The real estate industry in the UAE has witnessed one of its biggest booms in the last few decades. With millions of dollars being invested and transactions going in multi-billions, UAE’s property market is at the cusp of becoming an economic power pillar, riding on heavy foreign investment and a quick delivery model of premium and budget homes. According to a report by Bloomberg, there has been an 89% hike in the price of premium real estate properties in the last 12 months with other popular real estate hubs witnessing a 100% price hike.
While this is great news for the country, it also means more work for the real estate players in terms of their financial planning, submitting their tax papers, and being compliant with all kinds of property tax parameters. Any real estate agency deals with a large number of financial transactions, and accounting and bookkeeping can become a tedious task for them if not handled by a professional Accounting Firm in the UAE. Due to the sheer volume of financial transactions involved, accounting for real estate needs to be done in a more organized and compliant manner to avoid legal hassles and losses.
How will the Federal Corporate Tax on Real Estate Impact Investments
Recently, the UAE Ministry of Finance announced the introduction of federal corporate tax (FCT) for the financial year starting from 1 June, 2023. This means that any commercial or business activity related to the real estate industry will be subjected to FCT whether it is done by an individual in a personal capacity or by a corporate entity. The FCT will be levied on all businesses involved in construction and real estate management and development. This apart, all entities acting as agencies or brokers will also fall under the FCT.
Even though there are still some grey areas in the newly introduced FCT regulations, the initial announcements indicate that the income from real estate investments held by individuals in their personal name meant for personal use will be exempted from FCT. However, it is still not clear if the tax will be levied on multiple property ownership or if those properties are leased out. As far as foreign investments are concerned, the FAQs released by the department indicate that no FCT will be levied on foreign investment income.
On the other hand, all real estate activities undertaken by corporate entities will fall in the FCT category. However, assets held in the Freezones by Freezone entities will be exempted from FCT. But if the same entities hold any properties on the mainland, they will have to pay the tax.
How an accounting firm in UAE can help
A real estate firm has to manage financial transactions of a huge magnitude. Any discrepancy in the records can lead to a long legal battle or huge financial losses. This is why it is advised to hire an accounting company in Dubai to keep accounting and bookkeeping services right on track. An agency with professional accounting and bookkeeping experts with considerable experience in auditing and accounting will help you align your documents with the FCT regulations.
An accounting firm in UAE can help you in multiple ways including:
• Tenant Management
• Accounts Payable Management
• Accounts Receivable Management
• Management Reporting
• Business Advisory Services
• Internal and external Audit Services
• CFO Services
• VAT Consultancy Services
That apart a professional accounting firm in UAE will also provide several other supporting advantages that can make a huge difference in the way you manage your real estate-related accounting.
Minimizing errors, maximizing accuracy
Managing in-house accounting for real estate can result in errors and discrepancies. However, hiring an accounting firm in UAE will ensure that all your accounting and bookkeeping activities are 100% errors free and compliant.
When you hire a professional accounting company in Dubai, it will make sure that all your accounting books are maintained properly and on regular basis, allowing you to know exactly what your level of revenue generation is and the profits you stand to earn.
Detecting fraudulent activities
Expert accountants will understand and point out any loopholes in your accounting processes and will also assist you with steps to reduce inherent risk.
Policy, standard, and technology upgradation
A dedicated accounting firm in UAE will be aware of the latest policies, accounting standards, and best technologies to help you with a smooth flow of things. This ensures you are always at the top of your accounting game.
Tax treatment made more efficient
One of the biggest advantages of hiring professional accounting services in Dubai is that they will help you file all taxes well within the deadlines. Doing this will create a positive image of your company in the eyes of the law and will help you comply with tax-related rules and regulations.
Why choose Kloudac?
The real estate industry is one of the fastest-growing industries in the UAE. It will require you to be on your toes so that there are absolutely no loopholes in any tax-related activities. And this is what Kloudac helps you with. Our experienced team, custom-made solutions, quick and trustworthy services, and diverse clientele make us a one-stop solution provider in accounting and bookkeeping. So, if you wish to be on the right side of the tax law, let Kloudac handle your finances for the best results.