The UAE has a relatively low corporate tax rate of 9%, but there are still a number of ways that businesses can reduce their tax liability. Here are some up-to-date tips:
1. Take advantage of the Small Business Relief (SBR)
The SBR is a tax exemption for businesses with annual turnover of less than AED 3 million. To qualify, businesses must be registered in the UAE and have been in operation for at least 12 months.
2. Optimize your deductions and expenses
The UAE tax code allows for a wide range of deductions, including expenses for operating costs, salaries, rent, utilities, and depreciation. Make sure you are claiming all of the deductions that you are entitled to.
3. Invest in research and development (R&D)
The UAE government offers tax incentives to businesses that invest in R&D. These incentives can be in the form of deductions or credits against your corporate tax liability.
4. Use free trade zones (FTZs)
FTZs offer a number of tax benefits, including exemptions from corporate tax and import duties. If your business operates in an FTZ, you may be able to significantly reduce your tax liability.
5. Consider restructuring your business
Restructuring your business can sometimes be an effective way to reduce your tax liability. For example, you may be able to transfer profits to a lower-tax jurisdiction or create a holding company to reduce your tax burden.
6. Engage in tax planning
Tax planning can help you minimize your corporate tax liability by taking advantage of available deductions, incentives, and tax treaties. It is important to work with a qualified tax advisor to develop a tax plan that is tailored to your specific business needs.
7. Stay up-to-date on tax regulations
The UAE tax code is constantly evolving, so it is important to stay up-to-date on the latest regulations. This will help you ensure that you are claiming all of the deductions and incentives that you are entitled to and that you are complying with all applicable tax laws.
Here are some additional tips that businesses can consider to reduce their UAE corporate tax liability:
- Consider using transfer pricing: Transfer pricing is a set of rules that govern how businesses price transactions between related parties. By carefully structuring your transfer pricing arrangements, you can reduce your taxable income in the UAE.
- Make use of tax treaties: The UAE has tax treaties with over 100 countries. These treaties can provide businesses with tax benefits, such as reduced withholding taxes on dividends, interest, and royalties paid to foreign shareholders.
- Explore tax equity swap arrangements: Tax equity swap arrangements allow businesses to sell their future tax credits to investors in exchange for cash upfront. This can be a useful way to monetize tax credits and reduce your corporate tax liability.
Get expert help from AM Audit to reduce your UAE corporate tax liability:
While there are a number of strategies that businesses can use to reduce their UAE corporate tax liability, the most effective approach will vary depending on the specific circumstances of each business. That’s why it’s important to consult with a qualified tax advisor to develop a plan that’s tailored to your needs.
AM Audit is your trusted partner in UAE corporate tax compliance and planning. We have a team of experienced tax professionals who can help you navigate the complex UAE tax code and develop a tax plan that will help you save money.
We offer a comprehensive range of corporate tax services, including:
- Identifying and claiming all available deductions and incentives
- Structuring your business to minimize your tax liability
- Staying up-to-date on the latest tax regulations
- Preparing and filing your corporate tax returns
- Tax due diligence
- Tax advisory
- Tax dispute resolution
Contact AM Audit today for a free consultation to learn more about how we can help you reduce your UAE corporate tax liability and save money.
AM Audit: Your one-stop shop for all your UAE corporate tax needs.
