Accounting experts and business leaders taking part in the recent Gulf News seminar on the newly announced federal corporate tax system expressed confidence that the new regime will be beneficial for UAE businesses.
Taking part in the panel discussion on corporate tax and business readiness, Ashish Panjabi, Chief Operating Officer at Jacky’s Group of Companies, said he is quite optimistic about the outcome of the upcoming corporate tax implementation. Stressing that taxation is not bad, Panjabi exhorted businesses to look at how the UAE government has utilised VAT income for the country’s benefit. “Don’t get scared. Taxation is not a bad thing,” said Panjabi. “When used well, it actually works for the benefit of the country,” he added.
The one-day seminar, titled ‘Understanding UAE Corporate Tax & its impact’ was held on February 8 at the Anantara Downtown Dubai Hotel. Held in association with tax advisory and accounting firm AskPankaj, the seminar sought to help companies and finance and accounting professionals looking for clarity and guidance about the upcoming tax regime. The corporate tax system, which will come into effect from June 1, 2023, will represent a significant shift for businesses in the UAE that have enjoyed the benefits of no taxation on their profits.
“The new regime will require a change in mindset for accounting professionals,” said Pankaj S. Jain, Managing Director of AskPankaj.
“From the accounting and record-keeping perspective, corporate tax is all about starting from the net accounting profit. Historically, we have seen that accounting has not always been that disciplined because there was no statutory check like a taxation regime earlier. So that would require a call for a mindset change amongst all the professionals,” explained Jain.
Speaking at the seminar, Naresh Bhaya, Finance Director of Gulf News, cautioned finance and accounting professionals against procrastination taking comfort in the fact that there are nine months before returns must be filed. “Once you realise that you have enough time, what happens is that you get into a procrastination mode, and that’s when your problems start. So be careful about that. Start communicating, start understanding the law, and start preparing,” said Bhaya.
The experts also pointed to the importance of good accounting software in helping companies with tax compliance and record keeping. Ali Hyder, Group CEO, Focus Softnet, said it is important for businesses to plan and ensure that they have properly integrated systems and that their postings are accurate.
“As long as you have a good stable ERP system which is posting transactions from various modules properly, your basic accounting planning is proper, and everything is implemented in the system, then the auditors’ job would be very minimal,” said Hyder.
Engaging technical sessions for finance professionals
The seminar’s first session, Corporate Tax 101, explored the scope of the corporate taxation regime, free zone exemptions, tax grouping, registrations, and permanent establishments. In this session, Pankaj S. Jain drove home the importance of understanding the fundamentals of corporate tax to navigate the tax regime with ease.
The second session took an in-depth look into managing risk exposure, and shed light on how tax inefficiencies in a business model could create significant and irreversible business costs. It also discussed in detail the potential tax impact, anti-abuse rules, business restructuring, and the risk of inadvertently having to face penalties, litigation costs and bad press.
In the third session, Deepak Bansal, Senior Consultant at AskPankaj, elaborated on the subjects of accounting, transitional provision, withholding taxes and tax administration and their importance while getting ready for the tax regime. He said while the journey would possibly be inconvenient, companies and professionals can ensure that it does not become painful.
“The audience participation at the seminar was very encouraging and it is good to see that people are willing to understand and learn about corporate tax,” said Jain.
Attendees found the technical sessions interesting, comprehensive and thorough, while they also had the opportunity to network with members of the finance and accounting community.
“The seminar was insightful and informative, and provided all the pictures we should be prepared for. So I’m looking forward to such seminars in the future,” said Saif Qazi, Chief Accountant, Al Masaood Energy.
