How to Prepare for Tax Season 2024: A Guide for Businesses in the UAE

On June 1st, 2023, the corporate tax structure of the United Arab Emirates went into effect, bringing about a substantial shift for companies doing business in the country. Most businesses will file their first corporate tax return in 2024, so it's important to be ready to handle the new rules and ensure the tax season goes well.

This guide will help UAE-based businesses learn exactly what should be done to ensure a stress-free tax season in 2024.

Understanding Your Tax Obligations

A recent article in Khaleej Times provides an overview of the eligibility criteria for the Qualified Free Zone Person (QFZP) status, which can exempt certain businesses operating within Free Zones from corporate tax.

Gather Your Records

Obtaining all required papers is the next step after determining your tax filing responsibilities. This comprises:

• Financial statements: Cash flow, balance sheet, and income statement are all included in this.
• Tax invoices: Ensure that you have accurate records of all of your earnings and outlays, including invoices and receipts.
• Payroll records: These contain information on bonuses, salary, and any other taxable benefits given to employees.
• Transfer pricing records: To prove that transactions are carried out at arm's length, your company must keep transfer pricing records if it transacts with connected parties (parent firms or subsidiaries).

Review and Update Accounting Policies

Your accounting rules may need to be reviewed and updated in light of the implementation of corporate tax. Make sure your Tax and Accounting procedures comply with the Corporate Tax Law of the United Arab Emirates, specifically in relation to:

• Handling of costs: Clearly define and classify deductible expenses by the guidelines.
• Depreciation methods: To precisely determine the tax value of different assets, be aware of the allowed depreciation methods for such assets
• Inventory valuation: Select the most appropriate inventory value technique that the tax code permits.

Familiarise Yourself with Tax Deadlines

Staying on top of tax deadlines is crucial to avoid penalties. Businesses with a December 31st fiscal year-end will likely have their first corporate tax return submission in September 2024. However, it's important to confirm the exact deadlines with the Federal Tax Authority (FTA) or consult a tax advisor for personalised guidance. The FTA website provides valuable resources and guidance for businesses navigating corporate tax in the UAE.

Embrace Technology

The promotion of a digital tax system is a top priority for the UAE government. Companies must electronically file their tax returns and other necessary data to the FTA. Learn how to use the FTA's web portal and invest in accounting software to help you file taxes more quickly.

Seek Professional Help

Corporate tax can be complicated, particularly for companies that are not conversant with the most recent rules. Consider getting advice from a certified tax counselor or accountant who is familiar with the company tax system in the United Arab Emirates. They can assist you with accurately preparing your tax return, interpreting tax rules, and ensuring compliance to prevent fines.

Conclusion

Businesses in the UAE can approach the 2024 tax season with confidence if they follow these steps and remain proactive. To ensure a seamless and effective tax filing procedure, keep in mind that staying organised, obtaining the required paperwork, and being aware of the new regulations are essential. It's wise to keep up with the most recent developments in the UAE's corporate tax system and, as necessary, seek expert advice.