UAE Corporate Tax: Experts share tips on cash flow, compliance at UAE Growth and Investment Forum

Dubai: Businesses in the UAE should proactively budget for corporate tax throughout the financial year to avoid potential cash flow challenges, tax experts said at the recent Gulf News UAE Growth and Investment Forum.

During a panel discussion on the UAE's corporate tax landscape for 2025, Priju Dominic, CEO and Founder of Dominic and Partners, and Amit Mehta, Partner - Taxation at UHY James, stressed upon the importance of strategic tax planning and compliance.

Dominic said that many businesses falter due to poor cash flow management. He suggested that companies, especially those already facing financial constraints, should consider establishing a reserve account specifically for tax obligations. “Smart businesses don't just prepare for tax, they budget for it,” Dominic said, adding that this shift in approach transforms tax from a source of stress to an integral part of a well-defined business strategy.

Mehta agreed with Dominic and said the new corporate tax law presents a practical challenge as businesses adapt to allocating funds for tax payments. He has advised companies to implement robust tax forecasting within their cash flow projections.

Optimising cash flow

Additionally, Mehta pointed out opportunities for businesses to optimise their cash flow by scrutinising expenses and avoiding those deemed non-allowable under the tax regulations. "If any expense... is disallowable, then they can avoid and save... cash flows," he said, highlighting the double benefit of preventing unnecessary expenditure and reducing taxable profit.

The experts also emphasised the importance of staying current with evolving tax laws and seeking professional advice to ensure accurate compliance and informed strategic planning. This proactive approach, they argued, is crucial for businesses to navigate the complexities of the UAE's corporate tax system effectively and maintain healthy cash flow.

On business structures

Responding to audience queries, the experts also touched upon specific business structures. When asked about holding companies, Mehta stated that those established in free zones could benefit, particularly in terms of income from dividends and capital gains, provided they meet certain conditions, such as maintaining adequate substance and documentation.

Regarding Special Purpose Vehicles (SPVs) investing in UAE-based subsidiaries, Mehta stated that the dividends received by the SPV would generally not be taxed again, as the operational entity would have already paid corporate tax, thereby preventing double taxation.

Both Dominic and Mehta concluded by underscoring the critical role of advisors and consultants in navigating the intricacies of the tax system. They urged businesses to seek professional guidance to ensure they understand their obligations, identify applicable exemptions and relief schemes, and develop effective tax strategies aligned with their company.