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Ravishanker , Ravishanker V, Director - Taxation, Kreston Menon
Background
According to the UAE Federal Decree-Law No. 47 of 2022 on taxation of corporations and businesses (UAE CT Law), businesses will become subject to Corporate Tax UAE (CT) from the beginning of their first financial year which starts on or after 1 June 2023. Executive Regulations of the Decree Law containing interpretations and implementation guidelines of the Articles are forthcoming from the Ministry in the form of various Cabinet Decisions.
A few key areas have been reproduced below.
Registration of Taxable Persons
Who is liable to register for UAE CT Law?
All Taxable Persons (Persons subject to CT), including Free Zone Persons and Taxable Persons eligible for Small Business Relief are liable to register for UAE CT Law. It has been clarified by way of various Decisions that the following Persons need not register under UAE CT Law:
• A Government Entity
• A Government Controlled Entity
• A Person engaged in Extractive Business
• A Person engaged in Non-Extractive Natural Resources Business
• A Non-Resident Person that derives only State Sourced Income and has no Permanent Establishment in the UAE
• A Natural Person deriving income less than AED 1 million from Business or Business Activities
When can one register for UAE CT?
The Federal Tax Authority (FTA) is adopting a staggered approach with respect to registration. In early January, the FTA launched an early bird registration drive for CT through the EmaraTax platform. Subsequently, The FTA vide a press release on 14 May 2023 has announced the launch of registration for CT for Public Joint Stock Companies and Private Companies from 15 May 2023.
It should be noted that the Frequently Asked Questions (FAQs) published on the website have clarified that taxpayers are required to register before the prescribed due date of the first CT return without any penalties.
Tax Period
What is my first Tax Period?
For the purposes of the UAE CT Law, the Tax Period is the Financial Year of a Person which shall be the calendar year or the 12-month period for which the Taxable Person prepares financial statements.
The Decree Law applies to all financial years commencing on or after 1 June 2023. For most businesses, the financial year commences either on 1 January or 1 April. Accordingly, a bulk of the first tax years would either be
1 January 2024 to 31 December 2024, or 1 April 2024 to 31 March 2025, respectively. Further, the due date of filing returns is within 9 months from the end of the tax period i.e., 30 September 2025 and 31 December 2025, respectively.
Can a Taxable Person change their Tax Period?
It has been clarified by a recent decision that the Taxable Persons are eligible to change their Tax Periods for extending the same to up to 18 months or shortening the same to 6 to 12 months subject to meeting specified conditions.
Qualifying Free Zone Persons (QFZPs)
What are the conditions under which a Free Zone Person qualifies to be a Qualifying Free Zone Person (QFZP)?
A Free Zone Person who meets the pre-conditions for availing of the incentive mentioned under the law is termed QFZPs.
The pre-conditions to be regarded as a QFZP include:
• maintaining adequate substance in the UAE.
• complying with the transfer pricing requirements
• electing not to be taxed under the normal UAE CT regime i.e., at 9%.
The QFZPs would incur 0% UAE CT on ‘Qualifying Income’ and 9% on ‘Non-Qualifying Income’.
What is Qualifying Income?
While the term ‘Qualifying Income’ is expected to be clarified in specific regulations, the overview of the Decree published in the UAE Government Portal indicates that all income earned by the Free Zone Person which is in compliance with the restrictions on business by the Free Zone Authority particularly on transactions with the Mainland could constitute ‘Qualifying Income’.
Are there special considerations that are likely to apply to QFZPs?
It may also be noted that since the QFZPs are eligible for a tax incentive, the FTA is likely to monitor the returns and documents of such taxpayers closely. Accordingly, despite payment of Nil tax, there would be a need to maintain adequate documentation. Further, it has also been clarified that all QFZPs, irrespective of turnover, must maintain audited financial statements.
Small Business Reliefs
Are there special measures that have been introduced for small businesses including startups?
Resident small businesses having an annual revenue of less than AED 3 million in the relevant tax period or any preceding tax periods can avail themselves of Small Business Relief (SBR). Under this relief, such Taxable Person can elect to be treated as not having any Taxable Income. It may be noted that this relief is available for financial years commencing from 1 June 2023 and continues for subsequent tax periods ending up to 31 December 2026. Further, it may be noted that such relief is not available for a QFZP or a component of a Multinational Enterprises Group i.e a group with a consolidated revenue of more than AED 3.15 billion.
Are there any disadvantages of claiming such relief?
The Taxable Person claiming SBR would not be eligible to carry forward unclaimed interest costs or taxable losses in such tax periods where SBR is availed. Accordingly, it is pertinent to evaluate the claiming of this relief holistically and not in isolation.
Are there reliefs provided for small businesses with respect to Transfer Pricing (TP)?
By way of a recent Ministerial Decision, the requirement for maintaining a Master file and a Local file has been restricted to the following category of Persons:
• Component of a Multinational Enterprises Group that has a total consolidated revenue of AED 3.15 billion or more in the relevant tax period; or
• A Taxable Person whose revenue in the relevant Tax Period is AED 200 million or more.
This provides significant relief to small businesses with regard to the maintenance of extensive TP documentation. However, it may be noted that the requirement for application of the Arm’s Length Principle would continue to be applicable to international as well as local controlled transactions for all Taxable Persons.
Are there reliefs provided to small businesses pertaining to Accounting Standards and methods of accounting?
In a recent decision, relaxations have been granted to small businesses with regard to the Accounting Standards and method of accounting wherein a taxable person whose revenue does not exceed AED 3 million is allowed to maintain accounts on a cash basis and a taxable person whose revenue does not exceed AED 50 million may apply IFRS for SMEs.
Tax Grouping
What is a Tax Group?
A UAE CT Tax Group, in short, can be constituted by two or more resident juridical persons (other than a QFZP or an Exempt Person) having a parent-subsidiary relationship with at least 95% shareholding and control among other criteria. The conditions for UAE CT Tax Grouping are very different from tax grouping provisions available under UAE VAT Law wherein entities under common ownership, even if the shareholders are natural persons, are eligible to be grouped.
Is a Tax Group the same as a Qualifying Group?
The CT Law introduced two distinct grouping structures – ‘Qualifying Group’ and ‘Tax Group’. A fine reading of the relevant provisions identifies the following differences:
• While a ‘Qualifying Group’ is a de-facto status i.e., requires no application or election, a ‘Tax Group’ can be formed only through an application to the FTA.
• A qualifying group may also be constituted even if the common shareholder is an individual. The Tax Group can only be constituted of Juridical Persons.
• The constituents of the qualifying group will continue to be different taxpayers and file separate returns which will be assessed separately. In the case of a tax group, the ‘Parent company’ files one return on behalf of the group i.e., the group is assessed as a single entity basis consolidated financial statements.
• The basic exemption of AED 375,000 will apply to the tax group as an entity and not to each of its components.
Key Business Considerations
What are the key areas of the UAE CT Law that businesses will have to consider in their day-to-day operations and for making long-term strategic decisions?
CT, unlike VAT, would have a direct effect on the profits of the businesses and requires due consideration. Further, being a new introduction, the Decree Law also would introduce new concepts which would mandate businesses to recalibrate their traditional business practices.
The businesses should take due cognizance of the following major aspects introduced by the Decree and closely monitor the developments in these areas:
• Conformity to OECD Transfer Pricing (TP) guidelines for transactions with related parties and connected parties, including capturing the same in the opening balance.
• Maintenance of records supporting the information provided in the returns.
• Evaluation of any arrangement or agreement in the light of the General Anti-Abuse Rules (GAAR) prescribed by the Decree.
• The provisions relating to Place of Effective Management, Permanent Establishment or State Sourced Income may result in a business falling within the purview of this Decree, even if registered outside the UAE.
• Careful evaluation of various elections or applications prescribed under various provisions.
Are further decisions awaited from the Ministry and/or the Authority?
While a large trench of clarifications has been received over the last few weeks, the impending Cabinet Decision and regulations can add new requirements and provisions leading to multiple new interpretations and discussions.
A few key clarifications that are expected from the Ministry include:
• Specific requirements and format of documentation for transfer pricing.
• Definitions and procedures associated with QFZPs.
• Penal provisions and quantum of such penalty.
• Formats for annual returns, applications, and other statements.
Conclusion
UAE has always been known for its ease of doing business and business friendly ecosystem. The introduction of CT is a radical change, albeit essential. Apart from the effect of the additional expenditure in the Income Statement, the businesses are also concerned about the burden of compliance that they would be expected to bear.
The inclusion of provisions facilitating seeking clarifications from the FTA indicates the commitment of the Ministry and the Authority in undertaking this radical change in partnership with all the stakeholders, including all the taxpayers. This is a source of massive reassurance to the taxpayers
HE Lebona , H.E. Andrew Tsepo Lebona, Head of Mission & Consul General of South Africa to Dubai and Northern Emirates
ASSALAMU ALAIKUM
My African heritage obliges me to first extend my respect to His Highness Sheikh Mohammed Bin Rashid Al-Maktoum, UAE Vice President, Prime Minister, Ruler of Dubai and his fellow Members of The Supreme Council, Rulers of The Northern Emirates.
I am honoured to be the Consul-General of the Republic of South Africa to Dubai and The Northern Emirates. This is my first diplomatic posting and I suppose seasoned colleagues in the government and diplomatic communities would consider me a ‘newbie’. Thank you all for your warm welcome and kindness.
It has been a whirlwind four months since my arrival and I am enjoying finding my feet and experiencing the vibrancy of Dubai and this interesting and extraordinary part of the world. My first impressions are a kaleidkresoscope of sound and light, diverse nationalities and cultures, amazing architecture, and an abundance of commercial opportunities. It is my great pleasure to kick-off 2023 as Kreston Menon’s first guest article contributor. My aim is to outline South Africa’s economic relations with the UAE, what we can learn from Dubai and my vision for the next four years.
Trade and Investment Partnerships
Economic Diplomacy is a cornerstone of South Africa’s foreign policy as it aims to address the triple challenges of Poverty, Unemployment and Inequality, all a legacy of our apartheid and colonial past. South Africa’s national interests and foreign policy objectives are cushioned in promoting peace, security and economic development on the African continent. South Africa and the UAE have maintained a strong bilateral relationship with a strong economic focus since formal diplomatic ties were first established in 1994.
Trade and Investment are integral parts of our Economic Diplomacy. South Africa occupies a strategic position as Africa’s most industrialised country with its advanced financial systems, modern infrastructure, world class educational institutions and a vibrant Stock Exchange. It provides a valuable springboard for UAE enterprises to invest in the country, the region and the continent within the ambit of the newly-established African Continental Free Trade Area (AfCFTA) flagship project. AfCTA can enhance UAE companies to invest and trade with Africa’s vast sectors in mining, telecommunication, agriculture and financial services with Dubai at the helm.
The UAE is South Africa’s main trading partner within the Gulf Cooperation Council (GCC) countries since both countries agreed in 2016 to work towards considering South Africa as a strategic partner on the African continent and a preferred investment destination.
Further cementing of this relationship was made during President Cyril Ramaphosa’s visits to the UAE, first during his State Visit in 2018 during which numerous Memoranda of Understanding (MOUs) were signed; second was his Working Visit last year during Expo 2020. Great emphasis was placed on bolstering bi-lateral relations particularly in the areas of Tourism, Trade and Investment, High Tech, Renewable Energy, Agriculture and Infrastructure Development.
May I congratulate the Government and people of the Emirate of Dubai for hosting an exceptionally successful Expo 2020. The Official Motto “Connecting Minds, Creating the Future via Sustainability, Mobility and Opportunity” cemented Dubai’s vision of being the global centre of Innovation, Digitalisation, Robotics and Artificial Intelligence. South Africa’s participation provided a significant opportunity to further solidify our economic relationship with the UAE and further develop South Africa’s trade and investment partnerships.
From our Mission in Dubai, one of my responsibilities is to provide leadership to bring substance to our economic relationship on the ground in the areas of Trade Investments and Tourism. This includes renewed engagement with the Northern Emirates, namely Sharjah, Ajman, Umm Al Quwain, Fujairah and Ras Al Khaimah and expanding our ties with them. Although the limelight generally shines on Dubai and Abu Dhabi Emirates, they also present extensive business opportunities for South African enterprises.
According to the South African Business Council (SABCO), there are over 2,400 SA affiliated or registered companies with the Dubai Chambers of Commerce. South Africa has invested ZAR 10 billion in the UAE creating more than 2000 jobs in the petroleum, healthcare and financial services. In turn, the UAE has invested ZAR 1 billion in South Africa creating in excess of 1,500 jobs in the petroleum and new energy sectors.
South Africa will assume the 15th BRICS presidency this year and host the BRICS Summit in the second half of the year. BRICS countries (Brazil, Russia, India, China and South Africa) account for 17% of global trade and 33% of global GDP. South Africa joined this important bloc in December 2010, in line with the country’s foreign policy to strengthen South-South relations. South Africa is also keen to expand membership to include other progressive countries. UAE would be a prime candidate.
Post-Covid19 Economic Reconstruction and Recovery
Our Mission will continue to play a key role in South Africa-UAE relations as part of the South African Government’s implementation of the Economic Reconstruction and Recovery Plan to provide capable and effective public infrastructure development, secure and affordable energy supply and a significant employment stimulus to recover job losses in the aftermath of Covid-19 by creating jobs and supporting livelihoods.
Tourism: Dubai Airport tops the global list for international passenger figures, 25 million in 2022 and the highest aircraft movements exceeding 400,000. As a result of bilateral agreements with Emirates and Etihad to give them access to South Africa’s domestic routes while they promote South Africa abroad, South Africa is well-placed to tap into this hub with Emirates offering direct daily flights to Johannesburg (flagship Airbus A380) and Cape Town and Durban (Boeing 777). Dubai and the Gulf region is an untapped market with huge potential for the high-end income category, corporates and the general population. This partnership is expected to boost visitor arrivals and promote tourism and inbound traffic to South Africa from key markets across the Emirates network.
Agriculture: Dubai, the UAE and the Gulf states are lucrative export markets for South Africa’s agricultural and agro-processing produce. Food security in the UAE is a strategic national priority and that is a great opportunity for South African produce as the country imports 95% of demand.
The Blue Economy: South Africa is the only country on the continent to have two coastal water masses – the Atlantic Ocean on the West and the Indian Ocean on the East. With the importance of Biodiversity and Climate Change and the UAE’s remarkable knowledge base and Future Science pedigree, South Africa can enhance its Maritime Science.
Public service: The embodiment of South Africa’s public service motto “Batho Pele” (The People First), can forge ties with the UAE’s Department of Happiness and Tolerance in promoting a just and functioning society.
Healthcare: With its ailing healthcare system and tremendous challenges especially post-Covid19 pandemic, South Africa can benefit immensely from the example of Dubai’s many state-of-the-art institutions.
Global participation: Dubai will host two strategic global conferences this year – the World Police Summit in March and COP 28 in November. Through our Mission, South Africa’s participation will enhance the country’s activities in combating crime and corruption, and continuing to address the challenges of climate change.
Cultural Diplomacy
Cultural Diplomacy or ‘Soft Power’ brings warmth to bilateral relations. “La Cultura e come l’aria, non ha confine” (Culture is like air, it has no borders). There are 114,000 South African expatriates in the UAE, the majority of them resident in Dubai and operating in the healthcare, hospitality, petroleum and financial sectors. Properly supported, this group can be Goodwill Ambassadors spreading positive stories of our Rainbow nation.
Hosting our very own sensational swimmer Tatjana Schoenmaker, Olympic Gold and World Record Holder would allow her to inspire young Emiratis to excel in swimming.
South African authors have frequently participated in the Emirates Literary Awards with much success. Improving contacts with UAE institutions especially those in Future Science such as Artificial Intelligence, Robotics, Digitalisation, Innovation and Space exploration is top on my list.
In conclusion, it is my fervent desire to see South Africa-UAE relations elevated to a High Level Strategic Partnership focusing on New Energy, Innovation and Future Technology as Dubai remains an unrivalled leader in this domain. Dubai has an immense global stature and a track record that includes its vibrant people and lifestyle. Iconic landmarks that ensure Dubai remains a premium destination are Burj Khalifa, Dubai Fountain, Burj Al Arab, Dubai Mall, The Palm Jumeirah, Museum of the Future, Emirates Airline, Expo City, DWTC, DMCC to name a few. His Highness Sheikh Mohammed Bin Rashid Al-Maktoum has set ambitious goals to make it the most important global business centre. Our Mission in Dubai will continue to play its part in fostering and enhancing South Africa-UAE relations in myriad spheres.
As we move forward in strengthening bi-lateral relations, we are guided by Doctrines of The Founding Fathers of our two nations – elder statesmen His Highness Sheikh Zayed Bin Sultan Al Nahyan and His Excellency President Nelson Mandela.
“Nkosi sikelel’ iAfrika” (God Bless Africa)
Kreston Menon
As the bilateral trade relations between the UAE and Israel are steadily growing, more Israeli companies are looking for major investments in the UAE. According to Prof. Ehud Menipaz, Chairman of International Advisory Committee, Israel Directors Union (IDU) the focus sectors would be Fintech and Digital Security, Food and Agriculture as well as in Energy. He was talking at the “UAE-Israel Business Meet 2021 – A Hybrid Event” hosted by Kreston Menon and Israeli Directors Union (IDU).
Ibrahim Ali, Director of the Investment Promotion Division of Dubai FDI presented the ‘Dubai Advantage’ and invited the Israeli investors to partner with Dubai to shape the future. He interacted with the visiting Israeli delegation of 26 investors in person and with over 200 delegates who attended this hybrid event online.
Jamal Bin Marghoob, Senior Director – Sales, Dubai Airport Free Zone (DAFZA), Faisal Jassim, Senior Manager – Sales, Jebel Ali Free Zone (JAFZA) and Rashid Al Mulla, Vice President – Marketing, Dubai Commercity presented the sector wise advantages that the Free Zones can offer to Israeli businesses. They reiterated rather than being a passive facility provider they are committed to be active partners to the growth and expansion plans of Israeli investors by being a gateway to the world markets.
Dr. Gritt Gur-Gershgoren, Chair of the Chairman Club IDU reiterated that the progress made in the first year of signing the Abraham Accords Peace Agreement, is bound to grow beyond expectations.
According to Shmulik Ben Tovim, President of the Fintech Community of Israel, major partnerships are in the pipeline in the Fintech sector, as Dubai is considered as the region’s hub for financial services and Israel as the tech capital of the world.
Speakers from diverse industry sectors including Banking, Taxation, Real Estate, Legal and Healthcare talked about the investment opportunities in the UAE. Pushpakaran Parambath gave an overview of 100% Foreign Ownership in the UAE while Surandar Jesrani, Managing Partner and CEO of MMJS Consulting made a presentation on the VAT Scenario in the UAE.
Other speakers included Ali Imran, Head of Transaction Banking & Digital Services, Comemrcial Bank of Dubai, Benjamin David Martin, Chief Commercial Officer of VPS Healthcare, Michael Ghaderi, CEO of Aaronz & Co Real Estate, Mohammad Maria, Managing Partner of Just Wills and Gilles Gamon, CEO of BioMeat FoodTech Ltd from Israel.
Doron Rozenblum, Managing Partner of Kreston IL expressed his confidence that more bilateral business partnerships will emerge and Israeli companies with global plans will be looking at UAE as a launching pad.
Raju Menon, Chairman and Managing Partner of Kreston Menon and Sudhir Kumar, Senior Partner and Head of Corporate Communications assured that Kreston Menon, who has supported and guided more than 8000 investors to setup operations in the UAE, will partner with IDU and Kreston IL to promote FDI in both the UAE and Israel.
HE Dinesh Kumar Patnaik , Ambassador of India to the Kingdom of Spain
I am delighted that Kreston Global is having their Annual conference in Spain. While the UAE-Spain trade and business corridor is quite active, I would like to talk here a bit about the India-Spain economic & commercial relationship.
India and Spain share a very close relationship, both being strong democracies and without any bilateral, geopolitical irritants. Relations between India and Spain go back to the 20th century and Christopher Colombus, who discovered America, was actually sent by the Spanish Queen to look for a route to India. In 1937, Rabindranath Tagore wrote a Pamphlet titled “Conscience of Humanity”, which appealed to Indians to help in the fight for democracy during the Spanish civil war. In modern times, we established democratic relations in 1956 and today we have a vibrant political and economic relationship, which also encompasses considerable interaction in the field of Education, Science & Technology, Culture and other fields.
Economic & Trade relations have been extremely vibrant and Spain is India´s 6th largest trading partner in the EU. Bilateral trade, which registered a drop of 19 per cent during the pandemic, has rebounded and crossed 2019 figure of US$ 6.5 billion. India has a surplus of about
US$ 3 billion in its trade balance with Spain, but this is offset to a large extent by the large number of Spanish companies present in India who are doing very good business.
There are about 250 Spanish companies in India, with multi-sector presence across infrastructure & construction, auxiliary products and industrial engineering, renewable energy and environmentally sustainable products, EICT (electronic information and communication technologies), automotive components and automotive accessories. Spain has also invested more than US$ 3.56 billion as cumulative FDI in India. Recently, the Ferrovial Group of Spain invested US$ 425 million in the infrastructure sector through Prime Minister’s Gati Shakti Master Plan.
In addition, India has recently signed a major contract with Airbus Spain for procurement of 56 C-295 military transport aircrafts. This is one of the biggest ´Make in India´ contracts signed as 40 of the 56 aircrafts would be completely made in India with almost 13,000 plus parts of the aircrafts to be manufactured and assembled in India. This will see a relocation of the entire supply chain for Aerospace industries, especially for the C-295 aircrafts to India.
As I had mentioned before, India has a surplus in its bilateral trade with Spain with the main items of export being organic chemicals, textiles and garments, steel, fuels & mineral oils, aluminium and other articles, leather and leather goods, marine products, vehicles, auto components, pharmaceutical, pigments, inorganic chemicals, etc.
India has also made considerable investment in Spain of almost US$ 1 billion. There are more than 50 Indian companies in Spain mainly in Software & IT services, automotive parts & automobile industries, pharmaceuticals, chemicals and logistics.
The future looks bright for India-Spain collaboration and there are many sectors in which there is considerable scope for cooperation among entrepreneurs of Spain in India, with a maximum potential being in the start-up business. Spanish entrepreneurship ecosystem increased between 2015 to 2021 from €10 billion to €46 billion. This provides considerable opportunity for start-ups in India to upscale in Spain and Spanish speaking countries as well as for Spanish start-ups to do the same in India. The future is bright for India-Spain relations and companies and organizations active in this corridor, especially in UAE should take advantage of this opportunity.
gulfnews , Gulf News
Raju Menon, founder, chairman, and managing partner of Kreston Menon talks to Pranitha Menon about dreaming big, his management principles, and his autobiography The View from My Perch
Rajagopalan Menon, better known as Raju Menon, was 29 years old when he boarded his first-ever flight– from Mumbai to Dubai in 1991. Armed with a degree in Chartered Accountancy and a year’s work experience, he arrived on a visit visa with hope and courage to seek a life and livelihood in the UAE. ‘I was unsure of what the future held even though I had very clear visions of what it should be. There was no apprehension, just excitement,’ says Raju, who hails from a tiny hamlet called Edavilangu in the southern Indian state of Kerala.
Over three decades in the UAE, he would go on to found and helm the Kreston Menon Group, a leading audit and business consulting firm with operations in UAE, India, Qatar, and Oman; gather a long list honours; be named one of top 100 Indian Leaders in the Arab world, and pen an autobiography that is eliciting rave reviews.
Released late last year at the Sharjah International Book Fair, The View From My Perch chronicles his story of consistency and perseverance. Neatly demarcating his life into different phases, each represents a struggle and a step towards his destination and dream.
What led him to pen this story?
‘I never thought of writing a book and I felt I was too young to be writing an autobiography,’ says Raju, with a smile. However, the seed of a book was first sown by Sudhir Kumar, his senior partner Kreston Menon. A book, Sudhir was sure, could inspire students and young entrepreneurs.
‘Whether that happens or not, the thought convinced me to give it a try,’ recalls Raju.
The pandemic acted as a catalyst. Keen to use the free time that he had productively, he decided to pen his memoir. ‘To compile my experiences, thoughts, and vision into this compendium of life, I remember spending hours and days in the office meeting room, aptly named Maydan, which became my haven for ferreting into the past to dig out nuggets buried in the deep recesses of my mind.’
Once he got going, he wanted to ensure that the book would be perfect in all senses of the term. To that end, he made a few trips to Kerala to relive and experience once again firsthand some elements that had shaped his personality, and meet a few key people who in some way had had a bearing on his life.
Insightful vignettes of all of these feature in his book giving it a deeply personal feel.
‘Like everything else I do, I just gave it my very best,’ says the man who started out life in the UAE as an audit manager in a modest firm in Dubai.
What motivated him to set up Kreston Menon, a company that has bagged the Super Brand status for nine consecutive years? I ask.
‘To excel and never to be content with the ordinary,’ says Raju, with a smile. It is a mantra that pushes him to make his choices. It is a lesson, he says, he learned the hard way.
Need to think big
Forced to pursue higher studies in a privately-owned educational institution after performing poorly in his Grade 10 board examination, Raju watched with envy his friends heading off to vibrant, exciting environs of reputed colleges.
Realizing that his lack of focus at a crucial juncture of his studies had cost him the opportunity to continue education in a well-known college, he resolved ‘never to settle for the mundane again.
‘Even today, I hold that character trait dear. Think big, do big, execute big. You can break beyond the limits by thinking big. Once you think big and set your goals high, it will widen the horizon of your life, and bring you greater opportunities and greater success,’ he asserts.
Pursuing academics with a vengeance of sorts, he cleared his Chartered Accountancy exams in the first attempt, an achievement that made his parents proud.
Encouraged, he decided to set up an entrepreneurial venture in Kozhikode, Kerala. However, it did not take off as planned.
Not one to give up, he decided to look beyond the boundaries of his state to realize his dream of making it big in life. Heading off to Mumbai, he landed a job in a multinational company and earned valuable experience.
However, Raju’s dreams were big.
‘People get comfortable in their little successes and trapped in them for eternity, unable to realize their full potential. To succeed and achieve the maximum, one has to take risks and venture out into the challenging world… outside their safe haven,’ says Raju. Practicing what he preaches, he decided to move out of his safe job and took a flight to Dubai.
Raju was aware that it is a new place where he would have to put in long and hard hours to make a mark in his field. But he was willing to do that and more.
‘Upskill yourself and stay competitive. A successful entrepreneur needs to be a constant learner,’ he advises before adding, ‘Hard work is the cardinal principle for me.’
Is it not – work smart, not hard? I ask.
Hard work is the base. It is that first step that you must take before you work smart.
It was Raju’s mother, Susheela Menon, a midwife, who had a strong influence in shaping him into who he is today. ‘She was hard-working, willing to help people at any hour of the day or night, and was empathetic.’
The first job he got was in a company named Mak&Partners, in Dubai. For close to a decade here, he worked 14 hours every day. ‘I was never a clock watcher but used the flexibility given to me by my boss, Khalid Bhai, as an opportunity to gain knowledge and experience.’
In 1995, he set up the Kreston Menon Group. From a small team of three people, the firm today has grown into an enterprise employing more than 400 Chartered Accountants, internal auditors, and accountancy professionals. Raju’s wife, Girija Menon, is a senior partner at Kreston Menon and a certified internal auditor.
Even today, he believes in working hard… and smart. ‘Now, I head an organization that is structured and runs like a well-oiled machine. All I must do is manage it well.’
Delegation, he believes, is the key to effective management. ‘I have learned that micromanagement of people and business is self-defeating. When given the freedom, people bloom,’ he points out.
Trusting, empowering, incentivizing, and giving employees the freedom to creatively develop the business in their own style could work wonders, he says.
As an entrepreneur, he stands by the management principle of the People First approach and values work-life balance for all employees. ‘If you do not empower your leaders (partners, directors, managers) and give the freedom to operate, you won’t be successful,’ he says. ‘I am supported by a great team that shares the same objectives and strives for a common goal.’
Raju believes that there are no shortcuts to success. ‘My success will definitely be counted on how effectively I am creating a unique experience for each of my clients by providing them with the right and timely business advice.’
He goes on to explain that in an ever-evolving business environment, his success also lies in how effectively he leads his team to stay relevant, updated, and ahead of the competition.
The going– and growing– however, was not easy.
A legal issue in 2011 threatened his firm’s survival but Raju fought the case and won it.
The pandemic too affected them, but that was a great teacher, says Raju. ‘The lesson that it left in its wake that had to be put into practice was to be prepared for unpredictability and rework on short-term and long-term planning and strategies.’
The first break
Over the years, Raju says that he has witnessed and experienced that getting that first break is the most difficult task. He has noticed that once a person gets the right break, they move up very fast, provided they are willing to work hard.
‘Wiser by having undergone such ordeals, I believe in giving the first break to people who are known to me or have been referred even if they may not be up to par in their qualifications but have the fire in them to do well and succeed.’
One initiative that he is extremely proud of is partnering with the Expo 2020 team, as early as 2013, to support their bid to organize the world-renowned, unique, and historic event, the Expo, in Dubai.
A firm believer of women empowerment, the father of three mentions that 45 percent of the total workforce at Kreston Menon are women.
‘Life has been very kind and generous to me. Now, in turn, I try to spread happiness in people around me,’ he says.
To give focus to their philanthropic efforts, Raju and Girija have started the CA Girija & CA Raju Menon Foundation in Kozhikode, Kerala, providing support for education, marriage, and healthcare for individuals who approach them for help.
To empower women, they conduct training courses to enhance their communication and public speaking skills, which will give them the confidence to contribute to society.
‘Both of us wholeheartedly believe that all human beings are equal and equally capable of achieving and contributing to the community, society, and humanity,’ says Raju.
Source: “Think big, do big, execute big”, AuthorSpeak Section, Friday Magazine, Gulf News, 31 March 2023 and online article here.
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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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, 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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