Posts in category: Taxation Services

In Dubai, businesses may be subject to one of several different tax regimes, depending on the business activity and legal structure of the business. Some of the potential taxation types that may apply to a business in Dubai include:

Value-Added Tax (VAT)

VAT is a consumption tax that is applied to the sale of goods and services in Dubai. The standard VAT rate in Dubai is 5%.

Excise Tax

Excise tax is a tax on specific goods that are deemed harmful to public health or the environment. These goods include tobacco, energy drinks, and carbonated drinks. The excise tax rate in Dubai ranges from 50% to 100% of the price of the taxed goods.

Corporate Income Tax

Corporate income tax is a tax on the profits earned by a company. In Dubai, corporate income tax is generally not applicable to businesses operating in certain designated free zones.

Personal Income Tax

Personal income tax is a tax on the income earned by individuals. Personal income tax is generally not applicable in Dubai, as the emirate does not have a personal income tax system.

It is important to note that the taxation regime that applies to your business in Dubai may depend on the specific activities your business engages in, as well as the legal structure of your business. It is advisable to consult with a tax professional or financial advisor to determine the applicable taxation regime for your business.

KLOUDAC Accounting Firm Dubai, UAE

Tax preparation services are frequently more expensive than do-it-yourself choices, but hiring a tax prep professional may be a wise move if your taxes are particularly complicated. KLOUDAC can help you with taxation services that best fit you.

How Does Corporate Tax Affect Business Owners in the GCC?

In order to draw foreign investors and business owners, the Gulf economies have maintained low or even zero tax rates. Due to the region’s typically advantageous tax regimes, the GCC remains a desirable place for international investment. However, a number of adjustments have been made to diversify the region’s income streams while reducing its reliance on traditional revenue sources. While other countries implement new tax structures, certain countries have previously enacted value-added taxes.

What does corporation tax mean and How does this impact foreign nationals?

A type of direct tax that is levied on business profits is the corporate tax. KLOUDAC gives an end-to-end explanation on all you need to know about UAE corporate tax. In addition to paying taxes on their income, business owners also have to pay taxes on their output, employees, property, and environmental impact.

Non-residents who conduct business in a GCC country through a permanent establishment are subject to corporate tax. Entrepreneurs or business owners in a variety of areas, most notably oil and banking, owe it in multiple GCC countries.

Additionally, there are a lot of government fees and taxes applied to the region’s business sectors.

Why is taxation being promoted with such vigor?

Although personal income taxes are still unheard of in the Gulf, several countries have introduced a value-added tax on consumption, with Saudi Arabia raising the rate to 15% in 2021.

Which countries in the Gulf Cooperation Council (GCC) have a corporate tax system?

Corporate tax rates have decreased internationally from about 50% to about 20% as countries compete for inward foreign investment. However, because these taxes are being applied for the first time, the GCC is an outlier.

The UAE declared that as of June 1, 2023, business earnings will be subject to a 9% tax in the UAE. Bahrain is contemplating adopting it in 2023 as well. 

Certain individual Emirates have imposed a limited corporate tax at rates as high as 55% with regard to oil and gas development and production as well as the offices of foreign banks operating in the United Arab Emirates (UAE). UAE, in contrast, has no business tax.

What function does corporate tax serve in the Gulf Cooperation Council (GCC) economies?

Corporate tax rates vary widely amongst countries, with some being considered tax havens due to their low rates. Various deductions could lower corporation taxes. As a result, the corporate tax rate that a company actually pays is typically lower than the statutory rate, which is the rate that is declared before any deductions.

For business owners, paying additional corporate taxes may be preferable to paying additional individual income taxes. A government uses the money it collects from company taxes as a source of revenue.

VAT and corporation taxes are different. The majority of governments derive their primary revenue from taxes. Taxes help governments to increase their revenue and pay for public spending, but there is a big difference between company taxes like direct taxes and VAT like indirect taxes and excise taxes.

Indirect taxes that are gathered by businesses on behalf of the government include VAT and excise taxes. They should be considered consumption taxes paid by the final customer. 

For businesses that operate or want to invest, the absence of a corporation tax makes the country very attractive. For these reasons, the decision to impose VAT and excise tax was widely supported, and direct taxes on businesses have typically been very low.

Which non-resident corporations might benefit from tax treaties?

The number of double taxation agreements (DTTs) between the GCC and other countries is growing. Tax treaties have a considerable positive impact on non-residents who establish long-term businesses abroad or lessen their exposure to withholding taxes in the four GCC countries. There is no withholding tax or other type of tax for non-residents of the United Arab Emirates.

Most countries require withholding taxes be deducted from work income. The payment of interest and dividends is also subject to withholding taxes in several nations.

The GCC countries’ business tax tracking system.

Using online portals, businesses in the Gulf Cooperation Council (GCC) countries are now submitting their tax returns, contracts, and other papers. By making it simpler for tax authorities to cross-verify data, tax audits can be started when there are deviations from accepted standards.

Regardless of your ownership of a small or large organization, paying the right amount of tax is essential. You can make the right payment by being aware of the rules and laws governing business tax in the UAE. However, running a business comes with a lot of responsibilities, and staying current on tax law changes can be difficult and time-consuming.

KLOUDAC Accounting Firm Dubai, UAE

It would be beneficial if you obtained tax advice from experts in the field. Do not hesitate to get in touch with KLOUDAC for more details regarding our corporate tax in the UAE. Our crew has demonstrated experience in UAE tax issues while providing specialized tax services for a range of local businesses.

VAT (Value Added Tax) is an indirect tax placed on the consumption of goods and services. The introduction of vat would have a significant influence on the operation of transactions, making it harder for taxpayers to satisfy their tax obligations.

To keep up with global developments, VAT legislation are dynamic and always changing. Globalization necessitates global and local adaptation to current patterns. Building value for you is the first step in developing a long-term connection. 

KLOUDAC offers number of VAT consultancy packages for you. Starting off with VAT Registration and up until VAT Transaction Advisory which guides your business to success. 

Packages include:

Package 1: VAT Registration

Package 2: VAT Return Filing Services

Package 3: VAT Consultancy

Package 4: VAT Deregistration

Package 5: VAT Training for Staff

Package 6: VAT Transaction Advisory

Package 1: VAT Registration

A firm that is registered under the VAT legislation is recognized by the government as a provider of goods and services and is entitled to collect VAT from consumers and submit it to the government. Only VAT-registered enterprises will be permitted to carry out the following activities:

1. Value-added tax (VAT) should be applied to taxable products and services.
2. Input Tax Credits can be claimed for VAT paid on purchases, which will be deducted from the VAT liability on sales.
3. VAT is a tax that must be paid to the government.
4. VAT returns must be filed on a regular basis. 

With the help of VAT registration professionals, registering for VAT becomes a simple. KLOUDAC has a team of experts that have assisted a number of firms in implementing VAT.

Package 2: VAT Return Filing Services

VAT registered enterprises or ‘taxable individuals’ must file a ‘VAT return’ to the Federal Tax Authority at the end of each tax period (FTA). The value of supply and purchases made by a taxable person during the tax period is detailed in a VAT return, which also reveals the taxable person’s VAT liability.

The taxpayer must fill out and submit the ‘VAT 201’ VAT Return form in order to complete the VAT Return filing. The Form VAT 201 is divided into seven components, as listed below:

1. Taxable Person Details
2. VAT Return Period
3. VAT on sales and all other outputs
4. VAT on expenses and all other inputs
5. Net VAT Due
6. Additional reporting requirements
7. Declaration and Authorized Signatory

Package 3: VAT Consultancy

Business consulting services connect you with an experienced business consultant who can assist you with your company’s requirements. Security, finance, operations, human resources, legal, future planning, and a variety of other areas are among the topics that the consultant may assist with. A consultant can be hired both internally and externally. There are numerous benefits of business consultancy. Such as increasing profitability, operational improvements, and safe side.

Package 4: VAT Deregistration

If the application is not submitted in a timely manner, VAT deregistration might be costly to your organization. The VAT deregistration process should be done properly and with the help of a professional.

Tax deregistration can be applied if the following conditions are met:

1. If the value of taxable supplies made during a 12-month period is less than the voluntary registration level in the next 30-days
2. If it no longer produces taxable goods

Package 5: VAT Training for Staff

The training sessions describe how to handle the risks associated with VAT errors. Following that, meetings are held to show the administration how these risks might be eliminated using various ways.

The proper execution of the VAT journey requires employee training and the establishment of rules and processes. These are tailored to the needs of the businesses and executed concurrently to guarantee that trained staff fully comprehend the revised policies and processes in order to ensure complete implementation. 

Package 6: VAT Transaction Advisory

Vat transaction advising services are designed to help your company through unique sector transactions. Companies with complicated transactions, goods, and branches may find this to be more relevant. KLOUDAC has a group of experts to guide your through this journey.

KLOUDAC Accounting Firm Dubai, UAE

KLOUDAC is a recognized accounting firm in Dubai, UAE with 15 years of service experience. We have built connections with over 500 customers. It has also won the certification of Xero Payroll and certification of Xero advisor from the world leading online accounting software – XERO. Moreover, KLOUDAC is a golden champion partner of Xero.  Accounting and Bookkeeping is more convenient for the SMEs via KLOUDAC since they provide their clients with a whole package of services such as Financial Consultancy, Business setup, Audit and assurance services, Taxation services, Recognized accounting software and more.

When Tax Day is getting closer, you don’t have to panic! If you have well-organized documents and an accounting expert, filing your taxes will be a breeze. Simply you can address little things early, and clear away any barriers. Mentioned below are 5 tips that will be beneficial to prepare for a successful Tax Day.

Be aware when your tax document will arrive

At the beginning of January, you should receive your tax forms vis mail. Take a time when the mail starts to come to pull out a file folder, label it, and put it somewhere safe. As new documents arrive, add them to your new tax-day folder. Proper management of your documents is very essential when it comes to business. 

The majority of tax forms are mailed out by late January, so if you haven’t received them by mid-February, go ahead and look for them. Having everything you need in one place ensures a successful Tax Day.

Examine your year’s accomplishments.

Additional documentation and probably additional tax forms are likely to be required if you are getting married this year, having a baby, purchasing a house, etc. 

If you got married, for example, double-check that your filing name matches the name on your social security card. Update your address if you’ve moved – you can do it while you’re filing. You and your spouse will also need to pick how you’ll file this year: “Married filing jointly” and “married filing separately” are your options.

Remember that the IRS considers you married for the entire year, whether you married at New Year’s brunch or immediately before the ball dropped. Make that your data reflects this.

Consider whether you’ll itemize your expenses.

In recent years, the standard deduction has increased. In fact, its value has nearly doubled, resulting in a considerable decrease in the percentage of taxpayers who itemize their deductions. KLOUDAC can assist you with running the numbers to evaluate which option is best for you.

If you are planning to itemize – Begin sorting your receipts from the previous year. Snap, store, and arrange them into your phone’s / laptop’s photo albums for an easy method to merge digital and paper copies. They’ll all be in one location this way.

Make time for it.

If you are a businessman, it’s very important to manage your time and prioritize the pending work. So, set out a block of time on your calendar for filing as well.

Find a tax partner who can assist you in achieving your goals.

KLOUDAC was created to help you keep more of what you currently own. We’ll take you step by step through each component of your taxes, prompting you with tips for deductions and credits that you may not know about.

Most importantly, our tax preparation services enable you to complete your taxes rapidly so you can go back to living your life. Our consultants are ready to assist you in achieving your goals.

KLOUDAC Accounting Firm Dubai, UAE

KLOUDAC is a recognized accounting firm in Dubai, UAE with 15 years of service experience. We have built connections with over 500 customers. It has also won the certification of Xero Payroll and certification of Xero advisor from the world leading online accounting software – XERO. Moreover, KLOUDAC is a golden champion partner of Xero.  Accounting and Bookkeeping is more convenient for the SMEs via KLOUDAC since they provide their clients with a whole package of services such as Financial Consultancy, Business setup, Audit and assurance services, Taxation services, Recognized accounting software and more.

VAT (Value Added Tax)

VAT is a tax levied on all levels of product value addition across the supply chain. From the point of manufacture to the point of sale to the final customer, it is imposed at every point of sale. This is accomplished by allowing tax paid on purchases (known as “Input Tax Credit” or “input VAT”) to be offset against VAT received on sales (known as “Output VAT”). The consumer is ultimately accountable for the entire tax.

VAT services in UAE and exemption

03 Categories of VAT

1). 5% Value Added Tax

-Certain private Education related goods and services

-Stationary

-Electronic Equipment

-Healthcare services such as elective, cosmetic etc

-Certain Oil and gas products including petrol at the pump

-Sale and rent of commercial buildings

-Hotels, motels and serviced accommodation

-Jewelry

-Food and beverages

2). Zero-rated supplies (0%)

-Certain Education related goods and services

-Healthcare such as vaccinations, certain medicines and medical equipment

-Crude oil and natural gas

-International transportation of passengers and goods

-Supply of a means of transport (air, sea, and land)

-99% pure gold, silver and platinum, jewelry

3). Exempt supplies

-The provision of certain financial services as defined under VAT legislation

-Residential real estate

-Bare land

-Passenger transport in the local area

How VAT System works in Dubai, UAE

The VAT will not be collected directly by the government. As a result, it is the obligation of registered firms to charge tax to customers based on output and input tax, and to remit the money to the government.

Please Refer  VAT Calculation Process

Formula for calculating VAT is:

VAT = Output Tax – Input Tax

Where:

Output Tax – The VAT collected on the sale of goods or the provision of services to customers

Input Tax – The VAT paid on the purchase of raw materials for goods or services

KLOUDAC Accounting Firm Dubai, UAE

KLOUDAC is a recognized accounting firm in Dubai, UAE with 15 years of service experience. We have built connections with over 500 customers. It has also won the certification of Xero Payroll and certification of Xero advisor from the world leading online accounting software – XERO. Moreover, KLOUDAC is a golden champion partner of Xero.  Accounting and Bookkeeping is more convenient for the SMEs via KLOUDAC since they provide their clients with a whole package of services such as Financial Consultancy, Business setup, Audit and assurance services, Taxation services, Recognized accounting software and more.

Taxation in the United Arab Emirates is a major topic which is discussed daily. Surprisingly there’s no federal income tax in Dubai, UAE. So, many expats are drawn to the UAE because of its tax system. Employees pay no income tax, and there is no corporation or inheritance tax system. Nevertheless, the taxation system varies according to your purpose and needs. This blog consists of a number of taxation services which would be beneficial for you.

Mentioned Below are the Taxation Services:

–Federal Taxes

–Regional Taxes

–Taxes on Goods and Services (VAT)

Federal Tax

Income Tax

The United Arab Emirates has no income tax. As a result, there is no need to file an income tax return in the UAE because there is no applicable individual tax. Residents of the Emirates who are freelancers or self-employed are subject to the same rules.

Individual Tax

GCC(Gulf Cooperation Council) citizens, including UAE nationals, are subject to a 17.5% social security system in the UAE. UAE nationals pay 5% of their salary through an automated deduction, with the employer covering the remaining 12.5%. Employees of businesses and branches registered in a free trade zone are likewise covered by social security (FTZ). Residents in other GCC nations may be required to pay different social security contributions than citizens of their own country. Non-GCC nationals are not covered by social security in the United Arab Emirates.

Corporate Tax

In the UAE, only oil firms and foreign banks are subject to corporate taxes. However, the country has 45 free zones where enterprises registered in the UAE are excused from paying tax for a period of time that can be extended. Unless the corporation is subject to another type of income tax, there are no capital gains taxes.

Double Taxation

To encourage strategic worldwide alliances, the UAE is growing its network of Double Taxation Agreements (DTA) and Bilateral Investment Treaties (BIT). The UAE has signed around 193 DTAs and BITs with the goal of decreasing direct and indirect taxes on investments and earnings.

Tourist Facility Tax

The following taxes may be levied by restaurants, hotels, and resorts:

Tourism fee (6%)

Service charge (10%)

Room Rate (10%)

Municipality fee (10%)

City tax (6–10%)

Regional Taxes

Free Trade Zones

In the United Arab Emirates, there are free-trade zones with their own tax, customs, and import regimes. In fact, the United Arab Emirates has more than 40 zones. Companies in these special regions are exempt from paying corporate taxes for up to 50 years and are exempt from all import and export taxes.

Tourism

The cost of a hotel room varies per Emirate. A Tourism Dirham Fee of AED 7 to AED 20 is charged per accommodation in Dubai for each night of occupancy (up to 30 nights). In general, this is determined by the hotel’s star rating. Abu Dhabi adds a 4% surcharge to hotel bills, for a total of AED 15 per night, per room. AED 15 per room per night is also charged by Ras Al Khaimah hotels as a tourism fee.

Rental Tax

The taxation on rented homes varies per Emirate. Residential tenants in Dubai pay a rental tax of 5% of their annual rent, while commercial tenants pay a tax of 10%. In Abu Dhabi, however, UAE nationals are exempt from paying property taxes, but expats must pay 3%. In Sharjah, all tenants must pay a 2% rental tax.

Taxes on Goods and Services (VAT)

Value Added Tax (VAT)

In the United Arab Emirates, the VAT rate is 5%. Certain items, on the other hand, are VAT-free. In 2020, the UAE exempted some personal protective equipment used in the COVID-19 pandemic, such as medical and textile masks. The following items and services are also subject to a 0% VAT rate:

• Exports of goods and services to countries outside the Gulf Cooperation Council International transportation
• Precious metals of investment quality
• Residential properties that have recently been built
• Some healthcare and education service

Excise Tax

The UAE levied an excise tax in January 2017. This is an indirect tax levied by the government on goods deemed dangerous to human health or the environment. This tax applies to the following items:

• 50% on Carbonated Drinks
• 100% on energy drinks with stimulants like caffeine, taurine, ginseng
• 100% on Tobacco and Tobacco products

KLOUDAC Accounting Firm Dubai, UAE

KLOUDAC is a recognized accounting firm in Dubai, UAE with 15 years of service experience. We have built connections with over 500 customers. It has also won the certification of Xero Payroll and certification of Xero advisor from the world leading online accounting software – XERO. Moreover, KLOUDAC is a golden champion partner of Xero.  Accounting and Bookkeeping is more convenient for the SMEs via KLOUDAC since they provide their clients with a whole package of services such as Financial Consultancy, Business setup, Audit and assurance services, Taxation services, Recognized accounting software and more.

Value Added Tax (VAT) is an indirect tax which was introduced in 1^st of January 2018 at a rate of 5% in Dubai, UAE. And it has an involvement on the individuals and businesses throughout the UAE.

The Federal Tax Authority

Furthermore, The Federal Tax Authority (FTA) manages the administration and collection of income taxes and other fines. It also distributes tax-generated revenues and applying the expense related methodology in the UAE.

VAT Consultancy in Dubai, UAE

The impact of vat will have a significant effect on the productivity of a businesses in Dubai UAE, and there is a risk when the complexity of the transactions increases the taxpayers find it more difficult to fulfill their tax payments on time.

This complication can be overcome by the VAT consultancy services provided by the VAT consultants in Dubai, UAE.

Kloudac in one such recognized Accounting firm in Dubai consisting leading, UAE which provides VAT consultancy for the companies or Organizations.

VAT Registration Services

*Kloudac guides step-by-step on registration process. visit the link Kloudac.

VAT Registration is a procedure where a person registers to the FTA (Federal Tax Authority).

To register with the FTA, a person should satisfy a set of conditions. If the person satisfies those conditions, that person could register to the FTA and then receives a TRN (Tax Registration Number) issued by the FTA in UAE. A person who owns a TRN has the permission to collect and remit tax in UAE.

Moreover, there are 2 types of VAT registrations in UAE. They are Mandatory VAT registration and Voluntary VAT registration.

Mandatory VAT Registration is when a person who make supplies or sales of more than AED 375,000 in the past 12 months should mandatorily do VAT registration (in Dubai, UAE).

Apart from that, Voluntary VAT Registration is when a person makes supplies or sales which exceeds AED 187,500 but less than AED 375,000 for the past 12 months. That person can do voluntary VAT registration in Dubai, UAE (It is optional).

Registration Process for VAT in Dubai, UAE

Registration process for VAT via FTA is an easy task. Since the whole process is done online.

Step 1: Create an account in FTA.

Step 2: Log in to e-services account in FTA.

Step 2: Continue the registration process by submitting the required documents. Some of the required documents are stated below:

• Details of the bank
• Company Trade License
• Certificate of Incorporation
• Expected turnover in the next 30 days.
• Documents for the authorization process

Step 3: Finish Registration

VAT Return Filing Services

All the tax registrants should submit details of supplies and purchases to the Federal Tax Authority (FTA) in Dubai, UAE.

VAT Return documenting in the UAE relies upon the expense time frames allocated to your business by FTA upon VAT Registration.

Moreover, registrants’ tax dates are determined by the FTA during the approval stages of VAT registration. The period can be monthly or quarterly as determined by the authority. VAT Return filing process is more convenient since it is an online process. During this process, registrant is required to submit only the most relevant document and does not require to submit tax invoices. But should maintain all the documents related to the business in an organized manner (in order to submit them to FTA if required). 

VAT Accounting

Kloudac is an accounting firm in Dubai, UAE which manages and give solutions for VAT Accountancy issues faced by SMEs.

VAT consultancy is a mandatory for growing organizations. Kloudac assists you to maintain Vat Records and footpath all the details related to VAT payment.

We also assist you regarding unnecessary tax payments and manage all your tax related issues.

Kloudac also furnish you with:

• TAX Audit Services
• VAT Training