UAE Corporate Tax: How to Prepare and What You Need to Know
Casey issues a stark warning to businesses – failing to prepare could have serious consequences. The introduction of the new corporate tax is set to bring a significant transformation to the UAE’s business landscape, and according to Casey, it should be embraced by firms of all sizes.
Five years after the introduction of value-added tax in 2018, the UAE is now gearing up for its latest taxation measure targeting corporates. Under the new rules, businesses in the UAE will be required to pay a 9 percent income tax.
While some businesses may be concerned about additional costs, Casey emphasizes that the 9 percent rate is still lower than many other tax-efficient locations globally. He sees this move as an effort to position the UAE as a fair player on the global stage.
Small businesses, particularly those with sales under AED3 million, will be exempt from paying tax. However, despite the exemption, these businesses must still file tax returns – a fact often overlooked by many in the UAE’s business community.
Understanding Corporate Tax in the UAE
Historically, the UAE has stood out in global taxation practices due to the absence of corporate income tax. This has resulted in a knowledge gap among firms regarding compliance with the new rules. Casey stresses the importance of understanding basic financial concepts and complying with the new regulations.
Why the UAE is Introducing Corporate Tax
Corporate tax is a crucial element in diversifying the UAE’s government income base. By establishing a more diverse source of revenue, the country aims to ensure long-term financial stability and enhance its global standing as a business destination.
Businesses Need to Prepare Now
Casey warns businesses to prepare for corporate tax now to avoid future complications. Waiting until the last minute can result in increased costs, time-consuming processes, and the risk of overlooking key relief and exemption rules. Virtuzone has pledged to assist 10,000 small firms in preparing for tax for free to mitigate these challenges.
For businesses seeking to avoid potential pitfalls, Casey recommends partnering with experts who understand the process. Virtuzone can streamline the preparation process at an affordable price, ensuring businesses comply with the new regulations.
To kickstart compliance, the first step is tax registration, a process that Casey emphasizes can take days for the unprepared. Virtuzone’s pledge aims to educate businesses and get them ready for tax, addressing the overall lack of awareness surrounding the new corporate tax rules.