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Common Costly Mistakes in Corporate Tax Filing: Your Guide to the 31st December 2024 Deadline

Common Mistakes in Corporate Tax Filing presentation

If your business was incorporated on or after 1st June 2023 and has a tax period ending on or before 29th February 2024, the clock is ticking! With the first corporate tax return filing deadline set for 31st December 2024, now is the time to ensure your tax filings are accurate and error-free.

Read on to discover the common mistakes in corporate tax filing to avoid as you prepare for this crucial deadline!

1. Inaccurate or Incomplete Financial Statements

One of the most significant mistakes businesses make is submitting inaccurate or incomplete financial statements. This often happens due to poor bookkeeping practices, which can result in miscalculations of taxable income. Incorrect financial statements can lead to either overpayment or underpayment of taxes, potentially triggering audits or penalties.

How to Avoid It:

  • Maintain Detailed Records: Keep comprehensive records of all financial transactions, including invoices, receipts, and bank statements.
  • Categorize Transactions Accurately: Ensure personal expenses are not mixed with business expenses.
  • Retention Period: Retain records for the legally required period (usually five years) to ensure they are available in the event of an audit.

2. Failure to Claim Eligible Deductions and Exemptions

Many businesses fail to claim all the deductions and exemptions available under UAE corporate tax law, which can lead to overpayment of taxes. Companies may overlook tax benefits such as small business relief or sector-specific reliefs, losing out on potential savings.

How to Avoid It:

  • Stay Informed About Deductions: Regularly review available deductions, including sector-specific reliefs and small business exemptions.
  • Consult a Tax Advisor: Work with a tax professional to ensure all applicable benefits are claimed.

3. Improper Classification of Income and Expenses

Another frequent error is the improper classification of income and expenses. Businesses sometimes misclassify personal expenses as business-related or fail to properly distinguish between different types of income. This can lead to an incorrect calculation of taxable income, resulting in errors in tax filings.

How to Avoid It:

  • Accurate Classification: Ensure that all income and expenses are classified correctly in your financial records.
  • Review Regularly: Periodically review income and expenses to ensure they are categorized properly.

4. Lack of Conformity with Transfer Pricing Regulations

For companies involved with related parties (e.g., subsidiaries, directors, or shareholders), failure to comply with transfer pricing regulations can result in tax adjustments and penalties. Incorrect documentation of intercompany transactions can trigger audits.

How to Avoid It:

  • Adhere to the Arm’s Length Principle: Ensure that transactions between related parties are priced similarly to transactions with unrelated third parties.
  • Document Transactions Thoroughly: Keep detailed records of all intercompany transactions to comply with UAE transfer pricing rules.

5. Poor Record-Keeping and Documentation

Inadequate record-keeping and poor documentation practices can make it difficult for a business to substantiate claims for tax deductions and exemptions. Missing invoices, receipts, and contracts can lead to lost tax benefits or errors in tax filings.

How to Avoid It:

  • Organize Documents Properly: Maintain a structured system for storing records related to all financial transactions.
  • Stay Compliant: Keep all relevant documents (e.g., contracts, invoices, receipts) for the legally mandated period.

6. Failure to Register for Corporate Tax or Obtain a Tax Registration Number (TRN)

Companies operating in the UAE must register for corporate tax and obtain a Tax Registration Number (TRN). Failing to do so can result in hefty penalties and interest charges, as it constitutes a violation of tax laws.

How to Avoid It:

  • Register on Time: Ensure that your business is registered for corporate tax as soon as it meets the relevant criteria.
  • Set Reminders: Use tax management tools to help you track important filing and registration deadlines.

7. Misjudging Tax Liabilities

Many businesses miscalculate their tax liabilities by either underestimating or overestimating them. This can result from errors in calculating taxable income, misunderstanding deductions, or applying the wrong tax rate.

How to Avoid It:

  • Engage Tax Professionals: Consult with tax experts to accurately calculate your tax liabilities.
  • Regularly Review Tax Liabilities: Conduct quarterly or annual reviews to ensure accuracy in tax planning and filings.

8. Missing Out on Tax Incentives

The UAE offers various tax incentives, including relief for small businesses, exemptions for free-zone entities, and tax credits for qualifying expenses. However, many businesses fail to take advantage of these incentives, leading to higher tax payments.

How to Avoid It:

  • Stay Updated on Incentives: Regularly review the tax incentives available to your business.
  • Develop a Tax Strategy: Work with a tax advisor to incorporate these incentives into your tax strategy.

9. Overpaying on Transactions Between Related Parties

For transactions between related parties (e.g., payments to directors or shareholders), businesses may overpay or underpay, which can trigger tax audits. The UAE tax system follows the “arm’s length principle,” meaning that related-party transactions should be priced similarly to transactions with unrelated third parties.

How to Avoid It:

  • Follow the Arm’s Length Principle: Ensure that payments to related parties are fair and comparable to those made to independent third parties.
  • Document All Transactions: Keep thorough records of related-party transactions to avoid complications during audits.

What Happens When You Make Mistakes in Corporate Tax Filing

Failing to comply with tax regulations in the UAE can lead to serious consequences for businesses. The penalties for mistakes in corporate tax filing can range from fixed amounts for late submissions to percentages based on unpaid taxes. Interest may also be charged on unpaid taxes, further increasing a business’s financial liability. In addition, mistakes in corporate tax filing can also damage a company’s reputation and relationships with clients, partners, and investors.

How MS Helps You Avoid Mistakes in Corporate Tax Filing

At MS, we make corporate tax filing simple and error-free. Our experienced team will help you avoid mistakes in corporate tax filing like misclassifying expenses, missing out on eligible deductions, or failing to meet transfer pricing requirements. We ensure your financial documents are accurate, calculate your tax liabilities with precision, and guarantee compliance with the latest UAE tax laws. From start to finish, we manage the entire filing process, ensuring your return is submitted on time—so you can avoid the mistakes in corporate tax filing and the associated penalties.

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MoF Rolls Out 15% Domestic Minimum Top Up Tax for Eligible Multinationals, Effective 2025

Simplifying Domestic Minimum Top Up Tax in the UAE and Beyond

The UAE Ministry of Finance has recently announced the confirmation of the Domestic Minimum Top up Tax (DMTT), set to take effect on January 1, 2025, for applicable businesses. This significant update to Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses reflects the UAE’s commitment to fostering economic growth, enhancing global competitiveness, and aligning with international tax frameworks. With this bold reform of confirming the Domestic Minimum Top up Tax in the UAE, the nation continues to strengthen its position as a global leader in economic innovation and regulatory excellence, paving the way for a more transparent and robust tax environment.

Introducing the Domestic Minimum Top Up Tax in the UAE

Following the issuance of Federal Decree Law No. 60 of 2023, the Domestic Minimum Top up Tax in the UAE will apply to multinational enterprises operating in the nation with consolidated global revenues of €750 million (Approx AED 3 billion) or more in at least two out of the four financial years immediately preceding the financial year in which the DMTT applies. The move reflects the UAE’s strong commitment to implementing the OECD’s Two-Pillar Solution, which sets a 15% minimum effective tax rate on profits.

This means MNEs operating in the UAE will need to pay an additional tax on their UAE profits, on top of the existing 9% corporate tax. The Domestic Minimum Top-up Tax in the UAE ensures that the nation is playing its part in creating a fair, transparent global tax system, making the country an even more attractive and compliant place for multinational operations.

Tax Incentives to Fuel Innovation and Growth

But it’s not all about Domestic Minimum Top up Tax in the UAE or other taxes – the nation is also working hard to keep businesses ahead of the curve. The Ministry of Finance is also gearing up to introduce corporate tax incentives designed to boost innovation, investment, and economic growth in the country.

R&D Tax Credit: A Game Changer for Innovators

The UAE is preparing to roll out an ambitious Research and Development (R&D) Tax Incentive in 2026. This initiative offers businesses a 30-50% refundable tax credit on qualifying R&D expenditures, providing a robust platform for fostering innovation and technological advancement.

Designed to align with the globally recognized OECD Frascati Manual guidelines, the program ensures that R&D activities meet international benchmarks. By encouraging investment in high-impact, future-focused projects, the UAE aims to solidify its position as a global leader in research and innovation, driving sustainable growth and attracting top-tier talent and enterprises.

High-Value Employment Tax Credit: Rewarding Top Talent

In another development, the UAE is introducing a tax credit for high-value employment activities starting January 1, 2025. This incentive will reward businesses that employ senior talent, including C-suite executives and senior personnel who drive innovation and deliver significant value to the UAE economy. The credit will be a percentage of the eligible salary costs, supporting businesses in attracting and retaining the best and brightest minds.

Along with the Domestic Minimum Top up Tax in the UAE, these tax updates mark a significant shift in the UAE’s corporate tax landscape, reinforcing the country’s commitment to being a global business powerhouse. The final details of these changes will be shared soon by MoF, but businesses should start preparing now to take full advantage of the upcoming reforms and incentives.

Stay Ahead with MS: Simplifying Domestic Minimum Top Up Tax in the UAE and Beyond

Domestic Minimum Top up Tax in the UAE and R&D Tax Incentives are just one part of the evolving tax reforms in the UAE. At MS, we make it easy for you to stay ahead of these changes. Our expert team helps you understand these changes seamlessly, ensuring compliance while unlocking growth opportunities. We provide tailored solutions that turn tax challenges into a competitive advantage. Partner with MS to stay updated, compliant, and ready for the future.

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Abu Dhabi Business Week 2024: Driving Entrepreneurial Success in a Diversified, Future-Focused Economy

Abu Dhabi Business Week 2024

The 2024 Grand Prix in Abu Dhabi may have come to a close, but its significance extends far beyond the racetrack, reflecting the emirate’s broader evolution. For years, Middle Eastern oil-producing nations have viewed Formula 1 as a strategic tool for economic diversification, and Abu Dhabi has successfully embraced this approach. However, the UAE capital has taken it a step further, shifting from being solely defined by its oil wealth to positioning itself as a global leader across multiple sectors.

High-profile events like Abu Dhabi Business Week and Abu Dhabi Finance Week are just the latest examples of how the emirate is building its reputation as a powerhouse of innovation, finance, technology, and sustainability. With targeted investments and forward-thinking initiatives, Abu Dhabi is well on its way to becoming a diversified, future-ready global hub — where business, technology, and sustainability converge to shape the economy of tomorrow.

Abu Dhabi Business Week – a new era of global business

Under the theme ‘Deliver Value. Create Impact’, the first edition of ADBW brought together influential business leaders, entrepreneurs, and policymakers, all focused on shaping the future of the global economy. The event demonstrated the emirate’s ability to attract international attention, positioning itself as a center for innovation and sustainable finance, while also focusing on the continued diversification of the UAE’s economy.

The event highlighted 4 key announcements as part of its ongoing transformation into the “Powerhouse of Tomorrow”

A Bold New Look: Rebranding of the Abu Dhabi Chamber of Commerce and Industry (ADCCI)

One of the standout moments of Abu Dhabi Business Week was the rebranding of the Abu Dhabi Chamber of Commerce and Industry (ADCCI). Alongside the unveiling of its Roadmap 2025-2027, this initiative reflects a clear shift in how Abu Dhabi is positioning itself for future economic growth. The roadmap, created with input from both the public and private sectors, lays out a comprehensive plan to strengthen the private sector, drive economic diversification, and enhance Abu Dhabi’s global competitiveness.

Core pillars that will guide the emirate’s economic journey:

  • Policy Advocacy: Ensuring the voices of businesses are heard in shaping economic strategies.
  • Market Intelligence: Equipping businesses with data-driven insights to stay ahead in a competitive global market.
  • Ecosystem Building: Strengthening business networks and fostering collaboration across sectors.
  • Innovation Agenda: Embracing digital transformation and sustainability to keep businesses future ready.
  • Market Expansion: Opening doors to international markets and boosting global trade.

Empowering Family Businesses with the Abu Dhabi Family Businesses Council (ADFBC)

Family-owned businesses are the backbone of Abu Dhabi’s private sector, and the launch of the Abu Dhabi Family Businesses Council (ADFBC) made it clear that the emirate is fully committed to supporting them. These businesses are crucial to Abu Dhabi’s economic diversification and sustainability. The ADFBC aims to provide family businesses with the resources they need to grow, including governance training, succession planning, and strategic advisory services.

Simplifying Business Operations with ADRA

The launch of the Abu Dhabi Registration Authority (ADRA) marks a significant step toward simplifying business operations in the Emirate. ADRA is a one-stop platform that streamlines the registration process for businesses in both Abu Dhabi’s mainland and free zones. By reducing bureaucracy, ADRA makes it easier for entrepreneurs to start and grow their businesses, boosting both local and foreign investment.

ADRA complements the existing ADGM RA, which handles financial businesses under common law, while ADRA centralizes registrations. This initiative supports Abu Dhabi’s goal to improve the business climate, enhance global competitiveness, and diversify its economy with efficient, internationally compliant processes.

MZN HUB: Strengthening the Next Generation of Entrepreneurs in Abu Dhabi

MZN HUB, launched by the Khalifa Fund for Enterprise Development, is designed to help startups and entrepreneurs in Abu Dhabi grow and succeed. The hub provides resources, funding, and mentorship to turn ideas into real businesses.

It includes key features like MZN Venture Studios, a Light Manufacturing Unit, and MZN Venture Capital, offering support like sustainable funding, expert advice, and training. The hub also has advanced manufacturing facilities to help startups grow faster.

This initiative is important for keeping Abu Dhabi at the forefront of global innovation and technology.

As Abu Dhabi Business Week wrapped up in the eventful early days of December, the emirate has firmly strengthened its reputation as a global hub for innovation and business. With forward-thinking initiatives in sustainability, family business support, and streamlined operations, Abu Dhabi is paving the way for an innovation-driven economy. The spotlight gradually shifted to the highly anticipated financial gathering, Abu Dhabi Finance Week (ADFW) happening in the second week of December. With this, Abu Dhabi is unstoppable—ready to redefine the limits of finance, technology, and global investment on the world stage.

The future is here, and it’s driven by Abu Dhabi.

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Trusts and Foundations in DIFC Explained: Finding the Right Structure for You

Trusts and Foundations in DIFC Explained

When it comes to managing and protecting wealth in the Dubai International Financial Centre (DIFC), the choice between trusts and foundations can have a significant impact. These two structures offer distinct benefits, from asset protection to long-term family wealth planning, but their legal frameworks, control mechanisms, and tax advantages vary.

Let’s break down the key differences between Trusts and Foundations in DIFC, helping you make an informed decision about the best path for securing your assets and ensuring your legacy.

Key Differences Between Trusts and Foundations in DIFC

1. Legal Personality

Trusts in DIFC:
Trusts under the DIFC Trust Law are legal arrangements where the trustee holds and manages assets for the benefit of beneficiaries. A trust itself is not a separate legal entity.

DIFC Foundations:
DIFC Foundations are independent legal entities with their own corporate status. They are established under the DIFC Foundations Law, with a charter and by-laws governing their operations.

2. Control and Governance

Control:

In a DIFC trust, control over the assets lies with the trustee, which may limit the settlor’s direct involvement. But in a DIFC foundation, the founder can retain influence by serving on the foundation council, ensuring alignment with the founder’s vision and offering more control compared to trusts.

Governance:

Trusts are governed by the trust deed, which defines the rights and responsibilities of the trustee and beneficiaries. DIFC Foundations have a flexible governance structure, allowing for the establishment of advisory committees or specific management roles tailored to the foundation’s purpose.

3. Purpose and Functionality

Trusts in DIFC:
Trusts are designed for:

  • Asset protection
  • Estate planning
  • Beneficiary-focused wealth management
  • They offer flexibility for distributing assets in line with the settlor’s wishes.

DIFC Foundations:
DIFC Foundations cater to:

  • Philanthropic purposes
  • Family wealth management
  • Corporate structuring
  • They are particularly suitable for long-term planning and activities with a broader purpose beyond individual beneficiaries.

4. Regulatory Framework in DIFC

Trusts:
The DIFC Trust Law provides a robust and internationally recognized legal framework, offering flexibility for trust formation and operation.

Foundations:
Governed by the DIFC Foundations Law, foundations are required to register with the DIFC Registrar of Companies. This law supports both private and charitable purposes, providing strong protections and flexible structuring options.

6. Tax Considerations in DIFC

Trusts:
DIFC trusts may offer tax-neutral advantages depending on the residency of the settlor and beneficiaries.

Foundations:
Under the revised Ministerial Decision No. 261 of 2024, family foundations and their wholly owned subsidiaries, including single-family offices (SFOs), can qualify for tax transparency if their activities are limited to investments and asset management, excluding business activities like personal investments in UAE shares, securities, and real estate. Foundations earning revenue from eligible activities, along with their subsidiaries, may benefit from corporate tax exemptions, potentially extending to all consolidated assets and holdings. This offers significant tax relief for family wealth and investment management structures.

7. Transparency and Confidentiality

Trusts:
DIFC trusts are private arrangements. Details about the trust, its assets, and beneficiaries are not publicly accessible, ensuring confidentiality.

Foundations:
While DIFC foundations are registered legal entities, only limited information (such as the name and purpose) is publicly available. Beneficiary and asset details remain confidential.

Trusts and Foundations in DIFC: How to Choose the Best Structure for You?

When deciding between Trusts and Foundations in DIFC, consider what aligns best with your objectives. If your focus is on asset protection, estate planning, and maintaining privacy, a trust is often the better choice, especially if you prefer a simpler structure where the trustee manages assets on behalf of beneficiaries. However, if you seek more control over your assets, the ability to engage in philanthropy, or manage long-term family wealth with greater flexibility in governance, a DIFC Foundation might be more appropriate. Foundations also offer advantages like tax transparency for investment-focused entities such as single-family offices. Ultimately when choosing between trusts and foundations in DIFC, your decision should be based on your specific goals for asset management, control, and governance.

Establish Your DIFC Foundation with Ease

MS simplifies the entire process of setting up your DIFC Foundation, providing expert support from start to finish. We guide you through the legal framework under the DIFC Foundations Law, ensuring your foundation is structured to meet your specific goals—whether that’s wealth management, setting up a single-family office, or pursuing philanthropy. As you’ve already grasped the difference between trusts and foundations in DIFC, the focus now shifts to execution and achieving clarity in practice with MS.

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Hiring Your Next C-Suite Leader? 10 Executive Hiring Mistakes You Can’t Afford to Make 

Executive Hiring Mistakes

Hiring an executive talent for your organization is not always a straight shot. Between rushing the process, missing the cultural vibes, and setting unrealistic expectations, it’s easy to fall into some serious traps. 

Let’s break down those classic executive hiring mistakes and show you how a well-thought-out executive search can help you find a leader who’s ready to level up your business. 

Common Executive Hiring Mistakes That Can Derail Your Success 

1. Misalignment Among Stakeholders 

Starting a search without internal consensus is a fast track to confusion. When management and the board aren’t aligned on the role’s priorities, candidates are evaluated against shifting expectations. This not only wastes time but also risks alienating top talent. Before beginning the process, ensure everyone agrees on the strategic goals, required skills, and cultural fit. 

2. Rushing to Fill the Role 

The pressure to quickly plug a leadership gap often leads to hasty decisions. Hiring the wrong executive in a rush can result in long-term damage, from misaligned strategies to team disruption. Strike a balance: act with urgency, but don’t shortcut essential steps like in-depth interviews, reference checks, and cultural assessments. 

3. Overlooking Cultural Compatibility 

An executive’s credentials and experience might dazzle on paper, but if they clash with your company culture, the fallout can be disastrous. Cultural fit isn’t about finding someone who’s “nice to have around”—it’s about ensuring the new hire can lead effectively within your unique organizational environment. Misaligned values or leadership styles are one of the common executive hiring mistakes for early departures, so prioritize this in your evaluation. 

4. Limiting Your Talent Pool 

The executive talent pool is already competitive, and focusing solely on active job seekers narrows your options even further. Many high-caliber leaders are passive candidates—they’re not actively searching but are open to compelling opportunities. Tapping into this hidden market often requires partnerships with experienced executive search firms that can access a global network of talent. 

5. Underestimating Employer Branding 

In today’s competitive hiring landscape, candidates are scrutinizing you as much as you’re evaluating them. A weak employer brand can turn off top candidates before they even consider your offer. Showcase your company’s culture, growth potential, and values to stand out. Remember, how you treat candidates during the process can significantly impact their perception of your organization. 

6. Letting Bias Cloud Judgement 

Unconscious bias is a silent saboteur in hiring. Whether it’s gravitating toward candidates with similar backgrounds or relying on “gut feelings,” bias can lead to poor decisions. Implement structured interviews and objective evaluations to ensure fairness for avoiding those executive hiring mistakes. Additionally, train decision-makers to recognize and mitigate their own biases. 

7. Chasing Perfection Over Potential 

It’s easy to become fixated on finding the “perfect” candidate—someone with every qualification, skill, and experience. But in a tight talent market, this perfectionism can lead to endless delays and missed opportunities. Often, a candidate with strong potential and cultural alignment is a better long-term fit than someone with a glittering resume but limited adaptability. 

8. Neglecting Transparency 

Trying to present your organization in an overly polished light can backfire. Concealing challenges or weaknesses during the hiring process may lead to mismatched expectations and wasted efforts. Be upfront about your company’s realities—it’s better to find candidates who are excited to tackle challenges than to surprise them later. 

9. Dragging Out the Process 

While rushing is a mistake, so is prolonging the search unnecessarily. A drawn-out hiring process frustrates candidates and increases the risk of losing top talent to competitors. Once you’ve identified a strong candidate, move decisively. The best executives often have multiple offers on the table and won’t wait forever. 

10. Skipping Post-Hire Integration 

One of the common executive hiring mistakes is assuming the work ends with the offer letter. In reality, the onboarding phase is critical. Without proper support and integration, even the best hires can struggle to align with your organization and deliver results. Prioritize a structured onboarding process to set your new executive—and your organization—up for success. 

From Pitfalls to Perfect Hires: How Strategic Executive Search Prevents Costly Executive Hiring Mistakes 

The path to hiring exceptional executive talent is a minefield of potential pitfalls— one wrong turn, and you’re stuck with mismatched priorities, cultural clashes, or leaders who don’t deliver. An executive search done right goes far beyond filling a position but to tackle these executive hiring mistakes. By deeply understanding your vision and culture, the process ensures you don’t just hire a set of skills, but a dynamic leader capable of driving innovation, inspiring teams, and steering the organization toward lasting success. A strategic executive search can help you dig deeper, accessing untapped talent pools, ensuring a seamless fit, and avoid costly mistakes and secure leaders who will shape your future. 

Don’t Let Executive Hiring Mistakes Cost You —MS Helps You Get It Right 

At MS, we understand that pitfalls like misaligned priorities, rushed decisions, or cultural mismatches can affect even the best hiring intentions. That’s why our approach is designed to anticipate and tackle these executive hiring mistakes head-on. From aligning stakeholder expectations to conducting in-depth cultural assessments, we leave no stone unturned in finding leaders who are the perfect fit. With access to untapped talent pools, data-driven insights, and a strategic, thorough process, MS ensures you avoid costly missteps and secure executives who deliver real, lasting impact. 

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VAT Penalties Explained: How Non-Compliance Can Cost Your Business in the UAE?

VAT Penalties in uae

VAT compliance in the UAE doesn’t have to be a headache if you know where the pitfalls are and take proactive steps. Small mistakes like missing deadlines or submitting incorrect returns can quickly lead to hefty VAT penalties. These penalties can add up quickly, making it challenging for businesses to stay on top of their finances. However, there’s some good news: the UAE’s Federal Tax Authority (FTA) has introduced a grace period where businesses can benefit from a waiver of VAT penalties for updating the records, offering them a valuable opportunity to reset and get back on track without incurring hefty fines.

As per Cabinet Decision No. (74) of 2023, registered taxpayers must notify the FTA of any changes to their information within 20 working days using the FTA’s approved form and process. By taking advantage of this waiver, businesses can correct mistakes, file missing returns, or deregister from VAT without facing financial penalties. It’s an excellent chance to avoid further penalties and ensure that your business stays compliant with the law.

Most common VAT penalties you can avoid

VAT Registration Penalties

If a business fails to complete VAT registration within 30 days after exceeding the threshold, a fixed fine of AED 10,000 (~USD 2,750) will be imposed.

Deregistration for VAT

Businesses must apply for VAT deregistration within 20 business days if their taxable supplies fall below AED 187,500 annually or if they cease operations. The penalties for non-compliance are:

  • AED 1,000 for the first offence.
  • AED 1,000 for each additional month of delay, capped at AED 10,000.

Late VAT Filing

VAT returns must be filed within 28 days of the end of each tax period. Missing the deadline results in:

  • AED 1,000 for the first late filing.
  • AED 2,000 for repeated delays within 24 months.

Late VAT Payments

VAT payments are due within 28 days after the end of each tax period. Delayed payments are penalized as follows:

  • 2% of the unpaid VAT immediately after the due date.
  • An additional 4% fine if the VAT remains unpaid after 7 days.
  • A daily 1% penalty thereafter, up to 300% of the unpaid VAT amount.

Incorrect VAT Returns

Submitting inaccurate returns can lead to VAT penalties:

  • AED 3,000 for the first error.
  • AED 5,000 for subsequent errors within 24 months.

Failure to Maintain Proper Records

Businesses are required to maintain detailed records, such as invoices and tax calculations, for at least five years. Failure to comply results in:

  • AED 5000 for the first instance of improper recordkeeping.
  • AED 10.000 for repeated violations.

Failure to Issue VAT Invoices

VAT-registered businesses must issue valid invoices for taxable transactions. Penalties for non-compliance are AED 5,000 for each missing or incorrect invoice.

Non-Compliance in Designated Zones

Goods transferred within UAE Designated Zones must adhere to specific VAT rules. Penalties for non-compliance include AED 50,000 or 50% of the unpaid VAT, whichever is higher.

Submission of Incorrect Information

Providing false or incorrect details during VAT registration, filing, or updates can result in:

  • AED 3,000 for the first instance.
  • AED 5,000 for repeated inaccuracies within 24 months.

Voluntary Disclosures

If a business discovers errors in its VAT returns, it must submit a voluntary disclosure to correct the mistake:

  • Errors under AED 10,000 can be adjusted in the next VAT return.
  • Errors above AED 10,000 require notification to the FTA within 20 working days using a disclosure form.

VAT Penalties for non-compliance:

  • AED 1,000 for the first voluntary disclosure.
  • AED 2,000 for subsequent disclosures.

Additional fines may apply for underpaid taxes or during FTA audits.

Late Penalty Payments

Penalties issued by the FTA must be paid within 20 days. If unpaid, further fines are imposed:

  • A 4% monthly fine on the unpaid amount.
  • Total fines may reach up to 300% of the original penalty.

VAT Penalties Waiver: FTA’s New Initiative to Support Businesses in the UAE

The FTA has introduced a new initiative to help VAT-registered businesses in the UAE update their records without facing penalties, effective from January 1, 2024, to March 31, 2025. Any VAT-related penalties imposed between January 1, 2024, and the start of the grace period will be automatically reversed. Businesses that have already paid these penalties will receive refunds credited back to their tax accounts, without needing to take further action. This initiative supports VAT compliance by easing the burden of past penalties and encouraging accurate record-keeping.

Avoid VAT Penalties Effectively with MS

Managing VAT compliance doesn’t have to be overwhelming if MS is there to handle it for you. Our team of tax experts is equipped to assist with VAT registration, accurate filings, voluntary disclosures, and recordkeeping, ensuring your business stays compliant with FTA regulations without incurring any VAT penalties. With the recent penalty waiver initiative, now is the ideal time to resolve any past compliance issues and optimize your VAT processes.  Let us simplify VAT compliance for you.

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Term Sheets and LOI: Understanding the Difference to Keep your deal on track – Read More!

Got an M&A deal on the table? Now, it’s time to know your initial documents inside out. Many dealmakers mistakenly swap the Term Sheets and LOIs, treating them like they’re the same. This misunderstanding can lead to confusion, missteps, and even setbacks. The truth is, these documents are different, and knowing how to leverage each one at the right time is crucial to driving your deal forward smoothly.

Let’s break down how these two documents and understand the difference between Term Sheets and LOIs for your deal’s success!

Breaking Down the Roles of Term Sheets and LOIs in M&A

1. What is the Purpose?

Term Sheet:

Acts as a roadmap, giving a detailed picture of the proposed deal. For instance, it specifies working capital adjustments, indemnification terms, and representations and warranties. Its goal is to provide a clear foundation for further negotiations and identify potential deal-breakers early.

LOI:

Signals intent to proceed. It’s the handshake that assures both parties as they are on the same page before diving into exhaustive due diligence and drafting the final agreement.

2. When to Draft These Documents?

Term Sheet:

Appears right after initial discussions, allowing both parties to test compatibility on key deal elements. It saves time by clarifying terms before costly processes like financial audits or legal reviews.

LOI:

Finalizes the intent to proceed, based on the term sheet. By this stage, the parties are serious about the deal and ready to formalize negotiations.

3. How Detailed Are Term Sheets and LOIs in M&A Deals?

Term Sheet:

Goes deep into specifics. For example, it defines whether an earn-out payment will be based on revenue or EBITDA. This document minimizes ambiguity, especially for complex deals involving multiple variables like stock options, employee retention, or escrow amounts.

LOI:

Covers high-level terms like the deal structure (e.g., asset purchase vs. stock purchase) or confidentiality. It doesn’t delve into details like working capital adjustments but establishes intent.

4. What are the Binding Provisions of Term Sheets and LOIs?

Term Sheet:

Mostly non-binding but include critical binding clauses like exclusivity, which prevents the seller from negotiating with other buyers for a set period. These clauses safeguard the buyer’s position while they conduct due diligence.

LOI:

Similar in binding nature to the term sheet. For example, its confidentiality clause ensures sensitive information shared during the M&A process isn’t leaked or misused.

5. What is the Strategic Role of these in the deals?

Term Sheet:

Ensures there’s a shared understanding of deal specifics, reducing friction during due diligence. For instance, it aligns both parties with adjustments to the purchase price.

LOI:

Acts as a trust-building mechanism. By formalizing the buyer’s intention to proceed, it fosters a collaborative atmosphere, ensuring smoother negotiations.

How The Term Sheets and LOIs Work Together?

When dealmakers recognize and respect the differences between Term sheets and LOIs, the deal process flows smoother, negotiations become more efficient, and costly missteps are avoided. Mistaking Term Sheets for LOIs—or vice versa—is a common slip, but one that can cost you time, clarity, and sometimes the deal itself. For founders, sellers, and buyers, mastering the Term Sheets is essential. The details within these documents need careful handling as they set the tone for final negotiations. Knowing when and how to use both Term Sheets and LOIs can save you from future headaches, streamline the process, and keep your deal on track.

M&A Made Simple: Mastering Term Sheets and LOIs with MS

At MS, we make M&A seamless. Whether it’s drafting a detailed term sheet or creating a rock-solid LOI, our expertise ensures clarity, minimizes risk, and sets your deal up for success. Our team provides expert guidance to clarify critical deal terms, including pricing, payment structures, and due diligence, helping you avoid common pitfalls and costly oversights. With a focus on minimizing risk and maximizing value, we ensure that both buyers and sellers are well-prepared to proceed confidently and close deals efficiently.

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What Drive Leaders? 7 Purpose-First Approaches to Retaining Top Executive Talent

Pictorial presentation of a Top Executive Talent in the spot light

What if your top-performing executive walks out the door tomorrow? Suddenly, your leadership team is a seat short, and the ripple effect shakes the entire organization. But here’s the real kicker—what’s the hidden cost of losing that kind of talent? It’s more than just recruitment expenses or the scramble to fill the void. It’s the priceless expertise that walks out with them, the drop in team morale, and the stalling of momentum that can set your organization back for months.

Retaining top executive talent is critical, not only for keeping your business on track but for fueling its growth and success. Today, attracting and retaining top C-level talent is harder than ever. Today’s executives seek flexibility, growth opportunities, support, and empathy. Yet, many organizations are out of sync with what candidates truly need, leading to a disconnect that hampers long-term retention.

Before we get into strategies for retaining top executive talent, let’s talk about the steep price of leadership turnover:

  • Financial Impact: Replacing an executive is a major financial setback. For C-suite or senior leadership positions, the costs of recruiting and onboarding can escalate significantly, impacting your bottom line even more.
  • Productivity Loss: It can take up to two years for a new executive to achieve the same strategic impact and decision-making efficiency as an experienced leader, hindering organizational momentum and progress.
  • Knowledge Drain: When key executives depart, they take with them invaluable leadership experience, strategic insight, and institutional knowledge. Replacing this expertise is not only difficult but can create a leadership vacuum that disrupts your company’s direction.
  • Morale: The exit of a senior leader often sends shockwaves through the organization, affecting the morale of other executives and key talent. Their departure can leave teams feeling uncertain about the company’s future, undermining confidence and productivity at all levels.

7 Strategies for Retaining Top Executive Talent

1. Create Meaningful Work and Purpose

People want to feel that their work matters, and this can actually make a difference in retaining the top executive talent. Make sure your leaders understand how their roles contribute to the greater mission of the company.

Action Steps:

  • Clearly communicate your company’s mission
  • Align individual roles with company goals
  • Offer opportunities for employees to engage in social impact initiatives

2. Build a Positive, Inclusive Culture

A positive company culture isn’t just a nice-to-have—it’s essential for retaining top executive talent. Research by Deloitte found that 94% of executives believe a strong corporate culture is key to business success. Foster an environment where inclusion, transparency, and open communication thrive.

Action Steps:

  • Define and reinforce core company values
  • Build an inclusive, diverse workplace
  • Foster transparency and communication at all levels

3. Offer Competitive Compensation and Benefits

It’s no secret that money talks, but it’s not just about salary—it’s about offering a comprehensive benefits package. Keep your pay scales competitive with industry standards and show your leaders that you value their contribution with performance-based bonuses and generous health and retirement plans.

Action Steps:

  • Conduct annual salary reviews
  • Offer performance-based incentives
  • Provide comprehensive health benefits

4. Foster Career Growth and Development

Top talent is always looking to level up. Create opportunities for growth, whether through mentorship, job rotations, or leadership programs. Hire executives who are not only experienced but committed to fostering development within their teams.

Action Steps:

  • Establish clear career paths
  • Invest in leadership development
  • Offer cross-functional opportunities

5. Provide Work-Life Balance and Flexibility

Flexibility in work hours and remote options can significantly boost employee loyalty. A study by FlexJobs revealed that 80% of workers would be more loyal to their employers if they offered flexible work options.

Action Steps:

  • Offer flexible work hours
  • Provide remote work options
  • Encourage time off to recharge

6. Recognize and Appreciate Contributions

Recognition is a powerful motivator. Executives who don’t feel adequately recognized are twice as likely to quit within the next year but retaining top executive talent is crucial for your organization. A simple “thank you” or a more formal recognition program can make all the difference in fostering loyalty.

Action Steps:

  • Implement formal recognition programs
  • Encourage peer-to-peer shout-outs
  • Celebrate achievements publicly

7. Give and Receive Regular Feedback

Feedback is the fuel that drives growth and can aid in retaining top executive talent. Regular check-ins and performance reviews show that you care about their development and success.

Action Steps:

  • Hold regular one-on-ones with employees
  • Implement quarterly performance reviews
  • Use 360-degree feedback for holistic growth

Cultivating a Culture of Retaining the Top Executive Talent

The organization should create an environment that nurtures growth, values contributions, and offers flexibility for retaining top executive talent. By prioritizing regular engagement, fostering open communication, and supporting well-being, you ensure your leaders not only stay but thrive, driving your company’s success and growth.

By investing in your people—offering career development, recognizing effort, providing flexibility, and fostering a supportive culture—you’re not just retaining top executive talent. You’re creating an environment where top performers feel valued, engaged, and committed to your company’s long-term success. It’s not just about compensation—leadership, values, culture, and a clear purpose matter. Defining your organization’s purpose should be a thoughtful, inclusive process, driven by authenticity, not just top executives.

Building a Winning Team: Attracting and Retaining Top Executive Talent with MS

Finding a leader who will shape your company’s future, inspire innovation, and drive lasting impact. Our executive search solutions are designed to identify and recruit exceptional leaders who align with your organization’s values, vision, and strategic objectives. We work closely with you to ensure that each leader we place not only excels in the role but also strengthens your leadership team. Let us help you build a powerful, forward-thinking leadership team that will drive your company to new heights.

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UAE Corporate Tax Return Filing Deadlines for December 2024: Your FAQ Guide is Here!

Corporate tax return filing deadlines for december

Is your company ready to meet the 31st of December 2024 deadline for Corporate Tax Return filing and payment? If your business was incorporated on or after 1st June 2023, with a tax period ending on or before 29th February, this is your critical moment to act!

To guide you through this critical process, the Federal Tax Authority (FTA) has introduced a comprehensive Corporate Tax Return Filing Guide—your ultimate resource for staying compliant. Let’s explore the essential updates, step-by-step filing procedures, and practical tips to help you file accurately and on time.

How to Prepare for Your Corporate Tax Return Filing Process?

Organize Your Financial Documents

The first step in preparing for the Corporate Tax filing is to gather all the necessary financial documents. This includes your financial statements, invoices, receipts, and any other relevant documents that support your tax deductions and credits. Organizing these documents early on will streamline the filing process and ensure accuracy when submitting your tax return. Having everything ready well in advance can help you avoid delays and reduce the risk of errors during the corporate tax return filing.

Stay Informed on Tax Regulations

Tax laws are subject to change, and it is important to stay updated on any new developments or modifications to corporate tax regulations. Understanding the latest rules issued by the UAE government and the FTA will ensure that you are compliant with the current tax environment. The new Corporate Tax Return Filing Guide from the FTA is a valuable resource that provides clarity on the latest changes and requirements. Additionally, staying informed allows you to take advantage of any opportunities to minimize your tax liabilities through available tax planning strategies. This proactive approach will help avoid mistakes and ensure your filing is in line with all applicable requirements.

Avoid the Common Mistakes in Filing

As the deadline approaches, it is essential to verify that all financial data and tax calculations are accurate. Double-check your documents to ensure there are no discrepancies or missing information. This is the time to resolve any uncertainties you may have regarding your corporate tax return filing. If you are unsure about any aspect of your Corporate Tax filing, consulting with a tax professional can help prevent costly mistakes. Submitting incorrect or incomplete filings can result in penalties, so taking the time to review everything thoroughly is crucial.

What if you miss the deadline for Corporate Tax Return Filing?

The final day for filing your Corporate Tax Return and paying any outstanding taxes is 31st December 2024. Missing this deadline can result in significant financial penalties:

Non-filing Penalty: AED 500 per month for the first 12 months, escalating to AED 1,000 per month thereafter. Over time, this penalty can accumulate and significantly affect your business’s finances.

Late Payment Penalty: Any unpaid tax after the deadline will incur a 14% annual penalty, calculated monthly on the outstanding balance. This penalty compounds over time, increasing the financial burden on your business.

To avoid these penalties and ensure smooth business operations, it is critical to meet the deadline for both filing your return and settling your tax liabilities.

How MS Can Support Your Corporate Tax Return Filing

At MS, we offer comprehensive services to help you in the Corporate Tax filing process with ease and precision. Our expert team will assist you in gathering and reviewing your financial documents, ensuring all necessary information is accounted for. We will accurately calculate your tax liabilities, ensuring compliance with the latest UAE tax regulations, and handle the entire filing process to ensure everything is submitted on time.

We offer proactive reminders as the deadline approaches, so you never miss a critical step. Our team remains up-to-date with any changes in tax laws, including the new Corporate Tax Return Filing Guide, and provides strategic guidance to help minimize your tax liabilities.

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Wondering How Your Brand Stacks Up in Deals? Brand Strength Measure Can Help You Find Out 

Picture presentation to show Brand Strength Measure

We’ve all heard someone say, “I only buy branded stuff.” But what does that really mean? Why do some brands make us feel loyal, almost like we need them, while others just don’t make the cut? Whether it’s that luxury handbag, the smartphone you can’t live without, or the sneakers you’ve been eyeing for months, brands aren’t just about the products—they represent trust, reputation, and a feeling of connection. 

But when it comes to a business deal, like a Merger or Acquisition (M&A), your brand holds way more weight than just consumer preference. It becomes a real asset, something that could make or break the deal. That’s where the brand strength measure comes in—a tool that measures the true power of your brand. It goes beyond just a logo or slogan, looking at everything from customer loyalty to market perception, helping businesses understand the value their brand brings to the table. 

So, when you’re considering a big move, like an M&A deal, how do you know if your brand is ready to shine? Let’s explore how the brand strength can be the key to unlocking your brand’s full value and setting the stage for a successful deal. 

The Brand Strength Measure: A Game-Changer in Brand Valuation 

When it comes to brand valuation, traditional methods based on financial metrics can only take you so far. Measuring brand strength is a comprehensive, data-driven approach that evaluates a brand’s strength using both quantitative and qualitative factors. It doesn’t just consider market share or revenue growth – it dives deeper into the emotional and functional drivers behind brand perception, loyalty, and consumer attachment. 

This incorporates insights from market research (consumer behavior, brand perception, emotional resonance) and financial data (revenue growth, price premiums, and marketing investments). By doing so, it produces a single, dynamic score that reflects how consumers feel about the brand and, more importantly, how that translates into financial value. 

How the Brand Strength Measure Influences Brand Valuation in M&A 

In the context of M&A, the brand strength measure serves as a crucial component in assessing brand value, which is ultimately a reflection of the Net Present Value (NPV) of future cash flows attributed to the brand. A strong brand is often the key to unlocking higher valuation multiples and future growth potential in any M&A transaction. 

Here’s how the Brand Strength Measure shapes brand valuation: 

Quantifying Intangibles: The strength of a brand is intangible, but the brand strength measure brings it into the tangible realm. It incorporates factors like brand awareness, brand loyalty, perceived quality, and brand equity – all essential components for projecting future brand performance and cash flows. 

Differentiating Competitive Advantage: In an M&A scenario, a strong brand can significantly differentiate a company from its competitors. The brand strength measure allows businesses to benchmark their brand strength against others in the same industry or across different sectors. This helps potential buyers understand the competitive edge they would gain by acquiring a brand with strong consumer loyalty and recognition. 

Tracking Brand Health Over Time: A dynamic and evolving brand doesn’t just stay the same – it grows, changes, and adapts. The brand strength measure enables brands to track their performance over time, providing a clear picture of how brand strength has evolved and whether it’s set to increase or decline. This is invaluable when forecasting future performance and calculating brand value for M&A deals. 

Identifying Strengths and Weaknesses: By using the brand strength measure to benchmark various brand attributes, M&A professionals can identify areas where the brand excels or needs improvement. This insight is key when negotiating a deal or crafting post-acquisition integration strategies. 

Key Metrics That Shape Brand Strength: What to Focus On? 

While the brand strength measure is a comprehensive tool, it’s important to understand the specific KPIs (Key Performance Indicators) that shape it: 

Brand Awareness: How well-known is the brand? Is it top-of-mind for consumers? The more consumers recall the brand, the higher its future revenue potential. 

Brand Perception: How do consumers perceive the brand? Is it associated with quality, exclusivity, or innovation? This emotional connection directly impacts purchasing decisions and loyalty. 

Brand Equity: What additional value does the brand add to its products or services? Brand equity includes consumer trust, willingness to pay a premium, and customer loyalty. 

Brand Loyalty: How likely are customers to stick with the brand in the long term? A loyal customer base ensures consistent revenue streams, enhancing brand value. 

Brand Assets: From logos to customer experiences, the tangible and intangible elements that shape a brand’s identity are crucial for distinguishing it in a competitive market. 

Overcoming Challenges in Brand Strength Analysis 

While the brand strength measure is a powerful tool, it comes with challenges. One major hurdle is the dynamic nature of consumer preferences. As trends evolve and consumer needs change, the strength of a brand can shift dramatically. Therefore, continuous monitoring and adaptation are crucial to ensure that the BSI accurately reflects current and future market conditions. 

Another challenge is isolating the impact of brand strength from other factors that drive performance. For example, factors such as market share, economic conditions, and regulatory changes can influence brand performance, making it difficult to assess the true value of the brand in isolation. 

The Road Ahead: Enhancing Brand Strength for Maximum Valuation 

For companies in the midst of an M&A transaction, enhancing brand strength can lead to higher brand value and a more favorable deal.  

Strategies for enhancing brand strength include: 

Consistent Branding: Ensure that all brand touchpoints deliver a unified and compelling message. 

Emotional Engagement: Build an emotional connection with consumers through storytelling, personalized experiences, and values-based marketing. 

Innovation: Stay ahead of the competition by continuously innovating products and services that resonate with consumers. 

Customer Loyalty: Foster strong relationships with customers by delivering exceptional experiences and service. 

In M&A, a well-valued and respected brand can become the crown jewel of the deal, offering the buyer a sustainable competitive advantage that lasts far beyond the closing of the transaction.  

Elevating M&A Deals with In-Depth Brand Valuation Insights 

At MS, we know the value of your brand is key to M&A success. Our experts provide tailored brand valuation services using advanced methods like measuring brand strength. We analyze your brand’s market position, equity, and growth potential to help you make informed decisions. With MS, you can seamlessly integrate brand valuation into your M&A strategy, ensuring long-term success and maximizing shareholder value.