TAX PLANNING
IN DUBAI,
ABU DHABI &
THE UAE
Our Tax Planning service in Dubai, Abu Dhabi and the UAE is part of our tax consultancy services in Dubai, Abu Dhabi and the UAE.
There are several types of taxations imposed on businesses across the UAE, KSA and GCC countries; including Corporate Tax, Value-Added Tax (VAT), Custom Duty, Excise Tax, And Withholding Tax (WHT). All of these levies impose a tax burden and concern on business owners; accordingly, tax planning is a recommended practice for taxpayers since the early stages of their operations.
Tax planning is a key to successful business management and operations. Understanding the basics of tax planning and the available resources allow taxpayers to plan and compute their tax calculations in an efficient and less stressful way. Tax planning is the process of analysing a financial plan from a tax perspective and ensure tax efficiency, controlling capital deployment, managing and maximising income while reducing tax burdens.
WHAT ARE THE OBJECTIVES OF TAX PLANNING?
Tax planning should not be confused with tax evasion or tax avoidance, which is an illegal practice, however, tax planning is a method for businesses to take advantage of legal reliefs and structures to reduce the tax burden while paying the fair share of tax as per the law.
In general, the objectives of tax planning can be categorised into:
- Minimising tax liabilities on several aspects (corporate, sales, property, employment, etc…).
- Maximising the period before tax needs to be applied and paid.
The objectives of tax planning should also accommodate the current stage of the business. For an early stage of business, the objective can be seen as a key to maximise the cash flow and optimise spending through available resources to reduce the associated tax burden; while for mature businesses, the need for tax planning is to optimise the revenue flows of efficient operational spending and maximise the investors’ reimbursements, and in later years adopting of tax planning can be utilised as a method for succession planning in terms of maximising the capital released from sale of high value assets.
WHAT ARE THE TYPES OF TAX PLANNING?
Tax planning can be a reactive or a proactive approach; in which the reactive approach refers to managing tax burdens as they arise and manging and justifying the impact through the available resources; while the proactive approach and which is the recommended approach, sets a tax strategy and aligns it with the business needs and objectives, and formulates a tax future plan and an action framework to maximize the return on investment and the utility of business structure.
It can be classified as:
- Purposive tax planning where the taxpayers plan their taxation with a specific purpose in mind, selecting the appropriate investment to achieve optimal benefit including diversification of business and income assets.
- Permissive tax planning involves planning under the various provisions of the law.
- Short range tax planning involves planning at the end of the fiscal year to obtain immediate substantial tax savings as the financial year comes to an end.
- Long range tax planning takes place at the beginning of the fiscal year, where taxpayers follow the set plan throughout the year in an attempt to achieve tax benefits in the long run.
WHY IS TAX PLANNING IMPORTANT?
Tax planning is an ongoing practice and has an extended impact on the businesses; therefore, it is preferable that businesses plan their tax strategy early, and further review and amend it regularly as per the changing objectives of the business.
Failure to formulate and implement a tax planning strategy does not only put taxpayers at a risk of failure to file their tax returns and pay their tax liabilities on time thus enduring penalties, but also levies tax burdens that could have been legally reduced through tax planning such as investment and asset allocation, investment in tax-saving instruments, and making use of deductions such as added employee benefits to reduce the total taxable income.
At Creation Business Consultants, we are aware of the time requirement and sensitivity of changing tax strategies and applying useful tax schemes, and so you may work along with our dedicated team of tax advisors in reviewing your corporate structure and operations, and set an on-time and flexible tax planning for your business through:
- Analysing if your entity is entitled or required to register for taxation on a voluntary or mandatory basis.
- Reviewing your entity’s corporate structure and provide advice on a tax-efficient restructuring scheme.
- Investigating the legal strategies that could be implemented to achieve structured tax savings.
- Setting a tax planning framework and action plan to achieve the tax planning objectives.
- Adapting your entity’s tax planning to the needs of your business.
- Assisting in preparation and submission of tax applications with the required authorities.
- Timely follow up with the entity’s tax liability.
- Reviewing of all transactions.
WHAT ARE THE RISKS RELATED TO TAX PLANNING SERVICES IN THE UAE?
Through careful planning and professional advice, the minimal risks connected to Taxes in the UAE can be reduced. You can handle the Tax legislations and procedures easily with the assistance of professional consultants, ensuring adherence to legislations and reducing potential risks.
For an expert consultation, contact Creation Business Consultants via email [email protected] or call +971 4 878 6240 today.
TAX PLANNING FAQs
Businesses should review their tax planning strategy at least annually or whenever significant changes occur in their financial status, business structure, or tax laws. Regular reviews help adapt the strategy to new developments and optimize tax benefits. For assistance with regular reviews and updates, contact [email protected].
Factors to consider include the current financial status of the business, future growth projections, changes in tax laws, investment opportunities, and operational changes. A comprehensive tax planning strategy should align with both short-term and long-term business goals. For help in developing an effective tax planning strategy, email [email protected].
Yes, effective tax planning can improve cash flow management by optimizing tax deductions, credits, and timing of tax payments. Proper planning can reduce the overall tax burden, allowing for better cash flow control. For strategies to enhance cash flow through tax planning, reach out to [email protected].
Common mistakes include failing to stay updated on tax law changes, not planning for future tax liabilities, neglecting to claim eligible deductions or credits, and not consulting with tax professionals. Avoiding these errors is crucial for effective tax planning. For a review of your current tax planning practices, contact [email protected].
Tax incentives and credits can significantly reduce a business’s tax liability by providing financial benefits for specific activities, investments, or expenditures. Identifying and utilizing these incentives can lead to substantial savings. For guidance on maximizing tax incentives and credits, email [email protected].
Short-term tax planning focuses on immediate tax savings, typically at the end of the fiscal year, while long-term tax planning involves strategies designed to optimize tax benefits over an extended period. Both approaches are important for a comprehensive tax strategy. For advice on balancing short-term and long-term planning, contact [email protected].
Effective tax planning can support business growth and expansion by optimizing tax liabilities, freeing up resources for reinvestment, and improving financial stability. Strategic planning helps in making informed decisions about growth opportunities. For assistance with tax planning related to business growth, reach out to [email protected].
Tax planning is crucial in succession planning as it helps minimize tax liabilities associated with transferring ownership, selling assets, or passing on the business to heirs. A well-structured tax plan can ensure a smooth transition and maximize the value of the business. For help with tax-efficient succession planning, contact [email protected].
Yes, startups and small businesses often benefit from tax strategies that focus on maximizing deductions, managing initial capital investments, and taking advantage of available tax credits. Tailored tax planning can help these businesses manage their tax burden effectively. For personalized tax planning for startups and small businesses, email [email protected].
International tax laws can impact UAE-based businesses through regulations on cross-border transactions, foreign income, and international tax treaties. Understanding these laws is essential for effective tax planning and compliance. For advice on navigating international tax implications, contact [email protected].
