When the UAE announced the implementation of corporate tax (CT), many business owners were caught off guard. But now that corporate tax is here with complete effect, starting from financial years beginning on or after June 1, 2023, there’s no time to waste. Every business that anticipates falling soon under the CT scope needs to plan and prepare. Failing to act could lead to penalties, missed tax deadlines, or compliance problems.
Tax Gian has qualified corporate tax agents in the UAE who can help businesses with proper CT implementation and ensure compliance.
Understanding the CT Basics
Before diving into what needs to be done, it’s essential to understand a few key features of the UAE’s corporate tax:
- A 9% tax will apply to businesses with profits over AED 375,000.
- Multinational firms may face a higher rate under global tax rules, i.e., 15% DMTT.
- Government entities, extractive and non-extractive businesses, certain investment funds and pensions remain subject to Emirate-level taxation.
- Free Zone companies can still enjoy tax benefits if they meet certain conditions.
- Loss carry-forwards and group relief will be allowed.
- No withholding tax will apply.
- Dividends and capital gains may be exempt under specific situations.
- Transfer pricing rules will follow international standards.
Start with Entity Review
Different business types encounter different tax treatments. Free Zone companies, for example, continue enjoying tax breaks, but it’s conditional on the case: if they avoid certain activities like direct trade with the mainland.
To avoid problems, companies should begin by reviewing their legal structure. This includes:
- Checking if entities qualify for exemptions.
- Understanding if group relief applies.
- Mapping financial year-end dates.
- Reviewing audit status and related-party dealings.
This exercise may uncover gaps in financial data, legal exposure, or unclear business practices. It’s best to address these now, not later. Corporate tax agents in the UAE can help with such a review.
Upgrade Your Accounting Systems
Not all systems are ready to handle corporate tax calculations. Many UAE firms have never needed to track taxable profit or deal with disallowed expenses.
It’s time to test whether your current accounting software and processes can support tax calculations. Businesses may need to:
- Adjust how certain expenses are tracked.
- Flag non-deductible items clearly.
- Collect better data for related-party transactions.
Tax compliance tools are available, and expert corporate tax agents in Dubai are also a suitable option. You don’t need to decide right away, but it should be a topic in your planning sessions.
Strengthen Internal Teams
Corporate tax affects more than just financial statements. It changes jobs and roles. Your finance and compliance staff need to understand new responsibilities. Ask:
- Can the current team handle the extra workload?
- Do they need training?
- Should you hire someone with tax experience?
Answering these questions early can save time and reduce costly errors later.
Forecast the Impact
Running a financial model under the new tax rules helps businesses understand the bottom-line effect. Include:
- Expected profits.
- Eligible deductions.
- Group relief and loss carry-forwards.
- Possible foreign tax credits.
This will also help flag weak points in your data or systems.
Coordinate with Your Auditors
Since corporate tax in the UAE relies heavily on audited financials (such as the latest audited FS rules for Tax Groups), your audit team becomes an essential partner.
Talk to them early:
- Do they have the capacity to handle the new tax disclosures?
- Will they assist in preparing or reviewing the return?
- Is your audit based on standards that meet government requirements?
Some businesses might stick with their current auditors. Others may choose separate firms to avoid a conflict of interest. Either way, these decisions need to be made well ahead of deadlines.
Take Early Action
Waiting for your business to fall under the scope of CT officially might seem fine. But planning now can avoid rushed decisions later. Set priorities, delegate tasks, and begin preparing your team and systems.
Here’s a simple checklist to get started:
- Map all your entities and assess their tax status.
- Review and upgrade accounting processes.
- Train or hire staff with tax experience.
- Talk to auditors and corporate tax agents in Dubai about compliance expectations.
- Run forecasts to estimate the impact on your profits.
How can Tax Gian Help?
Proper planning is what makes it possible to deal with corporate tax. Businesses that act early will have more control, fewer surprises, and better outcomes. This is where Tax Gian helps. If you are a business that anticipates falling under the scope of CT or if you are finally subject to CT, you need proper corporate tax implementation with the assistance of our qualified experts. We will help you with complete planning and preparation so that you can comply fully.
