In brief A complex matter resumed in a couple of lines: - All businesses must now register for Corporate Tax (“CT”), regardless of their applicable regime. - A 9% CT rate applies to generated profits, starting 1 January 2024. - Free Zone entities can benefit from a favorable 0% tax regime based on a combination of 3 key concepts: Qualifying Free Zone Persons, carrying out Qualifying Activities and generating Qualifying Income. Investors’ Current Mindset In response to these developments, many of our clients are currently reassessing their existing budgetary allocations and tax advice to ensure the continued relevance of their strategies. However, it is crucial to manage expectations beyond the evident frustration, by considering several factors: - Elements of the new regulations that appear to deviate from the principles outlined in the preceding Public Consultation Document. - The rapid evolution and recent implementation of these regulations. - The anticipation of additional guidance on referenced key concepts. - The dynamics of the Transition Period and the inherent leniency in the concrete application of these regulations. It is worth noting that, amidst the uncertainty surrounding Free Zone entities, many tax advisors are recommending that clients budget for a 9% corporate tax, while not ruling out the possibility of transitioning to a favorable 0% tax regime should all requirements be met. 50 LAWYER MONTHLY MARCH 2024 Concrete Recommendations In practical terms, our 3 primary recommendations are as follows: 1 - Enhanced Recordkeeping and Documentation Practices Comprehensive documentation provides 2 key advantages: 1. Serving as a fundamental support for complying with stringent regulatory and reporting obligations. 2. Acting as a safeguard against potential audits and disputes, demanding meticulous attention to detail from business owners. 2 - Implementation of Structural Adjustments At the outset, it is imperative to shift attention from solely focusing on the numerator of any tax rate to pay attention to its denominator. Recognizing that the taxable base is derived from accounting profit, methodically allocating revenues and judiciously considering deductible expenses from an accounting standpoint becomes an essential initial step integral to the entire process. 3 - Selecting the Right Tax Professionals for Effective Advice In the rapidly evolving maze of intricate tax laws, engaging tax professionals is a strategic imperative. Businesses need to capitalize on the expertise of consultants skilled in manoeuvring through compliance complexities, identifying tax-saving opportunities, and effectively navigating the ever-changing tax landscape. However, beyond the customary recommendation lies a gap in explaining the underlying rationale. In taxation, a comprehensive approach is essential to deliver tailored and actionable advice; deviation from recommended methods can drastically alter the outcome. Dubai has emerged as a prime destination for property investment in recent years due to its thriving economy, favourable business environment and enviably high standard of living. What are the challenges and considerations for investing in property within the UAE? Before delving into the dynamics of the UAE real estate market, it is crucial to note that, while we are not experts in this field, we provide clients with valuable insights: - Market Volatility: Historical fluctuations, particularly in Dubai’s real estate market, require careful consideration. - Oversupply Concerns: Oversupply in certain property segments in emirates like Dubai has led to market saturation, impacting rental yields, and property value. - Economic Stability: Dubai’s economy remains robust, driven by sectors such as real estate, tourism, and trade. - Financing Aspects: Securing financing for Dubai property investment may be subject to specific regulations and eligibility criteria. Navigating property acquisition in the UAE requires adherence to various legal requirements and regulations for a seamless and legally sound transaction. Here are 5 essential technical recommendations: 1 - Understanding Regulatory Framework Foreign ownership is limited to designated areas in all emirates, allocated by the UAE government, known as “freehold” properties. Dubai offers both leasehold and freehold options, specificities of which In the rapidly evolving maze of intricate tax laws, engaging tax professionals is a strategic imperative.
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