Dealing with tax is a very crucial process whether it comes on an individual front or a business entity. The business establishment is a risky process and tax filing is considered to be a burden on this planet. The process becomes more complex when it has to deal with foreign affairs and follow international taxation policies as it holds the power to either raise or decreases the business reputation at an international level. At the initial stage, building a tax strategy plays an important role. This strategy should be in-line with the corporate strategy and should not be isolated from the business framework. Realizing this, even the United Arab Emirates, one of the fastest moving countries of the world have re-framed their tax structure to a new tax law. Before moving ahead, let’s understand what tax strategy is all about and why it is essential for a business entity.
Building a tax strategy is an important part of any business tax at the initial stage. This strategy includes rigorous planning and tax risks that a business needs to identify. Basically, a tax strategy is set for a duration of 3 to 5 years, aimed to increase the value by reducing tax-related risks to suffice the expectation of the shareholder. Building a tax strategy helps a business entity to compare the tax situation upon requirement.
The UAE Tax System | Before and After
The Emirates is known for trade free business zones that promote creativity and encourage entrepreneurs to set up their business in the emirates. The income tax in UAE is fully exempted that lowers the burden of individuals to a great extent. The foreign investors enjoy a wide range of benefits due to the exemption of tax in UAE that motivates them to come forward and set up business in UAE.
Moving forward, the Emirates have also accepted changes in the UAE Tax Law system and have adopted and implemented the VAT taxation from the beginning of 2018. Let’s have a look on the UAE Tax Authority and the reason behind acceptance of tax.
UAE Tax Authority
The Federal Tax Authority (FTA) Dubai was established in 2016 for the better welfare and management of tax. The initiative taken by the GCC Council to introduce the tax in UAE was taken in order to expand and diversify the home economy. When it comes to payment of UAE tax, the corporates, working individuals, and entrepreneurs enjoy tax exemption benefit.
Under the UAE Tax Law, a lot of changes have been made under the taxation framework that will have an effect on the following:
- Excise Tax
- Federal Tax Authority
- Federal Tax Procedures
Dubai VAT Tax
Taxation is a path that allows the government to build a better society by providing better infrastructure, job, business trade etc. Taxation in Dubai has seen certain changes, as new tax rules were asked to adopt. Currently, the UAE tax law is at the early stage since the VAT framework was built in January 2018 at a rate of 5%.
Tax Management and its Benefits
Till now we have understood why building tax strategy is important, different initiatives were taken by the UAE Tax Authority to maintain and implement the taxation processes in the Emirates economy. Maintenance of the tax is one of the complex processes that every organization need to go through be it national or international level. Such a strong management would lead to benefits like:
- Prevention of the company's bearing any kind of financial loss
- Enhancement of a company's goodwill
- Help in identify the investment opportunities
- Reduction in tax liability and increase profitability
- Determination of the financial barometer of the organization
At JAXA, we understand the complexities that a business undergoes during the tax filing process. Our main aim is to ease the complex process by building a stronghold on our working style that includes:
- Adoption of best tax practices across industries and geographies
- Dealing with international tax structure
- A team of experienced professionals
- On-time delivery of business projects
- Assurance of quality delivered
- Tailor-made solutions based on company requirements
JAXA, since its inception, has been operating in the field of accounting and taxation services, delivering all over the world. We are a tax consultant with a team of tax experts that acts as a tax advisor, builds the taxation framework for your business according to the international taxation structure. At JAXA, we do offer a wide range of tax services, which includes:
- Income tax online filing
- Tax compliance services
- Excise tax registration
- Audit services
- Wealth management