Taming the Tax Dragon can be a daunting task, but with the right approach, you can transform this fire-breathing beast into a friendly tax-optimized companion and businesses can emerge from the transitional period smoothly.
๐๐ ๐ข๐ซ๐ฌ๐ญ, ๐ ๐ข๐ง๐ ๐๐จ๐ฎ๐ซ ๐ ๐ข๐ซ๐ฌ๐ญ ๐๐๐ฑ ๐๐๐ซ๐ข๐จ๐: This is your dragon’s training ground. Identify your first tax period: If your fiscal year matches the calendar, it starts January 1st, 2024.
๐๐๐ฌ๐ฌ๐๐ฌ๐ฌ ๐๐จ๐ฎ๐ซ ๐๐ซ๐๐ ๐จ๐ง’๐ฌ ๐๐จ๐ฆ๐๐ข๐ง: โ
๐ฏ๐๐๐ข๐ง๐ฅ๐๐ง๐ ๐ฏ๐ฌ. ๐ ๐ซ๐๐ ๐๐จ๐ง๐ Is your current setup maximizing your tax benefits? Mainland companies offer access to the wider market but face the 9% corporate tax. Qualifying Free zones offer zero % CT, but restrictions on operations apply. Analyze your business needs and choose the best fit.
๐ฏ๐๐๐ฑ ๐๐ซ๐จ๐ฎ๐ฉ ๐ ๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง Do you have multiple entities? Consider forming a tax group to consolidate profits and losses, potentially reducing your overall tax burden.
๐๐๐ฅ๐๐ฒ ๐ญ๐ก๐ ๐๐๐ฉ๐๐ซ ๐๐ซ๐๐ ๐จ๐งโ๏ธ๐ฏ๐๐ฅ๐จ๐ฌ๐ ๐ข๐ง๐๐๐ญ๐ข๐ฏ๐ ๐๐จ๐ฆ๐ฉ๐๐ง๐ข๐๐ฌ:”Paper companies” can create unnecessary tax complexities. Close them down to streamline your structure.
๐ฏ๐๐ฉ๐๐๐ญ๐ ๐ฒ๐จ๐ฎ๐ซ ๐ฅ๐๐ ๐๐ฅ ๐๐ซ๐๐ฆ๐๐ฐ๐จ๐ซ๐ค: Ensure your legal documents (e.g., MoA) reflect your chosen structure.
๐ฅ๐๐จ๐ฐ, ๐ฅ๐๐ญ’๐ฌ ๐๐๐ฆ๐ ๐๐จ๐ฎ๐ซ ๐๐ซ๐๐ ๐จ๐ง! ๐๐๐ ฐ๐ ฝ๐๐ ต๐ ด๐ ๐ ฟ๐๐ ธ๐ ฒ๐ ธ๐ ฝ๐ ถ
If you have related entities, familiarize yourself with the arm’s length principle. Treat them fairly, or the Tax Dragon might bite.
๐ต๏ธโโ๏ธ๐๐ง๐๐ฅ๐ฒ๐ณ๐ ๐ซ๐๐ฅ๐๐ญ๐๐ ๐ฉ๐๐ซ๐ญ๐ฒ ๐ญ๐ซ๐๐ง๐ฌ๐๐๐ญ๐ข๐จ๐ง๐ฌ: Look for any deals between you and your dragon’s cousins. Were they fair market value? Did they reflect what independent dragons would charge each other?
๐๐๐๐ฏ๐ข๐๐ฐ ๐ฒ๐จ๐ฎ๐ซ ๐๐ฅ๐จ๐ฌ๐ข๐ง๐ ๐๐๐ฅ๐๐ง๐๐ ๐ฌ๐ก๐๐๐ญ: Your opening balance sheet for tax purposes will be based on your last financial year’s closing balance sheet, prepared according to IFRS, and adjusted for Arm’s Length pricing.
โ๐ป๐๐จ๐๐ฎ๐ฆ๐๐ง๐ญ ๐ฒ๐จ๐ฎ๐ซ ๐ญ๐ซ๐๐ง๐ฌ๐๐๐ซ ๐ฉ๐ซ๐ข๐๐ข๐ง๐ ๐ฉ๐จ๐ฅ๐ข๐๐ข๐๐ฌ: This is like a dragon training manual, outlining how you value transactions with your kin. It shows the tax authorities you’re playing fair.
๐๐๐จ๐ง’๐ญ ๐ ๐จ๐ซ๐ ๐๐ญ ๐ญ๐จ ๐ ๐๐๐ ๐๐จ๐ฎ๐ซ ๐๐ซ๐๐ ๐จ๐ง!
๐ฏ๐๐๐๐จ๐ซ๐-๐ค๐๐๐ฉ๐ข๐ง๐ ๐๐๐ ๐ข๐ฆ๐: Implement a robust system to track income, expenses & other financial data. This is your dragon’s leash, ensuring it doesn’t stray into penalty territory.
๐ค ๐๐จ๐ง๐ฎ๐ฌ ๐๐ข๐ฉ๐ฌ ๐๐จ๐ซ ๐ ๐๐๐ฉ๐ฉ๐ฒ ๐๐ซ๐๐ ๐จ๐ง: ๐ฆ๐
๐ฏ๐๐ซ๐๐ข๐ง ๐ฒ๐จ๐ฎ๐ซ ๐ญ๐๐๐ฆ: Educate your employees on the new tax rules & their responsibilities.
๐ฏ๐๐ญ๐๐ฒ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐: Keep up with the latest tax updates & regulations through official channels and reliable sources.
๐ข๐ป๐๐๐ ๐๐ ๐ป๐๐๐ ๐๐๐๐ ๐ป๐๐ ๐ซ๐๐๐๐๐?
๐ฉ๐ปโ๐๐ฏ๐๐๐ ๐ ๐ป๐๐ ๐พ๐๐๐๐๐ ๐ป๐๐ ๐๐๐ต๐ผโโ๏ธ
Author:
Aliya N.
Associate Partner| Top Voices on LinkedIn (Management Consulting, Artificial Intelligence, Business Services, Public Speaking) | FCMA | MBA | GCC VAT Dip | Oxford Said Business School Fintech Program Published.