Following the positive response to our recent insights on how businesses can prepare for Corporate Tax, we’re excited to present Part 2. This article delves into crucial topics your business must address to ensure thorough readiness for the upcoming Tax implementation.
From comprehending its implications on legal, financial, and operational facets to aligning your people, processes, and systems with the new regulations—there’s a lot to unpack. In light of these considerations, we spotlight key areas that businesses should prioritise by the close of 2023.
1. Transfer Pricing Profile
Adhering to Transfer Pricing (TP) rules and regulations is a fundamental aspect of the CT regime. This not only effects the effective tax rate of businesses but also influences how they allocate, account for and document income within the Group. To ensure your company is prepared for compliance, CRESCO Accounting can assist:
- Review the TP model and ensure alignment with the operating model
- Verify that the design transactions aligns with the value creation within the Group.
- Create TP policies that are consistent with the arm’s length principle, enabling implementation throughout the financial year 2024.
2. Review foreign entity profile
Entities established outside the UAE may face Corporate Tax exposure due to their actual or deemed presence in the country. The activities of for example, specific management, employees etc could lead to potential future tax liabilities and compliance responsibilities.
CRESCO Accounting assists with:
- Identify Directors or senior management of foreign companies who manage the company effectively from the UAE. Recognise the primary commercial activities of foreign companies conducted in the UAE by employees or related parties based in the country.
- Revise the board composition, delegation of authority, governance procedures, and operating models to handle and alleviate any possible unintended consequences.
3. Review Operational Readiness
In order to successfully handle the UAE CT obligations you will require effective finance & tax operations, processes and IT systems.
CRESCO Accounting assists with:
- Generate separate Trial Balances for each entity as per the law and standalone financial statements per entity.
- Examine the Chart of Accounts and assess any requirements for tax sensitivity around tax-exempt incomes, identifying non-deductible expenses, managing transfer pricing adjustments etc.
- Provide a view on how CT will be governed and too which degree it will influence your operations so that you can either adapt or change your IT systems, hiring plans and budgets.
- Help you ensure your Tax responsibilities are clear and formalised so you may make informed decisions in your business.
- If required we can conduct internal awareness sessions and training to non-tax functions such as Legal, Business Development and Human Resources.
Preparing for UAE Corporate Tax Implementation may require updates your legal structure, financial profile, operations and processes.
As an FTA certified Tax Agency we are equipped to support your business on all of the above.
Additionally, we have within our Group a legal firm – CRESCO Legal, who will be available for any legal consultations should you require.