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  • Voluntary VAT Registration in Dubai, UAE

    Voluntary VAT Registration in Dubai, UAE

    Every business entity in the United Arab Emirates (UAE) is not required to register for VAT. While some companies are compelled by the Federal Tax Authority to register for VAT, small firms, independent contractors, and freelancers that have not yet reached the statutory VAT registration threshold may choose not to do so. We’ll examine in detail the elements of voluntary VAT registration in Dubai that businesses should be aware of in this post. 

    What is Voluntary VAT Registration? 

    Voluntary VAT registration means a business chooses to register for VAT even if it’s not required by law. Generally, only businesses that earn more than a certain amount are required by law to register. But if your sales are below that level, you can still choose to register. Many small businesses do this because it makes them look more professional, helps them work with bigger companies, and lets them claim back the VAT they pay on things like rent, equipment, or supplies. It’s basically an optional step that can give your business some extra benefits before VAT registration becomes mandatory. 

    Voluntary VAT Registration in the UAE 

    In the UAE, the Federal Tax Authority (FTA) allows VAT voluntary registration UAE for businesses with taxable supplies or expenses exceeding AED 187,500 in the past 12 months or expected to exceed this amount in the next 30 days. This threshold is lower than the mandatory registration threshold of AED 375,000, giving small and growing businesses the option to register early. 

    In short, voluntary VAT registration is an optional but strategic move for small businesses in the UAE that want to stay compliant, claim input VAT, and build a professional reputation before hitting the mandatory VAT registration limit.  

    Who Can Opt for Voluntary VAT Registration in the UAE? 

    To apply for voluntary VAT registration UAE, your business must meet the conditions outlined by the Federal Tax Authority (FTA). This option is designed for small companies and startups that are not yet required to register but want the benefits of being VAT-registered. 

    • Turnover between AED 187,500 and AED 375,000: If your annual taxable supplies fall within this range, you can register voluntarily rather than wait for mandatory registration. 
    • Past or future threshold trigger: You’re eligible if you crossed AED 187,500 in the past 12 months or you expect to reach it within the next 30 days. 
    • Startups with high expenses: Even if your business has no sales revenue yet, you can register if your taxable expenses exceed AED 187,500. This enables you to recover input VAT on costs incurred during your setup phase. 

    In essence, voluntary VAT registration UAE allows growing companies to claim tax benefits early, establish compliance, and position themselves for smooth expansion before hitting the mandatory VAT threshold. 

    Documents for Voluntary VAT Registration in the UAE 

    If you’re planning to register for VAT in the UAE voluntarily, here’s a basic of the required documents, based on the official guidelines from the Federal Tax Authority (FTA) and reputable sources: 

    • Valid trade license(s) 
    • Passport and Emirates ID of the authorised signatory(s) 
    • Proof of authorisation for the signatory(s) 
    • Contact information (e.g., business email, phone, and address) 
    • Bank letter confirming bank account details 

    What is the Process of Voluntary VAT Registration in UAE? 

    Voluntary VAT registration in the UAE is available to businesses that do not meet the mandatory threshold but wish to register for VAT to claim input tax or enhance business credibility. Here’s a clear step-by-step guide to understanding how it works: 

    Step 1: Check the Voluntary VAT Registration Threshold UAE 

    Verify if your taxable turnover or taxable expenses exceed AED 187,500 in the last 12 months or are expected to exceed this limit in the next 30 days. This threshold is lower than the mandatory VAT registration threshold of AED 375,000. 

    Step 2: Prepare Required Documents 

    Gather the documents typically required for VAT voluntary registration UAE, such as: 

    • Valid trade license 
    • Passport and Emirates ID copies of owners/partners 
    • Proof of business activities (contracts, invoices, purchase orders) 
    • Financial statements or expense records showing eligibility 

    Step 3: Create an e-Services Account on the FTA Portal 

    Register on the Federal Tax Authority (FTA) e-Services portal. You’ll need to create a user account before applying for voluntary registration for VAT UAE. 

    Step 4: Submit the Voluntary VAT Registration Application 

    Log in to your FTA account and complete the online VAT registration form by: 

    • Providing business details and activity descriptions 
    • Uploading supporting documents 
    • Indicating turnover or expenses to justify voluntary VAT registration 

    Step 5: Await FTA Review and Approval 

    The FTA will review your application to confirm that you meet the voluntary VAT registration threshold in the UAE. If approved, you’ll receive a VAT Registration Certificate containing your Tax Registration Number (TRN). 

    Step 6: Start VAT Compliance 

    Once registered, your business must: 

    • Charge VAT on taxable supplies 
    • File VAT returns periodically 
    • Maintain proper accounting records to stay compliant with UAE VAT laws 

    Key Advantages of Voluntary VAT Registration 

    Below are the key benefits of voluntary VAT registration in the UAE 

    1. Input VAT Recovery & Potential Refunds 

    You can reclaim VAT paid on business purchases known as input VAT, which improves cash flow and reduces operational costs. If the input VAT exceeds the VAT on sales, you may receive a refund.  

    2. Boosts Business Credibility & Reputation 

    Being VAT-registered signals transparency and compliance, enhancing your image among customers, suppliers, investors, and partners. It positions you as a reliable and professional enterprise. 

    3. Competitive Edge & Market Access 

    VAT registration can make your business more attractive, especially to clients or government entities that prefer VAT-compliant suppliers. It can also help you bid for contracts that require VAT credentials.  

    4. Prepares Your Business for Growth 

    Voluntary registration equips you for smooth compliance once your turnover surpasses the mandatory threshold. It ensures you’re already structured for future scalability.  

    5. Improved Financial Discipline & Record-Keeping 

    VAT registration necessitates accurate bookkeeping and regular VAT return filings, which in turn advances better financial management and transparency. 

    6. Easier International Trade 

    If you export goods or services, VAT-registered businesses can benefit from zero-rating exports and reclaim VAT on imports, streamlining cross-border trade. 

    7. Avoid Penalties & Risks 

    Delaying registration may lead to hefty fines if you unexpectedly exceed the threshold. Voluntary registration helps you stay ahead and avoid such penalties. 

    8; Access to Government & Large Corporate Contracts 

    Many tenders favour businesses that are VAT-registered. Being compliant widens your opportunities in government and corporate procurement. 

    Responsibilities of Registering a Business for VAT Free in the UAE  

    If you have applied for optional VAT registration in the UAE and are accepted, you will assume the obligations of entities that have applied for mandatory VAT registration. In essence, this means that you will:  

    • Submit VAT returns  
    • File refunds for VAT (if any)  
    • Maintain records and accounts for all VAT transactions.  
    • Pay the FTA-required VAT liability on time  
    • Charge VAT in invoices as per the applicable VAT rate  
    • Comply with the demands of VAT-registered enterprises.  

    If your company has registered for VAT, you must abide by the duty to keep VAT records and submit them to the appropriate authorities.   

    Drawbacks of Voluntary Registering for VAT in Dubai  

    The price of the goods or services you supply may appear more expensive to the end user as a result of VAT charges in the invoice.   

    The fact that VAT-registered entities, also known as taxable entities, assume additional duties such as the ones listed above, is a significant drawback to voluntary VAT registration. This entails keeping all relevant VAT records, submitting VAT reports to the UAE FTA, and retaining all VAT receipts and invoices. You need to comply with in terms of administration and bookkeeping.  

    Exemption from VAT Registration 

    Businesses are not permitted to register under UAE VAT if the value of their supplies and imports is less than the voluntary registration level of AED 187,500. Additionally, companies that only produce zero-rated supplies are eligible for VAT registration exceptions.  

    VAT Registration Experts in Dubai 

    Having a partner to help you manage VAT is crucial if you’re considering registering for VAT, either legally or voluntarily.   

    It is pretty simple to register with VAT Registration UAE and to comply with all applicable laws and regulations. Even the filing of VAT returns and the accounting and bookkeeping for VAT are assisted by our experts. With decades of experience in the field and a group of knowledgeable, licensed tax agents in Dubai, you can be sure that you are working with dependable experts.   

    Are you considering seeking professional assistance?

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

    FAQs 

    Q1. Is VAT registration mandatory in the UAE? 

    VAT registration in the UAE becomes mandatory if your annual taxable turnover exceeds AED 375,000. Businesses below this limit can opt for voluntary VAT registration if their taxable supplies or expenses exceed the voluntary VAT registration threshold in UAE (AED 187,500). Voluntary registration for VAT UAE is beneficial for startups and SMEs to recover input VAT and enhance credibility with suppliers and clients. 

    Q2. Do zero-rated supplies count towards the VAT threshold? 

    Yes. Even if your business makes zero-rated supplies, their value is included when calculating your VAT registration threshold. If your taxable turnover (including zero-rated goods or services) exceeds AED 375,000, VAT registration becomes mandatory. If your turnover is between AED 187,500 and AED 375,000, you may apply for VAT voluntary registration UAE to reclaim input VAT. 

    Q3. Can I claim back all the VAT paid by my business? 

    You can reclaim VAT paid on business expenses, provided they are used to make taxable supplies (standard or zero-rated). However, VAT on certain expenses like entertainment, personal use items, or motor vehicles used for personal purposes cannot be reclaimed. Voluntary VAT registration UAE allows businesses below the mandatory threshold to recover eligible input VAT before crossing the higher turnover limit. 

    Q4. Can I cancel my VAT registration in the UAE? 

    Yes. VAT deregistration is permitted if: 

    Your business ceases making taxable supplies, or 

    • Your annual turnover falls below the voluntary VAT registration threshold in the UAE (AED 187,500). 
    • The deregistration process must be completed through the FTA (Federal Tax Authority) portal. Late deregistration may attract penalties. 

    Q5. What are taxable supplies as per the UAE VAT Law? 

    Taxable supplies include all goods and services made in the UAE that are subject to VAT at either 5% (standard-rated) or 0% (zero-rated). These include: 

    • Sales of goods and services within the UAE 
    • Imports of goods or services 
    • Specific zero-rated sectors, such as exports, healthcare, and education 

    Businesses engaged in taxable supplies should evaluate whether they meet the VAT voluntary registration UAE criteria if they have not yet crossed the mandatory threshold. 

    Q6. What is the voluntary VAT registration threshold UAE? 

    The voluntary VAT registration threshold UAE is AED 187,500. Suppose your taxable turnover or taxable expenses exceed this limit but are below the mandatory threshold of AED 375,000. In that case, you may apply for voluntary registration for VAT UAE to recover input VAT and improve compliance. 

    Q7. How long does it take to get VAT registered in the UAE? 

    Typically, VAT registration through the FTA portal takes around 20 business days, provided all documents are in order. Incomplete or incorrect information may delay approval. 

    Q8. What documents are required for voluntary VAT registration UAE? 

    Common documents include: 

    • Trade license 
    • Passport and Emirates ID of owners/partners 
    • Proof of taxable turnover or projected income 
    • Financial statements or invoices 
    • Bank account details 

    Q9. What happens if I fail to register for VAT on time? 

    Failure to register within the FTA deadline may result in administrative penalties of AED 10,000 or more. Businesses are advised to assess their VAT voluntary registration UAE eligibility early to avoid non-compliance. 

  • VAT For E-Commerce Businesses in UAE

    VAT For E-Commerce Businesses in UAE

    E-commerce in the UAE has been growing at lightning speed. Back in 2019, there were around 4.5 million online shoppers, and by the last year, this number jumped to 6.5 million (roughly a 20% increase). The retail sector itself is now worth about AED 306.6 billion. In 2024, the UAE’s e-commerce market reached AED 32.3 billion and is expected to cross AED 50.6 billion by 2029. A young, tech-savvy population, reliable internet, and fast delivery services are all driving this boom.

    But with this growth comes responsibility. Since January 1, 2018, the UAE has applied Value Added Tax (VAT) at a standard 5% rate, managed by the Federal Tax Authority (FTA). For e-commerce businesses, whether you sell products, digital services, or operate through marketplaces, it’s essential to know if there’s a VAT for e-commerce businesses in the UAE.

    This includes when you need to register, how to charge VAT, and how to handle cross-border sales.

    Staying VAT compliant protects your business from penalties, builds customer trust, and shows that you’re running a professional setup.

    VAT for E-commerce Businesses in the UAE

    E-commerce businesses in the UAE are fully covered under VAT regulations. Doesn’t matter if you’re selling physical products or digital services; VAT applies in most cases. Therefore, it’s important to know how it works in different situations.

    1. Online sales to UAE residents (B2C transactions)

    If you sell goods or services directly to individual customers in the UAE, you must charge the standard 5% VAT at checkout (once your business is registered for VAT). This applies to everything from clothing and electronics to subscriptions and e-learning platforms.

    2. Online sales to businesses (B2B transactions)

    For B2B e-commerce transactions within the UAE, the standard 5% VAT rate generally applies. The business selling the goods or services charges VAT to the business customer. The purchasing business, if it is VAT-registered, can typically reclaim this VAT as input tax in its own VAT return.

    The key difference in B2B transactions often comes into play in cross-border scenarios where the reverse charge mechanism may apply.

    3. Cross-border transactions (imports/exports)

    The VAT treatment for cross-border e-commerce depends on whether the transaction is an import or an export.

    • Imports into the UAE: Goods imported for sale online are subject to VAT at the point of import. The seller is responsible for accounting for this VAT, which may later be recovered if the goods are resold.
    • Exports outside the UAE: Sales to customers abroad are generally zero-rated, meaning VAT is not charged, but you must keep proper documentation to prove that the goods or services were exported.

    Who Needs to Register for VAT?

    Not every e-commerce business in the UAE has to register for VAT right away. It depends on your turnover (the total value of your taxable supplies and imports) in a 12-month period.

    1. Mandatory VAT Registration

    If your taxable turnover is AED 375,000 or more, you must register for VAT. This applies whether you’re an online store, marketplace seller, or even a freelancer running a digital service business.

    2. Voluntary VAT Registration

    If your turnover is AED 187,500 or more, you can choose to register voluntarily. This is useful for small e-commerce businesses that want to look more professional and be able to claim back VAT on business expenses.

    3. Marketplace Operators

    If you sell through online platforms or marketplaces, you should check whether VAT collection is your responsibility or handled by the platform. In most cases, the seller is responsible for VAT compliance, not the platform.

    4. Freelancers and Small Businesses

    Even if you’re just offering services online (like digital design, tutoring, or software subscriptions), the same VAT thresholds apply.

    VAT on E-commerce Transactions

    VAT applies differently depending on the type of product or service being sold online. Here’s a breakdown to make it simple:

    1. VAT on Sales of Goods Online:

    If you’re selling physical goods (like clothes, electronics, or home items) to customers in the UAE, you must charge 5% VAT at the point of sale. The same applies whether you’re selling through your own website, social media, or an online marketplace.

    2. VAT on Digital Services:

    Digital products and services are also taxable. This includes things like:

    • Online subscriptions (music, streaming platforms, etc.)
    • Software and mobile apps
    • Online courses and e-learning platforms
    • Digital consulting services
    • If your business offers these, you must add 5% VAT for UAE customers.

    VAT on Imported Goods Sold Online:

    When goods are imported into the UAE for online sale, VAT is charged at the point of import. The seller pays this VAT to customs but can often reclaim it later as input tax when filing returns. For the customer, the price they pay should already include the VAT.

    For Non-Registered Businesses: A business that is not VAT-registered must still pay the 5% VAT on the imported goods at customs before the goods are released. Since they are not VAT-registered, they cannot reclaim this tax.

    How VAT is Charged at Checkout:

    For e-commerce transactions within the UAE, VAT is usually added to the final bill at checkout. For example, if an item costs AED 100, the customer will pay AED 105 (including 5% VAT). Businesses must clearly show the VAT amount on the invoice or receipt to stay compliant.

    VAT Compliance Requirements for E-commerce Businesses

    Running an e-commerce business in the UAE means following certain VAT rules set by the Federal Tax Authority (FTA). Here’s what you need to keep in mind:

    VAT Registration:

    If your sales cross the mandatory threshold of AED 375,000, you must register for VAT. Registration is done online through the FTA portal.

    Issuing VAT-Compliant Invoices:

    Every sale must be supported by a proper VAT invoice. Invoices should clearly show:

    • Seller and buyer details
    • A unique invoice number
    • Item/service description

    Net price, VAT amount, and total price (including 5% VAT)

    Record Keeping:

    Keep detailed records of all sales, purchases, imports, and exports for at least 5 years (in some cases, 15 years for real estate). Proper bookkeeping helps in case of FTA audits.

    Filing VAT Returns:

    Most businesses need to file VAT returns quarterly (every 3 months). Returns must show total sales, VAT collected, and VAT paid on purchases (input VAT). Returns are submitted online through the FTA portal, and payment must be made before the deadline.

    Accounting for Cross-Border Sales:

    Ensure correct treatment for exports (usually zero-rated) and imports (VAT charged at customs). Keep proof of export to claim zero-rating.

    Note: VAT rules can change, especially for e-commerce and digital services. Regularly check FTA updates or work with a tax consultant to avoid mistakes.

    Penalties for Non-Compliance

    For e-commerce businesses, mistakes can quickly become costly. Here are some key penalties to be aware of:

    • Late VAT Registration: If you fail to register for VAT on time after crossing the mandatory threshold, the penalty can start from AED 10,000.
    • Late VAT Return Filing: Missing the VAT return deadline can result in penalties starting at AED 1,000 for the first time, and AED 2,000 for repeated delays within 24 months.
    • Late VAT Payments: If you don’t pay VAT on time, a percentage-based fine is applied (2% of unpaid tax immediately, 4% monthly, and up to 300% maximum).
    • Incorrect or Incomplete Records: Not keeping proper invoices, sales records, or import/export documents can lead to fines of AED 10,000 – AED 50,000, depending on the violation.

    How Shuraa Tax Can Help

    E-commerce is booming in the UAE, and following VAT rules is a big part of running a successful online business. Registering for VAT, VAT return filing on time, and keeping proper records not only helps you avoid fines but also shows customers that you run a trustworthy business.

    If you’re unsure where to start, don’t worry, you don’t have to do it alone. Shuraa Tax can guide you through the entire process, from VAT registration and compliance support to bookkeeping and VAT return filing. Reach out to Shuraa Tax today and let us make VAT simple for your business.

    Frequently Asked Questions

    1. Is VAT applicable to e-commerce businesses in the UAE?

    Yes. VAT for e-commerce business in the UAE applies just like traditional businesses. Most online sales and digital services are subject to 5% VAT.

    2. Do I need to charge VAT on digital services like subscriptions or e-learning?

    Yes, digital services are considered taxable supplies. If your business is VAT-registered and sells digital products to a customer in the UAE, you must charge the standard 5% VAT on the sale.

    3. Do freelancers or small online sellers need to register for VAT?

    Yes, if their turnover crosses AED 375,000. Below this, registration is voluntary but can still be beneficial.

    4. Do I need to charge VAT on online sales to customers in the UAE?

    Yes, VAT on online sales to UAE residents (B2C) is 5%, which must be added to the product or service price at checkout.

    5. How is VAT handled on imported goods sold online?

    A VAT-registered business pays the 5% VAT on imported goods at customs but can then reclaim this tax as input tax in its VAT return. The business then charges 5% VAT on the final sale to the customer.

  • UAE VAT Amendment Highlights w.e.f 1.1.2023

    UAE VAT Amendment Highlights w.e.f 1.1.2023

    The President of the UAE issued Federal Decree-Law No. 18 of 2022, amending the VAT Law. A new article on the Statute of Limitations is included in the VAT Law amendment, which also updates 25 other existing articles. On January 1, 2023, the revised provisions are supposed to go into effect. 

    It is noteworthy that various Articles of the VAT Law have been revised. Some of these will significantly affect how businesses are currently handling their VAT obligations. The addition of a new article on the statute of limitations, the deadline for the issuance of a tax credit note, the deadline for the issuance of an invoice for continuous supplies, the definition of hydrocarbons, the valuation of a deemed supply in the case of related parties, etc. are a few of these. 

    Although some amendments will not have a significant impact on the VAT positions previously adopted, they are included to add clarity. These amendments relate to wording changes, incorporating all relevant provisions in one place, etc., which are irrelevant to many businesses. 

    UAE VAT amendment highlights w.e.f 1st Jan 2023

    The following is a summary of some significant amendments and their significance for taxpayers to be aware of: 

    Definitions

    New definitions for Relevant Charitable Activity, Pure Hydrocarbons, Tax Evasion, Tax Audit, Tax Assessment, and Voluntary Disclosure were added to the new Decree-Law. 

    Supplies explicitly regarded as outside the scope of VAT

    A new clause has been added to Article 7 that states the Executive Regulations may specify any other supplies (aside from the provision of vouchers and the transfer of business). 

    VAT registration exemption

    Both registered and non-registered individuals are covered by Article 15’s exception to registration requirements. 

    Date of supply in special cases

    According to Article 26(1), one of the events used to determine the date of supply in special cases is the day one year has passed since the day the goods or services were provided. 

    Place of supply in special cases

    Article 30(8) now specifies that the location where transportation begins will serve as the location of supply of services related to transportation. 

    Place of residence of a principal

    According to Article 33, a principal’s residence is where the agent resides. The place of residence of the agent must be the same as the principal’s, according to the current VAT Law. 

    Value of supply

    Article 37 will now take precedence over Article 36, which deals with the specific anti-avoidance rule for the value of supply or import of goods and services between related parties (value of deemed supply). 

    Goods subject to zero-rate VAT

    Additional goods are listed in article 45 (clauses 4, 5, and 6) as being subject to zero-rate VAT. This covers the import of vehicles, the import of accessories for vehicles, and the import of rescue ships and planes. 

    Reverse charge

    Clause 3 of Article 48 states that Pure Hydrocarbons (defined in the new Decree-Law as “any kind of different pure combinations of a chemical equation made only of hydrogen and carbon”) are subject to the domestic reverse charge. 

    Recovery of Input VAT

    Two new clauses that outline the requirements for the taxable person to recover VAT paid or declared on the import of goods or services have been added to Article 55 regarding the recovery of input VAT. 

    Recovery of Input VAT by Government Entities and Charities

    Article 57 now mentions that government entities are permitted to recover Input VAT incurred for the performance of sovereign activities. Similarly, charitable organisations may claim input VAT paid for qualifying charitable activities. 

    Output VAT adjustment

    The scenario where the taxable person applies an incorrect tax treatment is now covered by the output VAT adjustment mentioned in Article 61(1). The taxable person should now issue a tax credit note to modify the output tax in such circumstances. 

    Timeframe for issuing a tax credit note

    Article 62(2) pertaining to the output VAT adjustment mechanism now includes a requirement that the taxable person issue a tax credit note within 14 days of the date that any of the occurrences listed in Article 61(1) occur. 

    Tax payment

    Under Article 65(4), a taxable person who issues a tax invoice with a VAT declaration or who receives money marked up as VAT is required to pay the VAT to the Federal Tax Authority (FTA). 

    Timeline for issuing a tax invoice

    According to Article 67(1), a tax invoice issued in accordance with Article 26 (date of continuous supply) must be issued no later than 14 days after the date of the supply. 

    Adding a New Article on the Statute of Limitations 

    Along with the changes, a new article (Article 79 bis) was also included in the VAT Law. This section is comparable to the one about the statute of limitations that was recently added to the Excise Tax Decree-Law. 

    The following topics are covered in the new article on statute of limitations: 

    •  If the FTA has given the taxable person a notice to be audited, the 5-year statute of limitations will not apply if the audit is finished within 4 years of the notice’s issuance date. 
    • The statute of limitations will be extended by one year if the taxable person makes a voluntary disclosure within five years of the conclusion of the applicable tax period. 
    • The taxable person cannot submit a voluntary disclosure after five years have passed since the conclusion of the pertinent tax period. 

    The article also states that these prolonged periods may be modified further through a separate Cabinet Decision. 

    Final Words 

    By the start date of January 1, 2023, taxpaying entities must review any changes to the VAT Decree-Law and ensure that they are prepared for implementation. This would entail a change in how VAT is applied for specific supplies (such as the supply of hydrocarbons and the importation of transportation equipment), the timing of the issuance of tax invoices and tax credit notes, and the practises for maintaining books and records for a longer period.

    Our in-house FTA registered tax agents are well-equipped and proficient to assist you in all necessary ways. All you need to do is get in touch with us on info@shuraatax.com or call us on +971 508912062.

  • Accounting Outsourcing Checklist for Startups

    Accounting Outsourcing Checklist for Startups

    Starting a business in Dubai or the UAE is a dream come true for many. And why not? The UAE is touted as one of the best places globally to start a business, all thanks to the advanced infrastructure, seamless connectivity to the rest of the world, access to the national and international market, high standards of living, and more. The list could go on and on.

    In fact, the International Monetary Fund (IMF) has recently revised its forecast for the UAE. According to the latest reports and revisions, the United Arab Emirate’s GDP is forecasted to grow at 5.1% this year. The earlier forecast predicted it to grow at 4.2%. But why are these figures so important? That’s because this is UAE’s highest growth in the past 7 years! That’s quite something, isn’t it? 

    Although the booming economy of the UAE entices thousands of entrepreneurs and businessmen – new and already established- you must take care of several things as a business owner. And one of them is accounting. 

    Typically, maintaining accounts and books is a tedious process. Not to forget the daunting tasks like filing returns and paying taxes. Unfortunately, one cannot simply let it be. You must be on top of your accounts and bookkeeping to ensure you have a viable financial plan for your business. 

    Although you could do it within the company, why not outsource it to an expert while you focus on other activities that directly impact your income? Want to know how? Keep reading. This blog will walk you through all you need to know about outsourcing your accounting.

    Why Must Startups Pay More Attention to Accounting?

    Any business’s survival depends on accurate bookkeeping and accounting, but you might need to keep more records as a startup. But Why? 

    Because your investors may need to see the records for evaluation. Furthermore, potential investors may need it to make an educated decision about investing in your business. Finally, a transparent and simple-to-read financial record will play a significant role in helping you get a loan if needed. 

    While you may manage accounting and bookkeeping in-house by hiring accountants and related individuals, outsourcing the job will give your team more time to proactively work on other productive activities. For instance, marketing, sales, customer retention, enhancing customer experience, product launches, and more.

    What Should You Do To Make Accounting and Bookkeeping Simple?

    1. Always Transact via a Bank 

    All of your commercial dealings should be done regularly through the bank. It is simple to keep track of spending when the transactions are being recorded. You can track inflows and outflows using your bank statement. You can use this to compute your taxes and file them. Follow practice of mentioning transaction descriptions during online banking.  

    2. Leverage Technology 

    Utilizing technology to simplify your company’s accounting procedures is a must-do. You can leverage software like Xero, Zoho, QuickBooks, and Tally for assistance in tracking and monitoring your financial actions. Additionally, you can use cloud-based applications. 

    They not only reduce the mundane nature of the job but also eliminate human error. Additionally, since the data is stored in the cloud, it is accessible from anywhere worldwide, making it flexible to work with. 

    3. Stick to a Schedule 

    Make a schedule for the computation and audit of taxes. Experts may also be recruited to perform tax audits and examine other paperwork, like certifications and bills. Furthermore, the financial checks should take place without prior notice. This allows you to check economic activity and ensure that there are no fraudulent actions within the company.

    Also, sticking to a schedule will help keep your books updated. The FTA can barge into your office at any moment for a check. As a result, you should be ready to give them your tax returns and other related documentation.

    4. Plan for the Future

    Any unclear circumstances could jeopardize the success of your business and significantly slow down sales, manufacturing, and other business operations. Getting ready for such events is absolutely essential. 

    Therefore, ensure to assess the dangers. You may want to set out an emergency fund to keep your company in operation for 3-6 months rather than investing everything into future projects. And for this, you must have a proper accounting process with complete financial analysis tools. 

    How To Choose an Outsourcing Partner?

    Deciding to outsource your accounting process is in itself a huge step. Another big step is to decide who to outsource it to because this is the decision that will make or break your accounting process. But worry not. 

    Here is a checklist to help you choose the best outsourcing partner for accounting – 

    1. They Fit Your Scope of Outsourcing 

    To determine whether a certain accounting firm or consultancy meets your scope, you will first have to list down all the tasks you want to outsource. Next, ask yourself – is this a part of my expertise? If not, it’s best to outsource it. 

    Then match it with the services your accounting partner is offering to you. Do these tasks fall under their area of expertise? If yes, they are likely to be a good fit. 

    2. They Are Highly Recommended

    Ask your friends and business competitors about the accounting firm they have partnered with. Discuss the firm you are planning to partner with. Collect as much information as you can about the prospective firm. You may even ask your prospective partner about their testimonials and the companies they are currently or have worked with. Contact these listed companies and discuss their experience. If there is consistency between the recommendations and reviews, they may be a good fit. 

    3. Ask Questions 

    Your accounting partner must be well-versed in accounting principles. Furthermore, they should know how to overcome complex accounting issues and loopholes. And to know about their expertise, it’s best to ask as many questions as possible. Following are some of the questions you can ask – 

    • Will you thoroughly reconcile payroll, sales tax, bank, and other items?
    • Do you accept customer records in any format?
    • Will you provide me with a thorough analysis to inspect the accounts?
    • Will you review the accounts to look for inaccurate income/expenditure calculations made by my clients? 
    • How do you safeguard data while adhering to rules?

    4. Check If They Are Using the Latest Technology and Infrastructure

    Looking at the outsourcing partner’s software, employment, and infrastructural skills is always a good idea. They must be able to find the resources required to complete your assignment. 

    Spending a couple of weeks with your partner could be beneficial to understand their work ethics and culture firsthand. Participate in their activities, attend staff meetings, and communicate with your wider team. 

    5. Know Your Service Provider 

    It’s vital to know your service provider in and out. Ensure you check the corporate profile, experience and qualification of the key personnel and whether they have experience in handling your industry’s financials. Finally, check if they are updated with the latest tax and legal compliances in the UAE. 

    Outsource Your Accounting to Shuraa 

    To summarize, it’s important to see whether your accounting outsourcing partner meets your needs, has a good reputation, is skilled and well-versed in the field, and is up to date with the latest practice. With Shuraa Tax Consultancy, you won’t have to worry about all this. 

    Our tax accountants are the best in the field and will meet all your needs. We are also well-equipped to ensure that your company is tax and accounts-compliant. Our in-house tax-registered tax agents will offer your overall support, including filing your VAT returns. All you need to do is reach out to us at info@shuraatax.com or call us at +971 508912062

  • UAE Tax Penalties: 2022 Guide with Latest Updates

    UAE Tax Penalties: 2022 Guide with Latest Updates

    Everyone knows that UAE used to follow a no-tax policy. However, the UAE government introduced Excise tax in 2017 and VAT in 2018. Ever since then, there has been a 5% VAT applicable to most goods and services. There are certain goods and services subject to a 0% rate or exemption from VAT. And just like any other country, you are entitled to pay the penalty if you delay the tax payment or violate any regulations.  

    Recently, the UAE government has made a few amendments to the Tax penalties. According to the new updates, each fine or penalty will be no less than AED 500 and can be no more than triple the tax value of the transaction in question. This blog will cover all the tax penalties with the latest updates and their benefits for taxpayers.  

    The UAE Tax Penalties with Latest Updates 

    Below mentioned is a detailed list of UAE tax penalties with the latest updates: 

    1. Fixed Penalties for Voluntary Disclosure  

    Trigger Old Amount New Amount 
    First Voluntary Disclosure AED 3,000 AED 1,000 
    Subsequent Voluntary Disclosure AED 5,000 AED 2,000 

    2. Late Payment Penalty for Under-Paid VAT as Per the Voluntary Disclosure or Tax Assessment 

    As per the new rules, taxpayers in the UAE will now be given up to 20 days to settle any unpaid or underpaid tax before any late payment tax penalties apply. The due dates for the calculation of the late payment penalty can be done this way: 

    1. 20 business days following the submission of a voluntary disclosure 

    2. 20 business days following the receipt of a Tax Assessment 

    Trigger Amount 
    Taxpayers fail to pay within the 20 days 2% 
    One Month from the Due Date 4% per month 
    CAP 300% 

    3. Variable penalty where a voluntary disclosure is submitted before the taxpayer is notified of an audit by the Federal Tax Authority (FTA) 

    As per the update, the penalty now ranges from 5% to 40%. However, that totally depends on when taxpayers submit the voluntary disclosure. 

    Year in which the error is disclosed New Amount Old Amount 
    Year 1 5% of the underpaid tax 5% of the underpaid tax 
    Year 2 10% of the underpaid tax 
    Year 3 20% of the underpaid tax 
    Year 4 30% of the underpaid tax 
    Year 5 or more 40% of the underpaid tax 
       

    4. Late payment penalty for failure to settle the stated VAT in the submitted VAT return 

    Trigger Old Amount New Amount 
    Day After Due Date 2% 2% 
    One Week After Due Date 4% 2% 
    One Month After Due Date  1% per day 4% per month 
    CAP 300% 300% 

    5. Variable penalty where a voluntary disclosure is submitted/tax assessment is received after the taxpayer is notified of an audit by the FTA 

    Here, the government has declared a significant increase in the penalties if the error is corrected after the taxpayer is notified of an audit. The previous penalty was 30% and 50% of the underpaid tax upon error discovered during an FTA audit. However, as per the new penalty, the taxpayer will now be charged 50% of the underpaid tax. Moreover, they will have to pay 4% of the underpaid tax per month from the due date of the VAT return till the payment of tax liability.

    Apart from these, the UAE government has extended the redetermination period of administrative penalties to 31st December 2022. Moreover, Non-UAE businesses can now claim a refund of VAT raised in the UAE under the business visitor refund scheme. This offers refunds to foreign businesses that do not have a place of establishment or a fixed establishment in the UAE, subject to the fulfillment of certain conditions. However, this refund is available only to foreign business visitors from an approved list of countries that provide the same reciprocal refunds. The minimum refund claim is AED 2,000 and can cover a period of twelve calendar months. 

    Other UAE Tax Penalties Reductions 

    In order to offer some relief to the taxpayers, the UAE government has imposed reductions in a few more tax penalties. They are as follows: 

    1. The penalty for late registration: reduced from AED 20,000 to AED 10,000. 

    2. The penalty for failing to submit a deregistration application on time:  reduced from AED 10,000 to AED 1,000 per month (capped at AED10,000). 

    3. The penalty for failing to display prices inclusive of VAT: brought down to AED 5,000 from AED 15,000. 

    4. The penalty for failing to issue a tax invoice or tax credit note: reduced from AED 5,000 to AED 2,500 

    How Do These Tax Penalties’ Amendments Benefit Businesses in The UAE? 

    These amendments in the tax penalties offer an incentive to businesses to review their overall filling positions. Moreover, they get the time to reveal any errors before they are notified of an audit.  

    The best part is that now taxpayers who have been subject to penalties can request a waiver or installment of penalties. Furthermore, they can choose between either disputing tax penalties through the TDRC and the Federal Courts or appealing for installment. 

    Partner With Shuraa for Tax Compliances 

    Although we are optimistic that after reading this blog, you’ve got a fair idea of all the tax penalties, we understand that it might get overwhelming. Since you already have a lot on your plate as an entrepreneur, keeping up with the legal stuff too can be challenging. But you cannot ignore the fact how important it is to comply with the tax regime. Therefore, we suggest that you get in touch with a tax agency. 

    Legal experts at Shuraa Tax Consultants and Accountants can advise and assist you. We ensure that your company follows all its obligations by filing your return on time. Also, we efficiently communicate with the FTA and legally represent you wherever and whenever required. 

    We have cordial ties with the ministry that enable us to stay in step with many commercial legislation and tax regulations applicable to the UAE. Moreover, we guarantee that your company is ready for potential economic repercussions. We will take care of everything for you. All you need to do is reach out to us on info@shuraatax.com or call us on +971 508912062 and focus on other important business matters at hand.

  • The Importance of a Reliable Tax Agency for UAE Companies

    The Importance of a Reliable Tax Agency for UAE Companies

    The United Arab Emirates is popular worldwide for its profitable tax regimes for businesses of all sizes and kinds. In fact, it is one of the many reasons why entrepreneurs and businessmen want to set up or expand their businesses in the UAE. Globally renowned for its oil business, the UAE has worked systematically to break the shackles and transform itself into a modern state that caters to businesses on a wide spectrum. And one of the ways it has managed to achieve the status of a business hub is by reforming its policies, including its tax regimes.  

    To strengthen and maintain its position, the UAE has several tax regimes in place. These regimes also ensure that businesses here maintain a highly professional environment and strive to meet international standards. Although the UAE does not levy any income tax on individuals, it levies taxes on companies under certain conditions. And while the tax system may look straightforward, it is always better to get some assistance from a reliable tax agency in UAE. But why? Read on.  

    This blog will walk you through all you need to know about a tax agency – what it is, why it is important to partner with a reliable agency, and more.  

    What Is a Tax Agency in the UAE? 

    Simply put, a Tax Agency is an entity that is registered with the Federal Tax Authority (FTA) and has a valid license to operate as a tax agency.  

    Furthermore, a company cannot register and work as a Tax Agency without having at least one FTA-accredited Tax Agent on staff. Likewise, a registered tax agent must be affiliated with a licensed tax agency before being permitted to work as a tax agent. 

    Who Is a Tax Agent? 

    The UAE Federal Decree-Law describes and defines a tax agent as — 

    Any natural person registered with the authority in the register of Tax Agent who is appointed on behalf of another person to represent him before the authority and assist him in the fulfilment of his tax obligations and the exercise of his associated tax rights. 

    Simply put, they are licensed and FTA approved specialists qualified to represent your company before the authorities. They are there to offer you comprehensive tax-related support, so your company is compliant from the start. 

    Read Also: Dubai Import Tax: A Complete Guide for Businesses

    Why Should You Partner With a Reliable Tax Agency for your UAE business? 

    Given the strict laws and the penalties outlined by the UAE government for operating companies, it is important that you stay compliant with the laws at all times. Furthermore, you must register and file your tax returns within the stipulated time to avoid hefty penalties. And for this, you must have in-depth knowledge of the tax system since the UAE categories taxes as –  

    • Corporate Tax – For businesses or individuals operating with a commercial license in UAE Free Zones and Mainland.
    • Excise Tax – Levied on businesses dealing in excise goods (goods harmful to human health and the environment).
    • Value Added Tax – Levied at point of sale for the use of goods and services.
    • Other Taxes – Levied on tourist facilities and hotel businesses. For instance, Municipality tax. 

    Within these taxes, especially for Corporate tax, UAE follows a slab structure. The question is: Do you, as an entrepreneur or businessman, have the in-depth knowledge to follow proper tax rules? Are you updated with the latest changes, and do you understand key terms? Do you have internal control mechanism to file VAT return complaint with Tax laws?  

    This is why choosing a reliable tax agency is important. A reliable tax agency is a tax agency that:  

    • Holds a valid license.  
    • Has a team of registered tax agents? 
    • Has a proven track record?
    • Has in-depth knowledge of UAE tax regimes, processes, and penalties? 
    • Is up to date with the latest announcements.

    But why do you need to partner with them? Because a reliable tax agency in UAE will –  

    • Always operate and represent the company lawfully and in compliance with the Federal Tax Authority
    • Ensure that your business activities are compliant with the obligations.  
    • Assist with the timely filing of tax returns. 
    • Register your company with the FTA and lawfully represent you. 
    • Guide you.
    • Assist you with formalities and advise you on how to stay out of trouble and minimise fines.
    • Provide the FTA and its inspectors with essential legal and accounting information if the authorities ask you for records 
    • Forewarn you about changes to both the business and tax legislation 
    • Make communication easier and provide quick answers while following up with the Federal Tax Authority (FTA) 

    Besides this, partnering with a reliable tax agency will save you time and effort. A company’s tax concerns are varied, ranging from registering, planning, filing, and consulting. As a result, allocating resources and managing tax affairs becomes a time-consuming and expensive endeavour. By partnering with a tax agency, you can save time and money while benefiting from their in-depth understanding of and experience working with various clients. 

    Partner With Shuraa for Tax Compliances  

    Awareness of tax compliances differs greatly from ensuring that your company is tax compliant. The process can be overwhelming, especially when you have to wear multiple hats as an entrepreneur and businessman.  

    Furthermore, failing to meet the tax requirements can result in strict action against your company. Additionally, you must follow the procedure and apply for voluntary disclosures in the event of indifference. Under particular circumstances, you can also be required to submit an objection to the Tax Disputes Resolution Committee (TDRC).  

    A reliable tax agency like Shuraa Tax Consultants and Accountants can advise and assist you. We will ensure that your company follows all the tax obligations by filing your return on time, efficiently communicating with the FTA, and legally representing you wherever and whenever required.  

    Our cordial ties with the ministry enable us to stay current on the many commercial legislation and tax regulations applicable to the UAE. We also guarantee that your company is ready for potential economic repercussions. We will take care of everything for you. All you need to do is reach out to us on info@shuraatax.com or give us a call on +971 508912062.

  • Tax Compliances in UAE: Latest Updates

    Tax Compliances in UAE: Latest Updates

    Tax compliance in the UAE has become an important part of running a business. Over the years, the country has introduced structured tax systems such as VAT, Corporate Tax, and Excise Tax. Even though the UAE is still known as a business-friendly destination, companies are now expected to follow clear tax rules and meet regular reporting requirements.

    Staying compliant helps businesses avoid penalties, reduce risks, and keep their operations running without interruptions. Simple mistakes like late filings, incorrect returns, or missing updates can create unnecessary problems. Understanding how UAE taxes work and what’s currently required can save both time and money in the long run.

    UAE tax regulations are updated from time to time, with new rules, clarifications, and compliance deadlines announced by the Federal Tax Authority (FTA). These changes can affect how you file returns, keep records, or calculate taxes.

    What are the Different Kinds of Taxes Applicable in the UAE?

    Over the past few years, the UAE has introduced new tax laws to align with global standards while maintaining its position as an attractive place to do business. Knowing which taxes apply to you is the first step toward staying compliant.

    1. Corporate Tax (CT)

    Corporate Tax is a direct tax on business profits. While the 9% rate is low by global standards, the rules around who pays what are becoming more detailed.

    The 9% Threshold:

    You only pay the 9% rate on profits above AED 375,000. If your profit is below this, your rate is 0%, but you still must register and file a return.

    Small Business Relief (SBR):

    If your annual revenue (total sales, not just profit) is AED 3 million or less, you can elect to be treated as having zero taxable income until the end of 2026. This means no tax and much simpler paperwork.

    Free Zone Rules:

    Companies in Free Zones can keep their 0% tax status on “Qualifying Income.” However, they must now maintain “Substance” (having a real office and employees in the zone) and have their accounts audited by a certified firm.

    2. Value Added Tax (VAT)

    VAT is a consumption tax charged on most goods and services in the UAE. Businesses that cross the mandatory registration threshold must register for VAT, charge it on taxable supplies, and file regular VAT returns with the Federal Tax Authority. Some supplies are zero-rated or exempt, depending on the nature of the activity.

    The Mandatory Limit:

    You must register for VAT if your taxable sales/imports hit AED 375,000 over the last 12 months.

    3. Excise Tax

    Excise Tax is applied to specific goods that are considered harmful to health or the environment, such as tobacco products, energy drinks, and sugary beverages. Businesses involved in manufacturing, importing, or storing excise goods must comply with strict registration, reporting, and payment requirements.

    Sugar-Based Tiers: Instead of a flat 50% tax on all sweet drinks, the tax is now based on grams of sugar per 100ml:

    • High Sugar (8g+): AED 1.10 per litre.
    • Medium Sugar (5g–8g): AED 0.80 per litre.
    • Low/Zero Sugar: 0% tax (though artificial sweeteners must still be registered).

    The 100% Club: Tobacco products, electronic smoking devices, and energy drinks remain taxed at a flat 100% of their retail price.

    4. Withholding Taxes (WHT)

    Withholding tax is a tax collected by the payer (like a business) on behalf of the recipient (like a foreign supplier). Currently, the UAE has set the WHT rate at 0%. This is a major advantage for companies that hire foreign consultants or pay royalties abroad, as it keeps cash flow moving freely.

    For very large multinational groups (earning over €750 million globally), a new Domestic Minimum Top-up Tax ensures they pay at least a 15% effective tax rate in the UAE, aligning with global efforts to prevent tax avoidance.

    5. Other Relevant Levies

    While not always called taxes, these fees are part of your ‘cost of doing business’ in the UAE:

    • Customs Duties: Most goods imported from outside the GCC face a 5% duty. Note that many Free Zone companies are exempt from this unless they sell their goods into the local UAE market.
    • Property Transfer Fees: In Dubai, for example, there is a 4% fee on the sale value of property. This is usually split 50/50 between the buyer and seller, though contracts can vary.
    • Digital Transformation Fees: The FTA has cancelled fees for paper certificates. Tax Registration Certificates are now issued as free digital copies with QR codes for instant verification.

    Recent Corporate Tax Updates in the UAE (As of 2026)

    The UAE’s corporate tax system has been rapidly evolving since its introduction in 2023.

    The First Major Filing Deadlines are Here:

    For many businesses, 2026 is the year the first tax return is actually due. The deadline is strictly nine months after the end of your financial year.

    • January–December Financial Year: If your first tax period ended on December 31, 2025, your filing and payment deadline is September 30, 2026.
    • April–March Financial Year: If your period ends March 31, 2026, your deadline is December 31, 2026.

    Note: Even if your profit is zero or you qualify for relief, you must still file a return.

    Small Business Relief (SBR):

    The Small Business Relief remains the most vital tool for startups, but it has a built-in expiration date. Resident businesses with revenue of AED 3 million or less can elect to be treated as having “zero taxable income.” This relief is currently set to apply only for tax periods ending on or before December 31, 2026.

    If you choose SBR, you cannot carry forward any tax losses or net interest expenses to future years. Businesses expecting high growth in 2027 should weigh whether it’s better to pay a little tax now to save their losses for later.

    Latest VAT Compliance Changes in the UAE (As of 2026)

    The UAE has introduced a set of important updates to its Value Added Tax (VAT) rules to make compliance clearer, strengthen enforcement, and align the system with international standards.

    Five-Year Deadline for VAT Credits & Refunds:

    A major compliance update is the introduction of a five-year limitation period to claim or use excess VAT credits and refunds. After this period, any unused VAT credit will expire permanently if not claimed or offset.

    This means that VAT refunds must be claimed within 5 years from the end of the relevant tax period. Legacy VAT credits that will expire soon may need immediate action.

    Launch of the E-Invoicing System (EIS):

    The UAE is moving away from PDFs and paper. Starting in July 2026, the government will begin testing a national e-invoicing system. Invoices will be sent to the FTA in real-time as they are issued, making manual errors much riskier. If an invoice is not issued through the approved system once it becomes mandatory for your tier, it may be considered invalid, and the buyer will be denied the right to recover input VAT.

    No More Self-Invoicing for Reverse Charge:

    Under the updated rules, businesses applying the reverse charge mechanism no longer need to issue internal self-invoices for these transactions. This reduces a significant administrative step, especially for importers and companies receiving cross-border services.

    Stronger Anti-Evasion Controls:

    To protect the tax base, the FTA now has clearer powers to deny input tax deductions that are linked to fraudulent or artificial transactions. This aligns with global efforts to tighten anti-avoidance measures and promotes honest reporting.

    Updates on Excise Tax in the UAE (As of 2026)

    Excise Tax in the UAE continues to evolve in 2026, with key changes aimed at improving public health outcomes, tightening compliance, and making the tax system more transparent and predictable for businesses.

    Introduction of a Tiered Sugar-Based Excise Tax:

    As of January 1, 2026, the old 50% flat tax on all sweetened drinks has been replaced. The tax is now volumetric, meaning it is charged as a fixed amount of Dirhams per litre, depending on how many grams of sugar are in the drink.

    Category Sugar Content (per 100ml) 2026 Tax Rate
     High Sugar  8 grams or more AED 1.10 per litre
     Moderate Sugar  5 to 7.99 grams  AED 0.80 per litre
     Low / Zero Sugar  Less than 5 grams 0% (Exempt)

    Artificial sweeteners (like Stevia or Aspartame) do not count as sugar in this calculation. If a drink uses only artificial sweeteners and has 0g of real sugar, it qualifies for the 0% tax rate.

    Category Shift for Carbonated Drinks:

    In a big change for 2026, Carbonated Drinks are no longer a separate excise category. Previously, all sodas were taxed at 50% just for being bubbly. But now, they are simply treated as Sweetened Drinks. If a brand reformulates a soda to have less than 5g of sugar, it can now be sold excise-free, even if it is still carbonated.

    Mandatory Lab Certification:

    You can no longer just claim your drink is low sugar. To benefit from the lower tax tiers, businesses must:

    • Obtain a Lab Report: All products must be tested by a MOIAT-accredited laboratory (such as Dubai Central Lab or SGS).
    • Register the Certificate: This report must be uploaded to the FTA’s EmaraTax portal.

    Transitional Relief and Excise Tax Deductions:

    The UAE’s tax authorities have also introduced specific provisions under FTA Decision No. 11 of 2025 that allow businesses to claim limited deductions where excise tax was previously paid under the old rules, but the new tiered model results in a lower tax amount – provided certain conditions are met (e.g., products remain unsold and proper documentation is supplied).

    Tips for Smooth Tax Compliance in the UAE

    Here are some expert-backed tips to help you stay on track.

    1. Don’t Treat Compliance as a One-Time Task: Tax and regulatory compliance is ongoing, not something you handle only at year-end. Track deadlines throughout the year for VAT, Corporate Tax, and UBO. Review compliance requirements whenever there’s a business change (new activity, revenue growth, expansion).
    2. Maintain Accurate and Updated Records: Clean and well-organised records form the backbone of tax compliance. Keeping proper invoices, contracts, bank statements, and accounting records makes filings smoother and protects businesses during audits or reviews.
    3. Use the Right Accounting and Compliance Tools: Reliable accounting software helps businesses track transactions accurately, prepare tax returns efficiently, and meet deadlines with confidence. With digital initiatives such as e-invoicing gradually rolling out, preparing systems early can save time and prevent disruptions later.
    4. Conduct Periodic Internal Reviews: Regular internal reviews help identify gaps or errors before they become serious issues. Reviewing tax returns, compliance filings, and supporting documents from time to time allows businesses to correct mistakes proactively and stay aligned with regulatory expectations.

    Bonus Tip: Get Professional Support to Stay Fully Compliant

    Even with the best internal processes, tax compliance in the UAE can become complex, especially with regular updates to Corporate Tax, VAT, Excise Tax, UBO, and reporting requirements. This is where professional support can make a real difference. Shuraa Tax supports businesses with end-to-end taxation services in the UAE. From Corporate Tax and VAT registration to return filing, compliance reviews, advisory, and audit support, the team helps businesses stay aligned with UAE tax laws at every stage.

    With expert guidance, businesses can avoid costly mistakes, stay updated with regulatory changes, and focus more on growth instead of compliance stress.

  • New Economic Substance Regulations for UAE Companies

    New Economic Substance Regulations for UAE Companies

    The UAE is a popular destination among investors and entrepreneurs to start or conduct their business due to its favourable tax regime. However, a European Union (EU) review of the UAE’s tax framework in early 2019 resulted in the UAE being included in the EU Blacklist. The EU Blacklist is a list of non-cooperative jurisdictions for tax purposes. In response to the review and to remove itself from the EU Blacklist, the UAE introduced new Economic Substance Regulations for UAE companies. Since then, the audit firms in UAE, tax consultancies have been helping businesses comply with this new structure.

    The Economic Substance Regulations (the Regulations) was issued on April 30, 2019, and further Guidance on the application of the Regulations was released on September 11, 2019. By implementing these Regulations, the UAE is making positive progress towards meeting the EU’s requirements to be removed from the EU blacklist.

    What are Economic Substance Regulations (ESR)?

    Economic Substance Regulations are introduced by countries that have low or no corporate taxes. This is done to prevent harmful tax practices such as unlawful avoidance or evasion of tax by entities operating within these countries. The purpose of ESR is to address concerns around the shifting of profits collected from certain activities that do not correspond to local economic activities undertaken in countries with low or no corporate taxes.

    Who does Economic Substance Regulations UAE apply to?

    The UAE Economic Substance Regulations apply to all businesses that covers one or more “Relevant Activities” listed by the UAE government. These include onshore, free zone, and offshore companies, branches, partnerships, and other business forms that have a license to operate in the UAE. However, companies that are directly or indirectly owned (at least 51%) by a UAE Government body or authority are exempt from the Regulations.

    The following businesses are considered as “Relevant Activities” under the Regulations:

    • Banking Business
    • Insurance Business
    • Investment Fund management Business
    • Lease – Finance Business
    • Headquarters Business
    • Shipping Business
    • Holding Company Business
    • Intellectual property Business (“IP”)
    • Distribution and Service Centre Business

    What are the compliance requirements of an entity carrying out Relevant Activities?

    • Notification form to Regulatory Authority
      Businesses should submit a notification form to their respective Regulatory Authority within the prescribed deadline.
    • Filing of annual ESR Return
      Businesses earning an incoming from any of the above-mentioned Relevant Activities, during the financial period, must show proof of Economic Substance in the UAE and must file an ESR return within 12 months from the end of the financial period. They are also required to meet the Economic Substance Test (EST).

    These requirements must be filed with the relevant Regulatory Authority. The Regulatory Authorities set their respective requirements, deadlines, and formats for notification filing. Delay or failure to submit notification form and ESR returns will incur heavy penalties. To avoid any penalty or fine, you can partner with a Tax Consultant in Dubai for ESR compliance.

    For the financial year ending on 31st December 2021, the date of Notification Filing was 30th June, 2022 & the last date of Report Filing is 31st December, 2022. For the next fiscal year which ended on 31st March, 2022, the last day of Notification Filing is 30th September, 2022 & the last date of Report Filing is 31st March, 2023. 

    Get assured services with Shuraa Tax

    To know more about the new Economic Substance Regulations for UAE companies or to get assistance with ESR compliances, feel free to contact Shuraa Tax Consultants and Accountants, the most renowned tax agency in UAE. Our UAE tax expert team will review the applicability of the Regulation to your company and will assist you through compliance fulfilment and reporting on time.

    Call us at +971508912062. You can also drop us an email at info@shuraataxintl.ae and get your queries answered in no time.

  • How to Select a Reliable Bookkeeping & Accounting Partner for your Business in Dubai?

    How to Select a Reliable Bookkeeping & Accounting Partner for your Business in Dubai?

    Accounting is a core aspect of any business. Professionally and precisely maintained books can help a business streamline their finances and even save big on taxes and fines. Moreover, accounting and bookkeeping are crucial for regulation & compliance. For instance, the new VAT laws in UAE require the companies to maintain books as per the new guidelines! SMEs or a start-up might not find it convenient and financially viable to hire an in-house accountant. It makes sense to seek assistance from a professional bookkeeping and accounting partner.

    If you’ve set up a company or are planning for the same, this article will help you choose the right tax consultant in Dubai or right accounting firm.

    Here, you will learn about the top factors to consider before choosing amongst reliable Accounting Services in UAE or tax services in UAE. Let us get going!

    Team & Expertise

    It pays to get associated with a versatile & capable accounting firm and tax agency in UAE that possesses experience in legal, financial & economic domains of the UAE market. The reason behind looking for such bookkeeping expertise is transition of the economy into new tax structures & regulatory changes. For instance, Shuraa Tax Consultants and Accountants bring in robust & reliable accounting outsourcing services. The team is adept in handling any volume of accounting tasks within a short turnaround.

    Industry & Service Specialization

    You must also assess two areas of specialization for any bookkeeping firm- 1) Industries served & 2) service specialization. Find out if the firm serves clients from a particular industry or serves everyone. If they specialize in your industry, it is a best reason to partner with them. If they turn out to serve versatile businesses, then look for their service specialization. Bookkeeping firms usually specialize in Accounting, Tax, VAT & Audit services. You must select the one that caters to your area of interest.

    Availability & Support

    You must look for an accounting & bookkeeping firms that keeps in touch with your business frequently. Which can give the contemporary reports. This enables you, as a business owner, to make quick decisions, solve tax/cost doubts & bolster your planning for further business growth. Accounting firms like Shuraa, that provide regular communication support & guidance to its clients has the following benefits.

    • Stay updated on any anticipated UAE Tax regulations changes
    • Proactive planning for your business growth from a tax perspective
    • Get expert advice whenever you want
    • Professional MIS reports for better decision making
    • Report discussions, meetings with client

    Fee Charging Structure

    You must evaluate the fees structure of different firms to outsource your accounting needs. The fee will vary for each of them (your cost of outsourcing) and the way they charge it will differ too. Payment terns should also be checked. Assess your major accounting needs and outsource your accounting accordingly.

    The right accounting partner will provide you end-to-end support besides the core bookkeeping services. Thus, it is crucial that you ally with an experienced firm with a sizable client portfolio. Outsourced accounting services helps to have accurate accounts which are reviewed by qualified Accounts professional.

    Keep in mind the above factors and do ask these questions to the shortlisted firms for selecting the right accounting partner in Dubai. Get in touch with the expert consultants at Shuraa Tax, one of the top accounting and tax firms in Dubai, specialized in Accounting, VAT, Excise, Internal Audit, Economic Substance Regulation (ESR) compliance, Business Valuations. Reach out to our experts on info@shuraatax.com or give us a call on +971 508912062.

  • Treatment of VAT in Free zones of UAE

    Treatment of VAT in Free zones of UAE

    The VAT in UAE was introduced from 1 January 2019 and applies to those supplies of goods and services which take place within the territorial boundaries of the UAE. As in the case of goods and services supplied within free zones in the UAE, the rules of VAT are applicable to undergo a certain change.

    Free zones are defined as those areas which are specifically designed to promote international businesses in the UAE by providing attractive incentives to foreign investors and businesses. In the UAE, there are currently more than 37 Free Zones such as:

    • Jebel Ali Free Zone
    • Dubai Airport Free Zone
    • Dubai Cars and Automotive Zone and many more

    As per UAE VAT law and Executive Regulations, not all Free zones are ‘VAT Free Zones’ and only those listed in a Cabinet Decision are eligible for the special VAT treatment. These Free Zones are referred to as Designated Zones for VAT purposes, according to Cabinet Decision No. 59 of 2017.

    Few supplies occurring within the Designated Zones will not invite the standard rate of VAT i.e. 5% under circumstances mentioned in VAT regulations. This is only in the case of a supply of goods. However, suppliers of services in the designated zone will be subjected to the usual VAT rate at 5%. It’s important to understand the conditions which businesses need to follow for the VAT-free supply of goods between the Designated Zones as prescribed by UAE VAT Executive Regulations.

    Following are the conditions which are mandatory to consider any UAE free zone as a Designated Zone to

    1. It should be enclosed within a specific fenced geographical area.
    2. It should have security measures and customs controls in place for monitoring the entry and exit of individuals and goods to and from the area.
    3. There should be laid out internal procedures related to the method of keeping, storing and processing goods within the Designated Zone.
    4. The operator of the Designated Zone should show support or comply with the procedures laid down by the Federal Tax Authority (FTA) of UAE.

    If any free zone no longer fulfills the above conditions, it cannot be then treated as a designated zone. It will be considered and treated as a part of the UAE And general VAT rules will be applicable to such free zones.

    Below are few examples of Free zones which are designated zones:

    • Jebel Ali Free Zone (North-South)
    • Dubai Cars and Automotive Zone (DUCAMZ)
    • Free Zone Area in Al Quoz
    • Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port
    • FOIZ (Fujairah Oil Industry Zone)
    • Khalifa Industrial Zone

    As per the registration for VAT is considered, these businesses within the Designated Zone have to register, report and account for VAT as per the UAE laws. In case of failing to register for VAT within the due date, a penalty of AED 20,000/- will be levied as per the UAE Federal Cabinet Decision No.40.

    Consult Shuraa Tax Consultants and Accountants to get assured and accurate help on the VAT laws related to the Free Zones in the UAE. We are a group of FTA approved tax agents in Dubai with a goal to provide accurate services of VAT in UAE (VAT registration and implementation, Tax compliance & VAT Return Filing). Contact us to get complete assistance and guidance on the VAT registration in UAE. All you need to do is reach out to us at info@shuraatax.com or call us at +971 508912062.