Al Dhaheri Jones and Clark says SMEs should assess business structures and processes to ensure compliance and avoid penalties
Dubai, UAE: Dubai-based consultancy firm Al Dhaheri Jones and Clark (ADJC) has called on all small and medium enterprises (SMEs) anew to ensure that their processes are fully compliant with the country’s corporate tax law to avoid potential penalties.
Starting June 1, 2023, the UAE will levy a direct tax on the net income or profit of corporations and other entities, including SMEs, from their business. Companies whose fiscal year begins on or after this date will be levied a standard tax rate of 9% for taxable profits exceeding AED 375,000.
To prepare, ADJC said SMEs should review their financial and tax position and make any necessary adjustments to adhere to the law’s provisions. Keeping accurate and up-to-date financial documents, including detailed records of their income, expenses, and assets, will help them correctly prepare and file their tax reports.
According to the firm, SMEs should also make sure that their existing business structures are tax efficient and that they are aware of the deadlines for filing tax returns and paying any taxes owed. Failure to meet these deadlines could result in penalties and interest charges.
SMEs may opt to seek the assistance of qualified tax advisors as well to help them prepare for the new corporate tax. The tax experts will not only help them understand the implications of the tax on their business but also identify any potential tax savings opportunities.
The UAE is implementing the corporate tax law as part of its bid to become a leading global hub for business and investment, as well as fast-track its growth and transformation. Most countries in the world have a comprehensive corporate tax regime, including other GCC member states.
The introduction of corporate tax in the UAE will have a significant impact on SMEs. By starting to prepare now and seeking professional advice, SMEs can minimise the impact of the tax on their business and ensure compliance with the new regulations.