Procedure for computing taxable profits in the UAE

taxable profits in the UAE

Starting a company in the United Arab Emirates is an easy process with the right guidance. However, to ensure the successful establishment of your business in the country, it is essential to meet the following conditions: Strict compliance with the laws and regulations of the UAE, an appropriate organization of the company’s resources, and good administration of corporate and individual tax. For this reason, in the following lines, we will talk about the taxable profits in the UAE.

In this article, you will learn about the aspects of taxable profits in the UAE, the process to calculate them, how to compute them and how we can help you with this process.

  1. What are taxable profits in the UAE?
  2. Aspects of taxable profits in the UAE
  3. Types of taxable profits
  4. How to calculate your individual taxable profits?
  5. The process to calculate your corporate tax
  6. The process to compute taxable profits in the United Arab Emirates?
  7. Taxable profits VS non-taxable profits
  8. The UAE taxation system
  9. How can we help you compute your taxable profits in the UAE?

1. What are taxable profits in the UAE?

Taxable profits are the part of your gross income that you use to calculate how much tax you owe in a given tax year. It can be described as adjusted gross income (AGI) minus standard deductions or allowable itemized. The taxable profits include bonuses, salaries, wages, and tips, as well as investment income and various types of unearned income.

2. Aspects of taxable profits in the UAE

Taxable profits consist of both unearned and earned income. The unearned profits that are considered taxable include government benefits (such as disability payments and unemployment benefits), canceled debts, lottery payments, and strike benefits. The taxable profits include the earnings generated from dividends, interest income, and appreciated assets that were sold during the year.

When it comes to deductions, the authorities offer individual tax filers the option to claim a list of itemized deductions or the standard deduction. Itemized deductions include interest paid on medical exceeding a specific threshold, mortgages, and a range of other expenses.

Generally, when businesses file their taxes, they do not report their revenue directly as taxable profits. Rather, they subtract their business expenses from their revenue to calculate their business profits. Then, they subtract deductions to calculate their taxable profits.

Important to realize: Marginal tax rates and tax brackets are based on taxable income, not gross income.

3. Types of taxable profits

Every person who pays taxes knows that the failure to file a report for one’s income tax can have serious consequences. So, to be sure about paying taxes, here we show you some types:

3.1 Employee compensation and benefits

This is the most common type of taxable income and includes wages and salaries, as well as fringe benefits.

3.2 Investment and business income

For self-employed individuals, they are also subject to tax liability, specifically through their business income. For example, partnership income and net rental income qualify as taxable income.

3.3 Miscellaneous taxable income

This type includes incomes that do not fit into the other types. Includes things such as death benefits, canceled debts, and life insurance. Alimony, items involved in barter trading, and income for one’s hobby are also miscellaneous taxable income

3.4 Assignment of income

This is the income that an agent recieve for you. If you agree by contract that an external party receives the income for you, you must include the amount in your income when the party receives it.

For example, if you and your employer come to the agreement that he has to pay a portion of your salary to your former spouse, you have to include the amount in your income when your former spouse gets it.

3.5 Constructively-received income

In this type, you are generally taxed on income that is available to you, regardless of whether you have it or not. A valid check that was available to you before the end of the tax year is an income you constructively receive in that year, even if you do not deposit it in your account or you do not cash the check until the next year.

For example, if the postal service tries to deliver a check to you on the last day of the tax year and you are not home to receive it, you must include the amount in your income for the tax year.

3.6 Prepaid income

Some prepaid incomes, such as compensation for future services, are included in your income in the year you receive them. However, if you use an accrual method of accounting you can defer the prepaid income before the end of the next tax year. In this situation, you must include the payment in your income as you earned it by performing the services.

4. How to calculate your individual taxable profits?

The steps to calculate your taxable profits in the UAE are the following:

4.1 Determine your filing status

To calculate your taxable profits for an individual tax return, the first thing you need to do is determine your filing status. If you do not have a spouse, you can file your taxes as a head of household (HOH) (if you have a qualifying person for whom you pay more than half of the support and housing cost) or you can fill it as a single filer.

In the case you have a spouse, you can file your taxes as married filing jointly. However, there are some instances when it makes sense to file as married filing separately.

4.2 Gather documents for all sources of income

Once you know your filing status, the next step will be to gather documents for all sources of income for yourself, your spouse (if applicable), and any dependents (if applicable). The result of all these sources of income goes by the name “gross income”

4.3 Calculate your adjusted gross income (AGI)

The next step is to calculate your AGI. Your AGI is the result of taking certain “extra attributions” to your gross income, such as loan interest, contributions to a qualifying individual retirement account, and certain education expenses.

We consider these items as “extra attributions” because they reduce your income before taking any allowable itemized deductions or standard deductions.

4.4 Calculate your deductions (itemized or standard)

After calculating your deductions, as mentioned above, you can either take the itemized deductions or the standard deduction. The standard deduction is an amount that tax filers can claim if they do not have enough itemized deductions to claim.

4.5 Calculate taxable income

The last step is to calculate your taxable income, you will need to take AGI, calculated above, and subtract all applicable deductions.

5. The process to calculate your corporate tax

The corporate tax is a form of direct tax levied on the net profit of corporations and other business entities. You can also find it as the “Business Profits Tax” or “Corporate Income Tax”. All companies whose taxable profit is greater than AED 375,000 fall under the purview of corporate tax and must pay a certain percentage of the net profit. In order to extend support to small businesses and start-ups, the corporate tax will be 0% if the net profit is up to AED 375,000.

This tax is 9% of the net profit in the company’s financial statements. For example, if the net profit is 200,000 AED, the corporate tax will be 18,000 AED (200.00×9/100).

6. The process to compute taxable profits in the United Arab Emirates

There are two approaches to calculating taxable profits, the direct method, and the indirect method. Under the direct method for calculating taxable profits, you can calculate taxable profits directly by deducting the tax allowable, the cost of goods sold, and other allowable deductions from the gross income of the corporations. In other words:

“Taxable profits = gross income – cost of goods sold – Tax allowable expenses and deductions + other taxable income”.

This is the most straightforward method of calculating taxable profits and would be even more effective if companies do not prepare their financials regularly. In the indirect method, you can calculate the taxable profit by making accounting profits as a base, adding back all disallowable expenses, deducting tax allowable expenses, adding other taxable income, and deducting non-taxable other income.

Generally, the tax authorities and companies prefer to use the indirect method to calculate taxable income. This is a reliable and very effective method to compute the corporate tax where businesses are preparing the financials regularly, and these financial statements are audited by external auditors. In addition to this, it is an easy way to calculate taxable profits as accounting profits are taken from the audited financials. And the count of any other numbers are available in the financial statements.

In both methods, the tax allowed incomes and expenses are based on the principles and rules defined in the corporate tax law and related regulations

7. Taxable profits VS non-taxable profits

Generally, the authorities consider almost any type of income taxable, but a small number of income streams are not taxable. For example, if you are a member of a religious organization who has taken a vow of poverty or work for an organization run by that order, and turns your earnings over to the other, then your income is not taxable.

Similarly, if you receive an employee achievement award, its value is not taxable as long as you meet certain requirements. If someone dies and you receive a life insurance payment, then that is a Non-taxable income as well.

Certain tax agencies define non-taxable and taxable income differently. For example, in the United States, lottery winnings are taxable. However, in Canada, lottery winnings and other unexpected one-time windfalls are non-taxable.

7.1 What is a non-taxable profit?

A non-taxable profit refers to the income received but it is not subject to taxation. However, even if these forms of compensation cannot be taxed, they still need to be reflected in the tax return.

Some examples of unearned profit are the following:

  • Interest
  • Capital gains
  • Inheritance
  • Meals and lodging
  • Child support payment
  • Gifts
  • Cash rebates from items bought
  • Welfare benefits

Other forms of unearned income can derive from loans that have been forgiven, winning from casinos or lotteries, and government benefits (like unemployment benefits or disability).

8. The UAE taxation system

The United Arab Emirates does not levy an individual income tax. However, it levies a corporate tax on foreign banks and oil companies. Excise tax is levied on items that are harmful to the environment or human health. Another type of tax is the Value Added Tax (VAT) and this is levied on a majority of services and goods.

9. How can we help you compute your taxable profits in the UAE?

Ensuring that a company lasts over time and can call itself successful is, without a doubt, a process that requires a lot of effort and time. However, our professionals can make this process easier for you. With more than twenty years of experience, Connect Zone is the ideal business setup agency to carry out any administrative or legal process you need. Our staff is highly trained to establish relationships with the corresponding government entities and to address any questions and inconveniences that may occur.

Some of the services you can enjoy with us are full support and guidance during the solicitation process for a freelance visa, a wide range of PRO services, and more.

In addition, if you are looking for a place where to set up your virtual office or a coworking space, we can offer you the best business centers in the UAE.

Do you want to start a new stage in your life by living and working in the United Arab Emirates? Our team is just a call away! You can call us at +971 43 316 688 or send us an email at Our specialists will assist you as soon as possible when you contact us.

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What really are deferred tax liabilities?

deferred tax liabilities

For a company to stay afloat, it takes more than investment and workforce. A prosperous business is based on a well-organized administration, the proper utilization of resources, and timely compliance with the country’s laws and regulations. One of the most important regulations to follow has to do with taxes and their administration. For this reason, in the following lines, we will talk about the deferred tax liabilities.

In this article, you will find information about the deferred tax, assets, and liabilities, how each of them works and how we can help you with the deferred tax liabilities of your company.

  1. The tax system in the UAE
  2. What is a deferred tax?
  3. What is a deferred tax asset?
  4. How do deferred tax assets work?
  5. What are deferred tax liabilities?
  6. How do deferred tax liabilities work?
  7. Is deferred tax liability a bad thing or a good thing?
  8. How can we help you with the deferred tax liabilities of your company?

1. The tax system in the UAE

The tax system in the United Arab Emirates, or rather the lack of taxes paid, is one of the main attractions of the region for many ex-pats. For instance, the employees do not pay income tax and there is no system for corporate and inheritance taxes, among others.

Some of the taxes that the UAE presents are the following:

1.1 Individual tax

Employees of the United Arab Emirates (who are GCC Nationals) are subject to a social security regime of 17.5%. Those who are UAE Nationals pay 5% (with an automatic deduction off their paycheck) and the employer pays the further 12.5%. The social security obligations also apply to employees of branches and companies registered in a free trade zone.

1.2 Corporate tax

The corporate taxes apply to oil companies and foreign banks in the UAE. However, if you establish your company in one of the 45 free zones in the country, you can be exempt from paying tax for a period that can be extended. There are no capital gain taxes unless the company is taxable under another income tax. Note that you can check out an extensive variety of information regarding corporate tax in our insights section.

1.3 Income tax

The United Arab Emirates does not levy a tax on income. In other words, an income tax return is not necessary since the individual tax is not applicable in the country. The same also applies to self-employed individuals and freelancers who live in the country.

1.4 Tourist facility tax

The resorts, hotels, and restaurants (among others) must charge the following taxes:

  • Service charge (10%)
  • City tax (6-10%)
  • Municipal fee (10%)
  • 10% on the room rate
  • Tourism fee (6%)

1.5 Property transfer tax

A transfer charge applies to all property transfers in the UAE. This varies according to the Emirate, for example, in Dubai, this tax is 4%. Although the seller and buyer share the burden of this, the buyer, generally, pays the transfer fee.

1.6 Value Added Tax (VAT)

The Value Added Tax rate of the UAE is 5%. However, this tax does not apply to certain products. For example:

  • International transportation
  • Investment-grade precious metals
  • Some education and healthcare services
  • Exports of goods and services outside the GCC
  • Newly constructed residential properties

In 2020, due to the COVID-19 pandemic, the government exempted some personal protective equipment, such as single-user gloves, chemical disinfectants, textile and medical masks, and antiseptics.

This is just a list of certain basic taxes. However, we will enter the world of managing a company and managing its taxes.

2. What is a deferred tax?

A deferred tax is an important part of a company’s balance sheet. Managing this factor helps reduce the taxable income. The deferred tax generally has a positive or negative effect on the balance sheet. This entry can be in the form of assets or liabilities.

In the event that the entrepreneur has paid advance taxes and has received a tax credit that can be used in the future, it will fall under assets. Alternatively, when a company is liable to pay additional taxes in the future, it will be considered a liability.

3. What is a deferred tax asset?

A deferred tax asset (DTA) is an entry in the balance sheet that shows a difference between the internal accounting of the company and the taxes owed. For example, if your company paid its taxes in full and then received a tax reduction for that period. You can use that unused deduction in future tax files as deferred tax assets.

3.1 What type of asset is a deferred tax asset?

This tax is an intangible asset because it is not a physical object like buildings or equipment. It only exists on the balance sheet.

3.2 Is the deferred tax asset a financial asset?

Yes, this tax is a financial asset because it shows a tax overpayment that can be redeemed in the future.

3.3 When does a deferred tax asset have to be used?

These tax assets have no expiration time, they can use it when and how best suits the business.

3.4 Where can you find the deferred tax assets on the balance sheet?

In the balance sheet, you can find this tax as “Non-current taxes”

3.5 Situations where deferred tax assets may arise

Some of the reasons why deferred tax assets may appear are the following:

  • The tax bases or rules for assets and liabilities are different
  • The tax of the revenue is ready before you recognized it
  • The taxing authority takes into account the expenses before they recognized it

Please know that while you can use the deferred tax assets for future tax files, you cannot use them to tax files in the past.

4. How do deferred tax assets work?

To better understand the concept of tax assets, we will present an example: Imagine that you use a rideshare service, but the car broke down and you had to walk home. In compensation, the company sent an AED 50 credit to your account in the app. If you had planned to spend AED 50 on ridesharing the next month, you can now budget that your spending will be 0, because the credit you have will cancel it out.

This is what the deferred tax assets represent. You haven’t used it yet, but you know it has value in the future and you can adjust your spending accordingly.

4.1 What causes deferred tax assets?

A deferred tax appears when there is a difference between the income on the tax return and the income in the accounting records of the company (income per book)

4.2 Example of deferred tax assets

  • Not operating loss: The company incurred a financial loss for that period.
  • Tax overpayment: You paid more of what you should in the previous period
  • Business expenses: When you recognize the expenses in one accounting method but not the other
  • Revenue: Instances where you collect the revenue during one accounting period but recognized in another.
  • Bad debt: Before an unpaid debt is written off as uncollectible, it is reported as revenue. When the unpaid receivable is finally recognized, the bad debt becomes a deferred tax asset.

5. What are deferred tax liabilities?

A deferred tax liability (DTL) is a tax payment that the company has marked on its balance sheet, but does not have to be paid until a future tax filing. A payroll tax holiday is a type of DTL that allows companies to put off paying their payroll taxes until a later date.

The tax holiday represents an advantage for the company today, however, in the long term it becomes a liability.

Some tax incentives may create a deferred tax liability journal entry, granting the business some temporary tax relief. However, you can collect this tax later.

In addition to this, depreciation expenses, like the annual devaluation of a fleet of company vehicles, can generate deferred tax liabilities.

5.1 Is the deferred tax liability a debt?

A DTL journal entry shows a tax payment that, due to timing differences in accounting processes, the payment can be postponed until a later date.

5.2 How can you find the deferred tax liabilities on the balance sheet?

You can find these taxes on the balance sheet as “non-current liabilities”

5.3 Reasons for deferred tax liability to arise

Some of the reasons why a deferred tax liability can arise are the following:

  • Companies, generally, try to push their profits to show maximum income to their shareholders.
  • Dual accounting of figures. For example, most companies keep multiple copies of financial statements for their personal use as well as those that are furnished to the tax authorities and the public. This is somewhat because the standard tax code and accounting rules differ heavily in key areas like expense, revenue, and depreciation of the asset.
  • Generally, companies try to push current profits also into the future to reduce the tax burden. This means more money for investment purposes rather than paying it off as tax to the government.

6. How do deferred tax liabilities work?

The deferred tax liability on a company balance sheet represents a future tax payment that the business is obligated to pay. This tax is calculated by multiplying the company’s anticipated tax rate by the difference between the taxable income and the earnings.

DTL is the amount of taxes that a company has not paid yet but it will in the future. This does not mean that the company has fulfilled all of its responsibilities. In fact, it recognizes a payment that is not yet due.

For example, a company that earned net income for the year knows that it will have to pay corporate income taxes. Because this tax applies to the current year, it must show the expenses for the same period. However, the company will not pay the tax until the next calendar year. In order to rectify the accrual/cash timing difference, the tax is saved as deferred tax liability.

6.1 What causes a deferred tax liability?

Any temporary difference between the amount of money owed in taxes and the amount of money to be paid in the current accounting cycle creates a deferred tax liability.

6.2 Deferred tax liability examples

  • Tax underpayment: The company did not pay the full amount of the tax in the previous cycle, and will have to make it up for it in the next cycle.
  • Installment sale: When you pay a product for installments, the company lists the full value of the sale on their balance sheet, but they only pay the taxes for each annual installment. The business recognizes that they have a DTL for future payments on that sale.
  • Depreciation of assets: Most businesses use an advanced asset depreciation model that results in the difference between the company’s balance sheet value and its value for tax purposes. This is the most common example of this tax.

7. Is deferred tax liability a bad thing or a good thing?

A DTL is either good or neutral, depending on the situation. This tax means that you owe money, but you do not have to pay it right away. The downside is that your business needs to have money set aside to pay this debt in the future.

8. How can we help you with the deferred tax liabilities of your company?

One of the most important aspects of a company is the administration of its finances and handling of taxes. Connect Zone is the best business setup agency to carry out all the administrative processes you need. Our professionals will accompany you at every step and will offer you valuable advice so that you make the best decisions.

With more than 20 years of experience, Connect Zone can offer you a series of top services for your company, such as the application for a freelance visa, and a virtual office so you can work in one of the greatest business centers.

In addition, we can provide you with Public Relations Officer services.

Would you like to know us better and the opportunities we offer? You can contact us at +971 43 316 688 or you can send us an email at One of our specialists will give you personalized attention.

If you are interested in learning about job chances in the Middle East, try Create an account and upload your resume to start sending applications. Finding the best opportunities has never been easier! You can also send your CV to for a chance to work with the best professionals.

Know about the VAT refund available in the UAE

VAT refund in the UAE

The United Arab Emirates is one of the countries that offer the greatest job opportunities for entrepreneurs. However, these opportunities bring with them a series of regulations that investors must comply to the letter. One of the many regulations has to do with taxes on companies, tourists, etc. In the following lines, we will talk about the VAT refund in the UAE.

In this article, you will find information about the Value Added Tax, the registration process, and the VAT rates. You will also get to know what is a VAT refund in the UAE and how we can help you with this process.

  1. What is VAT?
  2. How to register for VAT?
  3. What are the VAT rates?
  4. VAT implementation in the UAE
  5. VAT for businesses
  6. How is the VAT refund process in the UAE?
  7. Who is eligible for a UAE tourist VAT refund?
  8. How can we help you with the VAT refund in the UAE?

1. What is VAT?

The Value Added Tax or VAT is an indirect tax imposed on most supplies of services and goods that are bought and also sold. You can also find this tax as a “good and services tax”.

VAT is one of the most common taxes around the world. Around 150 countries have implemented VAT, including all the countries of the European Union, Australia, Canada, New Zealand, Malaysia, and also Singapore.

This tax appears in each step of the “supply chain”. Generally, final consumers bear the VAT cost while businesses account and collect for the tax. Acting, in a certain way, as a tax collector on behalf of the government.

A business pays the government all the taxes it collects from customers while it may also receive a refund on tax that it has paid to its suppliers. The tax receipt to the government indicates the “valued add” throughout the supply chain.

2. How to register for VAT?

The registration may be voluntary or mandatory, depending on the business revenue generated.

2.1 Mandatory registration

A company must register for VAT if the total value of its imports and sales within the UAE exceeds the mandatory registration threshold of AED 375,000 for the previous 12 months or within the upcoming 30 days.

2.2 Voluntary registration

A company can voluntarily register for VAT if the total value of its imports and sales within the UAE exceeds the voluntary registration threshold of AED 187,500 for the previous 12 months or within the upcoming 30 days.

Small scale businesses and startups can also register voluntarily if their expenses exceed the voluntary registration threshold, thereby making them eligible for a tax credit.

3. What are the VAT rates?

The VAT rate is 5% for most services and goods except for these exempted or 0% tax categories.

3.1 0% VAT

  • Goods and services exported outside the GCC
  • Certain education and healthcare supplies
  • International transportation
  • Newly constructed residential properties
  • Certain investment-grade precious metals (e.g silver and gold of 99% purity)

3.2 VAT exempt

  • Public transport
  • Life insurance
  • Residential properties
  • Certain financial services

4. VAT implementation in the UAE

The UAE Federal and Emirates government provide residents and citizens with many different public services. For example, roads, public schools, hospitals, waste control, parks, and police services. The citizens pay for these services using government budgets.

Value Added Tax provides the United Arab Emirates with a new source of income, thus contributing to the continued provision of high-quality public services in the future.

It also helps the government to reduce the dependence on income derived from oil and hydrocarbons.

4.1 VAT implementation in coordination with other GCC countries

The UAE is part of a group of countries that are connected through “the Economic Agreement between the GCC States” and “the GCC Customs Union”. This group of countries has historically worked together to design and implement new public policies that boost the economy of the nations.

5. VAT for businesses

All companies in the UAE need to record their financial transactions and ensure that these records are accurate and also up to date. Businesses that meet the minimum annual turnover requirement (as evidenced by their financial record) must register for VAT. Companies that do not believe it is necessary to register for VAT must maintain their financial record in any event. Just in case the government needs to establish whether they should be registered.

5.1 VAT-registered businesses generally

  • Keep a range of business records
  • Reclaim any VAT they’ve paid on business-related services or goods.
  • Charge VAT on services or taxable goods they supply.

If you register your company in the Value Added Tax, you must report the amount of VAT you have charged and also the amount of VAT you have paid to the government on a regular basis. This must be a formal submission and you must report it online.

If you charged more VAT than you paid, you will have to pay the difference to the government. If you paid more tax than you’ve charged, you are entitled to reclaim the difference.

5.2 VAT in real estate

The handling of VAT will depend on whether it is a residential or commercial property. Supplies (including leases or sales) of commercial properties are taxable at the standard VAT (i.e 5%)

On the other hand, the Value Added Tax does not apply to supplies of residential properties. This ensures that this tax does not constitute an irreparable cost to those who purchased property. In order to ensure that real estate developers can recover VAT on the construction of residential properties, the first supply of these properties within three years of completion at the time of VAT introduction is zero-rated.

5.3 Zero-rated sector

The following main categories of supplies will have a 0% VAT:

  • International transportation and related supplies
  • Exports of services and goods outside the GCC
  • Certain investment-grade precious metals (e.g silver, gold of 99% purity)
  • Supply of certain healthcare services, and also the supply of relevant goods and services.
  • Newly constructed residential properties.
  • Supply of certain education services, and also the supply of relevant goods and services.

5.4 VAT-exempt sectors

Some of the categories exempted from VAT are the following:

  • Bare land
  • Local passenger transport
  • Residential properties
  • The supply of some financial services

6. How is the VAT refund process in the UAE?

A company can receive a refund from the government on tax that it has paid to its suppliers. To get a tax refund you must follow these simple steps:

  • Log in to the respective governmental entity portal
  • Select a VAT refund request
  • Complete the requested form
  • You will receive an email from the respective governmental entity detailing the result of your application.

6.1 VAT refund in the UAE for business visitors

The foreign businesses that meet the following conditions are eligible to apply for a VAT return:

  • They are not taxable people in the UAE
  • The company has no place of establishment or fixed establishment in the UAE or any GCC-implementing state.
  • They are not carrying any business in the UAE

The time to claim each refund is twelve months, and the minimum amount of each tax claim submitted by business visitors under the Foreign Business Scheme is AED 2,000.

6.2 New residences

The new residence VAT refund scheme applies to all UAE nationals that meet the following criteria:

  • A natural person should be the one who makes the claim.
  • The claim should be related to a newly constructed building to be used solely as a residence of the person or the person’s family.

Under this scheme, people can claim a refund of the tax paid on the expenses of constructing the residence.

The VAT refund in the UAE applies to the following expenses:

  • Services provided by contractors, including services of engineers, architects, builders, and other similar services necessary for the successful construction of the residence.
  • Building material (goods of a type normally incorporated by builders in a residential building) This does not include electrical appliances or furniture.

You must deliver the refund form to the corresponding government entities within 6 months after the date of completion of the building. The date of completion is:

  • When the building is certified as completed by the municipality.
  • When the building becomes occupied.

6.3 Tourist

The visitors and tourists can claim a refund on VAT paid for purchases made during their stay in the country. The recovery of the payment will be made through a fully integrated electronic system that connects the retailers registered in the “Tax Refund for Tourists Scheme” with all ports of entry and exit from the UAE.

In order for a tourist to be able to claim a VAT refund in the UAE he must meet the following conditions:

  • The goods must be purchased from a retailer who is participating in the “Tax Refund for Tourists Scheme”
  • The tourist must have the explicit intention of leaving the UAE within 90 days from the date of supply.
  • The process of export and purchase of goods must be carried out according to the requirements and procedures determined by the Federal Tax Authority.
  • The individual has to export the purchased goods out of the UAE within 90 days from the date of supply.

6.4 Validation of the refund claim

All claims made by tourists must be validated at different validation points – special devices placed at departure ports. For example, border ports, seaports, and airports in the United Arab Emirates. Another example is if you are leaving Dubai as a tourist, you can perform the VAT refund process at the VAT counter at Dubai Airport.

A more detailed process is the following:

  • Go to the designed validation point before checking in your luggage.
  • Approach the immigration counter and present the original receipt with the Tax-free tag on it, a copy of your credit card, your passport, and obviously, the product purchased.
  • After the successful validation, you can choose to refund via cash or card.
  • Lastly, you will receive your refund.

Tourists can receive up to 85% of the total VAT amount. The remaining 15% is charged as administration fees. Also, please note that cash refunds are capped at AED 7,000 per day, following the new regulations imposed by the Federal Tax Authority.

This aims to reduce the shopper’s reliance on cash during financial transactions and help them to take advantage of the country’s technological advancement.

There is no limit on the maximum recoverable amount if the transactions are made through a credit card.

7. Who is eligible for a UAE tourist VAT refund?

Not all tourists can claim a VAT refund in the UAE. Due to certain regulations, only the following people are eligible for a VAT refund:

  • Travelers aged 18 or over who are not residents of the United Arab Emirates
  • GCC Nationals can claim VAT refunds
  • Not a crew member on flights leaving the country.

Noe that additional regulations may apply to GCC Nationals residing in foreign countries for studying

8. How can we help you with the VAT refund in the UAE?

A quality tax, accounting service, and a VAT refund in the UAE are essential for the development of any company. Our team of professionals is ready to offer an end-to-end service of guidance and support to run your business efficiently and smoothly.

Some of the services that Connect Zone can offer your company are the following, a wide range of PRO services to keep your company organized and up to date.

You will have our full support during your application process for a freelance visa, and also we will find an office for your business in one of the best business centers.

If you are ready to start the journey of getting a VAT refund in the UAE with us, our team is waiting for your call. Contact us and discover all the ways in which we help you; +971 43 316 688 or email us at

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Accounting plays a critical role in business planning and decision making


When deciding to form a company in the United Arab Emirates, there are several aspects that you need to take care of, for example, clearing of documents and accounting. Every successful company requires certain processes to maintain order and legality, these processes can be bookkeeping, auditing, and tax preparation, among others.

In this article you will find information about the role of accounting in business planning, why your company needs to hire this kind of service, what benefits and advantages you can acquire by performing accounting services, and how we can help you with this type of service for your company.

  1. What is accounting in Dubai?
  2. Principal areas of accounting
  3. What is the role of accounting in business planning?
  4. Golden rules of accounting
  5. Benefits of an accounting service
  6. What are the advantages of hiring an accounting service during the business planning service?
  7. Why does your company need an accounting service?
  8. How can we help you with the accounting services of your company?

1. What is accounting in Dubai?

The process is based on the documentation, authentication, recognition, and construction of the information necessary for the order of the company and its operation according to the laws of the United Arab Emirates.

In Dubai, a good accounting service, like the offered at Connect Zone, will be in charge of disclosing the profits and losses in a specific period, will carry out internal audits, will analyze the monetary information of the management, will keep the financial records of the company, and will be in charge of analyzing the value of the company’s assets.

This type of service is of the utmost importance for the financial stability of any company.

2. Principal areas of accounting

This process is generally perceived as a recording of business transactions. However, this type of service takes care of many more aspects of your company. Some of these are the following:

2.1 Forensic

This aspect is responsible for handling investigations for fraud, court and litigation cases, claims, and dispute resolution, among others.

2.2 Financial

This aspect includes the classification of business transactions and the presentation and preparation of internal and external customer financial statements.

2.3 Auditing

Internal auditing refers to the analysis of situations related to business practices and their risks. While external auditing refers to the analysis of financial records, according to a third party.

2.4 Fiduciary

This aspect is responsible for the management of certain accounts by people of power with the supervision of the company for the benefit of another person. Some examples are the following, receivership, trust accounting, state accounting, etc.

2.5 Cost

This function is responsible for analyzing and presenting manufacturing costs.Accountants determine the definite and standards cost to help the entrepreneurs to choose a favorable course of action, concerning the operations of the business.

2.6 Tax

This aspect, as its name implies, is in charge of tax planning, preparation of the tax return, and performs tax advisory services such as the following:

  • Ways to reduce taxes legally
  • Advice regarding the consequences of the decisions made
  • And other tax-related issues.

2.7 Management

This function takes as a priority the requirements of the manager. It includes financial analysis, examination of business decisions, forecasting and budgeting, and other similar areas.

2.8 Information system

This aspect is responsible for the expansion, execution, and supervision of procedures and systems.

3. What is the role of accounting in business planning?

This type of service is one of the most important features of any company and is required every day to maintain the organization. In addition to participating in the course of the day, these services are also present in the location and long-term planning of company resources.

A small error in the process can cause great delays and inconveniences in the processes of your company.

Also, it is important to note that although accounting services are responsible for the financial status of a business, they are also necessary when thinking about a business plan and making profitable decisions for the company in the long term.

4. Golden rules of accounting

There are 3 golden rules that work as basic principles to apply to any company. The golden rules of accounting are the following:

4.1 Debit the receiver, credit the giver

This rule applies to personal accounts. When a person grants something to a company, it becomes an inflow and must be credited in the account book. In turn, the receiver needs to be debited.

4.2 Debit what comes in, credit what goes out

This principle is used in the case of real accounts, this type of account includes land and building, machinery, etc. Real accounts have a debit balance by default. Hence when you debit what comes in, you are actually adding money to the existing account balance.

Similarly, when you credit what goes out, you are reducing the account balance when a tangible asset goes out of the company.

4.3 Debit all expenses and losses, credit all incomes and gains

This rule applies in the case of nominal accounts. The capital of the company is a liability, therefore, it has a default credit balance.

When you add all your income and profits, your capital increases. If on the contrary, you decide to debit losses and expenses, your capital will decrease. This is exactly what you need to do to keep the system balanced.

5. Benefits of an accounting service

Maintaining the order and legality of your company using these rules can bring you multiple benefits. Some of these benefits are the following:

5.1 Preparation of financial statements

If the golden rules of accounting are followed to the letter, as a result, all financial transactions will be properly recorded. Tax declarations such as the trading account, profit and loss account, and the balance sheet will be done quickly and efficiently if the process is well done.

5.2 Maintenance of business records

Keeping business records is essential for the success of your company. Performing the required processes will allow you to preserve your business transactions in the correct order and in a safe place.

5.3 Corporate decision making

A process based on the three golden rules will make your financial results reliable and the decision-making process in your company more logical and efficient.

5.4 Comparison of financial results

By following the three golden rules, it will become easier and faster for your company to compare the financial results of one year with those of another year. The analysis of this data year after year is of paramount importance.

5.5 Evidence in legal matters

Using the accounting organization system will allow you to keep the documents organized for quick future reference.

5.6 Budgeting and future projections

A good budget combined with good accounting practice is the perfect foundation for any business, especially if you plan to expand it. Future projections are safer and more reliable with a good organization in place.

5.7 Helps in taxation matters

Bad tax reporting can bring serious sanctions from the UAE government, damaging the image and reputation of your company.

With the proper use of accounting, entrepreneurs can trust that their taxes will always be in accordance with the law of the United Arab Emirates.

5.8 Valuation of business

The proper practice of this process helps improve your company’s brand and reputation. In this way, you can receive new and larger investments, and expand your business.

6. What are the advantages of hiring an accounting service during the business planning service?

This kind of service help companies grow. Some of the advantages that you can acquire during the process of forming your company are the following:

6.1 Provide statistical data about your business

The different functions of this process offer extremely important financial information that allows entrepreneurs to make decisions in a pertinent manner, taking into account the future of the company. It also helps external investors to have a clearer idea of ​​the nature of your business, which increases confidence and therefore investments.

Thus achieving the growth and profits of your company.

6.2 Proper allocation and utilization of resources

This function helps entrepreneurs to know which resources are being used wisely and efficiently, and which are not. In this way, entrepreneurs can make decisions with the optimization of resources in mind.

By doing this, wastage can be minimized and as a result, the company will become more profitable, as costs will be reduced.

6.3 Ensure the following of the compliance requirements

Complying with the laws and regulations of the United Arab Emirates is a priority for every company there. If the compliance requirements are not followed to the letter, the company could have problems with the government of the United Arab Emirates, and could even end up sanctioned.

This is when these services become important since they are in charge of ensuring the correct follow-up of laws and regulations and of protecting companies from certain sanctions.

6.4 Auditing process

The collection of financial information during accounting is of the utmost importance in certain processes, for example, filling for taxes, auditing, among others. If this function is not performed correctly, then none of the aforementioned processes can be carried out at all.

6.5 Preparation of budget

One of the most important things when setting up a company is budget preparation since business decisions in the future will depend on this. Using this function will ensure the prudent use of company resources. This will allow entrepreneurs prepare for any eventuality in the future.

6.6 Future plan for the company

Due to all the advantages already mentioned, accounting functions are especially important for the decision-making and planning of your company.

The collection of financial information will be of great help when planning the future movements of your company. Also, it maintains transparent relationships with investors, which means a solid foundation to gain their trust and expand your business.

7. Why does your company need an accounting service?

7.1 Find the best business structure

This process is not only about money, as many people may think. With the correct use of its functions, you will be able to find the business structure that best suits your needs. For example, partnerships, corporations, Limited Liability Companies, among others.

7.2 Advice on software using

All companies in the United Arab Emirates will need accounting software at some point. Without the help of a professional accountant, you may end up using fake software, which could spell trouble for your company.

7.3 Tracking expenses

During the transactions of your business, you must spend and generate income, if you do not keep a proper record of your transactions, confusion may occur. For this reason, all your expenses and income must be carefully monitored.

8. How can we help you with the accounting services of your company?

Every day new entrepreneurs decide to start their path as owners of a company in the United Arab Emirates, however, many do not know how to carry out certain necessary administrative processes if they want to succeed in the UAE.

As people say, the difficult thing is not to reach the top but to stay, and that is why at Connect Zone we want to be your preferred agency to carry out all the necessary administrative processes and that you and your company continue to offer a quality service.

We are expert accountants, we will take care of keeping track of your taxes, we will help you with the auditing of your business and we will even help you with the bookkeeping. You can contact us to learn more about us.

Would you like to learn more about us and the accounting services we offer? You can write to the following email where one of our representatives will assist you.

Lastly, if you are interested in working with us, you can send us your CV through or you can contact the following email