Business & Strategy

If you’re an expat with those grand business ambitions and a penchant for the Middle East, then consider establishing a free zone company in Dubai! A free zone opens a gateway to a world of unprecedented advantages and incentives, making it an appealing option for businesses looking to expand or set up operations in the region. Excited to know about the array of benefits these zones have to offer? Let’s explore! 100% Foreign Ownership: One of the most attractive facets of establishing a Free Zone Company in the UAE is the provision for 100% foreign ownership. This exceptional policy liberates international investors from the constraints often associated with shared ownership. By eliminating the need for local partners or sponsors, these zones offer an environment where global entrepreneurs can confidently shape their enterprises. Get Tax Exemptions Free Zone entities enjoy substantial tax benefits, including zero corporate and personal income taxes for a specific period, usually ranging from 15 to 50 years, depending on the Free Zone. Customs Duty Benefits: Companies within Free Zones benefit from customs duty exemptions on imports and exports. This paves the way for businesses to engage in more cost-effective and efficient cross-border transactions. Simplified Import and Export Procedures: By simplifying customs procedures, bureaucratic complexities get eliminated, resulting in a seamless flow of goods across borders. This advantage significantly reduces the time and resources otherwise spent navigating intricate customs regulations. Great Infrastructure and Facilities: These zones boast state-of-the-art amenities, including modern office spaces, well-equipped warehouses, and top-tier communication networks. Such exceptional infrastructure accelerates the setup and expansion of businesses, Business Setup in UAE made easy:  Setting up a Free Zone Company in the UAE is straightforward and relatively quick, with minimal paperwork and fewer regulatory obstacles. Geographic Advantage Positioned at the crossroads of major global trade routes, UAE’s Free Zones benefit from a highly strategic location that serves as a gateway to both regional and international markets. Repatriation of Profits Businesses can repatriate 100% of their profits and capital, ensuring a seamless flow of funds back to their home country. No Currency Restrictions There are no currency restrictions within Free Zones, enabling businesses to transact in various currencies without limitations. Supports a wide range of Business Activities UAE Free Zones cover a diverse array of industries and sectors, allowing companies to choose the one that aligns with their expertise and business model. Intellectual Property Protection Robust intellectual property laws and regulations safeguard businesses’ patents, trademarks, copyrights, and trade secrets. Hire a Talented Workforce It offers a diverse and skilled labour pool, making it easier for companies to find qualified employees to support their operations High-Quality Lifestyle The UAE’s modern lifestyle, world-class amenities, and multicultural environment make it an attractive destination for expatriate employees. Overall, establishing a Free Zone Company in the UAE provides a favourable business environment with a range of incentives that can significantly contribute to a company’s growth, expansion, and success.

The most advanced infrastructure and the world-class amenities the UAE offers is the prime factor to support the economic growth as well as the reason for its leading position among the Arab nations. A supporting commercial and legal environment in the UAE makes it the best place for businesses and investments. The tax regime in the UAE is about to welcome the greatest milestone as the country introduces corporate tax in 2023. UAE-based businesses will be obliged to evaluate the impact of the new tax regulations on their functioning and comply with them. As part of helping the business entities to be prepared for the introduction of the new tax, we have curated here some Frequently Asked Questions and their answers on the corporate tax In UAE. What is the UAE corporate tax? Corporate tax is a form of direct tax levied on the net income or profit of corporations and other business entities. When will the UAE corporate tax come into effect? As per the declaration of the UAE Ministry of Finance, corporate tax will come into effect from the financial year starting on or after 1 June 2023. What will be the rates of UAE corporate tax? The tax rate will be 0% for the taxable income up to AED 375,000 and 9% for the taxable income above AED 375,000. What type of businesses come under the scope of the UAE corporate tax? The UAE corporate tax will apply to all the business and commercial activities in the UAE except for the extraction of natural resources, which will remain to be subjected to the Emirate level corporate taxation. Which is the responsible authority for the administration and collection of corporate tax in UAE? The Federal Tax Authority will be in authority for the enforcement, administration and collection of the UAE corporate tax. The Ministry of Finance will be the ‘competent authority’ for international agreements and the exchange of information associated with corporate tax. Will a salaried individual be subject to the UAE corporate tax? The salary or income acquired through government or private employment will not make one subject to the UAE corporate tax. Will a foreign company be subject to the UAE corporate tax? Any foreign businesses and individuals who conduct a trade or business in an ongoing or regular manner will be subject to the UAE corporate tax. How the corporate tax will affect the real estate and banking sector in UAE? Banks and real estate come within the scope of corporate tax in the UAE. The other activities which fall under the UAE corporate tax regime include construction, management, development, agency and brokerage. Will the UAE corporate tax be levied upon the income of foreign investors? The income of foreign investors received from dividends, capital gains, interest, royalties and other investment returns will not be subject to corporate tax in the UAE. Is forming a tax group for the corporate tax permitted in the UAE? A group of companies in the UAE can create a tax group which will be considered as a single taxable person. It will be based on certain conditions and if they are all met, these tax groups can enjoy the benefit of being treated as a single taxable person who is expected to file only a single corporate tax return. Will the Free zone business entities come under the scope of the UAE corporate tax? The free zone businesses will also be subject to the corporate tax but the government will continue to honour the tax incentives given to the free zone businesses which meet all the requirements and do not conduct business with the UAE mainland. Will the large multinationals in the Freezone be subject to the UAE corporate tax? The businesses in the free zone will not be subject to the UAE corporate tax but those free zone business entities which are a part of the large multinational companies may be subject to the Global Minimum Tax of 15% under Pillar Two. Will the UAE holding companies be exempted from the corporate tax? Though holding companies will come within the scope of corporate tax, certain income streams of holding companies may be exempt from the corporate tax. Further clarification on the requirements for a qualifying shareholding is to be announced by the state. Will investment returns of individuals be subjected to corporate tax? Individuals will not be subject to corporate tax on dividends, capital gains, shares or securities in their personal capacity. Why corporate tax is being introduced in the UAE? The introduction of UAE corporate tax is based on the internationally accepted tax systems which will help the UAE government to remain in the position of the best place to start businesses. The new tax regime will aid the growth of the nation and realize its strategic commercial and industrial goals. Our team of experts at MAATS can assist businesses to be prepared for the upcoming changes in business operations and accounting due to the implementation of corporate tax. We help with complete corporate tax consultancy services, tax filing, tax refunding, tax deregistration etc.

What Is Financial Auditing? A financial statement audit involves performing a detailed evaluation of a company’s financial records. Regular financial statement audits are essential to every business – particularly those that are undergoing rapid growth – when it comes to tax planning, legal compliance, and the ability to develop an accurate budget. However, sifting through countless mountains of paperwork can undoubtedly put you behind schedule when you are trying to manage a business. While there are many reasons why your business may need a financial statement audit During a financial audit, a company’s accounting records and financial statements are examined. In the process, any issues are uncovered and documented in a final report. Sometimes the audit is carried out by an external auditor and sometimes by a committee within the company itself. External specialists know how to conduct professional financial audits and understand what to focus on. Internal audits are usually held in regular intervals, such as yearly or quarterly. What are the benefits of an audit? Audits can be incredibly beneficial to the growth of your company. A successful report can even help improve your credit rating and make you more eligible for financial business loans. It may even lead to lower interest rates and determine eligibility for certain types of loans which may be more difficult to apply for. You will also be able to prove to investors that your company is reliable and can be trusted. This is not only a benefit for potential shareholders but can also improve the image of your brand in general. By conducting an audit, you can promote accountability which will help employees be more organized and work more efficiently. Additionally, it helps you gain perspective and insights into problems and areas that could be improved. For businesses, it’s very important to be transparent and accountable. Financial audits are relevant to companies in all industries and can increase confidence and trust in your brand. It can even make your accounting easier since you will be motivated to organize your process better and be highly detailed when keeping records. Why Are Audits Necessary? An audit is important because it provides credibility to financial statements in your company. The credibility provided by an audit goes a long way to save you from many hassles and delays in the business world. The purpose of audits is to ensure that a company or business keeps accurate records and follows proper accounting principles. Audits assure shareholders that the accounting records presented in the financial statement are fair and accurate. In addition, with the help of audit reports, companies can improve their internal controls and systems. And, if your company is audited, it can increase your chances of improving cash flow through financing, investors, etc. (more on that later in the article). Reasons to audit your financial statements: Detecting and Neutralizing Fraudulent Activity: – Running a business and analysing your finances can be an overwhelming task. Paying attention to every detail of your daily operations while sifting through hundreds of documents can affect your company negatively. With so many tasks at hand, discovering possible fraud – and neutralizing it swiftly – can be difficult for business owners. A financial statement audit will allow you to have a detailed report on your finances. Having accurate information about every business decision over a set period places you in a better position to identify whether fraud has occurred, and if so, when and to what extent. Tying into the point above, a financial statement audit can help you boost your credibility with stakeholders and investors, demonstrating that your company is managing its funds vigilantly and appropriately. Expanding your Business: – Growth and profitability should be among the top focuses of any company. As your business expands and adds more branches or employees, so does the need for tight financial controls and efficient decision-making. A financial statement audit can help you determine the best courses of financial action to help your business continue its growth. If you are thinking about expanding your business, then you may need an audit that lets you know where your company stands financially – and where it can be improved. Timely and Accurate Information: – Information is a powerful tool that can be used to drive the future success of the company. In saying this, the information must be both timely and accurate. If the information received to make decisions is accurate, but a year out, to what use is the information? Conversely, if the information is timely, but incorrect, a misstep is likely. Our firm works with a lot of small and medium-sized companies and a common theme we find is that when management has no outside statutory requirements, the timely and accurate close of the books suffers instead of the day-to-day operations. We field calls all the time from companies looking for reviews or audits many months after the year-end because a requirement has suddenly come about. In many of these cases, the books are still not closed. Having an annual review or audit on the calendar each year sets precedence for management to focus on annual closings. It now becomes a bit of an annual report card for your accounting team. Management now knows that there is an expectation for timely annual information which hopefully results in timely monthly information throughout the year. Our firm also works with management to ensure financial statements are prepared by accounting principles generally accepted in the United States of America (“GAAP”).  We find that many small to medium-sized companies prepare their financial statements on a cash basis. Firstly, this is not in compliance with GAAP and secondly, it does not provide ownership with the complete picture of what took place during the year and how it may compare with previous years. Also, many industry standards and ratios are based on GAAP reporting, therefore when ownership is comparing the results of its company to the industry, the results may be deceptive. A review or audit will take a look at the accrual-based accounting