Most UAE businesses are not prepared for UAE Corporate Tax as CS Events gather experts at the UAE Corporate Tax Forum to take a stock of the situation
About 85 percent of the UAE’s 650,000 registered businesses that belong to the Micro, Small and Medium Enterprises (MSME) categories in the UAE, are shifting from a tax-free environment to a tax regime unprepared, as the country prepares for the UAE Corporate Tax that comes into effect in June 2023.
The UAE will introduce corporate tax on business profits on financial years starting on or after June 1, 2023. There will be no tax on profits of up to Dh375,000, in a move that will help small businesses.
“The introduction of a Corporate Tax regime will help the UAE achieve its strategic ambitions and incentivise businesses to establish and expand their activities in the UAE,” HE Younis Haji Al Khoori, Undersecretary at the UAE Ministry of Finance, said in a statement earlier this year. “The new Corporate Tax regime takes the UAE several steps in meeting international standards on ‘tax transparency’ and prevent ‘harmful’ practices.”
According to the most recent estimates from the International Centre for Tax and Development, total tax revenues account for more than 80 percent of total government revenue in about half of the countries in the world – and more than 50 percent in almost every country. The GCC countries have been exception to these – remaining largely free from corporate or personal income tax.
In 2020, revenue from taxes and social contributions decreased by EUR 215 billion in the European Union compared with 2019, to stand at EUR5.53 trillion. Revenue from corporate income tax in the United States amounted to US$372 billion in 2021. The forecast predicts an increase in corporate income tax revenue up to US$505 billion in 2032.
However, as a country the UAE is new to taxation, so as the people living and the businesses active in the country.
Although businesses belonging to the MSME categories and therefore might not come under the purview of the 9 percent UAE Corporate Tax that is applicable on a minimum of Dh375,000 profits generated by businesses in a year of reporting, they however, will still have to undergo proper financial reporting and tax filing process, even if it means ‘0’ payable tax, experts say.
Most of them do not have proper accounting system, let alone financial reporting process that will make it difficult for them to file their corporate tax returns.
In order toexamine the situation, create awareness and help the private sector prepare for the UAE Corporate Tax, Cogent Solutions Event Management, a Dubai-based innovative events management organisation, is organising UAE Corporate Tax Forum on September 15, 2022, at the Dusit Thani Hotel in Dubai, that will encourage companies to start the auditing and financial reporting process for the UAE Corporate Tax.
“The private sector of the UAE that moves from a tax-free environment to a tax regime will have to undergo a cultural shift in the next nine months. They will have to first adjust to a new mindset and a new way of thinking, then get used to a proper accounting and financial reporting process – to start with,” Nizam Deen, Founder and Chief Executive Officer of CS Events – organiser of the UAE Corporate Tax Forum, says.
“Unfortunately, majority of the businesses registered in the UAE do not maintain proper accounting system and paperwork, especially those who are under the Dh375,000 Value-Added Tax (VAT) threshold. The introduction of VAT in 2018 helped many businesses to get used to the basic taxation process. However, UAE Corporate Tax will push them to engage in proper audited financial reporting process – that might become mandatory for all.
“The question is, does the UAE have enough pool of Corporate Tax professionals to handle the auditing and financial reporting of more than 650,000 businesses spread across the UAE? UAE Corporate Tax Forum will examine the challenges and opportunities for the taxation professionals in the coming months.”
Tax experts from government regulatory bodies, banks, law firms and tax authority associations are registering to gather at the UAE Corporate Tax Forum to understand the processes, implications and its impact on the economy.
Cogent Solutions Event Management’s, UAE Corporate Tax Forum will help businesses in UAE to understand the fundamentals of the UAE Corporate Tax and its inferences in the region. Most importantly this event will help create understand UAE Corporate TAX across your business and how to plan for it.
UAE Corporate Tax Forum is the most influential gathering on September 15th 2022, focusing on exploring the Corporate Tax landscape and its implications.
The event will be attended by 170+ senior delegates which includes the CFO, CEO, Head of Tax, Head of Audit, Head of Finance, Head of Accounts within the region to gain knowledge and insights from the top industry leaders and experts from the region about Corporate Tax and its challenges.
UAE Corporate Tax Forum will include interactive panel discussions and deep dive into insights derived from the experts such as Hany ElNaggar – Group Direct and International Tax Leader at a leading GCC Company, Basel Abughazaleh, Regional Business Tax Leader MENAT at HSBC; Seema Sharma, Group Head of Tax at Network International; Nauman Asif Mian, Chief Financial Officer of Bayt.com;, Francisco Sousa Soares, Vice President Tax at Taqa Group; Manish Arora, Regional Tax Manager at Schneider Electric; Faizan Dar, Tax Specialist at a leading FMCG Company; Aparna Lakshminarasimhan, Head of Group Transfer Pricing at GFG Alliance; Zeeshan Humayun, Director for Transfer Pricing at PwC, Moderator.
UAE Corporate Tax Forum will also provide an opportunity for tax consultant, law firms and Enterprise Resource Planning (ERP) solutions providers who are looking forward to show case their products and services and cater to the needs of the industry. The confirmed sponsors include PwC, MMJS as the Sponsor and Exhibitor respectively and TAQA as a supporting partner.