UAE Corporate Tax: Small businesses unsure on compliance should check out 'Muwafaq' package
SMEs should at all times opt only for FTA-approved 'tax agents' to handle their interests
Dubai: Small businesses in the UAE still unsure about how to go about corporate tax compliance can do themselves a lot of good signing up for the ‘Muwafaq’ service from Federal Tax Authority.
“The Muwafaq portal will guide on the process to be followed to ensure compliances are met independently,” said Amit Mehta, Associate Partner – Taxation at the Dubai-based consultancy UHY James. Plus, ‘it can help in connecting with tax agents.
“There is no fee collected by the FTA in this program. However, if we are going to reach out to a tax agent, they will be charging the client discounted service fee.”
According to market sources, many SMEs are still finding their way on what they should be doing on corporate tax measures. Of course, they have had their VAT compliance and processes in place for years now, but industry sources say being corporate tax compliant is quite a step up. Even with all the months of preparation time the UAE authorities had provided (Registrations for the new tax started June 1.)
The tax authority had launched the Muwafaq program in march, and the take up rates have soared in recent weeks.
“The Muwafaq is designed specifically to cater to SMEs and it does not have any specified time limit,” said Mehta. “It is a portal through which the business can connect to the right person who can evaluate and guide on the way forward.”
Connecting with tax agents
A key part of the process is for the SME to connect with a tax agent, who can:
- Act on behalf of the business with regards to fulfilling the company’s tax affairs at the Federal Tax Authority.
- A tax agent assists the person in meeting all tax obligations and in the ‘exercise of his associated tax rights’.
Go with 'approved' auditors
Business owners, however, should at all times appoint auditors officially approved and accredited by the FTA.
"These accredited tax agents have undergone rigorous training and exams, ensuring a deep understanding of the UAE's tax legislation," said Zahra AlDahmani, the Taxpayers Services Director at FTA. "Choosing qualified tax agents from our accredited pool is prudent.
With the implementation of corporate tax, we anticipate a substantial surge, potentially tripling the existing number. This led us to issue comprehensive regulations governing tax agents' conduct and qualifications.
At the ongoing Gitex, the FTA is promoting the Muwafaq package. "This package offers several advantages, including a 20 per cent discount when companies engage an accredited tax agent for advice and registration," said Zahra. "We've designed programs to address SMEs’ specific requirements."
In addition, the package also provides access to specialised accounting software programs approved by the FTA.
"To address the challenge of understanding corporate tax integrations, we have also introduced the role of an account manager for each company,” said Zahra. “SMEs now have a dedicated point of contact for support related to FTA services."
The aualification criteria is completely decided by the Federal Tax Authority and eligible SMEs can see the link available on the face of the dashboards in EmaraTax login.
Companies registering
The UAE has classified tax agents based on economic sectors to ease taxpayers' compliance.
The FTA, according to Zahra, is seeing a significant increase in companies registering for corporate tax, which can be attributed to the simplification of the registration process.
"We have made it easier for companies to understand the necessary documentation and navigate the system," said Zahra.
As a result, companies no longer need to rely on external assistance or endure long waiting periods.
The 'Maskan' service allows for tax refunds to UAE nationals building new homes system, where the FTA refunds VAT charges incurred by them. The platform aims to reduce the burden on applicants by streamlining the process with fewer steps and making it paperless.
"Users can upload invoices related to their new home building using the app's OCR technology,” said Zahra AlDahmani of the FTA. “It will automatically extract all necessary details, eliminating manual data entry."