Tag: UAE

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From Record-Breaking 1.4 Trillion Non-Oil Trade to Ambitious 4 Trillion! Read the UAE’s H1 2024 results

From Record-Breaking 1.4 Trillion Non-Oil Trade to Ambitious 4 Trillion! Read the UAE's H1 2024 results

Amidst global unrest and conflicts, including the ongoing Israel-Palestine crisis, the UAE stands out as a pillar of economic strength and stability.  The country is well-positioned to maintain its momentum in global trade, serving as a crucial link between East and West, as well as North and South. Its remarkable non-oil trade figures further highlight its growing influence and resilience in a time of significant change.

The UAE’s Exceptional Growth in Non-Oil Trade Figures

In the first half of 2024, the UAE achieved record-breaking non-oil trade figures, reaching AED 1.4 trillion ($381 billion). This remarkable performance not only surpasses the annual export figures from before the COVID-19 pandemic but also puts the country on track to achieve AED 3 trillion ($817 billion) in non-oil trade by the end of the year.

  • Non-Oil Exports: AED 345.1 billion ($94 billion), reflecting a significant 25% growth.
  • Non-Oil Imports: AED 800 billion ($218 billion), showcasing an 11.3% increase.
  • Re-Exports: AED 345.1 billion ($94 billion), with a 2.7% increase from the previous year.

The UAE Strengthening Global Trade Relations

As the global trade landscape evolves, it is increasingly shaped by structural changes in the world economy and society. Advances in technology, shifts in manufacturing centers, changing consumer preferences, demographic trends, and geopolitical developments are all driving significant transformations in how and where trade occurs.

The UAE has taken centre stage when it comes to the bilateral trade. One clear example of this is the UAE’s relationship with India. The UAE isn’t just a major trading partner for India; it’s also a vital gateway for Indian exports. This is reflected in the 10% increase in trade between the two countries.

But it doesn’t stop there. The UAE is also strengthening its trade ties with other important partners. Trade with Türkiye has grown by 15%, highlighting a solid economic partnership. Even more impressive is the 41% jump in trade with Iraq, which has now become the UAE’s top destination for exports. This showcases the transformative impact of the Comprehensive Economic Partnership Agreements (CEPA).

UAE’s non-oil trade and diversification

The UAE has long been a leading force in global trade largely due to its abundant natural oil reserves. With the sixth-largest oil reserves in the world, this strength has consistently positioned the UAE as one of the key players in international trade.

However, the UAE is now shifting gears and focusing more on non-oil trade. With the current H1 trade results, the country has set impressive new records and shown significant growth in this area. While it continues to benefit from its oil resources, the UAE is making a full-throttle push into non-oil sectors, demonstrating its ability to diversify and excel across a broader range of industries. It’s a clear sign that the UAE is not just resting on its oil-rich past but is actively shaping a broader, more dynamic future in global trade.

The emirates’ contributions to making the UAE a leading force in global trade are substantial. Abu Dhabi has broken a 10-year record for non-oil GDP in Q1 2024, driven by growth in sectors such as construction, finance, transport, manufacturing, and telecommunications with key contributions from Abu Dhabi Global Market (ADGM).

Meanwhile, Dubai continued its steady economic growth in Q1 2024, with positive performance across sectors including transportation, finance, real estate, and information and communication. The Dubai International Financial Centre (DIFC) delivered exceptional results in H1 2024, reinforcing Dubai’s role as a hub for innovation and business growth.

UAE’s trade vision: how the emirate’s aims for AED 4 trillion by 2031

As we look to the future, the UAE has set an exciting goal: reaching AED 4 trillion ($1.1 trillion) in annual foreign trade by 2031. Given the impressive progress we’ve already seen in 2024, it’s clear that this target is well within reach. The UAE is committed to expanding its trade network and building even stronger international relationships, which is driving its continued economic success. With these strategies in place, the UAE is well-positioned to achieve its ambitious goals and thrive in the years ahead.

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Transfer Pricing Adjustments in the Age of Pillar Two: Is it a new challenge to tackle for MNEs?

In 2016, Apple Inc. found itself at the center of a high-stakes tax controversy that captured global attention. The tech giant faced scrutiny from the European Commission over its Transfer Pricing practices and tax arrangements with Ireland. The investigation revealed that Apple had been allocating a substantial portion of its profits to Irish subsidiaries, benefiting from a favorable tax rate that was considerably lower than those in other jurisdictions. This strategy, while legal at the time, raised questions about profit shifting and tax base erosion.

The case was a landmark moment, underscoring the relation between Multinational Enterprises (MNEs) and international tax regulations. It led Apple to overhaul its Transfer Pricing policies to align with the OECD’s BEPS guidelines, ensuring greater transparency and compliance with global standards.

Fast forward to today, and the global tax landscape is evolving once again with the OECD’s Pillar Two GloBE rules introducing a global minimum tax rate of 15%. For MNEs operating in the UAE, understanding how these new rules intersect with UAE Federal Corporate Tax is not just important—it’s essential.

As MNEs operating in the UAE confront the evolving global tax landscape, understanding the intersection of OECD Pillar Two GloBE (Global Anti-Base Erosion) rules and UAE Federal Corporate Tax is crucial. These rules, part of the Base Erosion and Profit Shifting (BEPS) project, set a global minimum tax rate of 15% to combat profit shifting and tax base erosion. For MNEs in the UAE, the close association between Transfer Pricing rules and UAE Federal Corporate Tax brings both opportunities and challenges.

The Interplay Between Transfer Pricing Adjustments and UAE Federal Corporate Tax

In the UAE, Transfer Pricing adjustments are vital for ensuring that transactions between related parties reflect arm’s length pricing, in line with both UAE Federal Corporate Tax and international standards. The introduction of Pillar Two further adds a layer to this landscape:

Timing of Transfer Pricing Adjustments

  • Post-Year-End Adjustments: MNEs in the UAE often make adjustments after the financial year-end to align their results with Transfer Pricing policies. Under Pillar Two, these adjustments must be booked in the fiscal year to which they pertain or the year in which they were made. This requirement aligns with the UAE’s Federal Corporate Tax regulations, which also demand accurate reflection of financial results in tax returns.
  • Low-Tax Jurisdictions: Historically, the UAE’s favorable tax environment has been seen as a low-tax jurisdiction. Under Pillar Two, there is increased scrutiny on Transfer Pricing adjustments in such jurisdictions. The UAE’s Federal Corporate Tax framework, which adheres to the arm’s length principle, must be carefully integrated with the GloBE rules to avoid potential disallowance of adjustments and double taxation risks.
  • Double Taxation Risks: Adjustments made after filing the GloBE Information Return (“GIR”) can complicate dispute resolution. For UAE-based MNEs, this means navigating potential double taxation if income is reallocated from the UAE to higher-tax jurisdictions. The UAE’s corporate tax regime and its alignment with global standards play a critical role in managing these risks.

Strategies for Managing Transfer Pricing Adjustments in the UAE

To address the challenges posed by Pillar Two and ensure compliance with UAE Federal Corporate Tax regulations, MNEs should adopt the following strategies:

1. Creating a Robust Transfer Pricing Policy

  • Alignment with UAE Federal Corporate Tax: Ensure Transfer Pricing policies are consistent with UAE regulations and international standards. The UAE Federal Corporate Tax rules emphasize the arm’s length principle, which should be reflected in the global Transfer Pricing policy to avoid discrepancies with tax authorities.
  • Regular Monitoring: Regularly update Transfer Pricing policies and documentation to align with both UAE Federal Corporate Tax requirements and Pillar Two rules. This practice supports compliance and mitigates risks associated with post-year-end adjustments.

2. Timing of Adjustments

  • Proactive Adjustments: Make Transfer Pricing adjustments contemporaneously with transactions to reduce discrepancies between financial accounts and tax returns. For UAE-based MNEs, timely adjustments are crucial for aligning with both local tax regulations and Pillar Two requirements.

3. Alignment with Financial Reporting

  • Collaboration with Financial Reporting Teams: Ensure that Transfer Pricing adjustments are accurately reflected in consolidated financial statements. Accurate reporting in line with UAE Federal Corporate Tax and GloBE rules is essential for determining the correct GloBE ETR.

4. Seeking Advance Certainty

  • Advance Pricing Agreements (APAs): Utilize APAs to gain certainty on the arm’s length nature of transactions. In the UAE, bilateral or multilateral APAs can help mitigate disputes and ensure that Transfer Pricing adjustments are recognized by UAE tax authorities and other jurisdictions.

The close association between Transfer Pricing rules and UAE Federal Corporate Tax underscores the importance of a well-coordinated approach for MNEs. By aligning Transfer Pricing policies with UAE regulations, managing the timing of adjustments, ensuring accurate financial reporting, and seeking advance certainty through APAs, MNEs can navigate the complexities introduced by OECD Pillar Two effectively. Embracing these strategies will help MNEs comply with both local and global tax requirements, ensuring a smooth alignment with the new international tax standards and minimizing potential risks.

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What is the UAE Corporate Tax Exempted Incomes? Find Here!

The UAE’s corporate tax landscape has undergone significant changes, making it essential for businesses to understand the nuances of the new regulations. With the stakes high, non-compliance can lead to substantial penalties.

One of the most crucial aspects of corporate tax regulations is identifying and leveraging available exemptions. The UAE government has outlined specific exemptions for certain types of income and entities, which can significantly reduce tax burdens.

Upcoming CT Deadline: Don’t Miss It!

Before diving into the specifics of corporate tax exempted incomes, it’s crucial to remind you about an important upcoming deadline. If your Resident Juridical Person’s license was issued in June—regardless of the year—you have until 31 August 2024 to submit your Tax Registration application. Missing this deadline could result in late registration penalties, which can have a financial impact on your business. This deadline is just one example of why staying on top of your tax obligations is so important.

Corporate Tax Exempted Incomes: What You Need to Know

While CT registration is mandatory for all businesses, not all income is subject to taxation. The UAE government has outlined specific exemptions that certain businesses and individuals may qualify for. Understanding these exemptions can save you time, effort, and money.

Here’s a concise overview of the Corporate Tax Exempted Incomes:

1. Individuals Earning Employment Income

One of the most common sources of income, salaries, and other employment-related income from both public and private sectors are not subject to corporate tax. This exemption means that individuals working as employees will not see any changes to their tax obligations, as their employment income is not taxable under the corporate tax regime.

2. Passive Income Earners

If you’re earning passive income from sources such as interest, dividends, capital gains, or other investment returns from personal savings or investments, you are exempt from corporate tax. This exemption is particularly beneficial for individuals who rely on investments for income rather than traditional employment, allowing them to continue growing their wealth without the burden of additional taxes.

3. Foreign Investors

The UAE has always been an attractive destination for foreign investors, and this continues under the corporate tax framework. Income generated by foreign investors from dividends, capital gains, interest, and royalties remains non-taxable under UAE corporate tax. This exemption helps maintain the UAE’s competitive edge as a global investment hub, encouraging further foreign investment in the country.

4. Extractive Industries

Businesses involved in the extraction of natural resources, such as oil and gas companies, are governed by Emirate-level taxation. These entities are exempt from federal corporate tax, ensuring that their taxation remains within the jurisdiction of the individual Emirates. This exemption recognizes the unique nature of the extractive industries and the significant role they play in the UAE’s economy.

5. Qualifying Public Benefit Entities

Public benefit entities that meet specific criteria are also exempt from corporate tax. These entities typically include organizations that serve the public good, such as charities and non-profits. By exempting these entities, the UAE government supports the continuation of their vital work without the added financial burden of corporate tax.

6. Government and Government-Controlled Entities

Entities that are wholly owned by the government or are controlled by it are not subject to corporate tax. This exemption ensures that government-related activities can continue uninterrupted, supporting the broader economic and social objectives of the UAE.

7. Free Zone Businesses

The UAE’s Free Zones have long been a major draw for businesses due to their favorable tax regimes. Under the new corporate tax laws, certain businesses operating in Free Zones may continue to enjoy tax exemptions, provided they qualify as “Qualifying Free Zone Persons” and do not engage in business activities within mainland UAE. This exemption maintains the Free Zones’ attractiveness to businesses looking for a tax-efficient environment.

Next Steps: Ensure Compliance and Avoid Penalties with MS

Corporate Tax Exempted Incomes are one key aspect of UAE Corporate Tax Regulations. Also, understanding various aspects of corporate tax can be challenging, especially when it comes to determining whether your business qualifies for an exemption. If you’re unsure about your eligibility or need assistance with the registration process, our team of experts at MS is here to help. We can guide you through the necessary steps to safeguard your business and ensure you remain compliant with all applicable tax regulations.

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How to Optimize Your UAE Corporate Tax Position: Key Insights and Best Practices

Recent updates from the UAE Federal Tax Authority (FTA) underscore the urgency for businesses to stay informed about Corporate Tax (CT) regulations. For instance, companies with licenses issued in June 2024 must complete their CT registration by August 31, 2024, to avoid penalties. The introduction of the UAE Corporate Tax CT regime not only brings new compliance requirements but also opens up opportunities for optimizing tax positions. Companies can benefit from incentives for Qualifying Business Activities and must understand detailed rules on expense management and financial reporting. Adopting a proactive approach to these changes is essential for maximizing benefits and ensuring compliance in this complex tax environment to optimize your UAE Corporate Tax position.

Here’s a quick rundown of key points that help you ensure compliance and enhance your tax positioning:

  1. Strategic Tax Optimization and Adjustments

The UAE’s CT framework offers potential incentives for Qualifying Business Activities, providing opportunities to reduce tax liabilities. While specific details are still emerging, businesses should stay updated on these developments. Additionally, understanding the deductibility of local taxes, such as municipal and property taxes, is essential. However, taxes under certain Emirate laws, like those on foreign bank branches, are not deductible.

Key considerations:

  • Qualifying Business Activities: Research potential incentives and explore how your business can align with qualifying criteria.
  • Local Tax Deductibility: Understand the deductibility of various local taxes and plan accordingly.
  • Expense Management and Allocation

Proper management and allocation of expenses are critical under the new CT regime. Employee costs, including benefits like medical insurance and travel allowances, are generally deductible subject to the arm’s length standard. However, excessive contributions to private pension funds are not deductible.

For expenses serving both business operations and exempt income, businesses must allocate them on a fair and reasonable basis using a consistent method. Non-deductible expenses capitalized cannot be depreciated for CT purposes, requiring careful consideration when determining capitalizable costs.

Key considerations:

  • Arm’s Length Standard: Ensure that expense allocations comply with the arm’s length principle.
  • Expense Allocation Methods: Adopt a consistent and justifiable method for allocating expenses.
  • Capitalization and Depreciation: Carefully evaluate the capitalization of expenses and their potential impact on tax deductions.
  • Financial Reporting and Compliance

As businesses approach the financial year-end, accurate and compliant tax-related reporting is essential. Companies with a revenue threshold of AED 50 million must prepare audited financial statements in accordance with the arm’s length standard.

Decisions regarding the election to apply the realization basis for unrealized gains or losses should be made early, as this choice is irreversible. Pre-incorporation and pre-trading expenses, deductible even before revenue generation, need careful recording.

Key considerations:

  • Audited Financial Statements: Ensure compliance with audit requirements for businesses exceeding the revenue threshold.
  • Realization Basis Election: Make informed decisions about the realization basis to optimize tax positions.
  • Pre-Incorporation and Pre-Trading Expenses: Accurately record and document these expenses for potential deductions.
  • Preparing for Tax Adjustments

The UAE’s CT regime requires a structured approach to calculating taxable income and CT payable. Multiple tax adjustments may be necessary, involving data from various business functions.

Key considerations:

  • Tax Policy and Procedures: Implement documented policies and procedures to streamline tax calculations and ensure compliance.
  • Year-End Reporting: Prepare for year-end reporting to accurately calculate CT and related deferred taxes.

Optimize Your UAE Corporate Tax Position with MS

It’s vital for all businesses to begin their UAE Corporate Tax impact assessment to understand where they stand according to the regulations of the CT. Partner with MS to properly assess your Corporate Tax and our expertise will help you understand the UAE taxation, keeping your business compliant and protected. Act now—secure your business’s future with MS today.

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Inside the UAE’s New AML Legislation: What’s Changed and Why It Matters

Inside the UAE’s New AML Legislation

The UAE has frequently been in the spotlight, but its latest headlines are dominated by the recently updated Anti-Money Laundering (AML) framework.

In the UAE, dirty money has been flowing under the radar for years. As we know that modern financial crimes require updated solutions, the country has been holding its anti-money laws in a tight grip. But have you wondered why the UAE has updated the Anti-Money Laundering (AML) and counter-terrorism financing (CFT) framework now?

Why the New Changes in UAE AML Laws?

The UAE is stepping up its game in the battle against financial crime, especially money laundering and terrorism financing. The UAE has seen a dramatic increase in AML Violation fines, reaching Dh249.2 million last year alone. These new regulations are part of a broader push to strengthen the country’s financial defences and align with global standards, especially after the UAE was removed from the Financial Action Task Force’s grey list earlier this year. This intensified approach underscores the UAE’s commitment to maintaining a secure and transparent financial system.

What’s new in the revised AML regulations?

1. Strengthening Compliance with International Standards

The UAE’s new legislation comes almost six months after the country was removed from the Financial Action Task Force’s (FATF) grey list—a list of countries with deficient AML and CFT measures. The recent amendments aim to further solidify the UAE’s compliance with global standards and recommendations. By aligning its framework with international treaties and guidelines, the UAE seeks to enhance its reputation as a secure and trustworthy financial centre.

2. Enhancing Coordination and Oversight

One of the key goals of the new law is to improve coordination among various entities involved in the fight against financial crimes. The creation of new committees and a General Secretariat is designed to streamline efforts, ensuring that Financial Institutions (FIs), Designated Non-Financial Businesses and Professions (DNFBPs), and other relevant bodies work together more effectively. This enhanced collaboration is expected to improve information sharing and simplify reporting processes, making it harder for financial crimes to go undetected.

3. Committee under the new framework

The UAE has established two major committees under the new law:

  • The National Committee for Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organisations: This committee will be responsible for developing and implementing comprehensive AML and CFT strategies.
  • The Supreme Committee for the Oversight of the National Strategy for AML and CFT: This committee will oversee the National Committee’s activities, issue guidelines, and ensure that strategies are effective and aligned with international standards.

4. Creating a General Secretariat

A new General Secretariat has been set up to support the committees. Led by a Secretary-General who will also be Vice-Chairperson of the National Committee and a member of the Supreme Committee, the Secretariat will implement decisions and ensure smooth communication between the committees.

5. Improving Reporting and Evaluation

The new law introduces measures to enhance the reporting and evaluation processes. It mandates the oversight of the Mutual Evaluation Report, which assesses the UAE’s compliance with international AML and CFT standards. This focus on rigorous evaluation reflects the UAE’s commitment to not only adhering to global practices but also to continually improving its financial crime prevention measures.

Impact of new AML standards on Financial Institutions and Other Entities

1. Increased Compliance Demands

Financial institutions and DNFBPs will face stricter oversight and heightened reporting requirements. They must update their compliance programs to meet the new standards, including enhanced coordination and prompt reporting of suspicious activities.

2. Strengthened Financial Security

The updated framework aims to strengthens the defenses against financial crimes, contributing to a more secure and stable financial environment. This enhancement is likely to attract international businesses and investors seeking a reliable and protected financial system.

3. Continuous Monitoring and Adjustment

Entities must remain vigilant and adapt their practices in response to the new regulations. Regular updates to compliance strategies and internal controls will be crucial to keeping up with the evolving regulatory landscape.

How are IFC’s setting the benchmark in combating against Money laundering

The UAE’s updated anti-money laundering (AML) regulations now set a strong framework across the entire country, including the leading financial centres like Abu Dhabi Global Market (ADGM) and the Dubai International Financial Centre (DIFC). While both free zones follow the federal AML rules, they also have their own unique requirements. For instance, DIFC, under the Dubai Financial Services Authority (DFSA), has extra rules for real estate developers and requires UAE-resident AML officers. On the other hand, ADGM, regulated by the Financial Services Regulatory Authority (FSRA), focuses on stricter Know Your Customer (KYC) practices and specific sector guidelines.

The UAE Reinforcing the Future of Financial Security with New AML Standards

The UAE’s new anti-money laundering laws represent a significant advancement in the country’s efforts to combat financial crimes. By strengthening its legal framework, improving coordination among key players, and aligning with international standards, the UAE is reinforcing its position as a leading global financial hub. These changes underscore the country’s commitment to maintaining a secure and transparent financial system and enhancing its role in the global fight against financial crime.

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UAE’s Big Blockchain Move: What It Means for the Future of Tech

“Blockchain”- you’ve probably heard the term a lot lately. Have you ever wondered what exactly is blockchain? Let us delve into the 100th analogy trying to explain what blockchain is. Imagine blockchain as a secure digital notebook where each block is like a page that holds important information. As new pages are added, they link to the previous ones, creating a chain. This chain of pages ensures that once information is written, it can’t be easily changed.

This very principle of unchangeable and transparent records is becoming a game-changer for businesses in the UAE. Envision a system where every transaction is transparent, every process is streamlined, and every detail is securely recorded. The UAE’s commitment to innovation is evident in its advanced blockchain framework, which complements its robust digital asset regulations. By enhancing trade, streamlining supplier onboarding, and combating fraud, the UAE is not only attracting global businesses but also ensuring consumer protection and financial stability, setting a new standard for the future of digital economies.

UAE’s Blockchain Leap

The UAE government is pioneering a digital transformation with blockchain technology, reshaping how it conducts business and manages data. Through the Emirates Blockchain 2021 initiative and the Dubai Blockchain Strategy, the UAE is set to lead the world in blockchain innovation, with ambitious goals to make Dubai the first city fully powered by blockchain and to digitize 50% of government transactions.

Islamic finance and blockchain

Blockchain technology is really changing the game for Islamic finance, making it more transparent and efficient. In the UAE, where digital innovation is a big focus, blockchain fits perfectly with Shariah principles (which emphasize fairness and clear transactions). It helps cut down on fraud and makes sure rules are followed automatically through smart contracts. Plus, it updates Zakat (obligatory charitable giving) and makes issuing Sukuk (Islamic bonds) much simpler. Blockchain also tackles issues with digital assets by supporting central bank digital currencies (CBDCs), which are more transparent and fairer. As the UAE leads the way in using blockchain, this technology could really boost Islamic finance, making it more effective and in line with its core values.

What’s new in the Emirate’s Blockchain scenario

Abu Dhabi’s Blockchain centre: A new era for innovation and growth

Abu Dhabi has unveiled its Blockchain Center, marking a significant leap towards establishing the UAE as a global blockchain leader. This new hub is set to drive innovation and growth through a robust ecosystem supporting startups, enterprises, and academic institutions.

What’s inside the blockchain centre?

  • Incubation & Acceleration Hub: Provides startups with essential resources, mentorship, and funding.
  • Venture Capital: Invests in Web3 startups to fast-track blockchain development.
  • Education & R&D: Offers cutting-edge programs and research, plus a training center for continuous talent development.
  • Consultancy: Delivers expert advice on blockchain integration and regulatory compliance.
  • Events & Workshops: Hosts global events to connect industry leaders and showcase new blockchain advancements.

DIFC x RIPPLE

Dubai is taking blockchain to the next level with a new partnership between Ripple (the leading provider of enterprise blockchain and crypto solutions) and the DIFC Innovation Hub. This exciting collaboration is set to spark innovation by connecting Ripple’s advanced technology with Dubai’s vibrant tech scene. Ripple is investing 1 billion XRP to boost blockchain projects and drive the UAE’s fintech future.

The DIFC Innovation Hub, a hotspot for digital innovation, will now be even more influential in the blockchain world. With Ripple’s XRP now approved for use in DIFC, Dubai is firmly establishing itself as a leading player in the global blockchain arena, opening new opportunities and accelerating growth in the region.

The country’s commitment to integrating blockchain across various sectors is not just about staying ahead—it’s about setting new benchmarks for transparency, efficiency, and growth. With the Emirates taking the lead, the UAE is not only enhancing its own digital landscape but also inspiring global transformation. As blockchain’s influence expands, the UAE’s innovative approach is unlocking new opportunities and redefining interactions between businesses and governments. The journey is just starting, and the UAE is ready to lead the way.

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Avoid AED 10,000 Fine: Meet August 31st UAE Corporate Tax Deadline

UAE Corporate Tax Deadline

The United Arab Emirates (UAE) business scene thrives on innovation and adaptability. But with that comes the ever-present challenge of keeping pace with regulatory changes. Businesses operating in the UAE need to stay informed about changing regulations, especially regarding taxation. The Ministry of Finance recently implemented a significant update impacting Corporate Tax registration. This update introduces a penalty for businesses that delay the registration process.

New Penalty for Late UAE Corporate Tax Registration

The UAE Ministry of Finance has introduced an administrative penalty of AED 10,000 for businesses that fail to register for Corporate Tax within the timeframe mandated by the Federal Tax Authority (FTA). This penalty applies to all businesses operating in the UAE, regardless of their VAT registration status, turnover threshold, geographical presence, or financial performance.

Streamline Your CT Registration: Ensure VAT Compliance Avoids Delays and Penalties

Businesses aiming to register for CT should be aware of the potential roadblocks caused by delays in finalizing VAT amendments. Because completing any outstanding VAT amendments is often a prerequisite for CT registration, any holdup in the VAT process can significantly impact your CT timeline. To avoid this frustration, it’s crucial to ensure your VAT profile is accurate and up to date. Inconsistencies between your VAT and CT information can trigger fines from both tax authorities. Common pitfalls to watch out for include misclassification of your legal business status, expired licenses that haven’t been renewed, and outdated details regarding authorized signatories for your company. By proactively addressing any discrepancies in your VAT profile and ensuring it reflects the most current information, you can streamline the CT registration process and avoid unnecessary delays or penalties.

Upcoming Deadline for UAE Corporate Tax

Existing Businesses:

ADGM companies incorporated in June of any year prior to 2024 have a critical deadline approaching. These businesses must complete their Corporate Tax registration by August 31st, 2024. Failure to comply by this date could result in significant penalties of up to AED 10,000.

Newly Formed Businesses:

For entities established on or after March 1st, 2024, the Corporate Tax registration process requires even greater attention to timelines. The latest directive from the Federal Tax Authority (FTA) mandates that new businesses (incorporated, established, or recognized) after this date, including those situated in Free Zones, must register for Corporate Tax within a strict three-month window from their incorporation, establishment, or recognition date.

Take action now with MS for UAE Corporate Tax Registration.

Regardless of the license issue date, it’s crucial for all entities to initiate the registration process promptly to avoid penalties and ensure compliance with the latest regulations. Understanding these updates and adhering to the specified deadlines is essential for businesses operating in the UAE. MS can be your partner in this journey to make your corporate tax registration seamless. Stay informed, stay compliant, and safeguard your business interests in the dynamic landscape of UAE taxation with MS.

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Shaping Economic Progress: A Glance at Dubai’s Tech Sector in H1 2024

Dubai's Tech Sector

120 km/h — that’s the highway road speed limit in Dubai. However, this speed is not confined to the roads; the word “speed” can be synonymous with Dubai itself. The city is more than just a haven of skyscrapers, luxury, and exotic desert landscapes. Its drive for speed and innovation extends well beyond its highways. Through strategic diversification plans, Dubai has emerged as a global tech hub, heavily investing in technology and innovation.

This rapid pace of advancement is reflected in the Emirate’s economic performance. In the first quarter of 2024, Dubai’s GDP grew by 3.2%, a result of substantial investments in emerging technologies. This growth underscores the effectiveness of Dubai’s diversification strategy, which is shifting the focus from oil-dependent revenue to a robust, knowledge-based economy.

The contributing tech factors

DIFC – for all your innovation needs

In a world where innovation is no longer an option but a necessity, the Dubai International Financial Centre (DIFC) has been calling up startups, entrepreneurs and technology firms to get their Tech Innovation License. With subsidized commercial license options, the businesses can have access to DIFC’s exclusive co-working space, and flexi desk.

The DIFC Innovation Licence has built the region’s largest innovation hub, with over 850 firms. By offering a 90% discount on licenses and a flexible platform, it has made the DIFC the go-to marketplace for cutting-edge businesses.

Other freezones

The Dubai Silicon Oasis Authority and other free zones are boosting tech companies, from startups to global giants, with top-notch infrastructure and support. These zones offer perks like 100% foreign ownership, tax breaks, and easy access to markets across the Middle East, Africa, and beyond.

Govt tech initiatives

Dubai Chamber of Digital Economy

The Dubai Chamber of Digital Economy is really boosting the tech scene in Dubai. In the first half of 2024, they helped 215 promising digital startups get started and grow, which is a huge 212% increase from last year. These startups now have a combined market value of about $7 billion. The chamber also trained 243 Emiratis through its ‘Create Apps in Dubai’ program, which shows their commitment to developing local talent. They organized 12 international roadshows to promote Expand North Star, the biggest global event for startups and investors. Plus, they took part in 15 other events, both locally and internationally, to keep pushing Dubai as a top tech hub.

DUB.AI

The Dubai’s Universal Blueprint for Artificial Intelligence was launched as a part of the D33 agenda to increase the emirates economic productivity by 50 per cent. DUB.AI is set to enhance Dubai’s quality of life and well-being through Artificial Intelligence. The plan kicks off with the appointment of Chief A.I. Officers in all government entities. Along with this, a new program will be introduced to attract and support data centres, and a special A.I. company license will be rolled out as a part of this initiative.

The plan is designed to create the best environment for A.I. companies and global talent by improving business operations, offering advanced tech infrastructure, and providing a flexible legal framework. This will help A.I. companies grow, spread the benefits of A.I., and drive progress for a better future.

With a range of proactive initiatives taken by the government, Dubai is poised to continue its pioneering role in the tech sector and remain an attractive destination for tech talent. The city’s rapid advancements in AI, e-commerce, and fintech are not only propelling its own technological growth but also catalyzing significant changes in related industries. This ripple effect creates numerous job opportunities and attracts top talent from around the world, further solidifying Dubai’s position as a leading force in shaping the future of technology on a global scale.

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Global Green Leadership: UAE’s Financial Innovation in Sustainability

Global Green Leadership: UAE’s Financial Innovation in Sustainability

Who predominantly leads in environmental sustainability and climate actions across the Gulf region? Further out in the desert rises the UAE. Beyond the oil riches and iconic skyscrapers, the UAE is really diving into a journey towards a greener future.

Have you ever wondered how can human settlement make sense in such place? It all comes down to the UAE’s strong commitment to sustainability. The recent study shows that the major cities of the emirates have shifted their long-term focus to sustainability, elevating the nation as a global advocate for environmental stewardship. With the COP28 on the list, the Emirates is outshining the other GCC countries in key areas of environmental progress and sustainability.

UAE’s action towards sustainability

The government is already big on green investment, innovation, and technology, but they’re nudging businesses to get even more creative in these areas. The country excels in infrastructure and transport with substantial investments in mass transit, electric vehicle charging networks, and cleaner port facilities. It has strengthened climate financing regulations and implemented rigorous net-zero reporting and monitoring measures.

There is no pause; the country has also committed $54 billion to renewable energy sources by 2030, taking long steps in clean energy investments. Additionally, the UAE’s pledge of $30 billion to help developing nations transition to clean energy underscores its leadership in regional sustainability efforts.

IFC’s Driving Sustainable Finance Revolution in the UAE

DIFC

The Dubai International Financial Centre’s Sustainable Finance Framework is pivotal for raising capital dedicated to impactful and sustainable projects within its precincts, solidifying its leadership in sustainable finance across the region. By emphasizing transparency and disclosure, DIFC not only showcases proactive measures but also aligns closely with the United Nations Sustainable Development Goals. This framework is instrumental in promoting consistent finance flows essential for sustainable development, reinforcing DIFC’s role as a global financial center committed to driving positive environmental and social change.

ADGM

The Abu Dhabi Global Market’s Sustainable Finance Regulatory Framework enhances its standing as a leading hub for sustainable finance activities. This comprehensive framework includes regulations for sustainability-focused investment funds, bonds, and managed portfolios, alongside mandates requiring ADGM companies to disclose their environmental, social, and governance (ESG) practices. These initiatives are poised to accelerate the development of a robust sustainable finance ecosystem in the region. Furthermore, they play a crucial role in advancing the UAE’s ambitious goal of achieving net zero greenhouse gas emissions.

COP28 – The breakthrough deal in sustainability

COP28, held in Dubai, was a pivotal moment for global climate efforts, culminating in the UAE Consensus—an ambitious framework for sustainable development.

A year since its inception, COP28 continues to make waves. At the eighth Ministerial on Climate Action, Dr. Sultan Al Jaber, COP28 President, underscored the pressing need of putting the UAE Consensus into action for sustainable development. Highlighting significant strides, such as PetroChina’s commitment to emissions reductions, the event underscored increasing global participation in climate action. This is calling upon the nations to strengthen their climate plans, emphasizing the transformative potential of AI in advancing clean energy solutions. Also highlights the need for infrastructure upgrades to meet future challenges sustainably.

Discussions centered on financial reforms crucial for supporting these critical climate initiatives, reflecting COP28’s ongoing commitment to catalyzing global efforts towards a sustainable and resilient future. This ongoing dialogue not only reaffirms the importance of COP28’s outcomes but also underscores the collective responsibility to achieve meaningful progress in addressing climate change.

ALTÉRRA – Redefining corporate sustainability

During COP28, the UAE introduced ALTÉRRA, a US$30 billion initiative in partnership with BlackRock, Brookfield, and TPG. ALTÉRRA aims to mobilize $250 billion for global climate action by catalyzing private finance. It focuses on reducing barriers to investment in under-invested markets such as least developed countries and Small Island Developing States. ALTÉRRA prioritizes energy transition, industrial decarbonization, sustainable living, and climate technologies, aiming to significantly impact global efforts against climate change. It isn’t just shaping the future of green finance, but it’s reshaping our view on the investment itself.

Saudi Arabia’s Green Initiatives

Saudi Arabia’s green financing framework marks a big leap towards sustainability and their goal of achieving net-zero emissions through a circular carbon economy. This framework isn’t just paperwork—it’s a game changer. By laying out clear policies and investment strategies focused on sustainability and preserving the environment, it’s paving the way for investors and businesses across different sectors to get on board. This move shows that the Kingdom is serious about backing up its green ambitions with financial muscle, which not only helps Saudi Arabia but also contributes to the global fight against climate change. It’s a big step towards fulfilling Saudi Vision 2030, ensuring sustainable policies, smart investments, and building eco-friendly infrastructure.

In the UAE, sustainability is not just a trend but a transformative force shaping the future of the nation’s economy and society. By prioritizing energy efficiency and sustainability across sectors, UAE firms are not only differentiating themselves but also creating substantial operational value. They play a key role in innovating solutions for sustainability challenges, with the power to fuel the diversification agenda like no other. As we look ahead, it’s clear: the UAE’s sustainability will not only shape but redefine the future of its trade.

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Family Offices in the UAE: A Game Changer for Entrepreneurs

Why Family Offices in the UAE Thrive at Business Environment

From its emergence back in the 6th century to being the leading players in private wealth management advisory, Family offices in the uae have undergone a remarkable revolution. With their operational flexibility, family offices are now reshaping global trade opportunities. In recent times, many countries worldwide have supported family businesses with institutional and policy backing, raising awareness, educating, and ensuring regulatory frameworks to ensure their continuity.

An introduction to family offices in the UAE

The growth of family offices in the UAE has been organic. The country holds the potential to influence the future of global business in the years to come. High Net-Worth Individuals (HNWIs), businesses, and family business owners are increasingly considering migration to the UAE. Backed by several factors, the UAE makes an ideal destination for your entrepreneurial dreams.

The UAE government is dedicated to supporting family offices by providing legislative, structural, and regulatory tools essential for the private sector’s success, crucial to the broader UAE economy’s health.

Family Offices in the UAE – a legislative revolution

A new UAE Federal Decree Law No.37 of 2022 on Family Businesses (the “Law”) was issued in October 2022 and came into force on 11 January 2023.

  • Establish a robust legal framework for ownership and governance of family businesses.
  • Facilitate smooth transfers of ownership between generations.
  • Support the continuity and sustainability of family businesses in the private sector.
  • Introduce mechanisms for resolving family disputes effectively.
  • Enhance the economic contribution and competitiveness of family businesses in the UAE.

Top freezones for your Family office in the UAE

  • Abu Dhabi Global Market (ADGM)

The Abu Dhabi Global Market (ADGM) is one of the premium destinations for family offices.  ADGM allows Single Family Offices (SFOs) under its Commercial Licensing Regulations, even though specific SFO regulations are absent. SFOs function as private companies with limited liability for shareholders. They provide services such as wealth and asset management, legal and accounting support, and administrative services exclusively to the family and their entities. This setup aids in protecting wealth tax-efficiently, alongside other ADGM wealth management options like SPVs and foundations.

  • Dubai International Financial Centre (DIFC)

The Dubai International Financial Centre (DIFC) has introduced new regulations for family offices under the Family Arrangements Regulations 2023. These regulations, effective from 31 January 2023, replace the previous Single-Family Office Regulations (SFO Regulations) of 2011. One significant change is the removal of the requirement for family offices to register with the Dubai Financial Services Authority (DFSA) as a Designated Non-Financial Business or Profession. This update aims to enhance the regulatory framework for family offices within the DIFC, supporting the initiatives of the Global Family Business and Private Wealth Centre.

DIFC Family Wealth Centre

The DIFC Family Wealth Centre (DFWC) supports family businesses and Ultra High Net Worth Individuals (UHNWIs) by offering tailored solutions aligned with the UAE’s commitment to these sectors. Their “Family Arrangements Regulations” aim to sustain and expand family enterprises and wealth, providing personalized services, education, networking opportunities, and advisory to guide families effectively.

Government initiatives for Family offices in the UAE

1)Unified Family Business Registry

The UAE Ministry of Economy introduced a unified registry for family businesses, supported by four cabinet resolutions aimed at enhancing governance and competitiveness. This initiative aims to establish the UAE as a preferred destination for local, regional, and global family enterprises.

They play a crucial role in driving the national economy forward, supporting its shift towards a knowledge-based future. The unified registry launch marks a significant step in enhancing governance and streamlining registration processes for family enterprises in the UAE. It’s about creating a cohesive system that builds on their existing strong legislative and technological foundations.

2)Dubai Family Business Management Programme

The Dubai Family Business Management Programme is designed to support the growth of Dubai’s business community by nurturing innovative leaders capable of addressing future challenges. This program supports Dubai’s business community by developing innovative leaders in Dubai capable of addressing future challenges. It focuses on preparing the next generation of family business leaders by enhancing governance, sustainability, global trade strategies, legal education, social responsibility, networking, media presence, and overall success preparation.

3)Abu Dhabi Family Business Index

The Abu Dhabi Department of Economic Development (ADDED) on a collaboration with the United Emirates University (UAEU) has signed an MoU to launch the Abu Dhabi Family Business Index.

An initiative to rank and evaluate family-owned and family-controlled businesses in Abu Dhabi, this index will assess factors like revenue, industry impact, employment, governance structures, leadership diversity, succession planning, longevity, and socio-economic contributions. By combining the expertise of UAEU and the economic development focus of ADDED, this initiative aims to enhance Abu Dhabi’s reputation as a hub for innovation and economic prosperity. It’s about understanding and improving how family businesses operate and contribute to the local economy.

The UAE has become a top spot for Family offices, with financial assets growing fast, especially from UNHWI’s. With projections indicating further expansion by 2026, the country’s appeal is strengthened by its progressive regulatory frameworks, legal innovations, and favorable tax policies. As global interest intensifies, the UAE is on track to be a key place for family offices offering great chances for wealth management and growth in the years ahead.

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