Tax Consulting Services

Juggling tax matters along with day-to-day business operations can be challenging. BCS is a team of expert tax consultants based in Dubai, with a dynamic workforce capable of handling a variety of tax specialities and incorporating them into your business strategy.

Our team of skilled professionals assesses both personal and business tax requirements to create a tailored financial strategic plan that aligns with your company’s needs. With a comprehensive understanding of the taxation system and advanced tools and methodologies, we provide our customers with top-quality services

Value Added Tax (VAT)

Value Added Tax or VAT is a tax on the consumption or use of goods and services. A VAT of 5 per cent is levied at the point of sale. Businesses collect and account for the tax on behalf of the government. Learn how to register for VAT (value added tax) and how to file VAT returns in the UAE.

Liability of VAT
The liability of VAT is the difference between the output tax payable (VAT charged on supplies of goods and services) for a given tax period and the input tax (VAT incurred on purchases) recoverable for the same tax period.

Where the output tax exceeds the input tax amount, the difference must be paid to FTA. Where the input tax exceeds the output tax, a taxable person will have the excess input tax recovered; he will be entitled to set this off against subsequent payment due to FTA.

How to file VAT return? (FAQ)
You must file for tax return electronically through the FTA portal: eservices.tax.gov.ae. Before filing the VAT return form on the portal, make sure you have met all tax returns requirements.

When are businesses required to file VAT return?
Taxable businesses must file VAT returns with FTA on a regular basis and usually within 28 days of the end of the ‘tax period’ as defined for each type of business. A ‘tax period’ is a specific period of time for which the payable tax shall be calculated and paid. The standard tax period is:

quarterly for businesses with an annual turnover below AED150 million

monthly for businesses with an annual turnover of AED150 million or more.

The FTA may, at its choice, assign a different tax period for certain type of businesses. Failure to file a tax return within the specified time frame will make the violator liable for fines as per the provisions of Cabinet Resolution No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE.

Implication of VAT on individuals

VAT, as a general consumption tax, will apply to the majority of transactions in goods and services. A limited number of exemptions may be granted.
As a result, the cost of living is likely to increase slightly, but this will vary depending on an individual’s lifestyle and spending behaviour. If an individual spends mainly on those things which are relieved from VAT, he is unlikely to see any significant increase.
The government will include rules that require businesses to be clear about how much VAT an individual is required to pay for each transaction. Based on this information, individuals can decide whether to buy something.

Implication of VAT on businesses
Businesses will be responsible for carefully documenting their business income, costs and associated VAT charges.
Registered businesses and traders will charge VAT to all of their customers at the prevailing rate and incur VAT on goods/services that they buy from suppliers. The difference between these sums is reclaimed or paid to the government
Implication of VAT on businesses
Businesses will be responsible for carefully documenting their business income, costs and associated VAT charges.

Registered businesses and traders will charge VAT to all of their customers at the prevailing rate and incur VAT on goods/services that they buy from suppliers. The difference between these sums is reclaimed or paid to the government.

https://u.ae/en/information-and-services/finance-and-investment/taxation/valueaddedtaxvat

Excise Tax
Introduced across the UAE on 1 October 2017, the Excise tax is an indirect tax that is levied on goods that are deemed to be harmful to human health or the environment. Any business which produces, imports, or stockpiles excise goods, or releases them from a designated zone in the UAE, should register for excise tax. Once your business has registered for excise tax, you are required to file your excise tax return by the 15th day following the end of each tax period.
From 1 December 2019, excise tax was also levied on :
100 % on electronic smoking devices and tools.
100% on liquids used in such devices and tools.
50% on sweetened drinks.

Corporate TAX
The United Arab Emirates (“UAE”) issued Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses, also known as the “Corporate Tax Law,” on December 9, 2022.
The Corporate Tax Law establishes the legal framework for the implementation of a Federal Corporate Tax (“Corporate Tax”) in the UAE, which will be applicable for financial years beginning on or after June 1, 2023.
The introduction of Corporate Tax is aimed at helping the UAE achieve its strategic goals and accelerate its development and transformation. By providing a competitive Corporate Tax system that conforms to international standards and taking advantage of the UAE’s extensive network of double tax treaties, the country is expected to remain a top destination for business and investment.

What is Corporate Tax? FAQ
Corporate Tax is a form of direct tax levied on the net income of corporations and other businesses.
Corporate Tax is sometimes also referred to as “Corporate Income Tax” or “Business Profits Tax” in other jurisdictions.

Who is exempt from Corporate Tax?FAQ

Certain types of businesses or organisations are exempt from Corporate Tax given their importance and contribution to the social fabric and economy of the UAE. These are known as Exempt Persons and include:

Automatically exempt	● Government Entities ● Government Controlled Entities that are specified in a Cabinet Decision
Exempt if notified to the Ministry of Finance (and subject to meeting certain conditions)	● Extractive Businesses ● Non-Extractive Natural Resource Businesses
Exempt if listed in a Cabinet Decision	● Qualifying Public Benefit Entities
Exempt if applied to and approved by the Federal Tax Authority *(and subject to meeting certain conditions)*	● Public or private pension and social security funds ● Qualifying Investment Funds ● Wholly-owned and controlled UAE subsidiaries of a Government Entity, a Government Controlled Entity, a Qualifying Investment Fund, or a public or private pension or social security fund

In addition to not being subject to Corporate Tax, Government Entities, Government Controlled Entities that are specified in a Cabinet Decision, Extractive Businesses and Non-Extractive Natural Resource Businesses may also be exempted from any registration, filing and other compliance obligations imposed by the Corporate Tax Law, unless they engage in an activity which is within the charge of Corporate Tax.

How is a Taxable Person subject to Corporate Tax?

In line with the tax regimes of most countries, the Corporate Tax Law taxes income on both a residence and source basis. The applicable basis of taxation depends on the classification of the Taxable Person.

A “Resident Person” is taxed on income derived from both domestic and foreign sources (i.e. a residence basis).

A “Non-Resident Person” will be taxed only on income derived from sources within the UAE (i.e. a source basis).

Residence for Corporate Tax purposes is not determined by where a person resides or is domiciled but instead by specific factors that are set out in the Corporate Tax Law. If a Person does not satisfy the conditions for being either a Resident or a Non-Resident person then they will not be a Taxable Person and will not therefore be subject to Corporate Tax.

What income is exempt?

The Corporate Tax Law also exempts certain types of income from Corporate Tax. This means that a Taxable Persons will not be subject to Corporate Tax on such income and cannot claim a deduction for any related expenditure. Taxable Persons who earn exempt income will remain subject to Corporate Tax on their Taxable Income.

The main purpose of certain income being exempt from Corporate Tax is to prevent double taxation on certain types of income. Specifically, dividends and capital gains earned from domestic and foreign shareholdings will generally be exempt from Corporate Tax. Furthermore, a Resident Person can elect, subject to certain conditions, to not take into account income from a foreign Permanent Establishment for UAE Corporate Tax purposes.

How to prepare for Corporate Tax?

Read the Corporate Tax Law and the supporting information available on the websites of the Ministry of Finance and the Federal Tax Authority.

Use the available information to determine whether your business will be subject to Corporate Tax and if so, from what date.

Understand the requirements for your business under the Corporate Tax Law, including, for example:

Whether and by when your business needs to register for Corporate Tax;

What is the accounting / Tax Period for your business;

By when your business would need to file a Corporate Tax return;

What elections or applications your business may or should make for Corporate Tax purposes;

What financial information and records your business will need to keep for Corporate Tax purposes;

Regularly check the websites of the Ministry of Finance and the Federal Tax Authority for further information and guidance on the Corporate Tax regime.

Transfer Pricing

The term “transfer pricing” refers to the pricing arrangements between companies that are part of a multinational group. This includes the transfer of tangible goods, services, intellectual property, loans, and other financial transactions.

The trend of globalization has made cross-border transactions between companies within the same group more common. As a result, taxpayers are required to adhere to regulations in the jurisdictions in which they operate, which can be time-consuming and complex. Tax authorities often share information, leading to increased scrutiny of cross-border transactions within multinational groups and associated business structures, particularly when there is a possibility of taxable benefits.

When could this be relevant to you

Do you require help in backing up your present transfer pricing policies and fulfilling documentation obligations for various transaction types?
You wish to implement new transfer pricing policies which could be driven by changes in your business and/or supply chain?
Do you need to justify your transfer pricing or receive guidance on resolving disputes and litigation cases?
Are you analyzing the effects of the reforms resulting from the Base Erosion and Profit Shifting project?

What we do

Support transfer pricing policies by preparing Master files, Local Files and Country by Country reporting templates, in accordance with regulatory requirements.
Develop tax efficient and globally defensible transfer pricing models, in line with commercial business activities and international transfer pricing practices.
Advise multinational groups on business restructuring and value chain transformation.
Assist businesses with the practical implementation of transfer pricing models and provide Tax Authority dispute resolution services as well as help manage TP litigation cases from prevention and management to resolution.

Economic Substance Regulations (ESR)

UAE Economic Substance
In April 2019, the UAE introduced economic substance regulations (the “Regulations”), which were revised by Cabinet Resolution No.57 of 2020 in August 2020. The Regulations mandate that UAE entities maintain sufficient “economic presence” within the UAE in relation to their activities.

The economic substance requirements in the UAE are applicable to all onshore and free zone companies in the UAE, as well as specific business structures that engage in one or more “Relevant Activities” for financial years beginning on or after January 1, 2019.

Entities that meet the requirements to be treated as “exempt” do not need to demonstrate economic presence in the UAE. However, such entities are required to file a Notification and provide sufficient evidence to support their exempt status

The implementation of economic substance requirements aligns the UAE with other jurisdictions that have recently implemented similar legislation (such as the Cayman Islands, Bermuda, etc.). It also reinforces the UAE’s commitment to addressing concerns regarding the relocation of profits from particular mobile business activities to “no or low tax” jurisdictions without corresponding local economic activities.

UAE entities must evaluate whether their activities are subject to the economic substance regulations and how to satisfy the economic substance requirements for each Relevant Activity. This involves a comprehensive assessment that includes a qualitative and quantitative evaluation of operational, financial, tax/transfer pricing, legal, and governance factors.

What are the Relevant Activities?

Banking activities
Headquarters activities
Shipping activities
Holding companies
Intellectual property (“IP”) holding or exploitation
Insurance activities
Fund management activities
Financing or leasing activities
Distribution of goods purchased from foreign connected persons
Provision of services to foreign connected persons

Tax Consulting Services