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Before beginning a business in the UAE you need to understand the country’s corporate tax system properly. UAE introduced corporate tax for keeping companies to keep up with global standards and also for avoiding any surprises down the line. 

So here we are breaking down corporate tax UAE for your better understanding. If you are a well established company or building a new one this complete guide will help you plan better and avoid any penalties. 

In 2022, the UAE Ministry of Finance introduced a Federal Corporate Tax for the first time. The corporate tax is set at 9% on business profits exceeding AED 375,000. This rate remains quite low compared to other countries, ensuring that the UAE’s corporate tax remains highly competitive.

The corporate income tax is a direct tax levied on the net income of corporations and other entities. 

These corporate taxes mainly focus on the earnings a business generates after deducting operating costs, salaries, and other expenses. UAE has mainly introduced this corporate tax to diversify the economy and align itself with global taxation standards. In June 2023, this corporate tax UAE became applicable to all businesses in the UAE, a shift from the previous tax-free environment the country was known for. 

UAE corporate tax is important for business in many ways, 

Also Read: How To Choose The Best Audit Firms in Dubai – UAE

Any business entity, whether operating on the mainland or in a free zone, should register for corporate tax in UAE. Even if a company qualifies for exemptions or relief, it must still go through the registration process to ensure compliance with the UAE’s tax laws. The registration ensures that the business is recognized by the authorities and is properly categorized based on its income and activities. Under certain conditions and thresholds, natural persons may also be required to register for corporate tax. There may also be situations where non-resident juridical persons would need to register for UAE corporate tax if prescribed conditions are met. 

There are some categories that are exempted from the Corporate Tax UAE as follows, subject to certain conditions: 

Also Read: The Three Golden Rules of Accounting

A number of changes have been made to business policies and the overall environment in the UAE since the introduction of corporate tax:

With corporate tax, all businesses will need to adjust their operations to account for these new tax regulations. This means higher operational costs, more financial planning, and other paperwork. The UAE’s corporate tax rate is still quite low compared to other countries, so many businesses should be able to adapt without significant financial strain.

UAE has been a magnet for foreign investors due to its tax-free benefits, great location, and infrastructure. Now that there’s a corporate tax, some might wonder if that attractiveness will drop, but the UAE remains highly appealing with its low tax rate and numerous free zones offering tax incentives.

Small enterprises might feel the impact of corporate tax a bit more than larger companies. The UAE government set up certain exemptions or reduced rates for businesses that don’t meet a certain profit threshold.

Free zones in the UAE have long been attractive to companies because they offer perks like 100% foreign ownership and tax breaks. At the same time, free zone businesses may still benefit from some of these advantages, so some businesses may reconsider whether operating in free zones or mainland UAE is more cost-effective.

By collecting corporate tax, the government will have more funds to invest in key public services like infrastructure, healthcare, and education. This can have a positive effect, improving the overall quality of life in the country and making it an even better place to do business.

Businesses will likely start making strategic adjustments to minimize their tax burden. This could involve restructuring, finding ways to qualify for deductions, or investing in more tax-efficient operations. Corporate tax UAE will become a part of the decision-making process for businesses. It leads them to seek out opportunities for cost savings in other areas. 

Also Read : Documents Required for VAT Registration UAE

Here’s a checklist of the key documents and information required for successful corporate tax registration in the UAE,

Also Read: What is ICV Certificate in Dubai-UAE and How to Get It?

Here’s what the Ministry of Finance says about corporate tax UAE rates,

First, you need to prepare the books of accounts according to the International Financial Reporting Standards, which are acclaimed by the UAE authorities for corporate tax purposes. 

You need to remember that 9% is charged only if the taxable profit crosses AED 375,000. So up to AED 375,000 is 0%.

Here is how you can calculate the corporate tax under the 9% corporate tax in UAE

In the case of an income of AED 600,000, the corporate tax would be calculated as follows:

(600,000 – 375,000) * 9% = AED 20,250. 

Also Read: Business Setup in Dubai: The Ultimate Guide to Company Formation in UAE

In summary, understanding business taxes in the UAE is essential for business. To ensure you are compliant, it is recommended that you learn all the necessary guidance, from how to register with tax companies to the documents required for annual returns.

Seek advice from a professional tax advisor. This is where Kreston Menon, one of the best tax advisor in the UAE, can play a key role. Whether it’s helping you register with tax companies or ensuring your returns are accurate, they will advise you on every issue. With their in-depth knowledge of UAE tax laws, you will be sure that your business is fully compliant and avoids any obstacles.

Dubai is the best country with many opportunities that benefit investors all over the world. They have advanced benefits like golden visas, 100% foreign ownership, and top-notch infrastructure, and all these are the reasons that people are starting to set up a business here. Planning to start one is easy, but you must know some ground rules with steps and the needed documents before that. 

You need to understand all these factors when forming your company in Dubai. So, this blog is for you as a guide with all the essentials of starting a business in Dubai, UAE.

UAE is known as the top global destination for setting up a business. The country comes from having many advanced advantages like advanced economics, making it the best hub for entrepreneurs worldwide. Whatever the size and budget of the business, Dubai always welcomes all of them. If you are new to business or a larger company, you can set up a company in Dubai easily, and it’s the best decision to help your business grow and succeed. 

Here are the best reasons to form a business in Dubai,

Foreign investors can enjoy full ownership of your business without needing a local sponsor, giving you complete control over your company and flexibility.  

Dubai always provides people with a quality of life. It has low crime rates, great leisure options, and low personal taxes, making it a highly attractive place to live. The city has seen a booming workforce, offering employers plenty of talent and professionals a great environment to network and connect.

Dubai offers various free zones with tax benefits, easy setup processes, streamlined procedures for company setup, and flexible business operations tailored for various industries. 

Dubai’s economy offers licenses for many business activities, which opens up opportunities for businesses in various sectors.

You can choose from different legal structures like LLCs, branches, or partnerships, allowing flexibility based on your business needs. 

Investors who meet certain criteria can qualify for long-term Golden Visas. It offers security and stability for those looking to build and grow their businesses in Dubai. It also gives you multiple entry visas and exemptions from certain taxes.

When planning to set up a business in Dubai, you first have to know the types of company structures that exist. It’s an important factor in company formation, so we outline different types of them and their features so that you can choose one that aligns with your needs. 

Mainland company formation is ideal for companies seeking to operate throughout Dubai and achieve a broader market reach. A mainland company allows you to operate within Dubai and across the UAE without any restrictions. You can trade freely both locally and internationally, making it the best choice for businesses aiming for broad market access. 

Free Zone is mainly for businesses looking for a tax-free environment and specialised services. These are popular for their tax exemptions, full foreign ownership, and quick setup processes. Each free zone is developed for specific industries, so you can find one that aligns perfectly with your business type. However, trading within the local UAE market may require a local distributor.

100% foreign ownership is allowed without the need of a UAE sponsor.

Easy company formation process

All the important details of the shareholders remain private to the public

Access to specialised infrastructure and facilities within the free zone.

The free zone is not an affordable option for businesses.

Offshore business setups are ideal for holding companies and international trade operations. Offshore companies are primarily used for international trading, asset protection, or holding company purposes. These companies don’t operate within the UAE market but offer privacy, reduced taxes, and straightforward setup procedures.

No physical presence is required in Dubai.

Primarily used for holding assets and conducting international transactions.

All the offshore companies do not need to pay taxes on their profits

You are required to open a bank account in the UAE and have the option to hold various currencies.

Dubai’s offshore companies provide an opportunity to expand internationally.

It has no minimum capital requirement.

The cost of company setup is low

since there is no need for office space; this is not issued with a residency visa.

When it comes to business setup in Dubai you need the right business plan. These proper instructions will help you go through the process of forming your company. We have outlined the process in detail for you to make it easier for you to understand.

The first step is setting up a business and selecting the legal structure. Dubai offers various options like sole proprietorships, partnerships, limited liability companies (LLCs), and branch offices. You can choose that by depending on factors like ownership requirements, liability considerations, and the nature of your business.

Dubai is mainly divided into three business zones so you can select one as per your business requirements and needs.

Get the appropriate license and approvals that depend on your business activity. This includes a different type of license, and various business activities require more approval from government authorities.

After getting your licenses and approvals for your business, the next step is to officially register your business with the relevant authorities. The registration process involves submitting the needed documents and paying the required fees.

You must open a corporate bank account, which is important for your business operations in Dubai. Choose a corporate bank that suits your business needs with the necessary documentation. This will help you in your payment activities.

To operate a business in Dubai, you and your employees must get a visa and residence permit. 

You need to choose a rental office or warehouse that helps in securing your business operations. In free zones, there are many flexible options for office spaces, while mainland businesses must meet specific requirements for commercial spaces.

To ensure a smooth business setup and formation process in Dubai, you’ll need to gather some important documents. Here are the documents required for a successful business setup and formation in Dubai.

A passport is an important document that you need in a business setup to verify your identity and nationality. A visa is a must-have document that permits you to enter a place for a specific time. Both are necessary for starting a business in Dubai.

Proof of residence is necessary to confirm your living address, which is required for business registration and legal processes.

The Memorandum of Association (MOA) and the Articles of Association (AOA) are needed in business formation. These two documents are crucial for business formation and help in setting rules and regulations for your business.

A Power of Attorney is needed when you grant authority to another person to act on your behalf in your business matters.

You need to submit detailed information about shareholders, which is required for company registration purposes.

Also, providing the names and roles of company directors is essential for legal registration and transparency in business operations.

A trade license is a mandatory permit that you need to take before you start your business in Dubai.

Starting a company involves many important steps, and it’s natural to feel confused about all the details. If you’re not sure about the process, you can easily contact a Business Setup Consultant In Dubai, which can make things much easier. 

Kreston Menon is a leading Company Setup Consultant In Dubai with years of experience in company formation. The team specialise in business setup, offering proper solutions by focusing on all client’s needs. The years of expertise ensure that every step of the process is handled by professionals, guiding you through each stage of your company formation. No matter what your business industry is, the team is here to help bring your vision to life exactly as you see it. The agency is the best choice for business setup in Abu Dhabi, Dubai, and Sharjah offering expert advice and all the information you need. Our proper process helps you save time and cost while removing the headaches of beginning your journey. 

Contact to get proper guidance on the legal requirements; you can just reach out to Kreston Menon, one of Dubai’s leading business setup firms, to get the best.

If you run a business in the United Arab Emirates, you have many moving factors to balance. So maintaining great products or services is necessary while managing your finances is also important to help keep everything on track. 

But when it comes to all these options, how do you know you are using the right one to capture the data correctly and make it easy?

Proper featured accounting software is the solution many UAE businesses are turning to. Unsurprisingly, in 2024, the UAE cloud accounting software market is forecast to reach USD 28.44 billion and grow to USD 57.06 billion by 2029, with a CAGR of 14.94%.

With so many popular tools available, selecting the right accounting software in Dubai can feel like a big decision. To make it easier for you, we’ve compiled a list of the top 10 accounting software solutions in the UAE to help you manage your business finances and support your growth.

Here are the best 10 accounting software in UAE that helps you in selecting one. You can look at their features and pricing details and select one top software for your business. 

Zoho is a comprehensive accounting software in UAE that helps you grow your business. It is a most versatile accounting software that comes with managing end-to-end services like banking, e-invoicing, inventory and more. The tool has features that come at an affordable rate that will help you get a good tool within your range as it comes with a free plan too. It can be used for small businesses, mid-sized businesses, students and accountants. 

Also Read: Corporate Tax UAE: Everything You Need to Know in 2024

QuickBooks accounting software is mainly used for small and growing businesses to take full control of their finances. The tool comes with a free 30-day trial plan that helps you in getting to know the software better. The software is a user-friendly and simple dashboard that automates all your tasks. It helps with bookkeeping, invoicing, time tracking, sales tax management, budgeting, bank reconciliation and inventory tracking. The company has 4.5 million users all over the world.

Easy to learn and use

Integration feature available

Affordable compared to other software

Get good accounting insights and reports

Also Read: What Are the Different Types of Audit Reports?

Tally Prime is another famous accounting software in the UAE that caters to all your business requirements. The tool is simple to use with easy navigation and you can manage your accounting, inventory, statutory and compliance, banking, payroll and various processes with this tool. Tally Prime accounting software supports real-time and secure access to business from a web browser, or any device, anywhere. 

Also Read: How To Choose The Best Audit Firms in Dubai – UAE

Odoo is known as a modern accounting software that helps you avoid any waste of time in your business finances. The features that come in the software will process within seconds as you don’t have to waste any productivity in business. As it comes with an automation feature as an AI-powered invoice data all you have to do is just validate the invoice. The accounting software has features like bank synchronization, smart AI matching, real-time reporting, EDI dynamic taxes and accounts and many more. 

Also Read: Documents Required for VAT Registration UAE

Xero is a popular cloud-based accounting software in UAE that is recognized for its design and effective features for your business. It offers advanced features like record-keeping, automation capabilities, and customizable reporting options. With over a million subscribers globally, you can confidently contact them to get the best accounting software.

Also Read: The Three Golden Rules of Accounting

Oracle Netsuite is the best ERP software in UAE with an AI-powered cloud business management solution that helps all businesses. It helps organisations to operate effectively by automating core processes in operational and financial performances. The features include managing accounting, order processing, inventory management, production, supply chain and warehouse operations. The dashboard is easily customizable and automates all your manual processes from a single application. The accounting software is used in more than 200 countries and supports 27 languages as a global business. 

Also Read: Business Setup in Dubai: The Ultimate Guide to Company Formation in UAE

Sage X3 accounting software will take overall control of your business with a single solution. It comes with greater efficiency, flexibility and insights for all types of businesses that help them in their growth. Also, it has multi-country and multi-legislation capabilities as in any type of industry. The product has features like production management, supply chain management and financial management. 

Also Read: How to Find TRN Number and Perform TRN Verification in UAE?

Infor is a famous accounting software that helps your business finances with proper functionalities. It has AI-powered cloud-based tools for accounting, expenses, reporting and project costing and billing services. The tool benefits manufacturing, healthcare, retail and other industries. You will get secure and flexible functionality software as per your business needs. 

Also Read: What is ICV Certificate in Dubai-UAE and How to Get It?

SAP accounting software in UAE helps you connect and achieve everything within a single software. The tool combines solutions like product planning, hr management, finance functions and many more functions. It has more than 50,000 customers which makes it one of the best accounting software in UAE.

Also Read: How to Register for Corporate Tax in UAE Using Emaratax 

Wave accounting software helps create invoices, accept online payments and make all your business accounting easy with proper features. They have a user-friendly dashboard that anyone can easily use without further study, and you get a complete picture of your business health. It helps in invoicing, payments, accounting, payroll and advisors. The team has millions of users all over the world mostly with small businesses on their finances. Any freelancer, self-employed entrepreneur, consultant or contractor can use this tool easily. 

Here are the benefits of using accounting software and how it simplifies processes and saves time in your business.

After learning about the different types of accounting software, selecting the one is the right thing to do. Looking at some main factors helps in managing your finances effectively in compliance with UAE’s regulations.

To arrange the right kind of accounting software and therefore, the same suitable financial 

operations and compliance with the UAE police and standards, it needs all organizations. This blog has surveyed some of the accounting software found in Dubai and its unique features to cater to the unique needs of a business.

However, unlike fancy software that eases up the work, guidance by a pro is a single winner that completely flips everything. Kreston Menon gives proper accounting services to one with respect to the requirements of those seeking to use the tools one has selected in the best manner. A perfect combination of software, along expertise, can direct the course of financial management appropriately.

In-Country Value Certification in Dubai (ICV) is a program of redirecting high public spending to the UAE economy with a government-driven procedure. It triggers economic performance and also helps the local industries. Though ICV certification is not mandatory, more organizations apply for it since it offers them additional weightage while performing tender assessments. 

Obtaining an ICV certificate demands timely adherence to all guidelines. Provision of the certificate lies only in the hands of the ICV-certifying body. What is an ICV certificate in Dubai-UAE? In this blog, let’s discuss everything about ICV certification and the steps to get it.

The ICV Certification program was launched in the UAE by Abu Dhabi National Oil Company (ADNOC). Now the ICV program is monitored and managed by MOIAT (Ministry of Industry and Advanced Technology). The approach focuses on analyzing the contribution of goods and services the businesses generate within the UAE–this can range between local investment and employment in the industrial sectors such as oil & gas.

ICV Certificate has the information of the in-country value, which a business operating in the UAE has ICV Certification was formed with the goals listed below by the MOIAT National ICV program:

Offering GDP growth through sourcing more products and services domestically, thus fostering Foreign Direct Investment in Abu Dhabi, and increasing the GDP contributions for SMEs and the private sector.

Improving Emirati’s access to employment opportunities in the private sector and boosting local labor force competencies.

It involves raising R&D (Research and Development) expenditures, enhancing national industry competitiveness, and contributing to technological advancement and application.

ICV certificate has been a significant credential for companies based in the UAE, spanning across industrial segments like oil and gas, ICT, construction, healthcare, etc. All ADNOC contractors and suppliers including its subsidiaries need to have an ICV certificate. This includes the firms that offer goods and services to ADNOC— engineering companies, drilling contractors, logistics providers, and so on.

ICV certification program is also ideal for companies in other segments that wish to do business with the UAE government. For instance, the businesses that bid on government contracts with segments like transportation, construction, and healthcare might be required to earn ICV certification. The collaboration of suppliers with corresponding vendors is required to earn ICV certification. With the help of MOIAT-approved ICV certifying body, you can easily get an ICV certificate in Dubai.

Companies should meet particular eligibility standards to earn ICV certification in the UAE. Let’s hop on to certain aspects you should note to check if you are eligible to gain an ICV certificate. 

Also Read : How to Choose The Best Audit Firms in Dubai – UAE: A Comprehensive Guide

Complicated data requirements raise the concerns of gaining an ICV certificate. Though earning this certification is not compulsory, it has significant advantages, especially for those businesses that focus on participating in secure contracts and government tenders. 

ICV certificate achievement helps you boost your business profile, and move ahead of the competition in the procurement phase. It informs the potential clients of your responsibility to contribute the best to the UAE’s economic landscape, which signifies your dedication to economic diversification and local content enhancement.

For businesses that go well with the ICV program’s criteria, ICV certification is the best strategic leap. It not only enhances your opportunity to achieve public sector projects but also puts your business practices aligned with the UAE’s vision to ensure sustainable economic development. 

If your organization is poised to adhere to the certification requirements, earning an ICV certificate in the UAE places a step towards exploring new phases of opportunity and defines your investment in the country’s future.

To earn an ICV certification in the UAE, the concerned company should contact and earn quotations from the respective certifying bodies. It should opt for a certifying body and award it as per the quotations earned, followed by signing engagement letter.

To ensure compliance with the ICV criteria, businesses may have to modify their operations. This could be increasing local investments, hiring/training additional UAE nationals, sourcing more goods/services from local suppliers, etc. Now, let’s walk through the ICV certification process:

Releasing the audited financial statements plays an integral part in obtaining the ICV certification in the UAE. The newly set up companies less than 10 months old should use management accounts to create financial reports according to the Financial Reporting Standards (IFRS). IFRS offers globally recognized vocabulary that supports financial reporting. IFRS keeps the company’s transparency high, makes processes reliable and enhances the stakeholders’ credibility.

A company’s ICV score is defined using the standard form, i.e; ICV template. It records data based on different aspects of a business’s function, including local sourcing, Emirati employment, investment in community amenities, and many other aspects that help in the local economy’s success. During completion of the ICV template, the businesses should clearly follow the ICV program instructions.

The next step is approaching the relevant certifying bodies to assess ICV templates. Independent businesses that have been provided permission by the ICV program to evaluate and certify businesses for ICV compliance standards are defined as the authorized certifying authorities. The certifying organizations possess the tools and knowledge necessary to assess the ICV template and other required materials supplied by the business. After reviewing the information supplied, the certifying authority performs an on-site audit to validate the information. 

In this final phase, the certifying authority will issue the certificate after a thorough review of the ICV template and supporting documentation to conclude that the business complies with the requirements of the program. 

Also Read : 3 Golden Rules of Accounting – A Detailed Guide

ICV certification in the UAE shall be valid usually for a period of 14 months from the date of issuance of the audited financial statements. To keep having the advantages of ICV certification after one year completes, the businesses must work on renewal of the ICV certification. 

Companies should first submit the revised financial documents. They should further complete the new ICV template for the entire renewal process to ensure that it follows the program’s standards and guidelines. The certifying authority will then assess the data updated and if the business persists to suit the ICV program needs, issue a renewed ICV certificate. Companies need to stay compliant with the ICV criteria throughout the year to make sure ICV scores meet the renewal requirements. 

If you have chosen to get ICV certification, the following considerations can make it convenient and hassle-free. 

The financial statements to be delivered for ICV should comply with International Financial Reporting Standards  (IFRS) which is the mandatory standard in Dubai. 

A combined ICV certificate can be issued for a supplier with different branches in the same Emirates with identical activities and ownership listed on the licenses.

The owner’s salary will be added if they are registered under WPS, i.e., Wage Protection System. It will be confined to AED 2,00,000 (excluding bonus) every month per owner.

Except for the depreciation expenses, all of the internal costs of the supplier will not be added to the calculations.

It denotes how many employees are accounted for every year.

Considering a supplier from the mainland, they can earn a 10% reward in the ICV score, particularly for trading license. While considering an industrial license, this would be a 50% reward.

Payments that the supplier makes to the free zone authorities and licensed organizations will be valued as 100% ICV.

For payments that involve direct contracts with the landlords, the company can earn 80% reward in the ICV Score for Lease/Rental Payments.

Payments to Utilities can earn 80% credit, provided the utilities are purchased directly by the company and the invoice reflects the company as the consumer.

Also Read: Documents Required for VAT Registration in the UAE

ICV certification has evolved since its launch and keeps growing. The best ICV auditors work closely with the clients to make sure that their adherence to the ICV criteria is measured accurately and reflects well in their ICV score. 

Kreston Menon is a reputed auditing firm in the UAE, offering a comprehensive range of compliance and financial services to businesses regardless of size. Being an approved ICV certifying body, we offer the top ICV certification services to businesses that operate in the UAE. By partnering with Kreston, clients can get an assured and reliable ICV audit process that aligns with the requirements of MOIAT.

Known for its business-friendly policies, the UAE has a vast ecosystem that welcomes tourists for its business setup initiatives. Fortunately, the tax system of the UAE is well-aligned with global standards and is highly transparent. VAT registration in the UAE is an inevitable factor for businesses to prevent any possible penalties.

If you’re running a business in the UAE and are clueless about the documents required for VAT registration, fret not, this blog can help you. We have compiled a brief list of all the documents you need to streamline your VAT registration process. Before diving into these details, let us first explore the basic meaning of VAT and the purpose of VAT registration for your business.

VAT or Value Added Tax is an indirect tax, which is transaction-based and levied at every phase of the supply chain. It is charged whenever value gets added to the product across the entire supply chain, ranging from production to the point of sale. 

Businesses don’t pay VAT, instead, it is paid by consumers in the price of goods, and businesses collect them, which makes it an indirect tax. Businesses then report this to the government. While VAT feels the same as the general sales tax for the end users, it is a more sophisticated tax and eradicates different challenges that impact the general sales tax.

VAT Registration ensures the business listing with the government to represent that the company is active in sales and production. Once a business does the VAT registration, it can reclaim any VAT paid for the company purchases, and be responsible for the following:

VAT Registration will be submitted via an online portal to FTA. Businesses registered for VAT will be issued a TRN, i.e.; a Tax Registration Number. This number should be present on all sales invoices of your business.  Every business should adhere to certain VAT registration requirements and have a TRN (Tax Registration Number).

A business “must” register when the sum of its imports and taxable supplies exceeds the threshold as of the previous 12 months, or businesses anticipate that the sum of the combined value of the imports and taxable supplies will exceed the registration threshold in the subsequent 30 days. The mandatory registration threshold value is AED 3,75,000– however, this value doesn’t apply to foreign businesses.

A business can apply to register if it doesn’t fit in the mandatory registration requirements and under the following circumstances:

The total of taxable supplies and imports or the taxable expenses over the previous 12 months overpowers the voluntary registration threshold, else, the business anticipates that the sum value of taxable supplies and imports or taxable expenses shall take over the threshold in the subsequent 30 days. The value of the voluntary registration threshold is AED 1,87,500.

As a business owner in the UAE, you should register for VAT. This verifies compliance with legal regulations and lets businesses fix the right VAT amount. It also lets businesses reclaim VAT on purchases. VAT reclaim is a significant saving for businesses that make a huge turnover. Voluntary registration provides a competitive edge to businesses and shows that you are a professional business that follows strict compliance with the tax laws in the UAE. Voluntary registration in the UAE also makes it easy to do business with other VAT-registered businesses. 

Companies that fail in VAT registration or in filing VAT returns in the UAE are subject to fines. Any business that operates without getting VAT registration will be imposed a fine of AED 10,000 and an additional AED 1000 for every tax period for which no VAT return was filed.  Additionally, the non-registered companies can’t earn input tax credits.

Therefore, VAT registration in the UAE is important to stay away from unwanted penalties. If you are running your business in the UAE, top VAT consultants or VAT registration services providers can help you be clear about all the tax obligations.

To get a Tax Registration Number or TRN, you should submit all documents necessary for VAT registration. The following are the documents required for online VAT registration:

The documents essential for VAT registration will be submitted to the Federal Tax Authority (FTA) online. After applying for online VAT registration, FTA would take about 2-3 working weeks to review the application and finally issue a TRN (Tax Registration Number). 

Businesses in the UAE can also register for a tax group. Different businesses of varying natures can also form a tax group. According to the Federal Tax Authority (FTA), when an individual has over 50% shares in more than one company, that person can form a tax group of the companies. The FTA issues a unique TRN that covers the entire group of companies.

While dealing with VAT registration in Dubai, businesses have many alternatives, such as online form completion. VAT registration services in Dubai make your registration process hassle-free, especially with services from reputed VAT consultants in the UAE. 

Once your company completes the registration, you can obtain a VAT certificate which ensures your social responsibility fulfillment. To learn further about VAT registration in the UAE and to learn how tax consultants in Dubai can support you in VAT registration, reach out to us!

An economic entity needs to portray its financial information to all the stakeholders. All the financial statements and the information must be true and should represent the picture of the entity. 

Implementing an appropriate financial system demands a complete understanding of economic status and maintaining uniformity in the accounting process. The golden rules of accounting help you enjoy this uniformity and account for all the transactions correctly. 

By building the foundation of passing journal entries, these accounting rules form the soul of accounting and bookkeeping. Let’s understand the three golden accounting rules that help to eliminate the complicated process of recording your company’s financial transactions.

Every business regardless of the operation, complexity, and size needs to deal with accounting. With the increased evolution of modern-day business, business processes, and accounting go hand in hand, which means they can’t function without relying on each other. 

Recording the financial transactions through accounting helps to improve business performance through the preparation of financial statements. Internal and external stakeholders such as tax authorities, investors, banks, regulators, and other users utilise these financial statements.

Accounting principles state the standard rules and regulations required to record financial transactions and generate financial statements. Accounting principles are the basic guidelines useful to record and prepare financial statements. 

There are certain accounting principles you need to keep in mind while making financial statements. Let’s take a glance at these basic accounting principles:

Generally Accepted Accounting Principles, or GAAP, form a compilation of rules, procedures, and standards implemented and revised by the Financial Accounting Standards Board (FASB).

The key focus of GAAP is to ensure the consistency, completeness, and comparability of the company’s financial statements.  It enables investors to easily analyse and extract significant information from the financial statements, which incorporates the data trends of a specific duration. 

Journal entries are the pillar stones of accounting, which focuses on serving a comprehensive documentation of every business activity involved. It makes sure that no transaction goes unrecorded or unnoticed. By following the double-entry bookkeeping principles, journal entries maintain a balance between debits and credits, to make accurate financial statements.

The accounting equation is represented as follows: 

Capital is the residual interest in the business’s assets after eliminating all the liabilities. While considering a limited liability company, capital is termed as an ‘equity’. Capital represents how much the owners invest in the business with retained profits or losses.

Which means that the sum of debits equals the sum of credits. Debits and credits build a foundation for accounting. Debits and credits act as the driving force in the accounting industry. 

A thorough know-how of the complexities that pertain to debits and credits is inevitable to understand the golden rules of accounting.

Here’s how debits and credits impact the four types of accounts:

In financial accounting, each debit or credit transaction entry belongs to any of the three types of accounts as listed below:

A nominal account is a general ledger that includes business transactions such as profits, losses, incomes, and expenses. It encompasses all transactions that take place in a fiscal year. Additionally, it resets to zero and restarts the following fiscal year. The commission received, rent account, salary account, and interest account are all examples of a nominal account.

It is a general ledger that relates to associations, people, or businesses. Furthermore, it is categorised into three subcategories, namely:

Like the previous two, a real account is a general ledger, however, it includes transactions specific to the assets and liabilities of a firm. The assets in this case can be classified into two, namely: tangible and intangible assets. 

Tangible assets encompass land, machinery, buildings, furniture, etc. The intangible assets include patents, goodwill, copyrights, etc. A real account doesn’t close after a financial year is completed. Instead, it gets carried forward to the subsequent year. Additionally, real accounts are also visible in the company’s balance sheet. 

As you’re now familiar with the types of accounts, let’s dive into the golden rules of accounting:

A personal account, i.e., a general ledger account linked to the defined people or entities is subject to this rule of accounting. For a personal account, it gets debited whenever you receive something. On the contrary, your account gets credited when you give something. Let’s consider a case that can help you understand the concept in detail:

Think of a scenario where you have purchased $500 worth of items from a company named ‘XYZ’. Here, you need to include two entries to your books as per the first rule. Firstly, you need to give credit to your company since they provide the items for your firm. Secondly, you should debit your purchase account being the recipient.

The second golden rule of accounting deals with permanent accounts also called real accounts, which don’t close when the accounting period ends. Real accounting encompasses assets, liabilities, and equity, and accounts for contra-assets, contra-equity, and contra-liabilities. 

For real accounts, you need to debit the account whenever something enters your firm, as an asset. On the contrary, you should credit the account when you experience a decrease in assets— i.e., when something departs your business.

For example, say you paid $1000 cash for some furniture. You would make the following entries if you followed the second rule. Consider the rule that you should debit the furniture account for the incoming funds and credit the cash account to represent the outgoing funds.

A credit entry to the cash account denotes the decline in cash since it leaves your company for purchase. However, a debit entry to the furniture account signifies the increased value of the furniture.

The third rule of accounting covers the normal accounts, or the transient accounts which are mandatorily closed at the end of every accounting period. Revenue, gain and expenditure are all examples of nominal accounts. 

While considering nominal accounts, you need to debit the account whenever your firm experiences an expense or a loss. However, you should credit the account when your company earns a profit or generates money. Let’s take an example that explains how the third rule of accounting can be applied.

Let’s say you invested $2000 on items from a firm ABC. According to the third golden rule, the entries must be accustomed to appropriately recording the transaction. To record the rise in expenses incurred, you would debit the $2000 purchase (expense account) and to record the subsequent decrease in the income, you need to credit the income account.

Proper maintenance of records plays a pivotal role in determining the company’s success. With record maintenance, you can ensure that they are stored safely and systematically.

Golden accounting rules make sure that the financial results are properly recorded. This lets businesses compare the financial results year-over-year efficiently. 

When a company calculates its financial statements properly, it makes the business valuation well-defined. Furthermore, it makes getting more investments easier while expanding the business.

If your business has a sound budget based on the best accounting practices, it builds a strong pillar for growth. Additionally, it helps in gaining more projections.

Recording financial information is highly recommended for prompt reference during lawsuits. With golden accounting rules, this becomes handy and systematic, serving as solid proof for legal purposes.

Lack of proper accounting practices could lead to huge penalties. This also negatively impacts the brand value and image. Accounting a firm’s financial statements helps companies to prevent shortfalls in taxes. 

Accounting becomes most significant while considering compliance with regulatory authorities. Without a well-laid accounting discipline, it becomes hard for any firm to achieve regulatory compliance. 

Now that you have a clear understanding of the idea of golden rules of accounting, you can recognise the account to which each type of transaction belongs. So, this helps journal entries on financial transactions to stay specific, legitimate, and accurate.

If you wish to outsource your accounting services in Dubai and the UAE, Kreston Menon has the expertise to provide the best accounting and bookkeeping services in Dubai and all over the UAE. With years of experience in this field, the company has supported many clients across various sectors with reliable accounting services. 

The qualified accounting professionals and the use of advanced technologies have helped the team to offer the most in-demand accounting services in the UAE. Earmarked as one of the leading accounting firms in Dubai, Kreston Menon has a skilled team of accountants with ample expertise in handling the laws of the UAE and financial reporting standards to offer accounting and bookkeeping services in Dubai. 

By the 3 Golden Rules of Accounting, we define something similar to the letters of the English alphabet. If you’re unfamiliar with the letters, you can’t put the words together, and cannot use the language. Likewise, for accounting, when you are unfamiliar with the golden accounting rules, you can’t pass journal entries and can’t account for the transactions accurately. 

Golden rules of accounting offer systematic instructions to enable the recording of financial transactions to accountants. Accountants can analyze which accounts need to be credited and which need to be debited using the accounting rules, ensuring the completeness and accuracy of the business’s financial records. The best accounting services in Dubai offer the reliable assistance you expect to resolve all possible concerns specific to accounting effectively.