OP-ED Column
Dubai, UAE, January 2023: Starting June 1, 2023, the UAE’s federal corporate tax on business profits will officially take effect. Businesses whose financial year begins on or after this date will be levied a standard tax rate of 9% for taxable profits exceeding AED 375,000.
This is the first time that the UAE is imposing a corporate tax, a move that signals to the world that it is leaving no stone unturned to effectively compete globally through, amongst others, diversification of its sources of income away from oil receipts.
The corporate tax will pave way for the country to boost its gross domestic product (GDP) as well as streamline business operations. Furthermore, it will bolster the country’s status as one of the most preferred business destinations worldwide.
Its efforts are already paying off, with global think tanks noticing its impressive system and practices. One such organisation is the Switzerland-based International Institute for Management Development (IMD), whose World Competitiveness Yearbook 2022 Peer Group rankings positioned the UAE 4th in its Tax Policy category.
However, whilst the processes are all set, businesses will admittedly still need strong support to ensure compliance with the corporate tax policy. As this is new in the country, companies will have to collaborate with auditors, financial and accounting experts as well as advisors and consultants to help them understand the new regulations and other essentials such as applicable rates, tax planning, tax impact assessment, litigation support, corporate tax advisory, and more.
They will need teams who can empower them with in-depth corporate tax information and ensure their seamless transition whilst strengthening their core operations. This way, they will be ready to fully comply with the new law when they submit their tax returns. Such collaborations will be fundamental to their competitiveness and continued success in the country.
Amidst the upcoming corporate tax rollout, which is a major development in the UAE’s business landscape, partnering with a tax expert is a step in the right direction and this is where we, at Al Dhaheri Jones & Clark, have an instrumental role to play.
