE is crucial for businesses and individuals alike. By adhering to these standards, companies can ensure accurate and transparent financial reporting, which in turn builds trust with stakeholders and investors. 

    It also helps businesses stay compliant with legal requirements and avoid penalties or legal issues. Seeking professional advice from tax advisors, such as Shuraa Tax, can further enhance this process. 

    Our experts have in-depth knowledge of the local accounting standards in Dubai and can guide businesses through the process, ensuring compliance while maximizing financial efficiency.  

    Shuraa Tax offers comprehensive accounting services tailored to the unique needs of businesses in the UAE. Our suite of services encompasses precise accounting practices, ensuring compliance with standards while optimizing financial efficiency. 

    Get in touch today at +971508912062. You can also drop us an email at info@shuraatax.com and get your queries answered in no time. Let’s minimize tax risks and optimize your tax positions.

  • Reverse Charge Mechanism under VAT in UAE

    Reverse Charge Mechanism under VAT in UAE

    The reverse charge mechanism in UAE VAT is a vital yet often overlooked aspect of VAT compliance. Unlike the conventional VAT process, where the seller collects VAT from the buyer and remits it to the Federal Tax Authority (FTA) the reverse charge mechanism shits this responsibility to the buyer.

    This is particularly relevant for cross-border transactions or supplies from foreign vendors, where the buyer in the UAE is required to account for VAT directly to the FTA. Ignoring this mandatory requirement can lead to significant compliance issues for businesses. In this blog, you’ll get a clear understanding of what the reverse charge mechanism in UAE VAT entails, when it applies, and how to ensure your business remains compliant.

    What is the Reverse Charge Mechanism in VAT?

    The reverse charge mechanism in UAE VAT plays an important role in cross-border transactions by exempting foreign businesses from registering for VAT within the country. Instead of the traditional VAT process where the supplier collects tax from the customer, the reverse charge mechanism in UAE VAT shifts the responsibility to the buyer.

    This means the buyer directly accounts for and pays the VAT to the UAE government. The supplier, particularly if based outside the UAE, is exempt from VAT and does not charge VAT on imported goods or services. In such cases, UAE residents receiving these goods or services must report and pay VAT under the reverse charge mechanism, ensuring accurate input and output VAT entries in their quarterly VAT returns.

    What is the Need for Reverse Charge?

    The need for the reverse charge mechanism (RCM) arises primarily to ensure VAT compliance in cross-border transactions and prevent tax evasion. Here’s a clear breakdown of why it’s necessary:

    1. Simplifies Compliance for Foreign Suppliers

    • Without RCM, foreign businesses would have to register for VAT in every country where they supply goods or services, resulting in increased administrative burdens.
    • The reverse charge removes this burden by shifting the tax obligation to the local buyer, making it easier for non-resident suppliers.

    2. Ensures VAT Is Collected on Imports

    • When goods or services are imported, the UAE government still needs to collect VAT.
    • RCM ensures this by making the local recipient responsible for accounting and paying VAT, even if the supplier is outside the UAE.

    3. Reduces Tax Evasion

    • Since the responsibility is on the local buyer, the government has better oversight and control over VAT collection.
    • It helps in tracking taxable transactions more efficiently, especially those involving international vendors.

    4. Streamlines VAT Reporting

    • Local businesses record both input and output VAT in their VAT returns, allowing for accurate and transparent reporting.
    • Often, if the buyer is eligible for input VAT recovery, the VAT under RCM may be fully reclaimable, resulting in no net tax liability.

    5. Supports Fair Market Practices

    • It levels the playing field for UAE-based businesses by ensuring that imports are taxed at the same rate as domestic supplies, thereby preventing unfair advantages for foreign suppliers.

    Application of Reverse Charge Mechanism in UAE VAT Law

    The reverse charge mechanism (RCM) in the UAE is applicable in specific scenarios where the recipient of goods or services — rather than the supplier — is required to account for and pay VAT to the government. Here’s when reverse charge is applicable under UAE VAT law:

    1. Import of Goods into the UAE

    When goods are imported from a supplier outside the UAE, the local recipient (importer) must apply the reverse charge mechanism and pay 5% VAT directly to the UAE Federal Tax Authority (FTA).

    2. Import of Services

    If a UAE-based business receives services from a foreign supplier (who has no place of residence in the UAE), it must apply reverse charge and account for VAT on that service.

    Example: Purchasing software licenses or consultancy services from abroad.

    3. Supply of Certain Goods or Services Within UAE (in specific cases)

    RCM also applies to specific domestic transactions involving:

    • Gold and diamonds
    • Hydrocarbons for resale
    • Crude or refined oil
    • Natural gas or energy

    In these cases, VAT responsibility is shifted from the supplier to the registered buyer (if both are VAT registered).

    4. Supply Between Designated Zones

    If goods move between designated free zones and certain conditions aren’t met, reverse charges may apply to ensure proper VAT treatment.

    5. Supply of Electronic Services

    Suppose a non-resident supplier provides electronic or digital services (such as software, streaming, or cloud hosting) to a UAE-based business or end-user. In that case, VAT must be applied by the recipient under the reverse charge mechanism.

    6. Agency Transactions (In Some Cases)

    If an agent acts on behalf of a non-resident and supplies goods or services to a UAE resident, RCM may apply, depending on the contractual terms and structure.

    What is the Purpose of VAT Reverse Charge Mechanism?

    The VAT Reverse Charge Mechanism is implemented to guarantee the collection of VAT on the supply of goods or services when the supplier is not a taxable person, and the supply occurs within the UAE. This concept designates the recipient or buyer as a party making taxable supplies to themselves, making them responsible for remitting VAT to the government.

    How Does the Reverse Charge Mechanism on Services Work?

    The reverse charge mechanism on services is a VAT concept that shifts the responsibility of tax payment from the service provider to the recipient. This mechanism is particularly relevant in cross-border transactions where the supplier is based outside the UAE and the recipient is a UAE-registered business.

    Under the reverse charge mechanism in UAE VAT, when a foreign supplier provides services to a UAE-based company, the local business must account for VAT as if it had supplied the service itself. This means the UAE recipient reports both the input and output VAT in their VAT return, resulting in no net VAT liability, provided the service is for business purposes and input VAT is recoverable.

    Example of VAT reverse charge mechanism UAE

    An Italian company, XYZ, dispatched goods valued at AED 8,500.0 to ABC, a VAT-registered entity in the UAE. As this constitutes a taxable supply of goods, VAT must be addressed. Since the goods were imported from Italy, XYZ does not impose VAT on ABC, as it is not registered in the UAE. ABC pays only the goods’ cost, with the VAT liability settled directly with the government.

    During VAT return filing, ABC asserts the 5% VAT-liable amount as input tax, offsetting it against the output tax liability. The reverse charge mechanism UAE VAT simply shifts the responsibility to pay VAT from the supplier (ABC) to the recipient (XYZ).

    What are the Requirements for Reverse Charge Mechanism?

    To apply the reverse charge mechanism UAE VAT, specific requirements must be met:

    1. Recipient Must Be VAT-Registered in the UAE: Only businesses registered under the UAE VAT regime are eligible to apply for the reverse charge.
    2. Supplier Must Be Outside the UAE: The service provider should not have a fixed place of establishment or residency in the UAE.
    3. Import of Services Must Be for Business Use: The services acquired must be used for taxable business activities in the UAE.
    4. Proper Invoicing and Record-Keeping: The UAE recipient must maintain appropriate records of the imported services and account for the VAT accordingly in their tax filings.
    5. No VAT Charged by Supplier: The foreign service provider should not include VAT on the invoice, as the responsibility for VAT payment shifts to the UAE recipient.
    6. Compliance with Article 48 of the UAE VAT Decree-Law: This article outlines the legal basis for applying the reverse charge mechanism in the UAE.

    In summary, the reverse charge mechanism UAE VAT simplifies compliance for international service transactions by placing the onus on the recipient to report and pay VAT. It ensures that UAE businesses are taxed fairly on imported services, aligning with the principles of local VAT regulations.

    What conditions must be met for the reverse charge mechanism?

    Below are the conditions that must be met for the reverse charge mechanism, UAE VAT:

    1. The recipient of the goods or services must be VAT registered.
    2. Every registered business owner is obligated to maintain accurate records of supplies subject to reverse charge.
    3. Invoices, receipt vouchers, and refund vouchers must explicitly indicate whether the tax payable for a specific transaction is through reverse charge.

    Why Engage a Trusted Tax Firm for Handling Reverse Charge Mechanism Transactions?

    Engaging a reputable tax firm is advisable to ensure accurate and successful handling of transactions subject to the reverse charge mechanism of UAE VAT. This involves organising and collecting import records, maintaining precise VAT filing for such transactions, and correctly claiming VAT using the appropriate forms.

    Our in-house FTA-registered tax agents are highly skilled and ready to assist you in every aspect.

    Feel free to contact us:
    📞 Call: +(971) 44081900
    💬 WhatsApp: +(971) 508912062
    📧 Email: info@shuraatax.com

  • VAT on Transportation Services in UAE

    VAT on Transportation Services in UAE

    As you may know, VAT is a consumption tax that is levied on goods and services at each stage of production and distribution. It is an important source of revenue for governments around the world, including the UAE. Within the framework, the significance is particularly important in transportation services. As the UAE continues to evolve economically, understanding the complexities of VAT on transportation services in UAE becomes essential for businesses operating in this sector.

    But fear not, we’ll break down the essentials of transportation VAT in UAE in a way that’s clear and easy to digest, so you can keep your finances on track and enjoy your journeys without any bumps in the road.

    What is VAT in the UAE?

    Value Added Tax (VAT) was introduced in the UAE on January 1st, 2018, as a new source of government revenue and diversification from oil dependence. It’s a consumption tax levied at each stage of the supply chain, ultimately borne by the final consumer. 

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

    Businesses whose taxable supplies and imports exceed AED 375,000 in the last 12 months are mandatory to register for VAT. Voluntary registration is possible for businesses exceeding AED 187,500. 

    Registered businesses must file VAT returns electronically every tax period (usually monthly or quarterly). 

    Applicability of VAT on Different Goods and Services in UAE

    • Standard rate (5%): Applies to most goods and services, including electronics, clothing, restaurants, hotels, and transportation.
    • Zero rate (0%): Applies to specific goods and services, such as exports outside the GCC, international transportation, certain medical and educational services, and the first supply of residential property.
    • Exempt: Certain goods and services are completely exempt from VAT, such as local public transport, basic foodstuffs, and financial services. 

    Role of Federal Tax Authority (FTA)

    The Federal Tax Authority (FTA) is the government agency responsible for administering, collecting, and enforcing federal taxes in the UAE. This includes Value Added Tax (VAT), excise taxes, and corporate income tax.

    The FTA is responsible for administering the VAT system in the UAE. The FTA issues regulations and guidance on VAT compliance and also enforces it through audits and penalties.

    VAT Rates and Exemptions for Transportation Services

    The UAE’s VAT system applies to various sectors, including transportation. However, there are specific rates and exemptions for different types of transportation services, making it crucial to understand the nuances to avoid any compliance issues.

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

    However, there are some specific exemptions for VAT on transportation in UAE:

    Domestic passenger transportation

    Any transportation of passengers within the UAE, by land, water, or air, is exempt from VAT. This includes taxis, buses, trains, trams, ferries, and similar modes of transport.

    International transportation

    • International passenger and goods transportation, including intra-GCC (Gulf Cooperation Council) travel, is zero-rated. This means the VAT rate is 0%, but businesses involved must still comply with certain VAT reporting requirements.
    • Supply of means of transport (air, sea, or land) for commercial transport of goods and passengers (over 10 people) is also zero-rated. This includes the leasing or chartering of airplanes, ships, and trucks for commercial use.
    • Goods and services related to these means of transport and to the transportation of goods and passengers are also zero-rated. This could include maintenance and repair services for vehicles used in international transport, catering services for passengers on board, and ground handling services for airplanes.

    Local passenger transport services for pleasure trips

    Not exempt from VAT and are subject to the standard 5% rate. This could apply to tourist cruises or private jet charters within the UAE.

    International passenger transport services by aircraft that constitute “international carriage”

    Not exempt and are subject to the standard 0% rate. This could apply to flights that originate or terminate outside the UAE even if they have a stopover within the country.

    Import of vehicles

    Subject to the standard 5% VAT rate.

    Free zones

    Some free zones in the UAE have special VAT regulations, so it’s important to check the specific rules for the relevant free zone.

    Zero-rating vs. Exemption Transportation VAT in UAE

    The key difference between zero-rating and exemption in the context of VAT on transportation services in the UAE lies in whether the business can claim input tax refunds. 

    Zero-rating

    While there is no actual tax charge, businesses still need to: 

    • Issue proper tax invoices with a 0% VAT rate. 
    • Maintain records of zero-rated supplies. 
    • File VAT returns. 

    Businesses can claim back the VAT paid on expenses incurred while providing zero-rated services. This helps reduce their overall tax burden. 

    Exemption

    No VAT is charged. The transaction is completely outside the scope of VAT.

    Businesses cannot claim back any VAT paid on expenses related to exempt supplies. This can disadvantage businesses with high input costs.

    Transportation VAT Implications for Businesses and Individuals

    The implications of VAT on transportation services in the UAE differ for businesses and individuals, depending on the specific type of service and its treatment under the VAT law. Here are some of the key implications: 

    • Domestic passenger transport, including taxis, buses, and trains, is exempt from VAT. This simplifies compliance for businesses operating in this sector. 
    • Flights, airfares, etc., are subject to the zero-rating benefit, potentially leading to lower costs compared to standard VAT rates. 
    • The zero-rating incentivizes international travel to the UAE, benefiting airlines, hotels, and tourist attractions. 
    • Businesses involved in zero-rated services can claim VAT paid on related expenses, improving cash flow. 
    • Zero-rated transactions still require proper tax invoices, record-keeping, and VAT return filing. 
    • Businesses can choose to absorb the VAT cost, pass it on to customers, or adjust pricing based on specific services. 
    • Some individuals may benefit from claiming input tax refunds on travel expenses related to their business activities. 

    Tax Matters Made Simple with Shuraa

    The introduction of VAT in the UAE has brought a new layer of complexity to the transportation sector. And, as the UAE continues to evolve economically, staying informed about tax regulations becomes not just a choice but a strategic necessity for businesses. 

    In this ever-changing tax landscape, seeking professional guidance becomes essential, and that’s where Shuraa Tax steps in. We, at Shuraa Tax, are more than just a team of knowledgeable and qualified accountants, auditors, and tax advisors in Dubai, UAE. Our mission is to assist businesses in simplifying their taxation and financial management needs. 

    Call us at +971508912062. You can also drop us an email at info@shuraatax.com and get your queries answered in no time. Let’s simplify taxation together!

  • Corporate Tax Registration in UAE

    Corporate Tax Registration in UAE

    The introduction of corporate tax in the UAE is scheduled for June 1, 2023. According to the law, individuals and businesses subject to taxation will face a 9% corporate tax from their initial fiscal year starting on or after June 1, 2023. They must acquire a corporate tax registration number.

    Since the initial announcement, businesses and tax experts have extensively deliberated on this development. This move positions the UAE as the fourth GCC nation to implement a federal business tax.

    Incorporating a corporate tax registration number aligns with the UAE’s commitment to enhancing its status as a premier global hub for commerce and investment, furthering its strategic growth and transformation goals. Additionally, corporate tax deters unfavourable tax practices and ensures compliance with international standards for tax transparency.

    Corporate Tax Registration UAE

    As per FTA’s Federal Decree Law 47, every taxable entity, including Free Zone Persons, must register for Corporate Tax and obtain a Registration Number. 

    • The Federal Tax Authority explicitly requires exempt persons to register for Corporate Tax. 
    • Taxable persons must submit corporate tax returns within nine months of the end of the specified tax period. 
    • This deadline covers settling all Corporate Taxes owed for the respective Tax Period covered by the filed return. 
    • In cases of exclusion permitted by the Minister, a Taxable Person must adhere to a specific timeline and format to register for Corporate Tax with the Federal Tax Authority. 
    • The Authority mandates that Taxable Persons or Independent Partnerships register for Corporate Tax and acquire the Tax Registration Number. 
    • Corporate Tax registration with the Tax Authority should be promptly completed when an individual becomes a Taxable Person. 
    • Upon successful registration, entities are subject to a standard Corporate Tax rate of 9% on taxable income exceeding AED 375,000, with a 0% charge on taxable income up to AED 375,000. 

    How to register corporate tax in UAE?

    • The Federal Tax Authority has introduced a pre-registration process for corporate tax on the EmaraTax platform.
    • EmaraTax is an online portal consolidating tax-related tasks, including registrations, returns, refunds, deregistrations, and payments.
    • The platform’s user-friendly interface facilitates easy VAT payments and corporate tax management. 
    • To get started, individuals can create an account on EmaraTax or migrate their existing FTA Account to the platform.
    • Successful registration for corporate tax requires the submission of all necessary documents as outlined in the UAE corporate tax regulations.
    • Utilising the EmaraTax Login guide simplifies the process of creating an account or transitioning an FTA Account, ensuring a smooth registration experience for corporate tax in the UAE. 

    Eligibility for Corporate Tax Registration in UAE and Applicable Rates

    Businesses in the UAE are required to register for corporate tax, which is imposed on taxable income at the following rates:

    • A corporate tax rate of 0% is applicable to taxable income up to AED 375,000, and this rate applies to all qualifying income generated by the person in the free zone.
    • A 9% corporate tax rate is imposed on taxable income surpassing AED 375,000, and it applies to all non-qualifying income generated by the individual in the free zone.
    • Multinational corporations falling under OECD Base Erosion and Profit-Sharing laws within Pillar 2 of the BEPS 2.0 framework, with combined worldwide revenues exceeding AED 3.15 billion, the Ministry of Finance announced that the UAE will not implement Pillar Two rules before 2025.

    Essential Documentation for UAE Corporate Tax Registration

    For Corporate Tax registration in the UAE, businesses must provide specific documents. The entire process is online, and the required documents include:

    • Copy of the valid Trade License.
    • Passport copies of the owners/partners/shareholders associated with the license (valid and unexpired).
    • Emirates ID copies of the owners/partners/shareholders holding the license (valid and unexpired).
    • Memorandum of Association (MOA) or Article of Association (AOA).
    • Contact details of the person concerned, including mobile number and email address.
    • Comprehensive company contact details, encompassing the complete address and P.O. Box.
    • Information specifying the Corporate Tax Period.

    Exempt and Taxable Persons for UAE Corporate Tax

    Given their significance and contribution to the social fabric and economy of the UAE, several types of companies or organisations are exempt from corporate tax. So, these are referred to as Exempt Persons and consist of:

    Automatically Exempted  Government entities Government-controlled entities specified by the cabinet decisions  
    Exempted if notified to the Ministry of Finance (subject to certain conditions)  Extractive Business Non-Extractive Natural Resource Business  
    Exempt if listed in a cabinet decision  Qualifying Public Benefit Entities (PBE)  
    Exempt if applied to and approved by the Federal Tax Authority (subject to certain conditions)  Public or private pension and social security funds. Qualifying Investment Funds Wholly owned & controlled UAE subsidiaries of a government entity  

    Government entities, government-controlled entities, and extractive and non-extractive natural resource businesses may be exempt from corporate tax filing, compliance, and registration requirements unless involved in taxable activities per the Corporate Tax Law.

    Exclusions from Corporate Tax: What Falls Outside the Corporate Tax Scope?

    • Individual Income Exemption:

    Corporate tax does not apply to individual income unassociated with a trade or business in the UAE. This includes income from employment such as salary, real estate, interest income, share investments, and other personal income sources. 

    • Foreign Investors: 

    Foreign investors not engaged in business activities within the UAE are exempt from corporate tax obligations.

    • Free Zone Businesses:

    Businesses operating within free zones, provided they adhere to all regulatory criteria, will maintain corporate tax advantages.

    • Capital Gains and Dividends:

    Corporate tax does not apply to capital gains or dividends earned by UAE corporations or individuals from qualifying shareholdings.

    • Intragroup Transactions:

    Intragroup transactions meeting the criteria for tax grouping are not subject to corporate tax.

    Understanding the Corporate Tax registration in UAE: Rates and Qualifications

    • Corporate Tax Rate Overview: 

       Enterprises in the UAE must pay a fixed percentage of their net profit as corporation tax if the taxable profit (net) surpasses AED 375,000. 

    • Corporate Tax Rates for UAE Businesses and Taxable Persons: 

       – 0% for taxable income up to AED 375,000. 

       – 9% for taxable income exceeding AED 375,000. 

    • Corporate Tax Rates for Entities in Qualifying Free Zones: 

       – 0% on qualifying income. 

       – 9% on income other than qualifying income. 

    • Qualifying Free Zone Person’s Net Profit: 

      The profit earned by a Qualifying Free Zone Person from international or UAE Free zone business is labelled as “Qualifying Income.”

    The Importance of Corporate Tax Assessment Before Registration

    Before registering for corporate tax, it’s vital to assess the risks thoroughly and legal factors related to the business, pre- and post-implementation.This approach ensures compliance with the country’s tax regime. Failure to properly assess may lead to corporate tax fines and penalties. 

    The assessment before corporate tax registration encompasses three key components: impact assessment, document assessment, and tax compliance assessment. Consider engaging professional corporate tax consultants or specialized firms for high-quality corporate tax assessment services.

    Empower Your Business with Shuraa Tax

    Shuraa Tax offers top-notch corporate tax services, accounting solutions, and audit services to help your business navigate everyday challenges, such as navigating corporate tax laws and transfer pricing regulations, addressing compliance issues, managing resource constraints, and enhancing accounting system compliance. For detailed information on UAE Corporate Tax Registration, contact Shuraa Tax Consultants & Accountants. Contact us via phone or text at +971 508912062 or email info@shuraatax.com.

  • Small Business Relief from the UAE Corporate Tax

    Small Business Relief from the UAE Corporate Tax

    The United Arab Emirates (UAE) has long been a haven for entrepreneurs and businesses seeking a favorable tax environment. As a result, the UAE Ministry of Finance introduced Ministerial Decision No. 73 of 2023 on April 3rd, setting the conditions for small businesses to claim Small Business Relief UAE corporate tax under the new Corporate Tax Law.

    This ministerial decision aims to further promote UAE as the appealing destination for business growth and investment.

    Let’s understand more about the new regime for corporate tax Law. Also, discuss how it going to affect the small businesses in UAE.

    What is UAE Corporate Tax?

    UAE Corporate Tax will be calculated on the taxable adjusted net profit of a business, which is the net profit after deducting all allowable expenses. Allowable expenses include the cost of goods sold, operating expenses, and net interest expense up to 30% of EBTDA.

    The Federal Tax Authority (FTA) will require businesses to file an annual corporate tax return. Therefore, the return will need to include the business’s taxable profits and any other information required by the FTA.

    A Taxable Person must also settle the Corporate Tax Payable within (9) nine months from the end of the relevant Tax Period, or by such other date as determined by the Authority.

    Corporate Tax Rates Under the Corporate Tax Law

    In December 2022, UAE introduced its new corporate tax regime through Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses.

    This law, set to take effect from June 1, 2023, brings with it a headline tax rate of 9% for accounting periods beginning on or after this date. While this marks a shift toward taxation, it remains a competitive rate on the global stage.

    The UAE Corporate Tax rate will be 9% on taxable income above AED 375,000. There will be a 0% tax rate on taxable income up to AED 375,000.

    To calculate UAE Corporate Tax, businesses will need to start by determining their taxable income. Subsequently, the total income is reduced by subtracting all allowable deductions. These deductions encompass various items such as the cost of goods sold, operating expenses, and depreciation.

    Here is an example of how UAE Corporate Tax would work:

    A company has total income of AED 1 million for the year. The company’s allowable deductions are AED 500,000. Therefore, the company’s taxable income is AED 500,000.

    The company’s corporate tax liability is calculated as follows:

    The first 375,000 will be taxed at 0% and the rest of the amount will be taxed at 9 %.

    1. 375,000 * 0% = 0

    2. 500,000 – 375,000 = 125,000 *.09 = 11,250

    The company will need to pay its corporate tax liability of AED 11,250.

    Eligibility and Thresholds for Corporate Tax Rates

    Ministerial Decision No. 73 of 2023 clarifies the eligibility criteria for Small Business Relief. Businesses with an annual revenue below AED 3 million (approximately USD 817,000) will qualify for this exemption.

    Importantly, this threshold applies to each tax period, including both the relevant tax period and previous tax periods. Once a business’s revenue exceeds this threshold, the Small Business Relief will no longer be available.

    It’s worth noting that businesses availing of this relief can still carry forward incurred tax losses. They can also disallow net interest expenditure from these tax periods for use in future tax periods, provided they elect not to apply for Small Business Relief for the UAE corporate tax.

    However, it’s essential to note that the Small Business Relief exemption does not apply to Qualifying Free Zone companies or members of Multinational Enterprises (MNEs) with consolidated group revenues exceeding AED 3.15 billion. These entities will follow a different tax regime.

    What is the Purpose of the Small Business Relief UAE Corporate Tax?

    To support small businesses and nurture entrepreneurship, the Corporate Tax Law provides for a Small Business Relief exemption. This provision allows small businesses that qualify as Resident Persons to be treated as having no taxable income for a specific tax period.

    The intent behind this relief is clear – to ease the tax burden on small enterprises, encourage their growth, and stimulate economic activity.

    Opportunities for Entrepreneurs to Establish a Business in the UAE

    With the introduction of Small Business Relief and a competitive corporate tax rate, the UAE continues to be an attractive destination for entrepreneurs and businesses. Moreover, here are some opportunities and advantages for those looking to establish a business in the UAE:

    1. Tax Incentives: Small businesses can take advantage of the Small Business Relief to reduce their tax burden, allowing for more flexible financial planning and growth strategies.
    2. Stability and Infrastructure: The UAE offers a stable political environment, world-class infrastructure, and a strategic location connecting East and West, making it an ideal hub for international business operations.
    3. Global Connectivity: The UAE’s advanced transportation and communication networks provide easy access to global markets, facilitating international trade and expansion. Furthermore, this strategic infrastructure positions businesses for seamless connectivity and growth on the global stage.
    4. Diverse Economy: The UAE’s diverse economy spans various sectors, from finance and technology to tourism and logistics, offering a wide range of business opportunities. Additionally, this economic diversity provides entrepreneurs with an abundance of options for investment and growth.
    5. Pro-Business Environment: The government’s commitment to promoting a pro-business environment is evident in its continuous efforts to streamline regulations and improve ease of doing business.

    Streamline Your Taxation with Shuraa

    The UAE’s introduction of Small Business Relief for the corporate tax marks a pivotal moment for entrepreneurs and small enterprises seeking opportunities in establishing business in the UAE. Furthermore, this initiative opens new avenues for growth and competitiveness in the local market.

    However, the UAE taxation process might be a little overwhelming for entrepreneurs. That’s where Shuraa comes in!

    To seize the advantages presented by Small Business Relief UAE corporate tax, businesses can benefit from the expertise of professionals like Shuraa Tax & Accounting Services.

    As a team of knowledgeable and qualified accountants, auditors, and tax advisors in Dubai, UAE, Shuraa offers comprehensive taxation services, including UAE VAT, tax management, and accounting. Moreover, we stand ready to assist businesses in simplifying their taxation and financial management needs.

  • Company Liquidation in Dubai: Everything you need to know

    Company Liquidation in Dubai: Everything you need to know

    Company liquidation in Dubai refers to the process of shutting down a business and ceasing all operations. A company liquidation may occur when a corporation is in business loss, payment defaults or when the shareholders decide to shut down operations voluntarily.

    During business liquidation, all the assets of the organization are distributed to owners and creditors based on the hierarchy of claims. The process of winding down a business is termed as liquidation, and the individual or entity responsible for overseeing this process is referred to as a liquidator. The company’s management appoints the liquidator.

    Shuraa Tax Consultancy provides Dubai mainland and free zone enterprises with company dissolution services. We offer company liquidation services to both LLCs and individual proprietorships.

    Company Liquidation Types

    In Dubai, there are two types of corporation liquidation:

    Company voluntary liquidation

    If the firm does not have enough money to run its operations or fulfil its expenses, such as supplier’s bills and salaries, it consistently loses money. In that circumstance, enterprises will seek voluntary company liquidation since they lack the finances to remain competitive in the UAE market.

    Mandatory company liquidation

    If a firm violates the authorities’ rules and regulations or commits a crime such as fraud or any other major offence or bankruptcy. The government or relevant authority will promptly shutter the entity, and as per the court’s ruling, compulsory company liquidation becomes necessary.

    How to Liquidate a Business in Dubai and the UAE

    The first step in de-registering a corporation is to appoint a liquidation firm. Only authorised liquidators may initiate the liquidation procedure, as government legislation defines. The organisation that provides company liquidation services assists in the closure of the company’s operations in accordance with UAE company laws. It is best to appoint a listed liquidator to avoid penalties from local authorities in the UAE. 

    Liquidation of a Limited Liability Company (LLC) in the UAE

    The following major stages are involved in dissolving/winding up an LLC Company:

    • BOD meeting: Minutes of a board of directors meeting declaring the reason for liquidation, like the company’s insolvency in case of mandatory liquidation and appointment of a regulated liquidator. For certain business structures notarised cancellation agreement is needed.
    • Official liquidator’s appointment letter: A letter from the registered liquidator confirming acceptance of the responsibility to liquidate the company.
    • Liquidation application: To secure a company liquidation certificate, it is essential to submit a liquidation form and the required fees to the Department of Economic Development or the relevant licensing authority.
    • Publication in the newspaper: To announce the liquidation of a corporation, place an advertisement in a local Arabic newspaper.
    • Notice period: The licensing authority will provide a 45-day grace period to creditors or clients with financial claims against the company.
    • Visa Cancellation: Cancel all employees’ and partners’ visas and seek NOC from the Ministries of Labour, Immigration, DEWA, and Etisalat/Du 
    • Report of the Final Liquidator: after all cancelations the liquidator will provide the final company audit report as well as a letter noting that no claims have been received from third parties/clients/creditors during the 45-day advertising period.
    • DED will issue a final company liquidation certificate after all of the documentation have been submitted.

    Our best liquidators in Dubai can provide further information on how to close an LLC or a Free Zone Company in the UAE in accordance with UAE Commercial Law.

    Liquidation of a Free Zone Company (FZE) in the UAE

    Almost every free zone has a unique mechanism for company liquidation. The following are the most typical and general procedures for de-registration of a Free Zone Company in the UAE:

    •  BOD meetings: Minutes of a meeting of the board of directors declaring reason of liquidation like the company’s insolvency; In case of mandatory liquidation and appointment of a regulated liquidator. Official liquidator’s appointment letter: A letter from the registered liquidator confirming acceptance of the responsibility to liquidate the company.
    • Liquidation application: To obtain the company liquidation certificate, the liquidation form and fees must be submitted to the relevant free zone authority.
    • : Notice requirement may differ from free zone to free zone.
    • Clearance certificates: You should obtain it from different authorities such as KHDA, RERA (if applicable), and service providers like FZ, DEWA, SEWA, Etisalat, and banks as applicable.
    • Cancellation of Visas: Cancel all employees’ and partners’ visas and receive NOC from the Ministry of Labour, Ministry of Immigration
    • Report of the Final Liquidator: The liquidator will provide the final company audit report as well as a letter noting that no claims have been received from third parties/clients/creditors during the 45-day advertising period.
    • Final Liquidation Certificate: Once all paperwork and liquidation report has been submitted, the Free Zone Authority will issue a final company liquidation Certificate.

    Although, We provide corporation liquidation services to all UAE free zones.

    Services for Business Liquidation in the UAE

    In the UAE, business liquidation is when a company ends its operations and is forced to close when it can no longer sustain its services. This could happen for several reasons. 

    The company’s liabilities may much exceed its assets, putting it on the verge of bankruptcy. If the company cannot continue to operate, it will be closed. A firm’s liquidation may also be elective if the management has opted to close it down for reasons known to them. After liquidation, the company uses all its assets to pay off its debts. After covering liabilities and expenses, any surplus assets are sold, and the proceeds are distributed among shareholders.

    Documents Required for Dubai Company Liquidation

    So, According to the Dubai government, various types of papers must be given for the liquidation procedure. For the liquidation of a company in Dubai, the following documents are necessary:

    • A duplicate of the licence.
    • Copy of the Memorandum of Association (MOA), as amended.
    • If applicable, a power of attorney.
    • Copies of the passports belonging to all shareholders.
    • A copy of your Emirates identification.
    • Shareholders’ resolution.
    • Form for requesting de-registration.
    • NOC from services providers like DEWA, Etisalat / Du 
    • Bank account closure letter
    • NOC from authority like RERA, KHDA in case of regulated business

    Why is company liquidation necessary? 

    The ultimate option for any business team is to liquidate the company. So, this means that the company can no longer operate and must close. A firm liquidation has various advantages, including:

    • Liquidation is an alternative for firms wishing to stop losing business and restart. This process ensures the proper allocation of the organization’s assets. During liquidation, the company first uses its assets to clear its outstanding debts. Any surplus funds are then distributed among the shareholders.

    Why Choose Shuraa Tax Consultants for Company Liquidation in Dubai?

    The company liquidation procedure can be time-consuming and costly because corporations must coordinate with a variety of external parties and authorities to complete everything on time. So, any missing step or document can result in extra delays and issues.

    With the introduction of Value Added Tax (VAT), Economic Substance Regulations (ESR), and Ultimate Beneficial Ownership (UBO) rules in recent years, the company liquidation process in the UAE has also become more complex, requiring companies to approach the winding-up process with greater caution.

    Shuraa offers comprehensive corporate liquidation services for all types of UAE entities, including mainland and free zone companies. Our services cover the entire liquidation process, and we can also assist with specific aspects of the process according to the customer’s preferences and needs. Our liquidators can assist you at every level of the corporate liquidation procedure. For further information on our liquidation services, please contact Shuraa Tax Consultants Dubai. You can contact us by sending an email to info@shuraatax.com  or by giving us a call at +971 508912062.