9% Corporate Tax in UAE – Our Thoughts
UAE has just announced that a corporate tax of 9% will be implemented from 1st June 2023. Implementation of corporate taxation in the UAE is something we had mentioned in the past as well. Now we have some more information that we can discuss further about the corporate tax in UAE and our thoughts about the same.
This is the first time a direct tax is being introduced for businesses in the UAE. This means that it will directly impact the profitability of the company. It is important to stay updated to make sure the business is ready.
Reverse Charge Mechanism – Simple and Practical Explanation
Reverse Charge Mechanism (or RCM) is a treatment of VAT that comes into play in the case of an import of service or goods. This may be a bit confusing for businesses especially start ups who face challenges when filing their VAT returns.
Reverse charge mechanism or RCM is mostly only for disclosures however, Filing VAT returns correctly is important to avoid penalties. Being compliant with the tax regulations is important.
Decriminalization of Bounced Cheques | All You Need to Know
In an effort to bring international best practices to the UAE economy, the central bank has announced amendments to the new transaction law.
We have already touched upon this in our previous blog. This updated law will come into effect on January 2nd 2022. Changing regulation surrounding bounced cheques will help the SME’s with their cash flow management.
These updated laws on bounced cheques will bring up UAE’s business environment up to international standards. This will make the UAE a much more attractive place to invest in.
China-UAE Trade Agreements
The Chinese President Xi Jinping’s recent visit to UAE is set to make gradual, yet large economic change in UAE. Both countries spoke about boosting different industries and have made 13 strategic agreements. These agreements include construction of embassies and cultural centers, advancing energy cooperation, e-commerce ties, numerous investments, and the infamous Belt and Road Initiative all of which the UAE government strongly supports, and would bring an inflow of income into the UAE.
Business Ownership Law To Boost Investments
UAE’s most recent investment law has become the talk of the town as it opens up business regulations further and allows 100 percent ownership to foreign investors in certain onshore business sectors. This law is currently awaiting the FNC’s approval and is planned to be introduced in the last quarter of this year.
Business Friendly Changes in Regulations
UAE has taken numerous steps recently for ease of business, by reducing visa requirements for businesses hiring expatriate employees. This not only cuts down on any additional expenses to hire an employee for a business but also increases bureaucratic efficiency.
Clarity on emirates wise classification of sale
For the purpose of filing for VAT, sales will have to be classified on the basis of each emirate.
VAT on Constructing your own house
All the construction related input VAT can be reclaimed if :
- The individual is a UAE national.
Warranties – VAT
What is a warranty?
A guarantee issued by the retailer or manufacturer to the consumer, promising a repair if necessary within a specified period time. This blog is briefly about how warranties are effected by VAT implementation.
Profit Margin Scheme
When second-hand goods are purchased from a non VAT registered user by a VAT registered user, purely for the purpose of resale, the VAT registered user can include the VAT on the profit margin.