As UAE companies edge towards their first corporate tax compliance obligations, businesses across the Emirates are gearing up for significant changes in their corporate tax landscape. This shift marks a crucial juncture for companies to reassess their business planning strategies, ensuring compliance while optimising their UAE corporate tax (CT) position.
Following the implementation of CT frameworks across the Middle East in recent years, we have been able to anticipate specific challenges that businesses may face in the UAE and share the lessons learned. As corporations may rush to meet compliance, filing and payment deadlines, the tax impact on the business from legal, accounting, financial and operational perspectives can often be overlooked. Instead of being an afterthought, tax considerations must now be at the forefront of business planning.
To ensure your business takes a holistic approach to complying with its new obligations, it is fundamental to consider how to be proactive rather than reactive in anticipation of UAE CT. It is especially prudent to determine which functions need to be brought in-house, which can be outsourced, and how to future-proof your business from a UAE CT perspective.
Functions to bring in-house
With the evolving CT landscape, it becomes imperative for businesses to bring certain tax functions in-house to enhance control and efficiency and maintain a key point of contact with the Federal Tax Authority (FTA). Depending on the size and scale of your operations, an in-house tax team equipped with expertise in the UAE CT regime can streamline compliance processes, mitigate risks, and ensure the timely submission of your tax returns. Internal tax expertise critically enables businesses to proactively identify tax-saving opportunities and structure solutions to optimise their tax position within the bounds of the UAE CT framework.
Strategic tax planning is another function that warrants in-house expertise. By aligning tax strategies with your overall business objectives, your company can effectively manage tax liabilities, maximise deductions, and capitalise on the incentives available under the UAE CT law. In-house tax professionals deeply understand your company’s legal and operational structure, enabling them to tailor tax planning strategies that align with your specific business needs and overarching industry dynamics.
Functions to outsource
While bringing certain tax functions in-house offers advantages, complex tax matters such as transfer pricing, international tax compliance, and tax controversy management often require specialised knowledge and resources. Outsourcing these functions allows businesses to access expert guidance, stay abreast of regulatory changes, and navigate cross-border tax complexities effectively.
Routine tax compliance tasks such as payroll tax processing, VAT filing, and bookkeeping can be outsourced to external service providers, reducing the burden on your internal resources while ensuring accuracy and compliance with newly imposed regulatory requirements.
As the UAE CT landscape advances, future-proofing your operations can enable your business to keep pace and get ahead. Here are some steps you can take to prepare your business from the top down:
- Reassess internal policies: Consider the importance of establishing an internal tax policy, a long-term tax strategy and risk management framework, and how to ensure effective implementation.
- Â Project planning: Consider how your budget will account for CT compliance and implementation costs, such as consultants, training and IT systems.
- Â Raise awareness: Educate and train employees on the impact of CT on accounting and reporting processes.
- Â Contracts: Review your tax position and any obligations under existing contracts and amend where required.
-  Embrace technology-driven solutions: Analyse your existing accounting systems’ capabilities and determine how to leverage tax software, automation tools, and data analytics to streamline tax compliance.
Remember, proactive tax planning is the key to maximising savings and staying compliant in the UAE’s dynamic tax environment.