With the implementation of corporate tax in the UAE this June, companies are urged to seek guidance on how to apply the new tax brackets, what exemptions are in place and how to navigate future laws related to the charge.
Experts who can provide valuable support in understanding and navigating the complexities of tax policies and ensuring compliance with relevant regulations are in high demand.
Fazeela Gopalani, Head of the Association of Chartered Certified Accountants (ACCA) in the Middle East shared her knowledge and expertise on how companies and individuals can avoid and/or minimize their exposure to legal risks while still optimizing their financial results and lowering their overall tax liability.
Role of ACCA
Gopalani said that since 1904, ACCA has been working in partnership with emerging economies to establish their professional accountancy organizations and grow their economic and finance ecosystems.
“Much of what we do revolves around supporting public and private individuals and entities by building talent and capacity via our leading-edge qualifications,” Gopalani explained.
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“We have been actively involved in supporting UAE’s move to incorporate tax since the introduction of VAT in 2018 and continue to do via conversations with public and private organizations, discussion groups, publications, and on our channels, as well as hosting conferences for knowledge sharing.”
ACCA’s most recent move was to develop a UAE-specific Tax and Regulation Certificate, which will help organizations equip their finance teams with the skills needed to meet changing tax and financial regulation needs in the UAE.
Complying with UAE’s 9% tax
The implications of the new Corporate Tax regime are far-reaching for all organizations operating in the UAE. Organizations began assessing the impact of the new rules, including their application, modeling cash flow implications, considering exemption regimes, and developing the processes and procedures to manage compliance.
“As further details are released over the coming months through a series of ministerial decisions, businesses should monitor these and prepare for compliance before the effective dates apply,” Gopalani said.
“Whilst we will have more clarity in the coming weeks, I strongly recommend organizations look into their internal finance systems and processes to assess the need for any restructuring, technical capabilities, and other resources needed to comply.”
Organizations will need to understand the complexities around systems and seek professional guidance incorporating the right tax practices to ensure they are able to comply and avoid any penalties.
Tax regulations and accounting clarity
Despite UAE’s Ministry of Finance releasing information on the recent Corporate Tax, there is scope for more clarity on related regulations concerning companies operating in UAE’s free zones, as a significant number of organizations are operating there.
“UAE’s tax law has provisions providing tax relief on organizations. The law confirms that qualifying free zone entities will be subject to 0% corporate tax in respect of qualifying income and 9% corporate tax in respect of non-qualifying income. The law does not provide any details on what constitutes qualifying income and this detail will be provided in subsequent legislation,” Gopalani revealed.
Failure to comply
According to Gopalani, failure to comply with regulations carries not only a financial risk but also a significant commercial risk because it can harm the organization’s credibility with the government and related agencies.
Similar to other taxes in the UAE (e.g., VAT), businesses will be subject to penalties for non-compliance with the UAE CT regime.
Optimizing financial results – lowering tax liabilities
ACCA supports organizations in building and further developing their Accounting and Finance talent.
“We take pride in doing the same when it comes to updating teams and building talent with the relevant technical skills on UAE Tax and Regulations,” Gopalani said.
“Earlier this year, we launched our UAE Tax and Regulation Certificate to help individuals upskill themselves with all things related to UAE’s Tax Regime and Financial Regulations.”
The UAE Tax and Regulation Certificate offers an introduction to UAE legislation related to the practice of the accounting and auditing profession. This includes the rules of conduct and ethics of the profession, the corporate system, the tax system, and civil and criminal liability related to the practice of the profession. This self-paced interactive course is available for purchase online individually or in bulk by organizations.
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