According to the CEO of KPMG Lower Gulf, the UAE’s new corporate tax, which will be implemented from June 1, 2023, will bring more transparency to the market around financial disclosures. Emilio Pera revealed in an exclusive interview with Zawya that KPMG had observed considerable attention from organizations that function in both free zones and mainland jurisdictions, as well as multinational corporations that conduct business within and beyond the UAE.
According to the tax scheme, companies and other organizations that have taxable profits greater than AED 375,000 ($102,110) will be obligated to pay a fixed rate of 9%. The tax will commence in 2024, with the first evaluations scheduled for 2025. “If you consider the 9% proposed tax it is one of the lowest internationally, but it’s also providing transparency in the market, and positions the UAE as a leading financial centre in providing that confidence,” Pera said.
The various groups that are obligated to pay corporate tax are UAE-based companies; individuals, whether foreign or resident, who operate a business or engage in business activities within the UAE; and foreign legal entities that have a permanent establishment in the UAE or are managed and controlled in the UAE. Pera noted that there has been an increase in companies’ skill requirements, as the implementation of VAT in the UAE was mainly handled by the finance functions of businesses, whereas now, standalone tax functions are being established.
“From a professional services perspective, it’s an area that we see growth in our tax business, but also advisory business, in order to support clients from a structural perspective, and also on the audit side,” KPMG CEO said.
Companies need to start looking from a deferred tax perspective, what the implications could be, he added. In terms of readiness, KPMG is seeing awareness and interest from larger organisations, from companies that have been operating in a regional or international environment, who have already been exposed to tax jurisdictions, and around the nuance of mainland and offshore jurisdictions within the UAE.
“As far as readiness, I believe there is sufficient time, we have significant interest from companies. I can’t say that there aren’t some companies that might wake up a little bit later. That’s inevitable, that there will be some companies that will come forward nearer the time,” KPMG CEO added.
