Taxation and Compliance for Business Registration in Dubai

United Arab Emirates (UAE) was made up of seven Emirates and was founded at the beginning of the 1970s. One of the newest Emirates in the area, Dubai has a sizable ex-pat workforce employed in a variety of sectors. Despite being relatively young, Dubai has diversified its economy and grown into a major force in the fields of trade, commerce, and finance globally thanks to its advantageous tax laws, encouraging government, modern infrastructure, and strategic location, it can be very profitable to get company registration in Dubai.

In order to diversify its economy and encourage long-term development, Dubai has made significant progress. The substantial rise in the number of business licenses issued in the first half of 2022 is proof of the city's initiatives. With 45,653 new licenses issued, the number is significantly higher than the 36,647 licenses issued in the prior year, representing a remarkable 25% increase in businessregistration in Dubai.

What is the Taxation in Dubai?

The Federal Tax Authority (FTA) of Dubai oversees tax compliance and levies a 5% VAT. As soon as a business crosses the threshold, they must register for VAT. With one of the lowest tax burdens on capitalists in the world, Dubai has one of the world's most competitive tax structures. Taxes on capital gains, personal income, and imports are all exempt.

Additionally, the government continues to promote new investments while giving start-ups and SMEs preferential treatment, with no tax assessed on profits up to Dh375,000. Investors should be mindful of a few taxes: For-profits over AED 375,000, the corporate income tax is charged at a rate of 9% effective from June 2023.

2.       Rentals of property in the Emirate are subject to the rental tax.

3.       In addition, there is a 10% tourist tax and additional taxes that apply to different services.

4.       2018 saw the introduction of the value-added tax throughout the GCC.

Dubai is still a desirable location for business owners despite these taxes because there are no personal income taxes or withholding/capital gains taxation in Dubai. It's also crucial for those looking to start a business in Dubai to be aware that there are free trade zones where there are up to 50 years of tax-free status and no customs fees.

What is the Procedure for Compliance after Company Registration in Dubai?

The process of compliance with regulations after registering a company for business setup in Dubai involves a few clear steps mentioned below:

1.       Compliance with Company Law Regulations in Dubai is something an investor or a business owner should acknowledge and adhere to.

2.       They should prepare the necessary documents as stated in the Company Law like:

·         Application of Pre-approval form

·         Dubai Resident permit

·         Notarised Passport copies of shareholders and the directors of the company

·         Proof of residential address like electricity bill or bank statement

·         Copy of Emirates’ ID

·         Approvals of Third-party

·         Copies of parent company documents

·         MOA/AOA of the company

 

3.       Furthermore, the company should also adhere to Labour and Employment Regulation revised in 2019 including clauses that prohibit workplace discrimination and changing clauses that treat male and female employees differently.

4.       Companies should adhere to the taxation policies as we have mentioned above.

5.       After a company is established, statutory audits are required in Dubai for compliance reasons. Annual audits are required for onshore businesses, while prior to license renewal for free zone businesses, the audit report must be submitted to the appropriate authority. The company's audit should be performed by a reputable auditing company.

6.       Economic Substance Regulations (ERS), is a new compliance idea for businesses founded in Dubai. It applies to businesses operating both onshore and in free zones that engage in pertinent activities like banking, insurance, investment fund management, and other similar ones. Every year at the end of the fiscal year, the ESR report needs to be submitted.

7.       AML/CFT compliance aims to stop criminals from abusing the financial system. Anti-money laundering and counter-finance-terrorism laws must be strictly followed, and non-compliance has consequences. The KYC process is typically used by banks for managing compliance procedures, but organizations engaged in specific operations must register with GoAML in order to notify suspicious transactions.

8.       Companies must keep track of their ultimate beneficial owners (UBOs) and shareholders in order to remain in compliance with laws after company formation in Dubai. Any updates to the shareholders or UBO data must be stated, and this register must be provided to the appropriate authorities.

Dubai is the perfect place to launch a business because it is a tax haven with numerous exemptions from taxes. It is a desirable option because neither employees nor workers are subject to income taxes. What to know more about the complex tax regimes and compliance laws for your business? Our professionals can help you with the registration procedure, and our company incorporation agents in Dubai can give you more details on how to form a business!

Also Read: The Benefits of Registering a Company in Dubai's Free Zones