Comply with both VAT and corporate tax to avoid risks of costly fines

Implementing robust accounting and financial tracking systems will help businesses avoid penalties and support growth, while staying informed about the latest tax updates through reliable sources remains critical in this evolving business landscape, highlighted Alia Noor, Associate Partner, Ahmad Alagbari Chartered Accountants, during a presentation, titled How to tame your tax dragon, at Gulf News’ The UAE Growth & Investment Forum, currently under way at Jumeirah Emirates Towers.

With corporate taxation now a reality in the UAE, understanding the fundamentals – such as identifying tax periods, differences between VAT and corporate tax compliance, managing allowable expenses, and ensuring compliance – has become essential for companies.

Noor discussed the intricate processes of corporate taxation during her presentation. Using the metaphor of dragons, she simplified complex tax calculations for businesses, making the information accessible and engaging.

Know the difference between VAT and corporate tax

“I aim to make tax compliance engaging and straightforward because understanding these concepts is crucial for avoiding hefty penalties,” she told Gulf News on the sidelines of the forum.

“In the UAE, it's vital to comply with both VAT and corporate tax. Many people confuse the two, thinking that registering for one exempts them from the other. However, non-compliance with VAT or corporate tax will lead to a penalty. That’s why it’s important to clarify the differences between VAT and corporate tax and explain the importance of both, helping attendees tackle their tax compliance challenges effectively."

Understand and comply with the tax regime

The introduction of corporate taxation in the UAE has streamlined operations and enhanced transparency, yet many SMEs and new businesses struggle to navigate the system. Noor emphasised the importance of understanding the complete tax processes, starting from identifying the first tax period, assessing currency considerations and tax residency, to transfer pricing and related parties transactions, and economic substance regulations.

“All financial statements must be reported in UAE Dirhams, with guidelines for converting foreign currencies based on Central Bank rates. Consistency in currency conversion methods is critical to ensure compliance,” she said.

She highlighted the need for companies to evaluate their status as either resident or non-resident entities. “This affects their tax obligations, especially in relation to mainland versus free zone regulations.”

Navigating the complexities of corporate taxation is critical for businesses looking for sustainable growth in the UAE. “By understanding these critical points, companies can effectively manage their tax responsibilities and minimise their risk of a penalty or fine along their journey,” said Noor.

Venue Partner of The UAE Growth and Investment Forum

The Venue Partner of the forum is Jumeirah Emirates Towers, which offers an easy access to Emirates Towers metro station. A prefered venue for events and conferences in Dubai, Godolphin Ballroom features beautifully crafted ceilings and crystal chandeliers and can accommodate up to 900 guests.

Sponsors and Partners

Platinum Sponsor of the event is Free Zones Authority of Ajman, Silver Sponsor is Creative Zone and Technology Partner is Tally. Support Partners of the event are Hussain Al Shemsi Chartered Accountant, TMSL, FAME Advisory, Ahmad Alagbari Chartered Accountants, BSA Law, Dhanguard, Hawksford, Fast Business Center, MICS, Triliv, Lawgical Group and Neeja Corporate Services.