Do-it-yourself corporate tax. How difficult can it be?
Which business person reading this has not reviewed dozens of contracts, be it trading or employment related?
While the two legal documents I have named are different, there is a structural integrity to each. Once you have read a few, you know what should appear when and where.
While this article is not meant to be corporate tax for dummies, adding to the well-known series of “how to” books, understanding how the legislation is built can be useful when having conversations with specialists.
No one wants to be the person who, brandishing the latest release, declares to all – with certainty – a particular perspective regarding an element of tax treatment.
Think of each formal publication as a single piece of a jigsaw. That will never be sufficient to comprehend the bigger picture.
This article will ignore core law, which underpins everything, as this does not directly instruct our actions with regard to corporate tax. Think of it as the foundation to the house of law you are entering.
Let us even set aside the corporate tax decree law released in December 2022, instead considering it part of our base understanding.
There are three primary sources of detailed supplementary statutory information. Two elements from the central government, Cabinet and ministerial departments, and one from the decree created by the Federal Tax Authority.
The senior party in this triumvirate is the Cabinet. Based on a special provision of the law, the Cabinet’s Council of Ministers may allow a minister or other competent authority to issue certain regulations.
Remember that each of these has other responsibilities besides corporate tax. That means when a decision is released using each respective body’s nomenclature, it will not necessarily sit in numerical order with regard to the subject matter.
For example, Cabinet Decision 49 of 2023 addresses the categories of businesses or their activities for resident and non-resident persons that are subject to corporate tax.
The determination of tax residency is Ministerial Decision No 27 of 2023.
Meanwhile, FTA decision No 5 of 2023 relates to changing an organisation’s tax period for corporate tax purposes.
Take one number off each of these and you have an entirely different subject matter area.
An additional challenge is that the information is not available in one place.
Most importantly, these decisions are coming into the public domain as they are ready for release.
Each can contain one or more components that can add a new dimension, clarification and complementary information to something already in the public domain.
The next category, while formal, should only be seen in a relatively supporting light.
Firstly, the public roadshows, where there are opportunities to ask questions after the formal presentations.
Meanwhile, the release in May of a 107-page corporate tax explanatory guide, written in English, has the potential to be remarkably helpful for any non-technical person.
To come is case law. Again, the relevant information will be published in another location. This is how all the countries in the world operate.
If you truly want to stay abreast of such a technical subject, the requirement is that you understand that world and surround yourself with all the data as it becomes available.
Let us look at two examples of having to take numerous sources of information from the official Cabinet, Ministerial and FTA communications.
Topic one: Natural persons and sole establishments
I’ve touched on these in my third article. You, the reader, are a natural person. Your entity is a juridical person.
A sole establishment is created through a juridical process, yet because it has unlimited liability, it is still a natural person.
That is the advice of the corporate tax explanatory guide. You may not have thought that reading the decree law.
Topic two: Threshold levels
These numbers come from three separate releases but must be read together.
Corporate tax becomes payable on amounts of taxable profits over Dh375,000. The small business relief applies to entities with revenue/turnover less than Dh3 million. These numbers exist on opposite sides of your profit and loss.
Finally, corporate tax will only apply to resident or non-resident individuals where the total business or business activity-related revenue exceeds Dh1 million.
In three days, corporate tax goes live.
If you have done nothing about it until now, have another read of this article and acquaint yourself with how best to prepare a reading list. Or find support.
After all, too many facts can be useless if you do not know how to use them.
David Daly is a partner at the Gulf Tax Accounting Group in the UAE
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Uefa Nations League: How it works
The Uefa Nations League, introduced last year, has reached its final stage, to be played over five days in northern Portugal. The format of its closing tournament is compact, spread over two semi-finals, with the first, Portugal versus Switzerland in Porto on Wednesday evening, and the second, England against the Netherlands, in Guimaraes, on Thursday.
The winners of each semi will then meet at Porto’s Dragao stadium on Sunday, with the losing semi-finalists contesting a third-place play-off in Guimaraes earlier that day.
Qualifying for the final stage was via League A of the inaugural Nations League, in which the top 12 European countries according to Uefa's co-efficient seeding system were divided into four groups, the teams playing each other twice between September and November. Portugal, who finished above Italy and Poland, successfully bid to host the finals.
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
TRAP
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UAE players with central contracts
Rohan Mustafa, Ashfaq Ahmed, Chirag Suri, Rameez Shahzad, Shaiman Anwar, Adnan Mufti, Mohammed Usman, Ghulam Shabbir, Ahmed Raza, Qadeer Ahmed, Amir Hayat, Mohammed Naveed and Imran Haider.
Film: Raid
Dir: Rajkumar Gupta
Starring: Ajay Devgn, Ileana D'cruz and Saurabh Shukla
Verdict: Three stars
Abaya trends
The utilitarian robe held dear by Arab women is undergoing a change that reveals it as an elegant and graceful garment available in a range of colours and fabrics, while retaining its traditional appeal.
Five famous companies founded by teens
There are numerous success stories of teen businesses that were created in college dorm rooms and other modest circumstances. Below are some of the most recognisable names in the industry:
- Facebook: Mark Zuckerberg and his friends started Facebook when he was a 19-year-old Harvard undergraduate.
- Dell: When Michael Dell was an undergraduate student at Texas University in 1984, he started upgrading computers for profit. He starting working full-time on his business when he was 19. Eventually, his company became the Dell Computer Corporation and then Dell Inc.
- Subway: Fred DeLuca opened the first Subway restaurant when he was 17. In 1965, Mr DeLuca needed extra money for college, so he decided to open his own business. Peter Buck, a family friend, lent him $1,000 and together, they opened Pete’s Super Submarines. A few years later, the company was rebranded and called Subway.
- Mashable: In 2005, Pete Cashmore created Mashable in Scotland when he was a teenager. The site was then a technology blog. Over the next few decades, Mr Cashmore has turned Mashable into a global media company.
- Oculus VR: Palmer Luckey founded Oculus VR in June 2012, when he was 19. In August that year, Oculus launched its Kickstarter campaign and raised more than $1 million in three days. Facebook bought Oculus for $2 billion two years later.
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The bio
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Place of Birth: Dubai, UAE
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University: Emirates Airline National Cadet Programme and Hamdan University
Job Title: Pilot, First Officer
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Number of flights: Approximately 300
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Nicest destination: Milan, New Zealand, Seattle for shopping
Least nice destination: Kabul, but someone has to do it. It’s not scary but at least you can tick the box that you’ve been
Favourite place to visit: Dubai, there’s no place like home
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What are NFTs?
Are non-fungible tokens a currency, asset, or a licensing instrument? Arnab Das, global market strategist EMEA at Invesco, says they are mix of all of three.
You can buy, hold and use NFTs just like US dollars and Bitcoins. “They can appreciate in value and even produce cash flows.”
However, while money is fungible, NFTs are not. “One Bitcoin, dollar, euro or dirham is largely indistinguishable from the next. Nothing ties a dollar bill to a particular owner, for example. Nor does it tie you to to any goods, services or assets you bought with that currency. In contrast, NFTs confer specific ownership,” Mr Das says.
This makes NFTs closer to a piece of intellectual property such as a work of art or licence, as you can claim royalties or profit by exchanging it at a higher value later, Mr Das says. “They could provide a sustainable income stream.”
This income will depend on future demand and use, which makes NFTs difficult to value. “However, there is a credible use case for many forms of intellectual property, notably art, songs, videos,” Mr Das says.
The more serious side of specialty coffee
While the taste of beans and freshness of roast is paramount to the specialty coffee scene, so is sustainability and workers’ rights.
The bulk of genuine specialty coffee companies aim to improve on these elements in every stage of production via direct relationships with farmers. For instance, Mokha 1450 on Al Wasl Road strives to work predominantly with women-owned and -operated coffee organisations, including female farmers in the Sabree mountains of Yemen.
Because, as the boutique’s owner, Garfield Kerr, points out: “women represent over 90 per cent of the coffee value chain, but are woefully underrepresented in less than 10 per cent of ownership and management throughout the global coffee industry.”
One of the UAE’s largest suppliers of green (meaning not-yet-roasted) beans, Raw Coffee, is a founding member of the Partnership of Gender Equity, which aims to empower female coffee farmers and harvesters.
Also, globally, many companies have found the perfect way to recycle old coffee grounds: they create the perfect fertile soil in which to grow mushrooms.
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