1. The date of issuance of any tax invoice;
2. The date payment is due as shown on the tax invoice;
3. The date of receipt of payment.

However, in the event that 12 months have passed from the date of provision of the goods or services and none of the above events has occurred, a date of supply will be triggered at the 12-month point.

Does the Certification of Construction Project Trigger the Date of Supply?

The certification of a construction project at a particular point in time will not trigger the date of supply for VAT purposes. However, certification of a project is often linked to other obligations such as a due date for payment, which may itself trigger the date of supply.

VAT Treatment of Retention Payments

A retention clause in a construction contract allows the client to hold a certain percentage of the billed amount, once the work has been completed, till the time the Defect Liability Period is over. This means that where the construction services are not considered to be contractually complete, VAT is only due to the extent of any payments received or invoices issued during delivery of the services. Under Article 26, even where the services are contractually complete, there is no tax point until an invoice is issued or payment is received or 12 months have passed – whichever is earlier. The VAT applicable on the retention payment would not be due to be accounted for by the supplier until the time the retention payment is received by the supplier, or an invoice in respect of the retention payment is issued, whichever is earlier.

Note: We at Lynchpin Training and Consulting have trained over 1,500 professionals on UAE/GCC VAT and also have VAT experience in assisting clients with VAT implementation and on-going VAT assistance. Please feel free to contact me at +971-4-4370704 or drop us a line at info@LynchpinConsulting.com and we would be glad to assist you in your VAT Compliance and VAT Return filing.

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What do we know about Corporate Tax?

The Corporate Tax, also generally called company tax, is a tax imposed on the net profit of the corporation and other similar organizations. It is a directly imposed tax on income generated excluding the cost of materials, administrative expenses, and all other kinds of expenditures on research, marketing, and sales.

Corporate Tax can be reduced from the set limit by the Government by finding the loopholes in the tax policy and by reducing the on-paper business income by increasing different expenditures. We will discuss in detail how to tackle the Corporate Tax situation through different strategies.

When is the UAE government implementing Corporate Tax?

UAE was considered a tax haven as there was zero income tax implied on the profits generated by the companies. Now, the situation is changing as more and more people are shifting to the business arena. The government has seen an opportunity to increase its revenue by implying taxes on the profits of different entities.

The Ministry of Finance (MOF) of the UAE government announced on 31st January 2022 that new taxes will be implemented in the UAE. They have announced the implementation of the federal corporate income tax (CIT). It is expected to be implemented from 1st June 2023 throughout the United Arab Emirates.

What are the main features of Corporate Tax implemented by the UAE?

The details of the upcoming Corporate Tax are explained below this will help the business holders to prepare for what is coming their way. It will help them to analyze the problem and prepare for the problem.

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Proposed rates of Corporate Tax

UAE which was previously known as tax heaven still isn’t applying high tax rates on their corporations. The rates proposed by the UAE government are quite reasonable as compared to the rates throughout the world. Different rates of Corporate Tax according to the business scale are as follows:

• 0% or no Corporate Tax on the small-scale business which is only earning taxable profits up to AED 375,000 approximately 102,000 US dollars
• 9% will be the rate of Corporate Tax for the businesses earning taxable profits above AED 375,000
• Multinational organizations generating huge revenues above 1.2 billion AED will get a different Corporate Tax treatment to be announced in due course.

Scope and subjected businesses

Corporate Tax (CIT) will apply to the following incomes:

• The implemented Corporate Tax will apply to the profit-generating commercial, industrial, and other kinds of professional business activities.
• It will also be implemented on the individual level. However, only on those individuals that are required to have a business license or permit to work and perform any kind of commercial or professional activities on the premises of the UAE.
• Freelancers also come under this category if they are working under some kind of freelancing license.
• This Corporate Tax will also be implemented on local banking services (foreign banks are already paying tax on their incomes)

Exemptions from Corporate Tax

The Ministry of Finance of UAE has announced that new taxes will not be applicable on the following types of incomes:

The Federal and Emirate Governments and their departments, authorities and other public institutions

• Wholly Government-owned UAE companies that carry out a sovereign or mandated activity, and that are listed in a Cabinet Decision
• Businesses engaged in the extraction and exploitation of UAE natural resources that are subject to Emirate-level taxation (T&Cs apply);
• Charities and other public benefit organizations that are listed in a Cabinet Decision (T&Cs apply);
• Public and regulated private social security and retirement pension funds;
• Investment funds (T&Cs apply)

What are the steps we can take to prepare our business for Corporate Tax in UAE?

When any problem arises, it is necessary to first recognize the problem, gather the information about that problem, and then look for the solution. So before solving this tax problem we need to gather useful data about Corporate Tax and then formulate a strategy to minimize the Corporate Tax as much as possible.

The following steps can be useful to prepare your business to fight the upcoming Corporate Tax reforms in UAE:

Accept and embrace the reforms

We should prepare our business for Corporate Tax and the first and foremost step is to have a basic understanding of the Corporate Tax implication. A lot of stuff is available on the website of the Federal Tax Authority or you can also check this link for Corporate Tax Training in UAE.

Communicate the issue among employees and board members

Once the problem is identified it is time to communicate all the issues and challenges you will face due to Corporate Tax. The financial, legal, and operational impacts of the new Corporate Tax should be communicated to all the stakeholders, owners, and board members so that a solution can be devised with the consultation of everyone involved. Also don’t forget to check on following items while preparing for Corporate Tax.

• Get your business Accounting Practices aligned as per IFRS
• Tax planning culture to be in place specially for large groups
• Staff Training for Corporate Tax awareness
• Review the pricing structure to be commercially viable
• Review the longterm suppliers’ contracts to have impact analysis on cost structure, as Corporate Tax will hit the bottom line of the business
• Cash Budgets to account for the adverse working capital effect

What is the importance of Corporate Tax consultants?

Professionals can help business owners to better understand the problems related to tax reforms and guide them about the ways through which this Corporate Tax can be minimized. Corporate Tax consultants can help the business owners in the following ways:

• They can guide you if the taxes are applicable to your business or not
• They can help you sort out your finances and guide you about what kind of operational and other expenditures should be added to your finance sheet
• They can help you file taxes and take care of all the legal matters which will not be easily understood by business owners
• They will help you with the proper documentation of your finances and look for any gaps left which can damage your financial growth

Whether you engage a Tax Consultant or prepare it on your own, now is the right time to start assessing the impact of Corporate Tax on your business.

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What are accounting services?

accounting services are the group of services provided by professionals in the field of finance to measure, process, and communicate financial information about different sectors of economics. These sectors mainly include management accounting, taxation services, auditing services, etc.

These accounting services play a vital role in successfully carrying out business activities. It helps us to track our business growth through income and expenditures management.

What are the most common types of accounting services in Dubai?

There are lots of different types of accounting services in UAE specially there are various kinds of accounting services provided in Dubai but the most common ones are explained below:

Bookkeeping

Bookkeeping is the most basic and essential of the account services provided by accounting firms. It is necessary for small to medium businesses as they have to keep track of their accounts and financial expenditures. This service is provided in most parts of Ajman, Dubai, and other states of UAE as the most basic one.

Financial systems are set up by the bookkeepers with the help of financial software. As your business gets expanded, EPR automated financial software proves to be very beneficial for keeping an eye on your finances.

Tax accounting

As the name suggests, accounting firms also provide their expertise to manage tax returns and filing procedures. Tax accountants provide their services in helping us to avoid unnecessary tax deductions and paying unnecessary taxes. The recent announcement of corporate tax in the UAE will make this field of accounting more important as people will surely need guidance on this matter. So, accounting services in Dubai specially must be acquired in order to avoid unnecessary taxing and secure your business financially.

Accounting audit

Audits are an important part of accounting as they make sure of the accuracy and validity of your financial records and statements. Audits provide us with an in-depth analysis of the financial status of our business.

Auditors play an important role in managing our financial records and save us from any penalties during internal financial audits.

Payroll related services

This is a specialized service provided by accounting firms at the request of the employer. Service providers are requested to manage the payroll of your company by preparing payroll and analyzing the employee’s salary and benefits.

Forensic accounting

Forensic accounting is a specialized field that involves tracking any inaccuracies, frauds, and missing funds present in the financial reports and statements. This service helps you to catch the culprit in case of tax fraud or any other discrepancies.

Signs you need to hire the accounting services in Dubai for your business

If you are a business owner having some background knowledge of accounting and tax laws and you know how to operate accounting software then you can handle the finances of your business. But it is a very tiresome task and can divert your focus. You will not be able to dedicate your time to the growth of your business. So if you see the following signs then it is most appropriate that you hire an accounting firm to carry out accounting services for your business:

1. Bookkeeping distracts you from other operations

It is easy to manage books and keep a financial record during the starting phase of business setup. You can manage it with Excel sheets or any other accounting software. But when the business start to grow you need to shift your focus to other operations like management, marketing, sales, etc so you need to expand your team as well.

It is the best time to hire an accountant or take services from an accounting firm to manage your finances without getting any kind of burden.

2. Rapid Business Growth

Every business owner has only one goal, which is to expand his business rapidly and take it to new heights with passing time. But when the business expands, its responsibility with it grows as well. The owner needs to find more staff and better inventory because of which the financial burden increases rapidly as well. So it is a clear indication for hiring someone with expertise to lessen your financial burden and manage your finances properly.

3. Net profit not increasing

When you are generating a hefty amount of gross profit and your revenue is getting bigger and bigger but your net profit is not increasing proportionally, it is a sign you need accounting services to manage your expenditures. A skilled accountant will help you find loopholes in your business structure and will help you devise a plan to better manage your expenditure according to your income.

4. At the time of large purchases

Dubai is a business hub and large purchases happen there on regular bases. It is always better to seek professional help when you are about to spend big on some project. Just to be extra sure before investing in any project or making a large purchase, it is advisable to procure help from accounting professionals and accounting services in Dubai are very helpful in this regard. They will assess the financial stature of your company to make sure your company is ready to make such a large purchase. They also manage all the legal and financial aspects of the purchase to avoid any kind of fraud or hidden charges.

5. Tax audit is around the corner

General business owners don’t have proper knowledge of tax laws and this can get them in trouble when the time for a tax audit arrives. Tax audits are very tiresome and require lots of paperwork and financial record keeping.

A full-time accountant or accounting services from a firm are a must to tackle this situation as they can help you organize your financial record and have the required legal knowledge to satisfy IRS inquiries.

6. When you need to lessen tax deductions

Many business expenses can help you wave off tax deductions you owe to the government. Business owners do not include some expenditures like an online subscription or phone bills that can help them lower the tax owed.

accounting services in Dubai are required in this matter as they have proper knowledge of all tax-related matters and laws. So, they can help you wave off a hefty amount of tax deductions. New corporate taxes announced will raise the needs of accounting services in Dubai.

7. Keep an eye on cash flow

Business owners generally face the problem that at the end of the month they don’t have any cash to cover their expenses due to reasons like late payments, insufficient clients, or any unexpected expenses. This cash flow problem can be prevented by keeping a proper track of your expenditures and income.

Accounting firms help you to manage the cash flow through proper bookkeeping software and skilled professionals. This will help us to manage our loses and keep us prepared for any emergency purchase.

8. Concerned about Fraud

A business or any company has lots of people working together. So, there is always a risk of fraud or any negligence that can cast a big dent in the financial structure of the company.

Forensic accountants help us in this regard to catch the culprit in case of any fraud and in this way help us to avoid any negligence in future.

9. Professional financial reporting

When you are looking for investors or loans, you need to have proper records of your financial history. An investor requires professional records and reports of your financial data before giving you any kind of investment.

So accounting services can help you make a professional financial report that will clear all the doubts of the investor and will help you secure the much-needed investment.

The business world is growing day by day so the financial industry is getting more complex with it. So, the accountants are specializing in a particular field of accounting and provide services in the area of their expertise to help grow different businesses. The importance of accounting services in Dubai is increasing rapidly and so are accounting firms in Dubai. So, we should study the market and choose the best accounting services according to the need of our business.

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Small businesses that can’t hire a permanent CFO can acquire CFO services from an accounting firm to carry out the required financial matters of the business. In this article, we will discuss the importance of CFO services and how they can help you to grow your business exponentially.

Who is a Chief Financial Officer (CFO)?

The chief financial officer (CFO) is an officer of a company or organization who is in charge of the company’s finances, including financial planning, financial risk management, record-keeping, and financial reporting. In some businesses, the CFO is also in charge of data analysis. Some CFOs are given the title CFOO, which stands for chief financial and operating officer.

The CFO’s role has expanded significantly. Traditionally regarded as a financial gatekeeper, the CFO’s role has expanded and evolved to that of an advisor and strategic partner to the CEO. The majority of large-company CFOs have finance credentials such as a Master of Business Administration (MBA), Master of Science (in either Finance or Accounting), or CFA, or come from an accounting background such as a Certified Public Accountant.

Outsourced CFO companies in UAE?

UAE is a haven for accounting firms because every other businessman is looking to hire financial services in UAE. An outsourced CFO Service in UAE is one of the most acquired Services. Specialized companies are providing these services.

Outsourced CFO firms are organizations that provide businesses with on-demand, part-time, or brief CFO services. They are frequently called upon to improve a company’s financial strategy by integrating advanced forecasts or systems, to assist a company in overcoming a financial challenge such as cash flow issues or unsustainable growth, to help a company get through an event such as an audit or capital raise, or to assist in achieving a goal such as preparing for a strategic exit.

Why do we need smart CFO Services in UAE?

UAE is a country that is financially very strong and huge cash flow is happening in every sector and business of UAE, especially in Dubai. New small businesses are starting and blooming in every corner of UAE so the following are the reasons we need to hire CFO services in UAE:

• Dubai has become a business hub in recent years but UAE is new to the financial world as compared to other developed countries and people there may lack the necessary knowledge to acknowledge the right financial opportunities.
• Due to the numerous other operations on which business owners must focus when they launch their business, the owners may overlook the company’s financial procedures, resulting in significant unanticipated losses.
• UAE is a rich country and investments there are larger, longer-term, and difficult to reverse, the high risk should be managed by exercising caution when handling corporate finances.
• New businesses are more prone to failure; they necessarily require the use of additional techniques to achieve profitability.

Common CFO Services in UAE and their importance

CFOs have expertise in financial matters and they can be very beneficial for the growth of your business. You can choose the services you require for the growth and smooth running of your business.
In this section, we will explain the services provided by CFO services so we can know their importance. General outsourced CFO services provided in UAE are explained below:

• Financial Strategy

The most significant advantage a CFO will bring to your organization is an elevated level of financial strategy. A CFO is focused on your organization’s detailed short- as well as a long-term strategy. An outsourced CFO is an expert in long-term planning and determining what is required to move your company from where it is now to where you want it to be.

• Financial Forecast

A financial forecast is one of the most effective tools that a company can have. It is a comprehensive operational and financial blueprint that provides a step-by-step guide to get you from where you are now to where you want to be. A financial forecast necessitates analysis, strategy, and pragmatism.

• Budgeting

A forecast is typically a 5- or 10-year projection of costs and operations, whereas a budget is a detailed plan of your projected financials. Even though this is a shorter timeframe than the strategic forecast, a budget is critical to an organization’s day-to-day operations. A strategic CFO will frequently use a forecast as a rolling budget to ensure that your financial performance aligns with your company’s goals and plans.

• Acquisition and Mergers

CFO plays a vital role in expanding your business by providing it with financial stability and proper business setup. CFO carries out his operations and ensures the business is in a perfect position to expand through mergers or acquisitions.

• Cash Flow Analysis

Cash flow is a major problem every businessman faces in the financial world. Solving cash flow problems entails more than simply increasing revenue–it entails understanding how much you’re spending and where you’re spending it, as well as knowing which expenses are critical to your organization’s growth and which can be cut or modified. Outsourced CFOs dig deep into your financials to determine how to improve the financial structure of your business.

• Financial Reporting

Finances are critical to an organization’s everyday operations, and financial reports keep you informed of your current (and future) standings. Allow a CFO to analyze your reports and provide you with the most important takeaways that best support your business needs. This allows you to form new strategies for your business and stay informed of events and has the information you need to make critical business decisions.

• Raising Capital

Raising capital is typically a grueling task for a company, but an outsourced CFO can help make the process go more smoothly. An outsourced CFO typically brings a network of financiers to whom they can introduce you and help you generate the capital.

When do you need to hire CFO Services in UAE?

• Would you be able to secure and progress past a Series A without the assistance of a CFO?
• Would you like a consultant to help you with your workflow and increase your bandwidth?
• Do you have the expertise to forecast future events based on historical data?
• Do you understand cash flow, profit and loss, the bottom line, and so on?

CFO Service to make If  you don’t know the answer to any of these questions then it is the right time to hire e your business prosper.

How CFO services will improve your business in UAE?

A CFO is a highly qualified financial professional who can provide his services to grow your business and turn it into a profitable organization. He can improve your business finances by doing the following operations:

• Creating business tactics to help you achieve your company’s vision and goals.
• Ensuring that your company follows all local regulations, statutes, and policies
• Examining the current global economic forecast
• Using automation and artificial intelligence to cut costs (AI)
• Providing accurate financial data regularly, along with proposals for both operational and strategic levels
• Reviewing your company’s financial pulse regularly and advising business management on the implications of all financial actions
• Managing your cash liquidity so that your obligations are always met.

Business Importance of temporary CFO Services in UAE for small sees

Hiring a full-time CFO used to be an unnecessary expense that only large corporations could afford. Although small to medium-sized businesses would benefit from a CFO’s expertise, the cost was simply not worth it. Because most small and medium-sized businesses cannot afford a full-time CFO, particularly in the early stages of building a business, which is an unfortunate situation because this is precisely when a business requires good financial direction.

Now the situation has changed Outsourced CFO Companies provide an incredible advantage for any company, regardless of size, to have the value of an on-board CFO at very affordable rates for a short period. More specifically, they will collaborate with your team to determine whether it’s time to hire a CFO and tailor a plan strategically positioned for your specific needs.

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Technology helped engineers and IT experts develop numerous accounting software that is becoming fundamental in managing the financial matters of the business. In this article, we will discuss the services accounting software provide in UAE and will also discuss the things you need to consider while choosing accounting software for your business in UAE.

What is accounting software?

Accounting software is a computer program that assists auditors and accountants in recording and reporting financial transactions for a business. Accounting software functionality varies from product to product. Larger companies may opt to implement a customized solution that integrates a large amount of data from various departments. Small businesses frequently select off-the-shelf products.

Business owners who want to lead their business to success must invest in the right accounting software. It should not only be able to present a quick summary or detailed presentation of profits and losses but also explain other financial transactions. It should also keep you in compliance with the legal requirements of the specific region or country in which your business operates. We are talking about the business in UAE so we should choose such accounting software that is compatible with the financial setup of the UAE.

Why use accounting software for your business in UAE?

Business is done at a very high level all around UAE. Financial matters are so complex that you need help from technology in addition to the expertise of accounting firms and financial officers. Accounting software helps you in this regard and the following are the benefits we can get by using accounting software for your business in UAE:

• Accurate Forecasting

It is one of the primary benefits of accounting software. Without a solid system, it would take a long time to understand the patterns and trends in your financial performance. Accounting software gives numbers meaning, assisting you in determining where to cut costs or invest more.

• Cost Saving

Accounting and finance software takes control of your revenue framework, removing the need to outsource finance management to a third party. Simultaneously, they cut costs associated with printing and distributing documentation and storing sensitive data in secure and monitored locations.

• Tax Compliance

Most of the top accounting software is dedicated to payroll assistance, reporting, and automatically adhering to tax regulations. Once activated, they become your primary source of tax and audit information, storing all pertinent information for you to maintain a transparent workflow.

• Productivity

Accounting software should be a business owner’s first choice if he or she needs to choose a digitized service to improve performance. These systems delve deep into the most time-consuming, day-to-day tasks of businesses, collecting, organizing, and analyzing their most sensitive data, and, most importantly, making better use of their money.

• Security

Financial data is the most important information in a company and must be kept safe from unauthorized access or loss. Accounting and finance software do exactly that for its users and provides a safe working environment to the users.

Considerations while choosing accounting software for your business in UAE

Different type of businesses has different financial management requirements. In UAE all types of businesses are blooming and every business is looking for some different accounting software that fits its financial system. So, the following are some considerations we need to keep in your mind while choosing accounting software for your business in UAE:

• Customization

There is no “one-size-fits-all” accounting system because each company runs specific finance calculations and follows a different set of rules. If you can’t find a specific system that matches your business model, look for an adjustable program that can adapt to your operations and that can grow with your company.

• Pricing

It is an obvious assessment that the more you pay the better services you would get from your accounting software. If you can afford a premium version of the compatible software then you should surely go for that. Otherwise, look for the affordable but efficient accounting software that is available in the market.

• Ease of use

Accounting calculations and procedures are quite tough and require adequate skills to carry out these financial tasks. You should choose such accounting software that will give you an easy-to-fit-in environment where you can find necessary functions on the dashboard of the accounting software. Operations should be performable in a rather short period.

• Mobile usage

In the early years of this technology, mobile-based accounting systems were only restricted to big businesses but now even small businesses can afford this luxury. Select accounting software that also provides its services in Android or IOS applications.

• Connectivity

You might be using different types of software to manage your financial matters. Choose such accounting software that gives you an option to interlink various software so that you can easily access the data and financial records in all of this software simultaneously.

• Security

All of the financial records and information of the business is provided to accounting software so it is pretty much prone to hacking attacks from our competitors or hackers. You should choose accounting software that provides bulletproof security to your financial records and prevents it from all malicious attacks.

What are the different types of accounting software we can use in the UAE?

Many different operations are required to manage the finances of the business in UAE. Each business requires a different type of operation for smooth running. Accounting software has different types based on the type of function it can perform according to the financial requirements of the business. Following are some common types of accounting software we can find in the UAE:

• Billing and Invoicing Systems

Billing and invoicing systems carry out regular, day-to-day tasks for businesses, such as check writing and notifying customers of upcoming payments. They are required to maintain control over the accuracy of accounting figures and to make the service appear more professional and credible. Billing and invoicing tools assist businesses in documenting financial records and operations. They also help in preparing businesses for authorization and validation.

FreshBooks, Zoho Books, and Invoiced are a few examples.

• Enterprise Resource Planning System

This is one of the most important types of accounting software. It integrates all systems for product planning, material purchasing, inventory management and control, distribution, accounting, marketing, finance, and human resources. The most recent services of accounting software allow the company to learn from its mistakes and plan better strategies in the future.

Examples include Intacct, Bright pearl, and Odor.

• Payroll Management system

These tools were created to perform a variety of tasks, such as calculating employees’ salaries, calculating deductions, depositing salaries directly into employees’ bank accounts, producing tax forms and pay slips, and more. They will help you secure your financial transactions, cut costs, and prepare detailed reports that will help you in the long run.

Examples include Xerox, Zenefits, and Account Edge.

• Time and Expense Management Software

This accounting software is modeled to help businesses expedite billing cycles and approve expenses on the go, and they are usually configurable enough for any business to adapt to its operational pace. The main reason for them is to help collect payments faster and detect slow and ineffective practices that were previously invisible. Their greatest advantage is the ability to generate detailed graphical reports on how time and resources are used in each company.

FreshBooks, Zoho Expense, and Expensify are some examples.

Best Accounting Software for Small Businesses in UAE

Accounting software is essential for freelancers, entrepreneurs, and small business owners just as much as it is for larger corporations. Finding the best accounting software for microbusinesses necessitates consideration of both price and usability. According to expert reviews and general public consensus in UAE, Zoho Books emerges as the best accounting software for small businesses in Gulf countries, especially in UAE.

• Zoho Books

ZOHO stands out as compared to its competitors due to its versatility and ability to connect with hundreds of everyday programs used by millions of people. Cloud storage is simple, whether you use Dropbox, Google Drive, or something else. Its mobile versions are available for IOS, Android, and even Windows Phone, ensuring that you are never disconnected from your work. You can manage sales, payments, and banking, as well as keep track of estimates, projects, and workflows. VAT integration is one of the most important aspects following the approval of the new tax laws. ZOHO is one of the few accounting software that has been officially approved by the UAE’s FTA (Federal Tax Authorities) and will undoubtedly assist in this case.

Choice of accounting software depends on the need of the business, its financial requirements, and the features this software can provide to assist your business in the best way possible. You should compare different accounting software and choose the most suitable one for the financial matters of your business.

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One such tax is Value-Added Tax (VAT), one of the most common taxes, and small business owners do not have extensive knowledge about this. In this regard, VAT consultancy services are essential to guide small business owners about VAT Return Filing in UAE. They provide VAT Return Filing Services to SMEs. VAT Training services in UAE are also available, which guide business owners in matters related to knowledge of VAT and its application.

What is Value-Added Tax (VAT)?

A value-added tax, or VAT, is a consumer tax imposed at each stage of the supply and retail chain to yield revenue for the government. VAT imposes a tax at every production stage, from the purchase of raw materials to their assembly. The total value-added at each point of sale is added to the final retail sale price, making the end-user liable for the full VAT. To be reimbursed from the previous step in the supply chain, each wholesaler, producer, or retailer in the supply chain adds their applicable percentage of VAT tax to a sale.

In contrast to the progressive income tax system, which charges people with higher incomes higher income tax rates, VAT is a flat tax across the board. One criticism of this tax policy is that lower-income people end up spending a more significant proportion of their earnings on goods. In UAE, many small businesses suffer from this tax, so VAT consulting services are required to help them.

When was Value-Added Tax imposed in UAE?

UAE was a tax-free region and was well-known to be a Tax Haven. No tax was used to be implicated to different businesses. Still, the new government has decided to impose taxes on various companies to increase the revenue for the government of the UAE.

Value Added Tax (VAT) was imposed in the UAE in 2018, and recently Corporate Tax was imposed in the UAE by the government, which will take its impact in 2023. VAT was recently introduced in 2018, and the people of UAE didn’t know much about the taxes, so this gave rise to the importance of VAT consultancy services in Dubai, UAE. Many accounting firms took this opportunity and introduced their VAT consulting services. To grow your business, finding the best VAT consultants in UAE is necessary.

Rate of Value-Added Tax on businesses in UAE

The general VAT rate is 5% and applies to most goods and services in the UAE, with some goods and services subject to a 0% rate or VAT exemption.

The 0% VAT rate applies to goods and services shipped outside of the Gulf Cooperation Council (GCC) member states, worldwide transportation, the supply of crude oil/natural gas, the first supply of residential property, and particular business sectors like health care and education. The value-added tax rate is 5% for other businesses in the UAE, and it has positive implications for businesses in UAE.

Criteria for VAT Registration in UAE

Value-Added Tax (VAT) applies to all businesses in the United Arab Emirates. Specific criteria must be met when a company registers for Value Added Tax (VAT). All businesses that want to register for VAT have been divided into three groups.

• Mandatory Registration

A company’s revenue is AED 375,000 or more must register for VAT filing.

• Voluntary Registration

If a company’s revenue is above AED 187,500 or up to AED 375,000, then the company can choose whether or not to register for VAT. They are not required to register the company, but it is always a good idea if the opportunity arises.

• Exemption from Registration

In such a case, if a company’s revenue is less than AED 187,000, it is not required to register for VAT. The company will be exempted from the tax, so small and newly started businesses will have room to breathe.

Steps for VAT Return Filing in Dubai

Taxable businesses must file VAT returns with FTA regularly, typically within 28 days of the end of the ‘tax period’ defined for each type of business. A ‘tax period’ is when the applicable tax must be calculated and paid. VAT Return Filing services can help business owners avoid non-compliance with the country’s tax policies.

The steps involved in the VAT return filing in the UAE are as follow:

1. Make sure that you have a registered account with Federal Tax Authority

2. Provide all the details to the FTA about the VAT Registered Business entity.

3. Submit all the necessary information about VAT sales, expenses, and any other inputs in a single financial year

4. Submit the calculations related to the Net VAT that is to be paid to FTA

5. Submit a declaration to testify the accuracy of all the data you have provided to the FTA

Benefits of compliance with VAT Registration in Dubai

Implementing VAT will have implications not only on accounting procedures but also throughout the different organizations in UAE. In the short term, some goods’ prices may rise, affecting both consumers and businesses. But in the long run, the Value Added Tax will benefit the country’s economy. When the government begins to make profits, it will also benefit the companies and people in the country. The following are some of the long–term benefits of VAT Registration on businesses in the UAE:

1. It will be a step forward in reducing dependence on the oil and gas industry
2. It will allow effective and efficient utilization of resources
3. It will allow creating of new job opportunities with VAT consultancy and training services
4. It will help in maintaining accurate financial records
5. It will increase customers’ confidence in businesses that comply with VAT policies

Role of VAT Consultancy services in Dubai

An expert colleague on the panel can help you navigate complex tax issues. The consultants in VAT consultancy services will assist you with everything from VAT return filing to payment. In Dubai, VAT is applied, and consultancy services play the following role in helping small business owners:

• Strong Monitoring

A VAT consultant acts as a keen observer, closely monitoring all transactions. They advise the company on which fronts action is required.

• Information on the country’s tax laws

A value-added tax consultancy services monitor these issues and alert a company when necessary. The services of the best VAT consultancy firm are required for better compliance with the ever-changing rules.

• Assistance in VAT registration

VAT registration in UAE is a time-consuming and technical procedure. A business frequently lacks information on how to complete it. Having specialized VAT consultancy services can be beneficial in this regard.

• Accurate submission

Once a company is VAT registered, VAT return filing is the next step. Tax authorities require that all businesses adhere to the standard format and meet the deadlines. A company cannot meet these requirements without Dubai’s best VAT consultancy services.

Benefits of VAT Training services in the UAE

Nearly two years after the introduction of Value Added Tax (VAT) in the UAE, many businesses are still unfamiliar with its basic ideas and concepts. VAT training services assist individuals and organizations in understanding the history of VAT, identifying its benefits and drawbacks, and understanding how it operates in the business setup of the UAE.

Joining a VAT Training service has numerous advantages. Some of them are listed below:

• It protects your company from potential tax non-compliance.
• It alleviates the fear and tension associated with tax obligations.
• It gives your employees more power through the knowledge of VAT.
• It allows you to calculate the correct amount of tax deductions
• It makes the VAT Return Filing procedure easier for a trained employee

Choosing the Best VAT Consultancy and Training Services in Dubai, UAE

Most UAE states decided to implement VAT on January 1, 2018. It was done to raise funds for infrastructure development. This posed a significant challenge for businesses because most of them were unfamiliar with submitting VAT returns in the UAE. To stay on the right side of VAT law, one should hire the best VAT services in Dubai to assist with return filing. The following things should be considered while choosing the best VAT consultancy and training services in Dubai:

• The reputation of the firm providing VAT consultancy and training services
• The license of the firm
• The professional environment of the firm providing VAT Services in Dubai
• Experience in the firm in handling VAT Return Filing in Dubai
• Customer support provided by the firm

Why Choose Lynchpin for VAT Consultancy and Training Services in Dubai, UAE?

Are you looking for VAT Consultancy and Training services in the UAE to assist you in becoming VAT compliant? Lynchpin Consulting and Training has already provided several businesses with VAT Consulting and Training Services in UAE. We can help you in preparing for VAT compliance in the UAE. Our VAT consulting services in the UAE include the following:

• Implementation of VAT-compliant Accounting Software for your organization
• Bookkeeping and Accounting services to keep you compliant with VAT policies of the UAE
• VAT Returns Filing services in accordance with UAE VAT policies
• VAT registration for companies in the UAE

VAT training sessions and certifications

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Dubai was once a tax-free zone, which is why it was titled a Tax Haven. Dubai has become a business hub where small businesses can thrive due to the non-existence of tax rates and implementation. However, the UAE government has decided to impose Corporate Income Taxes on firms in the UAE. We will discuss what shareholders and business owners think about this newly implemented tax.

What do we know about Corporate Income Tax?

A corporate tax is imposed on the profits of a corporation. Taxation is imposed on taxable income, which includes revenue minus the cost of goods sold (COGS), administration costs, marketing, and advertising cost. It is also imposed on the cost of maintenance and other operational expenses.

Corporate tax rates vary significantly from country to country. Some countries are considered tax havens due to their low rates of corporate income taxes. We can take advantage and eliminate various deductions from corporate income tax through subsidies and loopholes in the tax system. So, the actual amount we pay as the corporate income tax can be much lower than the proposed rate by the government.

When is the UAE Government Implementing Corporate Income Tax?

Historically, many business owners in the UAE have paid no income tax on their profits. This is about to be revolutionized, with the Ministry of Finance (MOF) announcing that the UAE government will implement a federal corporate income tax (CIT) in the UAE. This tax implementation announcement was made on January 31, 2022. This new era of CIT implementation is expected to take effect for financial years beginning on or after June 1, 2023.

This move is motivated by the wish of the UAE government to meet international tax benchmarks. Similar activities in the neighboring Gulf States inspired this tax imposition. The government will impose taxation on established business organizations, and small businesses and start-ups will be protected. The UAE will continue to have one of the lowest corporate tax rates in the world. Still, this tax will help the government to get income other than that from hydrocarbons.

Shareholders’ perspective on Corporate Income Tax Implementation in Dubai

After announcing a new corporate income tax, the UAE government stirred up a further discussion among business owners and shareholders. Shareholders and business owners have mixed feelings about these newly imposed corporate taxes. Some see it as an opportunity for the government to increase the country’s revenue, which will benefit businesses in the long run. In contrast, others consider it a burden on their already struggling businesses.

Who are Shareholders?

A shareholder is a person, corporation, or organization legally owning a share of a corporation’s stock. Shareholders invest in an organization and, in return, get some share or equity of the company. Shareholders own the company in principle and enjoy various rights and duties. This type of ownership allows them to benefit from a company’s success without involving themselves in operational matters of the company.

Shareholders are entitled to capital gains and dividend payments as they own shares of the company, which makes them co-owners. Shareholders also have certain rights, which are as follows:

• Shareholders have the privilege of voting in shareholders’ meetings which gives them a role in authorizing the board of directors
• Shareholders can also vote on distributions of dividends or merger process

Shareholders may lose their entire investment in the event of bankruptcy as they are co-owners of the business.

How do Shareholders pay Corporate Income Tax?

Corporate earnings are taxed at two levels. A corporation pays corporate income tax on its revenues, and its shareholders pay an extra tax on dividends from the corporation’s after-tax profits. The shares of a company become more valuable when they reinvest their earnings for the betterment of the organization. As a result, when shareholders sell their shares, they must pay capital gains tax.

The corporate income tax plays its role minimize after-tax returns for shareholders. As a result, shareholders must move some of their investments away from the corporate sector. Shareholders will try to move some of their assets to non-corporate businesses and others to foreign companies that are not subject to UAE corporate income tax. Rolling out these investments to these other businesses reduces the after-tax return on these sectors’ investments.

Shareholders’ Perspective on Corporate Income Tax

Different business owners and shareholders have shared their perspectives on the newly imposed Corporate Income tax in UAE. Some of the significant opinions about this new tax are presented below:

Chris Payne’s Perspective

Chris Payne is a significant personality in Dubai’s finance and economic sector. He shared his perspective on corporate income tax. Payne said in the interview that this announcement of the new taxes shouldn’t be a surprise for the people of UAE. He believes that it is an important decision by the Government of UAE as it will help to establish a source of income for the government. Also, this income source will not depend on volatile sources such as corporate dividends and investment income.

Financial Professional’s Perspective

Mark Hemmings, a finance and tax professional, admitted that the mixed reaction of the shareholders to this corporate tax is understandable. On the other hand, he believes this decision is very practical and sensible. He thinks that corporate tax will help companies in UAE comply with global tax rules better.

 .1 Economic Researcher’s Perspective

Taufiq Raheem is an economic researcher and has worked thoroughly to research this newly imposed Corporate Income tax. He shared his perspective that this tax will help UAE to compete with developed economic powers. He also believes that the UAE’s corporate tax rates are way lower than other developed countries.

.2 Ministry of Finance’s Perspective

Younis Haji Al Khoori is a secretary of the Ministry of Finance (MOF) of UAE. While announcing the corporate tax implementation in UAE, he shared his perspective that UAE is a country that helps various business start-ups to grow and become global. It is done by providing innovation and investment opportunities. He believes that this new corporate tax era will establish UAE as a business hub due to its various tax treaties and investment opportunities arising from this Corporate Tax regime. He affirms that imposing this corporate tax will bring a new era of business expansion to the UAE.

 These statements indicate that most of the shareholders believe that corporate income tax will benefit the UAE’s economy in the future. Some have doubts about its effect on already struggling businesses. But according to the unanimous perspective of shareholders, corporate tax is a step in the right direction for economic growth.

Objectives of Corporate Tax according to Shareholders’ Perspective

Throughout its history, the UAE has been tax-free due to the reliance on oil and gas reservoirs to meet its needs. However, as the world shifts toward electrical transportation and appliances, the UAE government is looking for other sources to generate revenue for the betterment of the country. According to the shareholders’ perspective following can be the reason to impose corporate tax in UAE:

1. Meeting Global Standards

The UAE is far behind the rest of the world regarding taxation. From shareholders’ perspective, this new tax will help comply with global tax standards.

2. Source of Revenue

The government of UAE recognizes that the country’s overall revenue cannot be purely based on the oil and gas reservoirs. The implementation of corporate taxes has provided the country with a new revenue source. As a result, the long-term goal of imposing corporate tax in the UAE is to support the country’s economy.

3. Protecting Small Businesses

The government has stated that it will lessen the financial burden on small businesses while protecting them. Corporate tax is primarily imposed on multinational corporations or companies with high annual revenues. So, according to the shareholders’ perspective, corporate tax will benefit small businesses and start-ups in the long run.

Why Choose Lynchpin for Corporate Tax Consulting & Training in Dubai?

Lynchpin Training and Consultancy is one of Dubai’s most well-known institutes for accounting and financial training courses and consultancy services. As we all know, the government will impose corporate income tax in the UAE on June 1, 2023. So, our training and consultancy services will assist you in preparing your business for the upcoming corporate tax. We provide an in-depth understanding of corporate tax through our consultancy services. Training courses related to the corporate tax regime in the UAE are also designed by Lynchpin Training. We will provide you with assistance to grow your business in this new financial environment.

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The impact of inflation on small businesses is likely deeply concerning to you. The financial consultants at Lynchpincan provide sound financial advice to help you maneuver through this economic landscape. These tips will also enable you to maximize your marketing budget and optimize your processes to keep your business afloat in this time of uncertainty.

How Does Inflation Affect the Growth and Stability of Businesses in Dubai? 

In recent years, the word “unprecedented” has been used frequently to describe our current economic climate. It is challenging for consumers to remain confident in the economy. World economies are reeling from a pandemic and the Russian invasion of Ukraine, and inflation is at a 40-year high.

Shareholders care most about profitable growth, which means growing revenue while generating profits simultaneously. It is challenging to pass on cost increases and maintain margins while keeping loyal customers. As a result, companies must be cautious when relying on price increases during inflationary periods.

How Can Accounting Firms Help Businesses Tackle the Challenge of Inflation?

Accounting firms in Dubai can help you in times of inflation by taking one of two approaches. As a first approach, the company takes strategic action in alignment with its long-term strategic goals. The second action is a non-strategic, short-term effort to improve the business by cutting costs and refining operations.

There are some businesses that may even require a combination of both approaches. An accounting firm in Dubai can assist business owners with identifying core areas that need immediate attention after determining their strategy. Take a look at the following areas that require close attention:

1. Expenditure Analysis

Analyzing your business expenses across all areas is critical when inflation is on the rise. You must include an analysis of the cost process and pure spending costs in the review. Also, business owners should determine if switching suppliers and negotiating new rates will bring them immediate benefits.

You should review every cost involved in your business according to accounting firms in Dubai. You must also streamline your expenses to achieve business goals and profitability. At a time of soaring inflation, you must not forget to perform this review, even though you should do it every year.

2. Automation of Accounting System

Evaluate your efficiency and automate your systems if necessary. You will benefit from automation in terms of cost reduction and efficiency boost, as well as the reduction in human error. Automation will reduce your costs and allow you to reinvest those savings into other areas of your business, ideally in your most profitable areas. You can increase the efficiency of your business by automating processes with the help of accounting firms in Dubai.

3. Keeping Track of Market Dynamics

Accounting firms in Dubai leverage external data to support strategic and operational decisions in planning and forecasting, including:

• Research in the market, external advice from bank economists, and knowledge gained from key functions and relationships.
• Information from third parties and external sources enhance understanding of demand and supply fundamentals and estimating what things are likely to cost in the future.

4. Cash Flow Management

Every business owner knows how crucial cash flow is to their company. The cash flow management process identifies how much cash the company earns and spends during a specific period. Consequently, accounting firms can help clients assess how cash flow projections and buying power impact their business. This will allow business owners to protect their cash requirements better.

Cash is the most liquid asset of your business clients. Therefore, business owners should check if they have any cash when making an urgent purchase, paying an invoice, or handling payroll. A cash flow management system can help business owners avoid taking out loans or seeking other forms of funding.

5. Focus on Profit Growth

Accounting firms will help you increase profits rather than just increase sales. When you know your profit margins and pricing structure, you can understand how inflation will impact your ability to break even or achieve certain profit targets.

You should focus on accounting and bookkeeping services to identify new revenue streams to increase your profits when inflation is on the rise. Identifying revenue streams that will withstand inflation is a start.

6. Assessing Labor Cost

The most effective way to determine small business labor and time costs is to analyze them. The first step is determining if some labor costs can be redirected or focused on helping the business grow differently. You can align these costs with your business goals by using accounting firms in Dubai to assess their commercial benefit.

7. Optimization of Prices

Your prices need to be adjusted as your cost of doing business increases to maintain your profit margins. Your business must keep close track of all costs, including direct and indirect labor and materials to optimize the prices.

Business owners may face rising costs during inflation, which they will pass on to their customers. It is possible that raising prices across the board will harm customer relationships, depress sales, and reduce margins. Despite inflation, you must maintain margins by adjusting pricing. You can avoid losing customers by optimizing the pricing with the help of accounting firms.

8. Outsource Accounting Services

As a strategy for inflation survival, outsourcing your organization’s non-core functions can benefit your organization in several ways. Accounting and bookkeeping services can be outsourced by businesses to maximize their limited resources.

It is obvious that outsourcing reduces overhead costs. Hiring an outsourced accounting firm is significantly more affordable than an in-house accountant. You can benefit from the cost-effective bookkeeping and accounting services provided by Lynchpin Consulting.

Why Trust Lynchpin to help Your Business Tackle the Challenge of Inflation in Dubai?

Your first point of contact should be accounting firms in Dubai when you feel the adverse effects of inflation. You can get advice from our experts on how to minimize inflation risks. Lynchpin Consulting is an experienced accounting firm in Dubai that you should consider when looking for accounting companies. Our team at Lynchpinhas more than 12 years of experience and can provide you with customized solutions.

We ensure you have a strategic partner who can help you maintain profits and shareholder value by capturing market share. As an accounting firm, we understand that the future financial professional does more than comply with regulations and crunch numbers. You can retain customer loyalty without implementing prices that drive away business by following our strategic Accounting services during times of inflation.

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