During a conference on Wednesday, tax experts addressed common misconceptions regarding zero percent tax eligibility, advising companies to review their status and operations to determine if they qualify for the exemption.
Mahar Afzal, CEO of Kress Cooper, highlighted at the 'Corporate Tax UAE Decoded' conference hosted by Khaleej Times that many businesses in free zones mistakenly assume automatic tax exemption. "Being in a free zone does not automatically exempt a company from corporate profit tax," he clarified. Afzal emphasized the need to assess the business status and activities to determine tax applicability during a panel discussion on 'Navigating Corporate Taxation for UAE Free Zone Persons'.
The UAE's Federal Tax Authority actively supports businesses, particularly SMEs, through guidelines and regular seminars to ensure full awareness of local tax laws. The 9% UAE corporate tax, effective for financial years starting after June 1, 2023, is among the lowest globally, aiming to maintain the country's competitiveness.
Jai Prakash Agarwal, vice-chairman of ICAI Dubai, noted that free zone entities meeting all conditions must register and file returns, though they may not necessarily pay taxes. Aatish Shah, head of tax for the GCC region at DP World, added that while the free zone offers zero percent taxation subject to compliance, non-qualifying activities do not guarantee tax exemption.
In a separate discussion on technology's role in tax compliance, Harsh Doshi of Dubai Investments highlighted the increasing adoption of tax technology solutions. Kalaiarasan Manoharan of Noon advised aligning technology strategies with business strategies, suggesting the use of dashboards for easier tax compliance. Joao Cabral of Dutco Group observed the global shift in tax landscapes through technology adoption.
Basel Arafe of Deloitte provided insights on navigating tax accounting in the first year of corporate tax, recommending the establishment of a tax accounting policy and proactive communication with auditors. Nirav Shah of Fame Advisory concluded the conference.
