How to start an online business in Dubai?

How to start an online business in Dubai?

The thought of you launching an online business in Dubai is the right choice at the right time with the boom use of technology and the growing online marketplace in the UAE as it is in progress of transforming as a center to grow businesses in Arab world. There’s so much potential and untapped market to be realized via online business in Dubai. You don’t need to acquire physical office space to set up an online business in Dubai. More than 90% of Dubai’s population has access to the internet. 

How to start an online business in Dubai

The process of starting an online business in Dubai takes some in-depth knowledge of the UAE and its many customs and regulations. That’s why it’s always advisable to acquire the services of a business setup company who can not only advise on the process but also seek out the most suitable license and setup type for your business, based on your needs and your budget. By making use of a business setup service, you also gain peace of mind that your license and visa applications are free from errors and omissions – both of which can lead to delays and rejection. When you work with a company formation specialist, all you need to provide is some basic documentation and a little information about the nature of your business.

What are the Steps to Launch an Online Business in Dubai?

1. Finalize your Business Activities

The first step to commence an online business in Dubai is finalizing the business activities you wish to carry out. You should analyze the products and services you can offer and also understand the market via market research then list down the activities to set up the business. It is best to finalize which type of business is feasible for you by doing a business valuation in the early stages of the planning.

2. Book a Trading Name

It’s imperative to have the trade name reservation payment receipt for starting an online business in Dubai. UAE has a strict set of naming conventions that will not be familiar to anyone outside of the region. When choosing a name for your Dubai business, you must keep in mind that it cannot include any offensive or blasphemous language, nor any references to religion.

3. Decide the Location

If you decide on the mainland setup, you are free to trade directly with the local UAE market without working with a local agent, and you are permitted to take on government contracts. If, however, you wish to start your business in a UAE free zone, as well as benefiting from the UAE’s zero percent tax rate, you can also take advantage of full customs tax exemption, no currency restrictions and the ability to repatriate 100% of your capital and profit. You should always consult with the legal advisors before finalizing the company establishment location.

4. Apply for an Online Business License

Operating an online business in Dubai – or any other business for that matter – requires a license.

If you wish to establish your business in a free zone you can apply directly to the free zone in question. If you prefer to set up in the mainland, you should apply to the municipality or Department of Economic Development in the emirate you wish to set up in. In both cases, you will be required to submit some basic documentation, including passport copies, along with your completed application form. You will also need to consider the new regulations regarding the corporate taxes in the UAE, and how it will affect your business.

5. Host a Website

You need to maintain a credible online presence to make a name for your brand in the marketplace. Therefore, hosting an optimized business website should be a top priority for starting an online business in Dubai. Offering flexible payment options increases the chances of scoring a sale. Moreover, always choose a trusted hosting partner for your website and implement easy-to-use navigation. Don’t forget to keep an eye on the website loading speed too.

6. Open a Bank Account

You can open a corporate bank account in any of the reliable local and international banks in the UAE once you’re done with all steps discussed above. In addition, ensure that the selected bank offers A-grade banking facilities and long-term benefits.

Online Business Ideas in Dubai

A few online business ideas in Dubai include:

  1. E-Commerce Store
  2. Online Tutoring
  3. Digital Branding Solutions
  4. Influencer/Brand promoter
  5. Online Consultancy Services
  6. Web design or development
  7. Marketing services

Launch your Online Business in Dubai!

Setting up an online business in the Emirates is cost-effective, easy to manage, and a highly lucrative venture. In the UAE, all you need to do is apply for the relevant business license and get started with your activities. So much so that you could be trading within just a few days of making your license application.

Reach us for more information,

Call: +97142569050

Email: info@kloudac.comWebsite: www.kloudac.com

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 the certification of Xero advisor from the world-leading online accounting software – XERO. Moreover, KLOUDAC is a golden champion partner of Xero.  Accounting and Bookkeeping are more convenient for 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.

Why is financial literacy important for small business owners?

Why is Financial Literacy Important for Small Business Owners?

What is Financial Literacy?

Understanding the financials of your company is the foundation of financial literacy. It requires solid financial education, or knowledge of financial terminologies, ideas, concepts, practices, and assertions. All of the information helps in your understanding of the financial state of your business and the variables that affect profitability.

The Importance of Financial Literacy for Small Business Owners

You should more crucially be aware of where your money is coming from and going. Being financially literate enables you to make the correct choices for your business. Whether it’s about cash flow management, creating a business plan, hiring a new employee, or anything else, you’ll have a completely different perspective once you’re financially literate. You don’t have to be a college graduate to understand or excel at financial literacy. Even if you are from a non-accounting background, learning the basics can help you make informed decisions.

Let’s dive deep into the ways of how being financially literate can help you in business.

  • Managing your cash flow

Every company must have liquid assets (Cash or possessions that can be rapidly and readily converted into cash are considered liquid assets). While liquidity makes sure that businesses have enough cash to pay their bills, it can also give them a competitive edge when liquidity is limited throughout the economy.

Make sure you pay your suppliers on schedule and collect payments from your customers. This guarantees you have the appropriate amount of money on hand. You must seek out high-interest loans if you are unable to control your cash flows. The financial health and profitability of your business will be significantly impacted by these high-interest loans, but this damage can be minimized with the appropriate financial education.

  • Analyzing your Financial Statements  

Financially literate people can analyze their financial statements on their own. Financial statements depict the performance of the company over a period of time. They are usually made at the end of the annual year. The profit and loss statement shows the net profit or the loss of the business. 

By analyzing your profit and loss statement, you can accurately calculate the amount of tax. Besides the P&L statement, evaluating your balance sheet is also important as it helps you learn about the company’s financial health. You can find out the liabilities, assets, and capital of the company through your balance sheet. What’s more, you can estimate whether you can qualify for a loan and get an idea about the business’s creditors and debtors.

  • Handling taxes

Business owners have to deal with income tax, self-employment tax, and many more. If you have a thorough understanding of your tax situation, you can calculate how much you need to pay. If your tax situation is beyond your capabilities to complete, you can also hire a tax professional or accountant to handle your taxes for you. 

  • Make more informed decisions

For you to make crucial decisions, you need to have a grasp of the financials and what it means for you. When faced with a difficult business decision, you can confidently consider the financial implications before weighing your options and making the best choice for your business. 

Ways to increase your Financial Literacy

1. Use Debt the right way 

Many people think debt is bad, but that’s not necessarily true. If you look to expand your business by taking a business loan or other debt, there’s no harm in that. But if you use debt on unnecessary items, you will end up spiraling into more debt.

2. Build a habit of reading 

Reading books is one of the best ways to increase your financial literacy. You will understand the business terminologies and the ways experts analyze the finances of different companies. It will help you find the right ways to manage your cash flow and prepare your taxes the right way.

3. Stay up-to-date with the new technology

One of the best ways to increase your financial literacy is by understanding new technologies. The internet is an excellent way to stay up to date about various technologies. You can also use it to learn new financial literacy skills. 

4. Take advantage of Financial Education Resources

There are lots of free quality resources on the web such as videos, audios, podcasts, webinars, digital books, websites and blogs. Determine which method of learning about finance is right for you. These factors include your preferred learning style, budget, schedule, and transportation options. Once you’ve selected a method, it’s important to dedicate time in your routine to your financial education, as well as make connections with other professionals.

5. Know when to Outsource

Not every business owner can be a financial expert. If you’re struggling to take care of your business finances, consider hiring someone to help you take care of them. It’s tempting to think you’re saving money by doing it all yourself, but financial mistakes can lead to serious fees and fines. Kloudac can help you to manage your accounting and  finances and to support your crucial business decisions.

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 the certification of Xero advisor from the world-leading online accounting software – XERO. Moreover, KLOUDAC is a golden champion partner of Xero.  

Accounting and Bookkeeping are more convenient for 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. 

5 key benefits of outsourcing accounting services in Dubai

5 key benefits of outsourcing accounting services in Dubai

Benefits of outsourcing accounting services

Delegating certain tasks to a business outside of your own in order to gain professional advantages is known as outsourcing. For complex accounting services and financial reporting, accounting outsourcing may be the best option.

Mentioned below are some of the benefits of outsourcing accounting services in Dubai, UAE

1. Higher profitability by improving productivity

Many companies became dissatisfied with the in-house accounting team’s delays, mistakes, and review requirements. Outsourcing services might assist in strictly enforcing policies and demanding effective work that was mutually agreed upon. 

Accounting tasks are completed on schedule by experts who outsource. Accounting jobs are designed to yield higher-quality results and typically come with effective resources for comprehending issues with budgeting and company performance. When productivity is high, you will eventually receive higher profit. 

You can limit your resources and concentrate on your abilities through outsourcing to increase the profitability of your company.

2. Lower prices

Cost-effective services are one of the main advantages of outsourcing accounting services. Cost savings can be significant. You can choose only the services you require via outsourcing. The company will be able to cut back on unnecessary costs in some areas.

3. Reduced risk

Reviewing financial transactions can take time, and reporting errors can be highly expensive. A team of professionals working for outsourcing companies can handle all records effectively and with the fewest errors.

4. Fraud check

In reality, contracting out accounting services to reputable firms can aid in preventing and reducing employee fraud. Internal employee fraud is a possibility if accounting functions are handled within the company.

5. Best Decisions

It can take time to be able to deliver higher quality accounting information more quickly, effectively, and efficiently. By collaborating with accounting experts, you may get more trustworthy data that can help you make better business decisions faster.

Why should we outsource our accounting services?

Any company organization should have an accounting department. Organizations seek out cost-effective accounting solutions, but they also hope to contribute value in order to improve outcomes. Outsourcing accounting services aid in outlining an organization’s main lines of activity.

With easy access to qualified accounting specialists, outsourcing accounting services in Dubai, UAE is a practical approach to managing accounting responsibilities. KLOUDAC is a trustworthy accounting firm that can handle all accounting transactions and offer support with setting up financial transactions.

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 the certification of Xero advisor from the world-leading online accounting software – XERO. Moreover, KLOUDAC is a golden champion partner of Xero.  

Accounting and Bookkeeping are more convenient for 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. 

How UAE is transforming as a center to grow businesses in Arab world

How UAE is transforming as a center to grow businesses in Arab world

According to the IMD World Competitiveness Ranking for 2022, the UAE is the most competitive nation in the Arab world.

One of the few remaining large, expanding economies that is still tax-free is the United Arab Emirates, which is well-known on a global scale. 

Recently, a number of high-net-worth people have emigrated to the UAE. The abundance of free zones that made it possible to establish Free Zone Enterprises (FZEs) and the ease of conducting business there have raised the UAE’s identity.

The OECD’s Two-Pillar strategy was released in 2021. 141 nations, including the UAE, endorsed the Inclusive Framework when it was released by the OECD. The Inclusive Framework stated that at least 15% of an enterprise’s profits must be subject to corporate tax. 

The UAE made the initial move by issuing FAQs in January 2022. This started the process of changing the UAE’s tax system from one that was tax-free to one that followed the standards set by the rest of the world.

The proposals essentially state that all entities (corporate or otherwise) that do business must pay taxes at a rate of 9% for accounting years beginning after June 1, 2023. Businesses who operate internationally and have annual sales of more than €750 million must pay taxes at a different rate that will be established. To comply with the OECD’s recommendations, this rate is anticipated to be 15%.

Currently, anytime a new tax is planned to be imposed, there is concern that it may reduce the destination’s competitiveness. There is general consensus, however, that the UAE’s introduction of corporate tax will give legitimacy to the enterprises operating there, that the Gulf country will join a larger global framework, and that the introduction of taxes does not reduce its competitive edge.

Apart from the fact that the taxes are very low at 9% and 15%, the consultation document’s tax system stands out as being fairly straightforward. Taxes will need to be paid on the amount of accounting profits. All businesses operating commercially in the UAE as well as foreign companies that are governed and managed from the UAE will be required to pay taxes. Legal entities established in the UAE would be required to pay taxes there on their worldwide income, while others would only be required to pay taxes on their income earned within the UAE.

The government’s ongoing pledge to uphold contracts made with Free Zone Enterprises and keep their income exempt from corporation tax is encouraging. So, if a Free Zone Enterprises deals with or conducts business in the mainland, measures have been added to tax the income from the mainland and/or to disallow the associated expenses. These provisions need to be carefully considered, and organizations that run both in Free Zone Enterprises and on the mainland may need to take a deeper look and reorganize their business models.

The UAE will continue to have tax-free overseas dividends and capital gains, as well as dividends from firms based there, in order to entice businesses to use it as a holding company jurisdiction. However, those using the UAE as a holding company jurisdiction must be aware of the restriction on interest deduction, which only allows for a maximum of 30% of Ebitda.

The provision about grouping is an important set of provisions that would simplify compliance and lessen the burdens of tax. Corporate tax groups may be formed by businesses with a common share ownership of at least 95%. Regarding the transfer of losses among group firms, there are a few unusual provisions. In general, taxes are paid on 75% of the book earnings, with the remaining 25% being offset by brought-forward losses. Transfers of businesses and reorganizations are exempt from tax under certain circumstances.

Finally, it is highly supportive that there are no obligations for withholding taxes or paying advance taxes.

All firms conducting business in the UAE must now consider whether their current organizational structures are adequate in light of the introduction of corporation tax. There would be many factors to take into account. To earn an interest deduction, one could need to restructure their debt and equity. They might also need to think about how to hold their assets and charge rent, where to put their intellectual property, and how much to charge in royalties, among other things. 

Despite losing its reputation as a tax-free country, the UAE will nevertheless gain from increased openness and recognition as a fully compliant global jurisdiction, and with the right architecture, firms may ensure that the burdens of corporate tax are minimized.

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 are 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.

Best case practices for payroll processing in Dubai, UAE

Best case practices for payroll processing in Dubai, UAE

Setting up a payroll procedure in your corporation is a requirement if you run your enterprise worldwide. Even if you may just have a few, many, hundreds, or even thousands of workers in your office, they all need to be paid. Most importantly, they must be paid on time, consistently, and precisely.

The Wage Protection System (WPS) was established by the UAE government as a project of the Ministry of Human Resources and Emiratization (MOHRE) to safeguard the rights and interests of employees in the UAE. 

The organization can benefit greatly from a strong payroll processing system in numerous ways. This mostly improves and strengthens how your office is run. It simplifies and streamlines the management of all associated processes. With the systems in place, it directly lowers the costs because less man-hours and labor are required.

1. Establish policies and guidelines for the entire payroll system

The policies and procedures form the basis of any effective process, especially one as complex as payroll. Expecting to know them all at all times is unrealistic. 

Although it’s possible that the core HR personnel will be able to recite them off by heart, payroll processing involves a sizable number of people, and information can be lost in translation. This is why it is essential to devote your time and money to writing a guidebook for the payroll procedure. Even though it is time-consuming, the job that needs to be done is crucial.

2. Use Integrated Systems

Many businesses use separate time and attendance and payroll systems. There might also be separate accounting or employee scheduling software. If the systems are not interconnected, someone must perform the tedious task of manually transmitting data. Moreover,  data entry and manual transfers might cause serious issues. You can use automated software for the payroll management.

3. Keep track of deadlines

The fact that practically all of the relevant deadlines are known in advance is one benefit of managing payroll. You should make use of the fact that you have access to this information by scheduling this strategic planning in your payroll department.

This will ensure that nothing comes as a surprise to you and prevent you from submitting your work at the last minute, which could result in payroll errors and lower employee engagement and satisfaction with the HR department. The success of your payroll processing may depend on your compliance with rules and regulations and the filing of necessary tax forms.

4. Create deadline reminders

Best payroll practices are always ones that don’t rely on memorizing but make sure to remind you of every crucial task you need to finish.

Your schedule is typically packed, so it’s simple to overlook crucial information whether you run a small firm or a huge organization with many employees. Recognize that writing down a deadline is insufficient if you will eventually forget about it due to being overworked. 

Setting up alerts and reminders for certain due dates and milestones is a great idea because of this. You can rely on your preferred project management tool or calendar to remind you as the due date approaches instead of tax due dates and paydays for each employee taxing your memory.

5. Be careful while classifying employees

If you aren’t aware of the risks associated with employee misclassification, it will be impossible for you to provide and file tax forms and then conduct payroll calculations correctly. To file them all individually and keep track of all the many payroll taxes you are needed to pay, you must understand the distinctions between full-time employees and independent contractors, exempt and non-exempt personnel. 

Incorrect employee classification can result in penalties from the IRS as well as accidental errors in state wage calculations and ACA hours reporting. This is one of the most helpful payroll best practices because it may transform your payroll management from complicated to excruciating.

6. Automate and update your payroll system

There isn’t much time to pause and update the procedure because payroll processing must be completed each month, on schedule, and accurately. But practices evolve over time, and one of the major improvements in human resources software is the way we handle payments. It is therefore imperative that you adopt payroll automation if you haven’t already.

Your daily payroll procedures can be dramatically improved by payroll software. Your payroll management can be automated using a variety of software programs and services. You may better manage your workload, increase payroll compliance, and file your payroll taxes by using automated and digitalized solutions. Changing your operating style will undoubtedly require a lot of effort, but it will pay you in the long term.

7. Real-time tracking of time and attendance

When it comes to earnings and overtime pay, the end of the month might come with a lot of surprises.

In large organizations, in particular, it is simple to lose track of everyone’s hours, and if you aren’t monitoring the time cards, you could run into severe problems at the end of the pay period. Due to a lack of funding, small business payroll can be quite difficult, and going over the allotted amount might negatively affect your cash flow.

The easiest approach to prevent that is to perform real-time data input and analysis, allowing you to keep track of each of your employees’ positions and determine whether they have reached any predetermined limits. In order to save money on streamlining this procedure, you should use the numerous templates available in payroll software for your timekeeping.

8. Keep your documents organized

Best practices are constantly centered on learning new ways to make it efficient, so we have a tendency to forget the fundamentals: it’s all about being organized.

Make sure your files are organized at all times, whether you store them electronically or physically at your office. Never let paperwork accumulate on your desk, as it is very simple to lose track of your documents. It will take twice as long to get things back in order, which will delay the payroll process.

Make sure to file any new invoices, contracts, confirmations, or other documents in the proper locations as soon as you receive them. It will help you keep track of all the required paperwork and ensure that your payroll management is error-free overall.

9. Don’t wait until the last minute

Setting up notifications is important in payroll deadlines.  So, don’t schedule them for the day before you have to file your taxes or when an employee has to get paid. You’ll wind up rushing through the document completion process, which will probably lead to mistakes you might have simply prevented. 

Set aside adequate time to complete all the paperwork carefully and without being rushed. By doing so, you’ll be able to get in touch with your staff in a timely manner, collect any information that might be missing from your documentation, and repair any potential errors without stressing out about missing the deadline.

10. Think about sourcing your payroll

Even if your payroll manager is wonderful, you could occasionally run into problems.

It could be time to hire some payroll experts rather than overburden your devoted staff. Don’t be afraid to collaborate with outside parties because payroll laws are complex and constantly changing. It won’t hurt to incorporate someone else’s viewpoint and knowledge to ensure that everything is being done correctly.

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 are 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.

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UAE Corporate Tax: All you need to know

With the introduction of corporation tax in the UAE, the tax and compliance needs of the vast majority of UAE companies are expected to fundamentally change. Because corporate tax is new to the UAE, firms will need the help of a consultancy with a knowledgeable tax staff. The appropriate assistance will be provided, and our knowledgeable tax staff will address your business tax-related queries. 

The UAE has made the decision to impose a Corporate Income Tax (CIT) on corporate revenues made within the nation. It will go into effect for financial years that begin on or after June 2023.

Corporate taxes in the United Arab Emirates

One of the lowest corporation tax rates in the world will continue to be in the United Arab Emirates. This plan is a result of the UAE’s desire to adhere to international tax regulations, which are consistent with initiatives made by other Gulf countries. It also aims to lighten regulatory burdens on UAE companies while safeguarding start-ups and small businesses.

Taking Effect

The UAE has made the decision to implement corporate tax, which will take effect for financial years starting on or after June 1, 2023.

Suggested rates

The planned company tax rates are as follows:

  • Taxable income up to AED375,000 (about US$102,095) is subject to a 0% tax rate.
  • Over AED375,000 ($102,095) in taxable income is subject to a 9 percent tax rate.
  • All multinational companies covered by OECD Base Erosion and Profit-Sharing rules that fall under Pillar 2 of the BEPS 2.0 framework, i.e., have combined worldwide revenues over AED 3.15 billion, will be eligible for a range of rates.

What is the purpose of the UAE’s new corporate income taxes?

  • Enhancing the nation’s standing as a major hub for trade and investment
  • To accelerate the UAE’s growth and change in order to achieve its strategic goals
  • Addressing standards for global tax transparency
  • Preventing the system from being corrupted by unfair tax practices to reduce reliance on oil

Taxable persons,

Under the UAE CT regime, there is a suggested treatment for various types of people. The 3 types of persons are:

  1. Natural persons
  2. Legal persons
  3. Exempt persons

1. Natural persons

There won’t be a parallel tax imposed on the income of natural persons, or individuals, under the UAE CT regime. 

  • Natural people conducting business or engaging in commercial activity in the UAE will likewise be subject to UAE CT. This covers sole proprietorships, solitary establishments, and individual partners in an unincorporated partnership. Other countries use comparable strategies without imposing parallel taxes on personal income from a firm.
  • In general, whether a person has a commercial license or an equivalent permit from the relevant competent authority in the UAE determines whether they are engaging in a business that is subject to UAE CT.
  • The government of the United Arab Emirates (UAE) has declared that the proposed tax regime will not apply to personal income received by UAE citizens or foreigners. Employment income, dividends, and rental income from UAE real estate investments will likewise be excluded from the proposed UAE CT’s application.

2. Legal Persons

  • UAE companies and other legal persons incorporated in the UAE will be treated as UAE-incorporated entities from 1 January 2017. 
  • Legal persons include Limited Liability Companies, Private Shareholding Companies, Public Joint Stock Companies, and other entities established under the laws of the UAE that have separate legal personalities. 
  • In order to apply UAE CT, legal entities that are effectively managed and controlled in the UAE will be treated as if they were UAE-incorporated firms.
  • Limited and general partnerships and other unincorporated joint ventures and associations of persons will be treated as ‘transparent’ for UAE CT purposes. This means they will not be taxpayers in their own right, but their income will instead ‘flow through’ and be taxed in the hands of partners or members.
  • Tax treatment of unincorporated partnerships in a cross-border context can create difficulties and unintended tax consequences, according to the United Arab Emirates (UAE) Tax Office (UTA) has outlined its plans to improve the tax treatment of partnerships between the UAE and foreign jurisdictions.

3. Exempt Persons

The following set of people will be exempt from UAE CT automatically or upon application;

1. The Federal and Emirate Governments, as well as its agencies, commissions, and other public institutions

2. UAE enterprises that are fully owned by the government and that are listed in a cabinet decision and perform a required or sovereign activity

3. Companies that harvest and use natural resources in the UAE are taxed at the Emirate level

4. Charities and other public benefit organizations that are included in a Cabinet Decision

5. Public and regulated private social security and retirement pension funds

6. Investment funds, provided they meet the requirements outlined in section

Basis of Taxation

Residents: UAE resident persons will be taxable in the UAE on their worldwide income. However, certain income earned from overseas will be exempt from UAE CT. Income taxes paid in foreign jurisdictions can be taken as a credit against the UAE tax payable in the United Arab Emirates to prevent double taxation.

Non-residents: Non-residents are subject to UAE CT on two types of income: (1) Taxable income from their Permanent Establishment in the UAE, and (2) Income sourced in the UAE.

Groups

Tax Groups: UAE resident group of companies can elect to form a tax group and be treated as a single taxable person. The parent company holds at least 95% of the share capital and voting rights of its subsidiaries. Neither the parent company nor any of the subsidiaries can be exempt or a Free Zone Person that benefits from the 0% CT rate.

Transfer of losses: The UAE CT regime may permit a transfer of Tax losses from one group company to another group company with profits for groupings of firms that do not fulfill the minimum 95% common ownership criterion or that do not wish to create a tax group. Transferring losses would result in a value shift from the losing company to the successful company. 75% of the entity receiving the transferred losses’ taxable income cannot be offset by all tax losses combined.

Corporate Income Tax’s Scope (CIT)

All businesses and economic activity within the emirates is subject to the United Arab Emirates’ federal tax system. Let’s examine the below-listed corporation taxation scope.

The planned CIT regime is intended to apply to all commercial, industrial, and professional businesses in the UAE, aside from the extraction of natural resources, which is currently subject to Emirate-level taxes up to 55%, and the branches of foreign banks, to whom 20% tax is applicable.

Companies registered in free zones are required to adhere to all legal requirements and refrain from conducting business with the UAE mainland.

All UAE enterprises will be subject to corporation tax, with the exception of those engaged in the extraction of natural resources like oil and gas and overseas bank branches.

A legal entity’s actions are all regarded as “business activities” and fall under the corporate tax structure.

CIT is not applied to income

  • Earnings from Foreign Bank Branches
  • Profits from intra-group trades and group reorganizations
  • Earnings from dividends, capital gains, interest, royalties, and other investments by foreign investors.
  • Exploiting natural resources generates income
  • Non-constant or infrequently conducting business in the UAE are foreign companies and individuals.
  • According to DIFC and ADGM legislation, a company that is incorporated in one of these jurisdictions is subject to a zero tax rate for a period of 50 years after the statute in question becomes effective.

Foreign Direct Investment and Corporate Tax

The introduction of a corporation tax is only one illustration of how quickly the UAE is developing and expanding. In addition to trying to position itself as a digital and technology powerhouse, the government’s goal is to restructure the country’s economy by weaning it off of its reliance on oil and gas.

The first comprehensive transformation of labor law, the removal of the requirement that a UAE national own at least 51% of a UAE company and the change of the workweek from Sunday to Thursday to Monday to Friday are all indications that the UAE wants to change its corporate structure and adhere to international regulations. Since work income would continue to be tax-free and earnings from personal holdings will not be subject to tax, the UAE will continue to entice highly trained people. But as a result of these changes, both living expenses and business expenses have increased.

Effect on the UAE Free Zones

According to the rules of each Free Zone, the UAE intends to uphold its commitment to enterprises registered in Free Zones that do not conduct business with the mainland and that will benefit from corporate tax incentives. For every free zone, a yearly CIT return must be filed.

With a portion of their revenue coming from onshore sales of goods or services, it is not uncommon for businesses to operate out of a free zone. Future implementation of excessive administrative requirements to contribute to onshore-generated revenues is likely. It’s feasible that companies with headquarters in free zones might think about establishing a presence onshore as a result of the relaxation of restrictions on foreign ownership and the expansion of real estate possibilities.

MNC’s Corporate Tax

In June 2023, the UAE will likely implement one of the lowest corporation tax rates in the world, which would likely draw in foreign businesses. Taxing corporate profits may seem strange with its goal of promoting investment and attracting global corporations. The implementation of a competitive tax policy, however, may make a nation attractive to multinational corporations looking for “transparent and vibrant” nations.

The effect of corporate tax on enterprises in the UAE

The tax and compliance costs of the majority of UAE firms are anticipated to significantly change with the implementation of corporation tax in the UAE. Entities must be in compliance with the new tax regime, which necessitates correct tax impact analysis and adjustments to the corporate structure, operational model(s), finance/tax operations, reporting systems, legal agreements, and transfers pricing policies, if necessary.

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 are 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. 

How to use Analytics to make better decisions for your small business

How to use Analytics to make better decisions for your small business

Data analysis includes assessing a vast amount of information, which is why it is termed “big data.” As a result, choosing the appropriate tools and techniques for your data analytics is really important. Data analytics may provide some limited insight to nontechnical workers. 

Additionally, you require more from your data analysis than just statistical summaries; you also need to comprehend the reasons behind the patterns in your data. Understanding the reasons behind the trends is much more important. 

You can use tools to analyze big data. Real-time analytics can be used as one method of discovering much of this data. Through an executive dashboard, this kind of data analysis offers crucial information to decision makers both instantly and as needed.

You probably produce more than enough data, regardless of how small your organization is, to benefit from big-data technologies. As an illustration, your company most likely has a large number of information-rich spreadsheets, databases, and customer relationship management applications. These data sources can be combined with freely accessible technologies like Google Analytics and data sets that are offered commercially.

Five essential methods of data analysis utilized by small enterprises

Utilizing various data analysis methods that are centered on business and technology is advantageous for small organizations. In order to establish corporate resilience in 2022, the following five critical data analysis techniques are crucial:

1. Statistical Analysis

Large-scale data collection, exploration, and presentation are all parts of the statistical analysis process, which aims to find patterns and trends. To finish the statistical analysis, five steps are done, including. 

  • Data explanation
  • Establishing links between the data and the population at large
  • The development of a model to summarize these links
  • Validation evidence for the model
  • Future trends prediction

2. Analysis of Text (Data mining)

Using databases or data mining techniques, text analysis or data mining assists in finding a pattern in massive data sets. Data analysts can use it to turn raw data into insightful business insights. Data mining enables the extraction of data, its examination for patterns and linkages, and its interpretation for business choices. Data sourcing, data exploration, modeling, and model deployment are the steps that make up data mining.

3. Analytical Diagnostics

A type of advanced analytics called diagnostic analytics looks at data or information to determine “why it happened?” Techniques like drill-down, data discovery, data mining, and correlations are used to describe it. Diagnostic analytics refers to the use of data to identify the reasons behind trends and the relationships between different variables. This approach can be used for a variety of purposes, including assessing market demand, studying consumer behavior, enhancing corporate culture, etc.

4. Analyses that Predict

Based on historical data, statistical modeling, data mining methods, and machine learning, predictive analytics is used to create predictions about future outcomes. Based on data analysis, businesses utilize predictive analytics to detect potential risks and opportunities.

5. Prescriptive Analytics

In order to recommend the actions a firm should take to address a problem, prescriptive analytics analyzes data or content. This kind of analytics uses a variety of tools and methods, such as recommendation engines, complicated event processing, neural networks, graph analysis, simulation, and many more.

To fully utilize your data sets, you must have a specialist’s knowledge. Consider employing a consultant who can guide you on the correct path if hiring a full-time analyst is not feasible financially. 

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 are 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. 

Key steps for a financial feasibility study

Key steps for a financial feasibility study

A financial feasibility study in UAE is a method that you can use to introduce outsiders to your business plan or idea. The research outlines the amount of money required to fund your project, as well as where that money will come from and how it will be used once it has been obtained. This analysis of projected cash flow can often disclose previously unknown flaws in your business plan and point you in the right direction for overcoming them.

Key steps of a feasibility study

1. Evaluate your business concept’s viability

Evaluate the market to see if funding your business makes sense before you start your financial feasibility analysis. Two things to consider are the audience and the competition. If the potential customer demand for what you’re trying to sell isn’t strong enough to keep your business afloat, now is the time to modify or remove your business plan. Similarly, you must evaluate your competition – learn about the items that customers may choose over yours and see what you can do to ensure that yours is superior.

2. Conducting and Writing a proper feasibility report

The format of most financial feasibility studies is similar. This is how they’re organized:

• Introduction – To make the paper easier to read, include a table of contents.

• Product/service – Include prototypes if there are any. Utilize this section to discuss how customers will use the product and plans for future product enhancements.

• Technology – Explain complicated technology procedures in language that a typical businessperson can grasp.

• Economical situation – Describe who your company will serve. Mention intended consumers, including both customers who buy the product in stores and end-users, who are the product’s ultimate owners.

• Competition – Include a list of significant competitors in this area. Include both direct and indirect competitors, or companies who offer a product that fills a similar need for customers.

• Industry – For already-existing industry, look at the current trends. Examine demand and supply over time and identify the elements that influence them.

• Business model – Explain how you intend to make money. Give enough information so that your potential investor feels comfortable discussing financial estimates later in the document.

• Sales and marketing strategy – Mention how much money you want to spend on marketing, ideally laying out a three-year sales strategy. Describe your marketing strategy in detail, as well as the rates you’ve set for your products.

• Requirements for production and operation – Once you’ve found a physical location for your business, make a note of its specifications (size, age, and condition), as well as the rental and equipment prices.

• Management and personnel requirements – Make a list of all the employees you plan to hire, as well as their qualifications. You should also consider the future, stating how many people you expect to hire and what they will be doing.

• Intellectual property – List every intellectual property that your company holds or is in the process of acquiring, including patents, copyrights, and trademarks.

• Critical risk factors: List all of the things that are keeping you from launching this business. Be open and honest about any barriers to access, economic forecasts, or rules that limit your production since your investors have a right to know how much money they’re risking by investing in you.

• Budget forecasts – Include information on start-up capital, finance, prospective returns, and payment to investors. Continue reading for helpful hints on how to make this section stand out.

• Conclusion – Present your final results and investor suggestions.

3. Financial projections guidelines.

• Request enough start-up cash to get the company up and running for the first two years.

• Put your personal money into your company, and make a big deal out of it in your feasibility study.

• Discuss factors that could affect an investor’s profit. 

ex: Set up several potential situations for investors to comprehend the risk they are taking.

• Don’t make any financial promises to investors that are precise and binding.

Reason: If you promise them a precise financial amount or a specified payment date, you run the danger of not being able to keep your word and losing a valuable partner in the process. Instead, tell them that they will receive a particular proportion of their investment at the end of each profitable business quarter, because that promise will benefit you both.

4. Make an executive summary

This single-paged document that should be the final item you write because it will act as a summary of the main points of your proposal. Because your executive summary will be the first thing your potential investors or partners view, it must be brief and interesting. It should emphasize the fascinating job you intend to undertake and how you intend to attain your objectives.

Startups have a hard time competing in new markets, and small businesses have a hard time attracting investors who believe in their visions. 

Investors who prefer to know exactly where their money is going will be impressed by your business skills and will be much more inclined to grant you the funds you need to fund your aspirations if you finish a financial feasibility study successfully.

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’s leading online accounting software – XERO. Moreover, KLOUDAC is a golden champion partner of Xero.  Accounting and Bookkeeping are 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.

How to do a business valuation in Dubai?

How to do a business valuation in Dubai?

The company’s management strives to increase the company’s value and shareholder wealth at all times. To do that there are a number of models that may be used to determine a company’s valuation. Inputs to these models, on the other hand, are based on judgment, which you will gain via practice. When using any of these various methods, the projected value of a firm becomes the focus point for putting a price tag on any company.

Business valuation services must be performed regardless of a company’s structure, size, or industry to ensure that the corporation is correctly valued. To assess a company’s worth, you’ll need a solid understanding of financial analytical tools, as well as the skills to negotiate and plan a deal. These skills are also required for acquisitions. 

An organization’s worth is determined by how well it can perform in the future. As a result, evaluating an organization’s past performance isn’t enough; we also need to consider its current culture, as well as its internal resources and intellectual capital, in order to determine its future earnings potential.

Different Valuations

Startup valuation – A startup valuation is an estimate of how much a company is worth in the market, based on a variety of factors. When raising funds or seeking for a technical cofounder, a business cofounder, or any partner or shareholder, valuing your startup is a process that every entrepreneur must go through.

Company / Business valuation – The process of determining the economic value of a full firm or company unit is known as business valuation. For a variety of reasons, including sale value, establishing partner ownership, and even taxation, company valuation can be used to evaluate the fair value of a business.

Corporate valuation – Corporate valuation is the process of determining the value of a company entity in the field of finance. It’s a key part of corporate finance that’s used for a bunch of options.

Business valuation methods

There are 03 methods namely:

  1. Asset-based method
  2. Market value method
  3. Cashflow method

1. Asset-based method

This approach of valuing a corporation adds up all of the company’s investments. When it comes to liquidating a firm, it’s often used. When using an asset-based method, there are two ways to calculate the value. You can either list the business’s net balance sheet worth of assets and remove the value of its liabilities, or you can calculate the net cash that would be obtained if all assets were sold and all liabilities were paid off.

2. Market value method

This method try to figure out how much your company is worth by comparing it to similar businesses that have recently sold. However, this strategy will only be effective if there are a large enough number of similar businesses to compare.

3. Discounted Cashflow method

This is a widely used valuation method that is based on the concept that a company’s true value is determined by its ability to generate wealth in the future. It calculates a company’s value by forecasting predicted future cash flows. It then calculates the present value of those future cash flows by “discounting” them by the buyer’s needed rate of return. 

This enables the evaluator to factor in any short- to medium-term assumptions and immediately input multiple valuations into the cash flow or rate of return. The majority of the subjectivity involved in appraisal is quantified using this method.

Although the Discounted Cash Flow technique is the most popular form of business valuation a combination of methods will be the most accurate way to calculate a selling price.

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’s leading online accounting software – XERO. Moreover, KLOUDAC is a golden champion partner of Xero.  Accounting and Bookkeeping are 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.

What are the major differences between in-house audits and external audits?

What are the major differences between in-house audits and external audits?

The goal of an audit is to determine if the information presented in a financial report accurately reflects an organization’s financial status at a given date. The auditor examines the organization’s financial report in accordance with the government’s auditing standards. Auditors use historical accounting data to forecast an organization’s future. An audit’s principal goal is to form an opinion about the data in a financial report.

Who typically organize, schedule, and perform in-house audits?

In-house auditors Internal Auditors are the ones who organize, schedule and perform in-house/internal audits.

An internal audit is the accounting procedure that assesses the performance of an organization’s internal controls. Simply, Internal auditors are internal employees who work for the company. An internal auditor’s goal is to add value and improve an organization’s operations while also ensuring that the organization follows government rules and regulations. Internal auditors collect all necessary information about how a company operates and use it to highlight where it is succeeding and where it might improve.

Who typically organize, schedule, and perform external audits?

An external audit is a third-party examination of a company’s financial accounts. An outside organization or an independent person does the external audit. An external audit is a valuable review of an organization’s accounting for both businesses and governments. In comparison to an internal audit, an external audit is less likely to encounter a conflict of interest. The role of an external auditor in evaluating a company’s finances is important.

What is the purpose of having both in-house and external audits?

An internal audit’s goal is to evaluate an organization’s performance on a regular basis and find areas for improvement in the future, whether the company is large or small. Internal audits are critical for businesses across a wide range of industries.

An external audit examines a company’s financial statements to ensure that they are accurate and complete. An external auditor may be hired by the organization to investigate fraud. It is an inspection carried out by a third-party accountant. This sort of audit is most typically used to obtain certification of an entity’s financial statements. Certain investors and lenders, as well as all publicly traded companies, demand this certification. 

Some major differences between in-house and external audits

Internal AuditExternal Audit
Look into firm business procedures and risksLook into financial records and render an opinion on the company’s financial statements
Single annual audit
Take place all yearAuditors will provide review services three times a year if the client is publicly traded
Not required to be CPAsMust be directed by a CPA
They are accountable to shareholdersThey are accountable to management
Must utilize specified formats for their audit views and management lettersCan deliver their conclusions in any report style
Management uses internal audit reportsStakeholders including investors, creditors, and lenders utilize external audit reports
Can offer staff guidance and other advisory servicesAuditors are restricted from assisting an audit client too closely

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’s leading online accounting software – XERO. Moreover, KLOUDAC is a golden champion partner of Xero.  Accounting and Bookkeeping are 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.