Dubai is becoming an ever-thriving business center, this land attracts entrepreneurs and business houses from all over the globe because of its tax-friendly climate. However recent times have seen changes happening in the tax climate in UAE, which initiated the imposition of corporate tax dubai in the region; hence is pretty essential for businesses to properly come through knowledge about their particular type of taxes. Mistakes in corporate tax planning can lead to penalties, problems of non-compliance, or loss of tax exemptions. In this article, we will discuss the most common corporate tax mistakes businesses make in Dubai and ways to avoid them.
1. Non-registration on or before the due date for Corporate Tax.
This is regarded as one of the mistakes that businesses make to fail on the due date in registering for corporate tax in dubai. The corporate tax system in dubai requires every business that introduces this to register from the start. It exposes a person to extra costs coming with penalties and fines as an attempt to avoid them. This is all that one needs, to make one’s business complaint of requirements of registration to be compliant with the corporate tax law dubai.
Companies operating in Dubai should be registered under the corporate tax law dubai within a certain period from the end of the financial year. In any case, failure to comply with such provisions might also mean that your corporation would lose the right to enjoy other tax exemptions privileges, like exemptions from the Dubai corporate tax exemption that some businesses undertaking operations in free zones might enjoy.
This can be avoided if your company knows the corporate tax registration deadline dubai. It will always be recommended to consult a reputed tax advisor in Dubai, like JAXA Chartered Accountants, for compliance with all deadlines and proper and accurate handling of your company’s registration.
2. Unawareness of Corporate Tax Rates and Deductions in Dubai
Another mistake on the part of the companies is not knowing the corporate tax rate dubai, along with the exemptions in corporate taxes that may be applied to its operation. Now, there is a new regime of corporate tax; therefore, any company needs to be sure about the rates of tax that apply to its business activities.
For instance, in Dubai, a company is exempted from corporate tax if it operates within the free zones defined and meets the agreed criteria. However, if outside of these boundaries, then it will be liable for corporate tax as is chargeable in Dubai, with present corporate tax rates ranging from 9% on earnings over AED 375,000. It is thus very important to know what exactly your business falls within the tax structure to make correct decisions in tax planning.
Besides, most firms tend to forget that, for corporate tax filing dubai, income, expenses, and activities need to be well documented. Corporate tax filing dubai has to be taken seriously not to make a mistake while submitting tax returns thus attracting costly fines or even audits.
3. Noncompliance with Transfer Pricing and Economic Substance Regulations
In Dubai, corporate tax also requires that businesses apply economic substance and transfer pricing regulations. The regulations are such that the company is required to have significant activities and operations within the UAE in support of tax positions. In case the company does not comply with the above requirement, it is liable for audit or denial of tax exemption.
For example, free zone companies based in Dubai may be subjected to scrutiny to ensure they have a physical presence or real business activities taking place within the zone for them to continue enjoying tax exemptions. Failure to evidence may deny them the exemptions and attract a much higher tax liability.
Businesses must be aware of such laws and should seek tax consultants’ advice to avoid violating such laws. JAXA Chartered Accountants, an FTA approved tax agent, can guide your business through such complex requirements and ensure compliance with the latest tax laws and regulations in Dubai.
Conclusion:
How JAXA Can Help Your Business?. This is more of the critical aspect of avoiding the most common corporate tax mistakes in Dubai for successful, cost-effective operations for businesses in the UAE today. With the introduction of corporate income tax in the UAE and to the Dubai corporate tax system, proper registration, appropriate understanding of tax rates applied, and regulatory compliance shall be more essential than at any other time before.
Corporate tax planning is one of the service offered by JAXA Chartered Accountants, alongside services in audits and compliance, Accounting, Corporate Tax registration or Corporate tax return filing, VAT related services in Dubai etc. Whatever may be the complexity of your requirements, our streamlined team will be there for each process to get their solution. Having a strong foundation of corporate tax law and being well aware of the UAE corporate income tax, we ensure that all the regulatory compliances are met for your business as it gets maximum benefits with tax savings.
Corporate tax mistakes should not keep your business limited to expansion in Dubai. Leverage the experience of professional training in corporate tax in dubai and the registration of corporate tax in dubai by professionals at JAXA. Your business is in safe hands on any matter regarding tax strategies at JAXA Chartered Accountants.
