All companies must maintain organized accounting records even if they are not subject to "corporate tax."
Whether your company is subject to the corporate tax due to be applied in the middle of the following year, 2023, or below the announced taxable income threshold of up to AED 375,000, it is wise to keep accounting books in order and implement a robust accounting system that shows revenues, expenses and net income, in preparation for the expected implementation corporate tax in UAE.
Maintaining audited and clear books of accounts is considered one of the biggest challenges for companies, especially SMEs. We have stressed this earlier on more than occasions in our blog "How A Bookkeeping Service Benefits Your Business?" "Common SME's and Startups Bookkeeping Problems and Solutions." The benefits accrue to companies due to accounting records, including knowledge of debts, monthly or annual revenues, and monthly or yearly costs and operations.
The UAE federal tax authority law applied to companies on value-added tax; the taxable companies must have accounting records or face a fine. Nearly 20% of small and medium-sized business SMEs fail in their first year, and about 50% see year five of operations. Reasons could vary from addressing the right products or services to balancing customer supply, demand, or cybersecurity issues. But some of the most significant problems that SMEs need to face on regular bases are financial. For example, not all companies have common accounting records, making processing accounting records a difficult challenge. It becomes even more complicated when there is a link between them and the laws and value-added tax or corporate tax implementation.
Corporate tax is a form of direct tax levied on net income or business profit. In other countries, it is referred to as "corporate income tax" or "business profit tax". The corporate tax will enter into force in the middle of next year, with a rate of 0% for taxable income up to 375,000 dirhams, 9% for taxable income over 375,000 dirhams, and a different tax rate for large multinational companies that meet specific criteria to be set according to « Pillar Two" of the Base Erosion and Profit Shifting Project of the Organization for Economic Cooperation and Development.
So what are the benefits of addressing the accounting shortfalls
Visibility to the company's cash position.
Opportunity to make more timely and better-informed decisions.
Improved banking and vendor relations.
Accurate and timely data for tax purposes.
Don't settle for normality aim for a more vital state and healthier operations and financial position. A competitive advantage can is gained when business financial performance is accurate, reliable and reported promptly. Right solutions are available to support and make the right decisions to increase their profitability and sustainability.
We are here to assist you. Assist Plus is a UAE Full-Service CPA Firm dedicated to handling your business's financial and accounting aspects so you can focus on your clients' needs, supply them with the products and services they want, and concentrate on revenue generation. Complete accounting and financial services to businesses throughout the country that will advise you on the most current, up-to-date rules so you can make the absolute best long-term decisions and profit-making planning strategies.
We want you to concentrate on your best as you're the expert in your line of business, and let us focus on what we do best for your financials. Our firm blends a leading regional firm's expertise with a local provider's convenience, familiarity, and passion. As a result, we distinguish ourselves on the various services we deliver and how we provide them.
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