Tax & VAT Services Dubai
The Value Added Tax, commonly called VAT in business parlance, is the most common type of consumption tax levied on goods and services. On 1st January 2018, VAT became an integral part of businesses in the UAE. Some categories including basic food items, healthcare and education are exempt of VAT, Rate of 5% Value Added Tax will be charged on the goods and services, at each step of the supply chain.
VAT Advisory Services
Our VAT services in Dubai aid our clients stay well-informed of regulatory changes, at the same time as offering direct access to our local experts and a robust control outline which provides accuracy and devotion to reporting deadlines.
Challenges to Businesses
In spite of the fact that seen by numerous individuals as only a accounting challenge, the new VAT framework pervasively affects the manner in which you do business. Recognizing the effect of VAT on costing, product pricing, cash flow, procurement and supply chain and executing the fundamental changes in the present IT system, accounting and financial reporting programs are the significant challenges to confront while ensuring compliance with the new regime. New operating models will have to be adopted. Employees will need comprehensive training to increase their skill sets for the same.
Our experienced taxation team with exposure to different tax regimes in the Middle East and Sub-Continent is capable of advising and assisting businesses in the region to improve their systems and processes. RNI with our experts by having depth knowledge of tax related matters is able to intensely reduce the management burden and save time on VAT complications.
A business must register for VAT if the taxable supplies and imports exceed the mandatory registration threshold of AED 375,000, the business is liable to pay tax.
Furthermore, a business may choose to register for VAT voluntarily where the total value of its taxable supplies and imports (or taxable expenses) is over the voluntary registration threshold of AED 187,500.
VAT Rates in UAE
The types of VAT rates in the UAE are:
- Standard rated (5% VAT)
- Zero-rated (0% VAT)
- Exempted (No VAT)
VAT Registration & De-registration
VAT Return Filing
Corporate Tax Advisory Services
UAE is introducing Corporate Tax (CT) with effect from 1st June 2023.
Corporate Tax in UAE is a form of direct tax levied on the net income or profit of corporations and other businesses. Going forward, licensees operating in UAE will be required to assess the impact of the upcoming regulations to their business and undertake the necessary compliance. On this note, the UAE Tax Authorities have already stated that non-compliance will translate to crippling penalties.
Scope of the Corporate Tax
The UAE has introduced a federal tax system that is applicable to all businesses and commercial activities operating within the seven emirates. However, there are certain exceptions:
Businesses operating in the extraction of natural resources. These will continue to be subject to the tax decrees issued by the respective Emirate Individuals earning income in their personal capacity (i.e. salary, investment income) as long as the income generating activity does not require a commercial license.
Businesses registered in Free Trade Zones, provided they comply with all the regulatory requirements, and that do not conduct business with Mainland UAE.
It is interesting to note that the foreign Banking sector, which has been operating under the Emirate level Bank tax decree will now be subject to the UAE Federal Tax Law. The impact of CT on the Emirate level banking tax decree will be communicated in due course. This will be a significant shift for both branches of foreign Banks, that will need to switch to the new Law and for local banks who similar to other businesses will now be subject to corporate tax.
The announced UAE CT regime introduces a tier system with 3 rates:
- All annual taxable profits that fall under AED 375,000 shall be subject to zero rate.
- All annual taxable profits above AED 375,000 shall be subject to 9% rate.
- ALL MNEs that fall under the scope of Pillar 2 of the BEPS 2.0 framework (i.e. consolidated global revenues in excess of AED 3.15 billion) shall be subject to different rates as per OECD Base Erosion and Profit-Sharing rules.
Taxable profits are the accounting profits subject to certain adjustments. At RNI, our team of experts can help you in assessing the challenges and opportunities that the introduction of a Corporate Tax will bring.
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