The introduction of Corporate Tax at a 9% rate on any taxable business with profits exceeding 375,000 AED annually is seen by corporations all around the UAE in a mainly negative light.
Contrary to how businesses view the implementation of the Federal Tax Law, Corporate Tax doesn’t just limit a resident business’s profits. In fact, it has many upsides that can promote the business’s growth.
We have discussed in previous posts how Corporate Tax will affect different types of businesses in a variety of ways. But for today we are going to be discussing some of the benefits and advantages for both the state of UAE as well as the businesses subject to Corporate Tax.
UAE Corporate Tax Benefits for the State
The implementation of the Federal Corporate Tax Law has many benefits for the state which in turn supports resident business’s prosperity in the long run. Aside from the strategic objectives that the UAE Government wishes to achieve, the introduction of Corporate Tax is accompanied by some significant benefits and advantages for the state such as:
- Economic Growth, as the implementation of Corporate Tax gives an edge to local businesses and reduces public debt, the UAE’s economy grows and becomes more stimulated as a result.
- Cementing the UAE’s position in the global market as a hub for business and investment.
- Increase of the country’s revenue and reduction of public debt.
- Helps the UAE meet international tax transparency standards and prevent harmful tax practices.
UAE Corporate Tax Benefits for Businesses
Despite how businesses view Corporate Tax in the UAE, it continues to be one of the lowest Corporate Tax rates on a global scale. Additionally, the implementation of UAE Corporate Tax introduces huge long-term benefits for businesses such as:
- Tax relief for start-ups and small businesses
- Reduced compliance burden
- Reduces the gap between huge corporations and small businesses
- A stimulated economy means higher spending power of UAE citizens
Another benefit of UAE Corporate Tax is more corporations adjusting their strategy and allocating more funds towards reinvestment and business development to reduce the amount of tax paid each year. As more businesses focus on development and reinvestment, the products and services of resident companies will likely witness significant improvement as well. Thus, attracting more investors from all over the world, improving market standards, and stimulating the economy.
Stay Ahead with AM Audit
Running a business, filing your taxes, and keeping all your paperwork in check at the same time is no easy task. On the other hand, it is challenging to delegate those tasks because of how imperative they are to your business. Which is why we take pride in our transparency and quality of services simultaneously at AM Audit. How you carry out the accounting and auditing of your business can have a significant impact on your operations. So, stay ahead of the competition and let our professionals do some of the heavy lifting by choosing one of AM Audit’s Services including Auditing, Accounting, Consulting, and Corporate Tax Services.
