5 Steps for Businesses in the UAE to Prepare for Corporate Tax
On January 31 2022, the Federal Tax Authority of the United Arab Emirates announced a Corporate Tax regime that will be implemented from June 1, 2023. Although it is not the first time that the UAE government has amended its tax landscape, this announcement created a bit of confusion in the corporate world. Now, as the dust settles on the announcement, businesses must be wondering how to implement them.
From 2023, the Federal Corporate Tax will be imposed on business profits in the UAE. The tax percentage may vary from 0 to 15% depending upon the net taxable income of businesses. This is bound to bring additional revenue to the nation’s economy. The rules and regulations of Corporate Tax are developed keeping businesses of all sizes in mind.
So, while this new tax regime is UAE’s step towards the future, how do businesses plan to cope with the change? To deal with this, institutes have come up with Corporate Tax training in Dubai to help professionals stay up-to-date with the latest tax changes.
In this article, we have listed 5 steps that businesses should consider while getting ready for the next tax regime.
1. Embrace the change
The first and foremost step involved in preparing for the new Corporate Tax regime is to accept and embrace the change. Building a comprehensive understanding of tax-administered jurisdiction and getting a real picture of the situation is the best way to prepare for the change. This can be started by looking at the potential impact of Corporate Tax on businesses and how to upskill your team to deal with this change.
2. Ensure proper communication channel
The second step is to ensure proper communication across every level of the organization hierarchy. Although the formal notification has not been issued yet, the announcement and accompanying Q&As can be used to draw enough inferences on how the new tax regime will pan out. Using this information and communicating it throughout the organization can help in preparing for the change.
3. Assess the impact of tax
Applying the tax rate to net profit with an intent to gauge the tax impact is a natural instinct. But taking a bottom-up approach to assess its impact is highly crucial. From transactions to entire business units, a clear assessment can help companies identify their tax rationale and prepare for tax applications. The assessment findings can be used to zero in on tax impact areas and handle focal points for successful implementation.
4. Identify the ways to implement changes
The next step is identifying the ways to implement the new changes. With increased awareness and education, pivoting and embracing the new tax regime can be made easy. This step ought to begin in the boardroom, which can then be carried along by other employees. This step is crucial as the ripple effects of this new tax regime are to be felt throughout the entire organization.
5. Check compliance
Compliance and governance are the final steps involved in dealing with a new tax structure. It is important that the quality of data and documentation meet the regulations. It is considered ideal or best practice for collecting and safeguarding the organization's data. This step will help in removing a potential barrier to full compliance when the federal tax law will be put into effect.
The introduction of the new tax regime will enable UAE businesses to build global presence and contribute to the UAE’s growth and its commitment to the G20’s efforts to battle tax avoidance. Whether you are prepared or not, the Federal Corporate Tax will be implemented. So, rather than worrying what the future might entail, it is better to improve the internal processes of businesses to meet the challenges ahead.
Message from the Author
Are you an individual or an organization keen on a front seat when the new tax regime is implemented? Then our Corporate Tax training in Dubai will serve you the most in exploring the rules and practices of the new tax regime.
Learners Point Academy is a KHDA and ISO 9001:2015 accredited training institute in Dubai.
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