Dubai Corporate Tax Compliance: A Guide
With the introduction of Corporate Tax in the UAE (Federal Decree-Law No. 47 of 2022), there is a significant change in the country’s business landscape. It is for the first time, companies operating in the UAE are forced to maintain detailed financial statements as per IFRS (International Financial Reporting Standards), timely filing of tax returns and ensure compliance with transfer pricing rules and Arm’s length principles on related party transactions.
As compliance with UAE Corporate Tax became mandatory for businesses, the role of a trusted accounting firm gained more importance than before. Among the different firms offering tax and accounting services in and across the UAE, how can you choose the right partner for your business?
This blog details the key factors to consider when selecting an accounting firm for your corporate tax compliance and how the right choice can save you time, money, and legal risks.
Why the Right Accounting Firm Matters
Choosing the right accounting firm for your business is not just about compliance; it is also about strategic support and timely advice. The right advisor will:
- Ensure you meet FTA filing deadlines on time and thereby avoid penalties
- Providing you with advice on how to optimise your tax position by taking advantage of different tax exemptions, deductions, and reliefs
- Assist with the preparation of transfer pricing documentation under ALP rules for related party transactions
- Provide necessary documentation and assistance during potential FTA audits
- Allow you to focus only on your business growth, while the necessary compliance is handled by experts
Key Factors to Consider
1. Corporate Tax Expertise
Not all accounting firms are the same. Many traditional firms focus only on bookkeeping and VAT compliance. For Corporate Tax, you need a engage with:
- A team of qualified tax agents recognised and approved by FTA
- Who has proven experience with corporate tax registrations, return filings and related advisory services
- Familiarity with special tax regimes (e.g. Qualifying Free Zone Persons, Small Business Relief, Family Foundations, etc.)
Example:
A Free zone IT company assumed by mistake that all their income are exempt since it is in a freezone. With the help of the right advisory, it could have properly classified its mainland PE income, thereby safeguarding its 0% QFZP status and avoiding potential penalties
2. Industry Specific Knowledge
Different sectors have unique tax challenges:
- Real Estate: Provisions on how to treat capital gains, land transfers, and VAT on different types of properties
- Trading & logistics: Specify the activities as Qualifying and excluded under Ministerial Decision
- Professional services: Preparation of Transfer pricing documentation to justify the related-party transactions
- Family-owned businesses: Structuring through family foundations and holding companies to avail the tax benefits under the UAE Corporate Tax laws.
An experienced firm will provide tailored advice based on your business sector and operations
3. Audit & Assurance Capabilities
Many businesses, especially tax groups and Free Zone entities, must prepare and maintain the audited financial statements under the UAE Corporate Tax law. It is very important to choose a firm that offers both tax compliance and audit services to ensure consistency and reduce the risk of errors.
Tip: Always approach an audit firm registered with the Ministry of Economy, known in the market for fair audit practice and listed with the Free Zone Authorities
4. Technology & Digital Tools
The FTA has increasingly emphasised e-filing, electronic invoicing, and real-time audits. The right accounting firm should use:
- Cloud-based and FTA-accredited accounting software
- Automated compliance dashboards
- Integrated solutions for complying with VAT, Corporate Tax and ESR reporting
Firms that use technology will ensure your compliance is efficient, accurate, and scalable.
5. Transfer Pricing & International Tax Experience
For multinational entities, compliance with corporate tax is incomplete without complying with transfer pricing rules. The firm should be able to:
- Prepare Local Files and Master Files where required for related party transactions
- Preparation of Benchmarking reports on related-party transactions in line with arm’s-length standards
- Analysing Double Taxation Agreements (DTAs) with each country to avoid double taxation
Example:
A Dubai-based subsidiary engaged in distribution failed to prepare the required transfer pricing documentation. During the review by FTA, adjustments were made, resulting in a significant increase in taxable income. The right advisor would have prepared documentation upfront and mitigated this risk.
6. Reputation & FTA Recognition
While selecting, always check if the firm:
- Is having FTA-approved tax agents
- Has a proven history of dealing with potential FTA audits and clarifications
- Can provide references and case studies of successful compliance support
A credible firm gives confidence not only to the FTA but also to investors, banks, and business partners.
7. Comprehensive Service Offering
Compliance with Corporate Tax is highly interconnected with:
- Advisory on VAT regulations
- Economic Substance Regulations (ESR)
- Anti-Money Laundering (AML) obligations
- Bookkeeping and payroll services
Choosing a firm that offers an integrated service package covering all means your business has one point of contact for all compliance needs.
Common Mistakes Businesses Make
- Selecting on cost alone: The cheapest provider in the market may lack adequate expertise in corporate tax regulations.
- Not checking FTA registration: Some consultants operate without authorized from FTA
- Overlooking industry focus: A firm strong in supporting retail businesses may not be suitable for a logistics company.
- Ignoring technology: Using manual systems increases compliance risks.
Case Example (Fictional)
Greenways Trading FZCO in JAFZA initially worked with a service provider offering bookkeeping services only. While their VAT compliance was handled correctly, the provider lacked enough knowledge on corporate tax. As a result:
- The company failed to apply the de minimis rule correctly for non-qualifying revenue.
- It results in losing its QFZP status and was taxed at 9% on its total profits.
After engaging with a specialised accounting firm, Greenways Trading:
- Reclaimed its QFZP status for the coming years
- Implemented proper transfer pricing documentation for related party transactions
- Avoided penalties of over AED 200,000
Conclusion
Choosing the right accounting and Audit firm in the UAE for ensuring Corporate Tax compliance is not a simple exercise; it is a strategic business decision.
The right partner will not only ensure compliance with the UAE’s corporate tax law but also help you optimise your tax position, safeguard your reputation and focus on growth.
How Flyingcolour Tax Consultant Can Help?
At Flying Colour Tax Consultant LLC, we provide:
- A team of FTA-approved tax agents
- Experience in corporate tax, VAT, ESR, AML, and transfer pricing regulations
- Dedicated and continued support for Free Zone, mainland, and multinational businesses
- Integrated accounting, audit, and advisory services
We ensure your corporate tax compliance is handled end-to-end, so you can concentrate only on running your business.
To learn more about How to Choose the Right Accounting Firm for Corporate Tax Compliance in the Dubai, book a free consultation with one of the Flyingcolour team advisors.
Disclaimer: The information provided in this blog is based on our understanding of current tax laws and regulations. It is intended for general informational purposes only and does not constitute professional tax advice, consultation, or representation. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the information contained in this blog.