The answer to whether branches are subject to the ESR depends on certain factors. It’s crucial to note that ESR applies to entities that engage in “Relevant Activities” within the UAE. These activities include:
Banking Business
Insurance Business
Investment Fund Management Business
Lease-Finance Business
Headquarters Business
Shipping Business
Holding Company Business
Intellectual Property Business
Distribution and Service Centre Business
If a branch conducts any of the relevant activities mentioned above, it falls under the purview of the ESR. However, if the branch solely performs administrative or support functions and does not engage in any relevant activity, it may be exempted from the ESR requirements.
Where do I report the details of my branch?
If your branch is subject to the ESR, it is crucial to understand the reporting obligations associated with it. The Regulatory Authority in the UAE, the Ministry of Finance, has designated the Federal Tax Authority (FTA) as the entity responsible for collecting and administering ESR-related information.
When reporting the details of your branch, you will need to provide the following information:
Entity Information: Include details such as the legal name, trade name, and trade license of the branch.
Activities: Clearly specify the nature of activities carried out by the branch, ensuring they align with the relevant activities listed under the ESR.
Financial Information: Provide financial statements and relevant financial data for the branch.
Employees: Disclose the number of employees engaged in the branch’s activities.
Physical Assets: Report the value and location of physical assets used by the branch in its operations.
Core Income-Generating Activities (CIGAs): Identify and describe the CIGAs performed by the branch in the UAE.
Confirmation: Declare that the branch has met the Economic Substance Test and attach any supporting documentation if required.
Conclusion:
Compliance with the Economic Substance Regulations is crucial for businesses operating branches in the UAE. Determining whether your branch falls under the scope of ESR is essential, as it will dictate your reporting obligations. If your branch engages in relevant activities, it must report the necessary details to the Federal Tax Authority (FTA) in accordance with the regulations.
We hope this article has provided you with valuable insights into the treatment of branches under the ESR and the reporting process. Stay tuned for our next blog, where we will explore another relevant topic related to Economic Substance Regulations in the UAE.
Disclaimer: The information provided in this article is for general informational purposes only and should not be considered legal or professional advice.
How to determine if your business is subject to Economic Substance Regulation (ESR) requirements in the UAE?
As the deadline for Economic Substance Regulation (ESR) compliance approaches in the UAE, businesses must ensure they understand if they fall under the scope of the regulation. ESR requires businesses in certain sectors to demonstrate economic substance in the UAE, and failure to comply could result in significant penalties. In this article, we will explain how to determine if your business is subject to ESR requirements in the UAE.
Determine if your business falls within the scope of ESR: ESR applies to businesses that undertake “relevant activities,” including banking, insurance, intellectual property, shipping, and holding company activities. Review your business activities to determine if they fall under any of the relevant activities outlined in the regulation.
Assess the level of activity conducted in the UAE: If your business engages in relevant activities, the next step is to determine if there is sufficient economic substance in the UAE. This involves assessing the level of activity, assets, and employees based in the UAE.
Identify if your business is a “Licensee”: ESR requirements apply to businesses that are licensed in the UAE, including free zone entities. If your business holds a license to operate in the UAE, it is likely subject to ESR requirements.
Determine if your business is exempt: Certain entities are exempt from ESR requirements, including entities that are tax-resident outside the UAE, and those that are wholly owned by UAE residents. Review the regulation to determine if your business qualifies for an exemption.
In conclusion, determining if your business is subject to ESR requirements in the UAE requires a thorough review of the regulation, your business activities, and presence in the UAE. If you are unsure about whether your business is compliant with ESR regulations, seek advice from a qualified professional to avoid penalties and ensure compliance before the June deadline.
Disclaimer: The information provided in this article is for general informational purposes only and should not be considered legal or professional advice.
The Economic Substance Regulation (ESR) is a set of rules introduced by the UAE government to align with the global standards of tax transparency and combat tax evasion. Under ESR, businesses in the UAE must demonstrate that they have sufficient economic activity and presence in the country to justify the income they earn and the taxes they pay.
ESR applies to businesses that conduct specific activities, such as banking, insurance, investment management, and intellectual property. The regulation impacts all companies in the UAE, including those in free zones and offshore jurisdictions.
Failure to comply with ESR requirements can result in hefty penalties, including fines, suspension of licenses, and reputational damage.
To ensure compliance with ESR, businesses in the UAE must maintain accurate records and document their economic substance through various criteria, including:
Physical presence in the UAE, such as offices, employees, and assets
Active management of relevant activities within the UAE
Adequate operating expenditures in the UAE
Qualified employees and equipment in the UAE
Appropriate levels of revenue generated in the UAE
As the June deadline approaches, businesses must take proactive steps to ensure they meet the ESR requirements. This includes reviewing their business operations, documenting their economic substance, and reporting to the relevant authorities.
In summary, compliance with ESR is a crucial aspect of doing business in the UAE, and failure to comply can result in significant consequences. By taking proactive steps to ensure compliance, businesses can avoid penalties and maintain their reputation in the market.
Expanding to Al Reem and Paving the Way as a Leading Financial District!
An important milestone for Abu Dhabi and ADGM was reached on May 8th, as the International Financial District grew to incorporate both Al Maryah and Al Reem islands, with a total area of 1,438 hectares. This expansion made it one of the biggest financial districts in the world.
Picture credits to ADGM.
The fastest-growing IFC in the area is ADGM, and this growth results from greater demand from local and international businesses who have chosen Abu Dhabi as their preferred place to live and work. Businesses in the financial district will profit from being subject to the English common law of the financial freezone, having the chance to recruit top personnel, and having more accessible access to investment and business possibilities by being a part of the dynamic community of ADGM. ADGM will keep assisting the community and improving its offerings, and we’re excited to celebrate the various establishments, amenities, and facilities for the high quality of life that the two islands have to offer. Welcome to ADGM, Al Reem Island companies, retailers, institutions, and people.
Are you considering setting up your business in ADGM’s rapidly expanding financial district? Let MS, guide you through the complex process of business incorporation in ADGM. With our extensive experience in the industry, we can provide you with expert guidance and support tailored to meet your specific needs and goals. We’ll advise you on company structure and governance, ensure compliance with local regulations and laws, and help you set up for long-term success in ADGM’s thriving business ecosystem. Beyond incorporation, we offer a range of essential business services, including accounting, taxation, and corporate finance. Our deep expertise and knowledge of the local market will help you make informed decisions and achieve your business objectives more efficiently and effectively.
WHY MS
We are an Energetic, Passionate, and curious mix of technologists, Lawyers, Problem Solvers, and Business builders with diverse expertise and background.
We believe our success comes from giving our clients the support to become the best they can be.
We value our clients and are committed to adding value to all our engagements without compromise.
We strive to find solutions to the challenges as we are known to have mastered the“magic of getting things done.”
We are responsive and believe in maintaining an open line of communication with our clients.
Unclear about ADGM-Al Reem expansion? Check out our FAQ here.
Starting from 1st June 2023, the United Arab Emirates (UAE) will be implementing a corporate tax regime for the first time in its history. Under the UAE Corporate Tax Law, all companies conducting business within the UAE will be subject to corporate taxation. The tax rate will be set at a flat rate of 9%, and companies will be required to submit annual tax returns to the Federal Tax Authority (FTA). The introduction of corporate tax in the UAE is a significant development for the country’s economy, and businesses operating in the UAE need to prepare for the upcoming changes.
WHAT IS CORPORATE TAX
Corporate Tax is a form of direct tax levied on the net income or profit of corporations and other businesses. Generally, such taxes are computed on the accounting net profit/income of a business, after making adjustments for certain items which will be specified under the UAE Corporate Tax law.
The UAE Corporate Tax regime will become effective for financial years starting on or after 1 June 2023.
It is clarified that when a business has a calendar year as its financial year. then the Corporate Tax shall be effective from 1 January 2024.
Corporate Tax Rate in UAE will be applicable at the following rates:
Income
Rate
Taxable income not exceeding AED 375,000.Qualifying Income of a Qualifying Free Zone Person*
0%
Taxable income exceeding AED 375,000.Non-Qualifying Income of a Qualifying Free Zone Person
9%
*It is not clear what will be considered as ‘Qualifying Income’, but further clarity is expected in a subsequent Cabinet Decision.
For example, if the Company earns a taxable profit of AED 400,000 in an FY, The Corporate Tax liability will be calculated as follows:
Taxable income of AED 0 – AED 375,000 at 0% = AED 0
The portion of taxable income exceeding AED 375.000 (i.e., AED 400.000 – AED 375.000 = AED 25,000) at 9% = AED 2,250
What is Taxable Income as per Corporate Tax?
To reduce complexity and compliance costs, the UAE CT regime determines a company’s Taxable Income based on its accounting net profit (or loss) as disclosed in its financial statements. This requires that the financial statements be prepared according to UAE accounting standards. Businesses in the UAE commonly use International Financial Reporting Standards (IFRS) because there are no generally accepted accounting principles (GAAPs) in the UAE.
A Taxable person is someone who is subject to corporate tax. What is the tax base of a taxable person?
Resident Person
Tax base
An entity that is incorporated in the UAE. (Including a Free Zone entity)
Worldwide Income
A foreign entity that is effectively managed and controlled in the UAE
Worldwide Income
A natural Person/individual who conducts a Business or Business Activity in the UAE
Worldwide Income
Non-resident Person
Tax base
Has a permanent establishment (‘PE’) in the UAE
Taxable income attributable to the PE
Derives UAE Sourced Income
The UAE sourced income not attributable to the PE
Has a Nexus in the UAE
Taxable income attributable to the Nexus
Will any kind of business be subject to Corporate Tax in UAE?
The tax will be applicable in all businesses including the free zones except:
Government Entity
Government Controlled Entity
Persons engaged in an Extractive Business
Persons engaged in Non-Extractive Natural Resource Business
Qualifying Public Benefit Entity
Qualifying Investment Funds
Pension fund and Social Security fund (subject to regulatory oversight of the competent authority)
Any other Person as may be determined in a decision issued by the Cabinet.
How do you know if you qualify for a Freezone?
In order to qualify for the 0% CT rate, QFZP (Qualifying Free Zone Person) must meet all of the following conditions:
It must be a Free Zone Person (i.e., a juridical person incorporated, established, or otherwise registered in a Free Zone, incl. branches).
Maintain adequate substance in the UAE.
Derive Qualifying Income (to be defined in a Cabinet Decision).
Not have made an election to be subject to the standard UAE CT regime.
Comply with all transfer pricing rules and documentation requirements; and
Meet any other conditions as prescribed by the MoF.
Corporate Tax Training
MS Group has extensive training experience in every new Regulation that has been introduced in the UAE. particularly in the area of VAT. AML. IFRS, etc.
We are passionate about developing people to their true potential. We are available to conduct a tailor-made awareness program to enhance the skill set of in-house teams and senior management.
We can customize our training plan to cover all or either of the following areas:
Provide overall awareness about Corporate Tax Regulations.
Awareness about deductible expenses/disallowances to be taken care of while computing taxable Income.
Corporate Tax Compliance
Dynamic economic development, globalization, business pressures, and continuous legislation amendments/developments all force organizations to consider a new approach to the process of tax accounting, preparation of tax reporting documentation, and cooperation with the tax authorities.
We assist organizations to improve management effectiveness, correlating tax decisions made in one country with the business imperatives of the overall organization.
Our Corporate Tax Compliance Team assists organizations in meeting tax compliance requirements, by offering a wide range of services that include:
General Compliance Service
Corporate Tax Registration
Calculation of tax payables
Preparation of Corporate Tax returns and other tax reporting documents
Review of the tax return prepared by the organization.
Assistance with correspondence with the tax authorities, in case of any queries raised by the authorities.
Coordinating with authorities to settle tax disputes if any.
Corporate Tax Implementation
In the increasingly complex areas of Corporate Tax reporting, tax authority compliance, and tax planning – in-house tax departments are often challenged to meet constantly changing requirements.
Our experienced professionals having industry experience and experience in Corporate Tax can supplement the professionals of your organization to ensure an error-free transition to the newly introduced Corporate Tax in the UAE.
Our reputation for expertise, efficiency, attention to detail, and superior service is recognized by both our clients and peers.
Whether your organization is an emerging operation or a large, established business, our team of professionals will apply their years of tax experience and resources to help you identify areas of risk, and offer solutions that mitigate financial risk and tax compliance exposures.
Our areas of expertise include:
Conduct an impact assessment of the legal structure of the organization and the group at large.
Conduct impact analysis of the bottom line and profits after tax.
Review whether the financial year followed by the organization requires any modification / adopts a uniform financial year.
Review Internationally Accepted Accounting Standards have been followed while making existing financial Statements, in all aspects.
Review whether adequate resources are available to undertake tax compliance functions.
Review whether the processes adopted by the organization to ensure adherence and compliance with corporate tax are adequate.
We offer a wide range of services that include general compliance, the introduction of tax, finance, and accounting services, and global coordination and management of tax accounting projects.
At MS, we understand the complexity of tax laws and the challenges businesses face when it comes to tax compliance. As a leading tax and accounting consultancy in the UAE, we are well-positioned to help businesses navigate the new corporate tax regime. Our team of experienced tax consultants can provide tailored advice on corporate tax planning and compliance, ensuring that our clients remain fully compliant with the latest tax laws and regulations. Contact us today to find out how we can help you with your corporate tax requirements.
A Guide for Opening a Bank Account in Dubai, UAE for SME
Dubai is known for its bustling business scene and is home to numerous Small and Medium Enterprises (SMEs). However, opening a bank account for an SME in Dubai, UAE can be a challenging task. The process can be lengthy, and there are several requirements that businesses need to fulfill to open a bank account in the city. In this blog, we will explore the challenges that SMEs face when opening a bank account in Dubai and how to overcome them.
Challenge 1: Meeting the Requirements
One of the biggest challenges that SMEs face when opening a bank account in Dubai is meeting the requirements. To open a bank account in Dubai, UAE – businesses need to provide several documents, including business registration documents, shareholder certificates, and proof of address. SMEs may also need to provide financial statements, tax certificates, and other documents to meet the bank’s compliance requirements.
Solution: SMEs need to ensure that they have all the necessary documents before applying for a bank account. They can also seek the help of professional services firms that specialize in assisting SMEs with the process. These firms can help SMEs to prepare the required documents and ensure that they meet the bank’s compliance requirements.
Challenge 2: Limited Banking Options
Another challenge that SMEs face when opening a bank account in Dubai, UAE is limited banking options. Many banks in Dubai only cater to large businesses and corporations, making it difficult for SMEs to find a suitable banking partner. The banks that do offer services to SMEs may have strict eligibility criteria or charge high fees.
Solution: SMEs need to do their research and identify banks that offer services to SMEs. They can also consider alternative banking options such as digital banks or offshore banks that may offer more flexible and affordable services. It is also essential to compare the fees and charges of different banks to find the most cost-effective option.
Challenge 3: Language Barrier
Dubai is a multicultural city, and English is widely spoken in the business community. However, many of the official documents required to open a bank account may be in Arabic, which can be a challenge for SMEs that do not speak the language.
Solution: SMEs can seek the help of professional translators or translation services to translate the required documents into English. They can also consider hiring a bilingual employee who can assist with the translation process and communicate with the bank.
Challenge 4: Time-consuming Process
The process of opening a bank account in Dubai can be lengthy and time-consuming. SMEs may need to visit the bank multiple times to complete the process, and the bank may require additional documents or information, further delaying the process.
Solution: SMEs need to plan ahead and give themselves enough time to complete the process. They can also consider using digital banking services, which may offer a more streamlined and efficient process.
In conclusion, opening a bank account in Dubai for SMEs can be a challenging process. However, by understanding the requirements and challenges and seeking the right help, SMEs can overcome these challenges and find a suitable banking partner that meets their needs.
At MS Finance and Business Consulting, we understand the challenges that SMEs face when opening a bank account in Dubai. Our team of experienced finance and business consultants has helped numerous SMEs navigate the banking process and find suitable banking partners. We provide a comprehensive range of services, including assistance with document preparation, compliance requirements, and identifying the most cost-effective banking options. Our team also provides additional services such as financial planning, accounting, and bookkeeping, which can help SMEs manage their finances effectively. By working with MS Finance and Business Consulting, SMEs can be assured that their banking needs are met efficiently and effectively, allowing them to focus on growing their business.
We at MS are proud to announce our partnership with MASDAR Freezone
Are you an aspiring business owner looking to establish your Business in MASDAR Freezone Abu Dhabi, the thriving business hub of the Middle East?
Look no further! We at MS are proud to announce our partnership with MASDAR Freezone, a world-class business ecosystem located in Abu Dhabi, to offer comprehensive business setup assistance to entrepreneurs and businesses of all sizes.
As one of the leading business consultancy firms in the region, we understand the complexities and challenges of setting up a business in a foreign country. With our expertise in finance and business management, coupled with the extensive resources and support offered by MASDAR Freezone, we are well-equipped to guide you through the entire business setup process, from start to finish.
Why Choose MASDAR Freezone?
MASDAR Freezone is a strategic initiative by the Abu Dhabi government to promote sustainable development and innovation in the fields of clean energy, sustainability, and technology. Located in the heart of Abu Dhabi, MASDAR Freezone offers a conducive environment for thriving businesses, with state-of-the-art infrastructure, world-class facilities, and a range of business incentives and benefits.
As a business setup destination, MASDAR Freezone offers several advantages, including 100% foreign ownership, no corporate or personal income tax, no customs duties, and streamlined business processes. Additionally, businesses in MASDAR Freezone have access to a pool of talent from diverse industries, a strong support network, and excellent connectivity to global markets, making it an ideal location for startups and established businesses alike.
How we MS help you set up your business in MASDAR Freezone.
Setting up a business in a foreign country can be overwhelming, with numerous legal, financial, and operational considerations. Our team of experienced finance and business consultants can provide you with end-to-end business setup assistance, tailored to your unique requirements. Here are some of the services we offer:
Business Planning and Feasibility Analysis: We can help you develop a comprehensive business plan and conduct a feasibility analysis to assess the viability of your business idea in the local market. This includes market research, competitor analysis, financial projections, and risk assessment.
Company Registration and Licensing: We can guide you through the company registration and licensing process, ensuring compliance with local laws and regulations. This includes assistance with selecting the appropriate legal structure, preparing the necessary documentation, and liaising with government authorities.
Financial Management and Accounting: We can provide you with expert financial management and accounting services, including budgeting, financial forecasting, bookkeeping, payroll management, and tax planning, to help you maintain accurate financial records and comply with local financial regulations.
Human Resources and Talent Management: We can assist you with human resources and talent management, including recruitment, employee onboarding, performance management, and compliance with local labor laws. This ensures that you have the right talent in place to drive your business success.
Business Advisory and Support: We can provide ongoing business advisory and support services to help you navigate the challenges of operating a business in a foreign country. This includes strategic planning, risk management, business process optimization, and performance monitoring, to help you achieve your business goals.
Partner with Us for a Successful Business Setup in Abu Dhabi
With our partnership with MASDAR Freezone, we are committed to helping business owners and entrepreneurs establish their ventures in Abu Dhabi with confidence and ease. Our team of experienced finance and business consultants will work closely with you to understand your business requirements, provide personalized advice, and guide you through every step of the business setup process.
Whether you are a startup or an established business, our comprehensive business setup assistance will ensure that you are well-prepared to capitalize on the lucrative opportunities offered by Abu Dhabi’s dynamic business landscape.
Every day at MS is a celebration of women. We celebrate our incredible women all day every day, but sometimes it’s nice to reflect on the incredible adventure that has so far been and plan for the extraordinary journey that will be ahead of us while embracing all women who are our heroes. This Women’s Week at MS is all about honoring and celebrating women who have inspired the “women at MS” that there are no dreams too big to chase. Women who have built their careers by sheer perseverance and talent, working day after day to build their careers and ventures.
Women in the UAE are at the forefront of breaking ceilings to set new standards as women around the globe continue to ascend unimaginable paths. Our MS Women meet such women every day, among whom are talented clients who are very effective at turning ideas into reality.
We decided to do something to help celebrate the talented and vibrant women entrepreneurs in our region, so we launched “WomenWhoHustle” at MS. Having such wonderful women around us has a positive impact on our mindset and inspires us to put our hustle-hats on and go 100% to make our dreams come true. The #WomenWhoHustle make us want to hustle every single day. Here are 5 women who have left us spellbound with their incredible achievements and uniqueness among several women who we admire.
Our top 5 picks for women who inspire women at MS to hustle in 2022
Nayla Al Khaja Nayla is the first ever Emarati woman director and producer. She is the Founder and CEO of Nayla al Khaja Films and has created a powerful name in the film community through her incredible work. She has presented her movies in numerous film festivals worldwide and has several awards and recognition under her belt. Breaking stereotypes and continuing to deliver masterpieces, she is an inspiration for generations to come.
Nayla Al Khaja
Mariam Ketait Mariam has a family medicine background but has over 18 years of professional experience working and leads teams in various sectors of the government of UAE and with the Prime Minister’s Office hence playing a crucial role in aligning the strategic vision with global goals. She additionally holds Chief Design Officer and Chief Wellbeing Officer certificates. She is also the founder of the NGO Chikara that helps with the development of women through coaching and mentorship. She indeed is a true hustler who uplifts other women too, a force to reckon with.
Mariam Ketait
Noura Al Dhaheri Noura put together her artistic passion and entrepreneurial abilities together while founding Studio Clay that aims to bring local artists particularly women together, support small ceramic businesses and improve mental well-being my being immersed in the experiences offered. She is an Emirati woman on a path less taken, putting in her blood and sweat into her venture inspiring more women to chase their passions and make a living out of it.
Nour Al Dhaheri
Alanoud Alhashmi Alanoud is an Emarati Entrepreneur and the Founder and CEO of the Futurist Company. She is a true believer in the power of STEM to positively impact and improve our lives while caring about the planet and works on several projects enabling this. She is a woman with visionary leadership and is set to leave her legacy behind.
Alanoud Alhashmi
Tanya Awad Tanya is the co-founder of Blank Canvas that focuses on reconnecting people to their creativity, individuality, and interconnectedness. With a unique vision and strong entrepreneurial soundness to put it into action, Tanya is always on the go to bring in innovation into her venture and promote art and wellness in the region. Her drive and skills make her the perfect candidate that shows us how women become unstoppable forces when they put their hearts into something.
Tanya Awad
As women at MS, we can’t wait to see what these women continue to do, and we can’t wait to follow suit of doing remarkable things within our fields.
On that note, we celebrated with a sweet gesture this Women’s Day on 8th March at MS for our superwomen in the team. The office desks were decked up when we walked into the office the morning. A little surprise that was followed by pouring wishes and insightful conversations, sharing stories of inspiration and discussing how men could be our true allies in fixing many challenges women currently encounter. We exchanged ideas and hope for the future ahead that will see more women reaching heights and taking humanity to the best form.
Good news tax registrants! The Federal Tax Authority (FTA) has stated on Monday 24th January 2022, to extend the grace period for the re-determination of administrative penalties on violating tax laws until 31st December 2022.
That is to benefit from Cabinet Decision No.49 of 2021. Those tax registrants who were not able to fulfill the conditions to benefit from re-determination before 31st December 2021, can now fulfill the conditions before 31st December 2022.
The UAE Cabinet’s decision stated that the amount of total unpaid penalties that were imposed before June 28, 2021, equal to 30 percent of the total unpaid penalties, provided the conditions set by the Cabinet are met. The FTA will determine the procedures for implementing the provisions related to the re-determination of administrative penalties for tax law violations. A maximum of 30 business days from the date specified in the Cabinet Decision will be allowed for redetermination of administrative penalties on tax registrants imposed by the FTA.
Such a decision has been made to provide an opportunity for the business sector to benefit from the reduction of penalties and reducing burdens on them due to the pandemic and to amplify their abilities in contributing to more growth of the national economy. This decision is also a part of the FTA’s goal to provide a legislative environment that encourages a high level of tax compliance.
Highlighting the eligibility of the tax registrants, it added that:
Firstly, the administrative penalty should have been imposed before June 28, 2021, and the amount due was not settled in full before that date.
Secondly, the tax registrant has settled all payable taxes by 31 December 2022.
Thirdly, the tax registrant has also settled 30 percent of total unpaid administrative penalties no later than 31 December 2022.
The FTA explained that the actual penalties imposed as a result of the re-determination of administrative penalties are already reflected in the accounts of many eligible tax registrants who have met the conditions stipulated in Cabinet Decision No. 49 of 2021 on amending some provisions of the Cabinet Decision on Administrative Penalties for Violation of Tax Laws in the UAE, which came into effect on 28th June 2021. For such registrants, the new values after re-determination appeared on the accounts of registrants on the FTA’s e-Services portal; registrants were also informed by emails that the re-determination process had been completed.
The Arab world’s second-biggest economy, the UAE is carrying out economic, legal, and social structural reforms aiming at strengthening its business environment and attracting foreign investment. UAE’s vat and tax amendment penalty rules change from time to time to aid businesses and motivate companies to expand their operations in the country. MS accounting & tax consultants in Abu Dhabi can keep your business up to date with VAT and tax rules alterations and handle your VAT registration and VAT filing processes in the UAE.
It is no longer possible for the world’s most successful companies to live long. The average tenure of an S&P 500 company was 33 years in 1965. Then it was 20 years in 1990. The average company lifespan in the S&P is 50. This is estimated to drop to 14 years by 2026. That’s simply because there are more companies today, and for start-ups to thrive, company leaders must create real value for customers.
If you have a start-up, you must be asking yourself, “How can I grow in a competitive business market”? You must be thinking you’re too small to focus on anything else than selling your product and services and creating value for your clients. As a CEO, you should focus mainly on your sales and satisfying the market, apart from the other million things to get done while running a start-up. Hence you need a clear head and save time from handling other HR, admin, legal, and accounting obligations. Although you may have little experience in these sectors, your first thought might be wanting to hire someone to fill these roles. And if you are thinking of someone to handle the profitability and scaling of your start-up, then you must consider the role of CFO services for startups and SMEs.
What is a CFO
What is the meaning of a CFO service / fractional CFO? CFO stands for Chief Financial Officer. A Chief Financial Officer is an experienced financial professional, that can offer high-level financial expertise for your goals in a fixed time period. Such expertise can come in advisory or taking actions to achieve broader business objectives. You can hire a CFO or consult with an outsourced CFO service. Which is better? Both deliver the same objective; however, an outsourced CFO service is way more cost-effective for start-ups and mid-sized businesses, as the cost for hiring a CFO is quite high. Also, outsourced CFO firms offer a broad scope of their services to meet specific business needs.
Probably, but expenses should be challenged, your money needs to be spent on those who will ensure you reach your goals. CFO services can foresee opportunities and anticipate pitfalls through data-driven analysis for growth and this will save you time to focus on other sectors of your start-up. But how much does a CFO service cost exactly? That depends on the outsourced CFO firm, also if it’s a virtual CFO service, or part-time CFO service.
Virtual CFO / Outsourced CFO
But the good news is, outsourced services are mostly way cheaper to accommodate start-ups, it ranges in prices that differ from firm to firm. Virtual CFO services also exist, from country to country, so you can easily find different outsourced CFO services costs that would suit you.
VCFOs serve as a link between the client’s bookkeeper and their management team, offering them financial support when they need it. Sometimes the bookkeeper and the management team are the same people in micro-businesses. Larger businesses can often benefit from having the VCFO sit between the finance director (FD) and the bookkeeper, providing extra support the FD doesn’t have time for or the bookkeeper doesn’t have the training to provide.
Small businesses and medium-sized businesses benefit greatly from hiring a startup CFO service or a cost-effective VCFO. VCFO invests in developing their cloud technology and digital solutions and can offer their services to more clients at the same time, making their services more affordable to SMEs.
When is it time to hire a CFO?
There is no one size fits all, hiring too soon may be costly – hiring too late and you may miss out on opportunities to move the business forward. But here are a few guiding questions you should ask yourself when hiring a CFO:
Can you get a Series A without a CFO?
Is it possible to sustain revenues over $10 million per year without a CFO on staff?
Would an accountant increase your bandwidth and streamline your workflow?
Are you capable of modeling future planning based on historical data?
Have you mastered cash flow, profit and loss, the bottom line, etc.?
You may have access to the same financial data, but you might not know how to utilize it for growth. It is completely reasonable for there to be a separation between a CEO and CFO because it is both healthy and normal.
Consequently, contracted CFO services will remain a cost-effective solution for most companies for years to come. The difference between making the playoffs and missing them can often be determined by partnering with an outsourced CFO.
Why should you consult with outsourced CFO services?
A CFO can analyze every facet of your company and maximize the Return on Investment (ROI) of your marketing expenses so you can reach more potential leads. They deal with many hidden costs in the business. Many people don’t know how to run the numbers, so it’s difficult to see the picture without running them. A CFO growth advisor can identify when the team is underperforming, why the margins are failing, and what pitfalls could hinder the business’ success. After the analysis, CFO advises about the steps to be taken in the company. So, it could be wise to consult with a CFO early enough within your startup so you could have reliable company growth.
In modern days, CFO services have evolved to suit SMEs and are no longer an expensive proposition like in the past, where only big enterprises were able to afford a full-time CFO. Today with MSATC, you can outsource a CFO on a part-time basis in the UAE. We can identify if it’s the right time to bring on a CFO to your team and strategize a plan for your needs. Our team is experienced with multiple business industries and can understand your mission, grow your business, and secure your numbers. We are here to support start-ups and SMEs to grow and including our CFO service in your team will be an investment rather than a cost. So reach out to us today or book a free consultation call for your first session.
