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The new tax laws are expected to result in a boost in demand for accounting services.
“The accounting industry has been growing stronger over the years since 2017 with the introduction of various regulatory requirements”, said Saju Augustine, Senior Partner at Kreston Menon. “The Excise Tax was introduced in 2017, followed by Value Added Tax (VAT) in 2018, the Economic Substance Regulations (ESR) (2019), Country by County Reporting (CbCr) for large multinational corporates (2019), Beneficial Owner regulations (UBO) (2020), Anti Money laundering regulations (AML) (2021) and recently the Corporate Tax law. The introduction of the above regulations, which are new to the region, made the business houses focus attention on proper accounting and reporting, which led to a demand for accounting professionals.”
Abdulla Al Hashmi , Chief Operating Officer, Parks and Zones, DP World UAE
Erwin Winata , Group Managing Partner - Kreston Indonesia
Kreston Menon
- Use of advanced technology;
- Adding value to the UAE economy;
- Contributing to Research and Development; and
- Meeting the requirements of the licensed activities.
- Duty exemption to import raw materials and machines
- Privilege to use “Made in UAE” mark on final product
- Duty exemption to export products to GCC countries
- Duty exemption to export products to member countries of Great Arab Free Trade Agreement
- How do you demonstrate high added value?
- How will the contribution to research and development be measured?
- What is the magnitude of Emiratization requirements?
- What are the criteria to assess if the technology can be considered “modern”?
Pushpan , Pushpakaran Parambath, Senior Partner - Kreston Menon Corporate Services
- A Private Joint Stock Company is a company where the number of shareholders is at least 2, but not exceeding 200.
- The capital of the company shall be divided into shares of the same nominal value, to be paid in full.
- The nominal value of the share shall not exceed AED 100 and shall not be less than AED 1.00
- It is not permitted to offer the shares for public subscription.
- A shareholder shall be liable only to the extent of his share in the capital of the company.
- The issued capital of the company shall not be less than AED 5,000,000 (AED five million) and shall be paid in full either in cash or in kind.
- The founders shall choose from amongst them a committee consisting of at least 2 members to complete the incorporation procedures and to register the Company with the relevant authorities.
- The Founders Committee shall be fully liable for the accuracy, validity and completion of all the documents, studies and reports provided to the relevant authorities in connection with the incorporation, licensing and registration process of the company.
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gulfnews
, Gulf News
Demand runs high for auditors, with more corporate tax focused firms set for launch
If anyone asks about the job category with the fastest and highest hiring rates in the UAE, don’t look beyond tax auditors and specialists. The hiring process continues even as the UAE Corporate Tax formally launched on June 1, with industry sources saying there are still more positions to be filled.
Where they are not getting filled internally, businesses are contracting those tasks to outside audit firms, which are expanding their own workforce to cope with the demand rush.
At the manager level, the salary structure for a tax auditor would vary between Dh18,000 to Dh24,000 a month depending on the firm.
Entry level salaries and incentives too have improved in the last 6-8 months, while candidates are lining up 10-25 per cent increases in their take-homes when they make the jump to a new employer.
Hiring in ‘surge’ mode
So, is hiring of tax auditors in ‘surge’ mode? Shibu Abraham, Director – Human Resources at the consultancy Kreston Menon, stops short of saying that a surge is on.
“There is demand for qualified and experienced tax consultants and auditors,” he said. “We have seen an increase of 10 percent in our staff strength this year, mostly at entry and mid-level.
“We have a structured career path for auditors, where most of them join as trainees or associates and who over time get promoted to senior auditors, supervisors and managers.”
Audit industry sources say that more specialist tax firms will launch in the coming weeks, and they too will get onto the hiring spree.
“Not every business can afford to have an in-house team of tax specialists, which is why outsourcing offers a big opportunity,” said an auditor.
“These new businesses are either launching on their own and hope to gradually build up a clientele, or opt for joint ventures to speed up the process.”
“Companies are increasingly outsourcing their tax functions to external tax consultants or firms,” said Abraham. “This approach is prevalent among many businesses, especially SMEs that might not have the resources or expertise to handle complex tax matters in-house.”
– Shibu Abraham, Director – Human Resources at Kreston Menon
More graduates enter the fray
It’s also a good time for new tax professionals to seek their chances in a trending job market. This week, Dubai’s DIFC Academy saw the passing out of the first 28 candidates who went through the UAE Corporate Tax Diploma Programme, run in tandem with PwC Middle East. Some of them had already passed the Final Certificate Examination provided by ATT-UK.
Focus on awareness
At the DIFC Academy, they went through a ‘condensed’ 30-day programme that equips them ‘to guide companies in complying with the new UAE corporate tax requirements’.
That’s exactly what the market wants.
“Finance professionals have gained the practical knowledge and skills to successfully ensure that all practices, systems, and processes of their respective companies comply with the new tax regime,” said Christian Kunz, Chief Strategy, Innovation and ventures Officer at DIFC Authority.
Everyone’s hiring
“The Big 4 and other top accounting firms are looking for qualified and experienced auditors and tax consultants who can combine tech know-how with their finance and taxation skills,” said Abraham.
“We had seen many individual tax consultants moving to the UAE to capitalize on the opportunities thrown open by the introduction of VAT a few years ago. We have also recently seen the emergence of tax boutique firms.
”Other industry sources say that the current buzz around hiring tax professionals far exceeds anything during the launch of the VAT regime in 2018.
“It will be no exaggeration to say that tax professionals are among the most active when it comes to registering for UAE’s Golden Visa program,” said a consultant. “The rush is unprecedented.”
Is every UAE business up to speed on tax?
Registering for the corporate tax UAE continues apace, but there is still time to start the process towards tax filings and making sure the books are in order.
“Companies are increasingly outsourcing their tax functions to external tax consultants or firms,” said Abraham. “This approach is prevalent among many businesses, especially SMEs that might not have the resources or expertise to handle complex tax matters in-house.”
This is why ‘to attract and retain the right talent, there is always a cost involved.”
It’s all showing up in the frenetic hiring in the UAE for auditors. Particularly those who specialise on tax matters.
Source: “More jobs, salary hikes: Is UAE’s demand boom for tax professionals only getting started? ’” by Manoj Nair, Business Editor, Business Section, Gulf News newspaper, 23 August 2023 and online article here.
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gulfnews
, Gulf News
Businesses, their owners, and auditors in the UAE are awaiting the next big update on the corporate tax – the one related to ‘qualifying income’ for free zone entities and on which they get the 0 per cent tax benefit. A decision on this is ‘imminent’, according to multiple audit industry sources.
Any income that these free zone-based businesses generate outside of that qualifying income will come under the 9 per cent corporate tax coverage. And there lies the crux, which is why these businesses are awaiting the guidelines on QI with such a heightened sense of anticipation.
The confirmation of the qualifying income benchmark will also be of significance to the many UAE free zones, given the clarity it brings in their dealings with existing entities licensed by them and prospective ones they are looking to sign up.
The UAE Corporate Tax comes into effect on June 1.
What could make up the qualifying income?
Raju Menon, Chairman and Group Managing Partner at Kreston Menon, says : “Income that conforms to business ‘restrictions’ of each free zone authority should be regarded as QI.
“Accordingly, export of goods from a free zone, the trade in goods within a free zone or between free zones – and without any ‘contamination’ in the UAE mainland – may be regarded as qualifying income for the ‘qualifying free zone person’.”
“So would any ‘passive income’ earned by free zone companies.”
These are the confirmations that all stakeholders are looking to from the Ministry of Finance. In recent weeks, debates have intensified over whether businesses should retain their free zone status or go for a full license from the mainland. Particularly among those businesses with a heavy chunk of their income derived direct from operations or services rendered on the mainland.
Deepak Bansal of Ask Pankaj Tax Advisors says, “The scope of qualifying income is an evolving issue. The crucial point is to understand the subtle difference between honoring the promised tax incentives (given to free zone licensed companies) and offering a new set of tax incentives.”
What makes up a ‘Qualifying Free Zone Person’?
The entity must maintain ‘adequate substance’ in the UAE, or in other words have a definable direct exposure in the local market.
Derive qualifying income as specified in a Cabinet Decision.
Comply with ‘transfer pricing’ rules and maintain relevant transfer pricing documentation.
Not have made an election to be subject to corporate tax in full.
‘Proportionate’ or ‘activity’ based incentives?
“The concept of proportionate taxation is prevalent in India for tax incentives to companies based in Special Economic Zones (SEZs) and certain other countries,” said Bansal. Singapore offers ‘activity-based’ tax incentives as compared to ‘entity-based’ incentives, requiring a proportionate determination of eligible/ineligible taxable income.”
The UAE model on qualifying income – and subsequent free zone incentives – would be based on best-of-breed regulations from other jurisdictions on how they treat income generated by such entities.
“Free zones were conceptualized as international trading/manufacturing hubs,” said Bansal. “The income from exports (goods and services), and trading within free zones, is likely to be treated as QI. “The fenced areas of free zones (connected to ports) are treated as outside UAE for VAT/custom purposes. Import of goods from such areas to the mainland may also be categorized as QI, i.e., at par with non-resident suppliers’ income from goods imported into mainland UAE.
“Certain passive incomes may also qualify as QI. Any other income may be taxed at 9 per cent resulting in proportionate taxation principles. The concept of ‘disqualifying income’, if introduced, could, however, have ramifications on business operations.”
Read more from our Taxation Services.
Source: “UAE’s free zone businesses await 0% ‘qualifying income’ ’” by Manoj Nair, Business Editor, Business Section, Gulf News newspaper, 9 May 2023 and online article here.
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