If you’re a startup firm, you should be careful in dealing matters of tax. Tax planning is a crucial step which causes business to manage their financial operations by minimising tax liabilities. Therefore, it is essential to ensure tax precautions to avoid any legal issues, financial penalties, and reputational damage associated with tax-compliance.
4 Key Tax Precautions For Businesses In UAE
•. Clear Understanding of Tax System
With the introduction of new sorts of taxes such as VAT in UAE, you need to have a clear understanding of them. Whether it’s excise or corporate tax, you have to know when and how to pay them to avoid tax penalties.
- Purchase Tax-Assets
If you want to lower your tax-obligations, it is feasible to invest in tax-efficient properties. Purchasing tax-efficient assets can be such as zero-coupon bonds, corporate bonds, and tax-efficient mutual funds etc. Moreover, it helps to diversify the contribution towards tax efficient account types for reducing the tax burden.
- Claim All Expenses
Recognizing all those expenses incurred by the firm is significant for reducing the liabilities of the tax burden. Once you are able to reduce these costs, the company can avail the tax benefits. This will instantly provide an advantage to the company by preventing them from having to pay taxes.
- Investing Overseas
Another tax precaution which your business can take is to offshore the profits of the corporate entity. Furthermore, invest overseas where you can get tax benefits such as zero percent tax on corporate tax. A major reason to do this is to enjoy overseas profit which can’t be charged for corporate income tax in the UAE.
Wrapping it Up
Before you apply for tax filling, you should do proper tax planning. For this purpose, you need to undertake tax precautions to mitigate the risks of financial penalties and ensure compliance with the tax laws in the UAE. Hence, to minimize any potential issues your company should look out for ways to reduce any tax burdens.
