The UAE has emerged as a favourable destination for businesses and financial offices because of its well-placed geographic position combined with investor-friendly legislation and favorable taxation systems. Implementing a business in a free zone such as Dubai is 100% free of foreign participation and free from tax. However, for a business to be legally compliant, it must file the correct taxes and returns. As a guide to any company seeking to set up a corporation in the UAE, particularly in Dubai, this article brings out a brief insight into the Tax & Return Filing in UAE.

Taxation System in the UAE

●        No personal income tax

●        Removing corporate tax, except for the ones that residents of the oil and natural gas industry pay

●        It should also have low import duties, which range between 0-5%

●        Sales tax known as Value Added Tax, wowudo was introduced in 2018 at 5 percent

The Tax & Return Filing in UAE are more or less beneficial for the conduct of the business by foreign investors for the growth of the economy. Although citizens of the UAE have no personal income taxes, all business establishments in the country must follow tax laws and file returns every year.

Return Filing 

●        Deadlines are within 6 months of the closing of the financial year.

●        Additional documents necessary include the balance sheet, profit/loss statement.

●        Accounts audited required in some cases

●        Failure involves fines which leads to suspension of business operations.

Despite what has been stated above about low corporate tax, mainland UAE-based companies are required to submit an annual tax return within 6 months after the financial year closure. Incorporation documents including memo and articles of Incorporation, will be required. besides other legal structures one has to submit relevant financial documents. There are penalties for non-compliance.

Setting up a Company in Dubai

●        Free zones allow 100% foreign ownership

●        No percentage of corporate and personal income tax.

●        Legal system provides good defense for investors

●        Availability of a competent pool of human capital and facilities

Dubai has several free zones, which enable foreigners to own businesses with full capability throughout various sectors. This together with the 0% tax rate attracts investors from all over the world. Strong corporate rules also guard the interests of investors. Availability of proficient manpower at global level and integration makes its location at Dubai convenient.

Compliance Requirements

●        A local service agent who must be a UAE national must be appointed

●        Meet Emiratization workforce percentage requirements

●        File annual returns and documents 

●        Audit required in the case of companies with turnovers exceeding certain thresholds

Although getting started to establish a company setup in Dubai is fairly simple, one has to deal with visa requirements, employment and paperwork. The use of a local service agent is compulsory. However, Emiratization policies mean that UAE citizens are to be recruited as well. Firms are also required to conduct account audits and file returns annually.

Conclusion

Everything, starting from the zero-taxation policy to superior connectivity and excellent transportation network, makes Dubai a perfect location for a company setup in Dubai and expanding a business venture. Yet, ongoing compliance shall be a critical factor in particular to the financial reporting and return filing on a yearly basis is mandatory for smooth running of the company. The right consultant should be engaged at the right times during the set up so that every process known is checked and aligned.