Dear Dubai business owner, as 2024 marks the commencement of corporate tax in UAE, SMES must prioritize meticulous financial record-keeping. Ignoring this aspect could lead to fines and potentially impact your business operations. Let’s clarity why maintaining robust financial records is now more critical than ever.
Why Need Maintain Good Bookkeeping?
- Tax Compliance: With corporate tax in effect, accurate financial records are essential for calculating taxes and avoiding fines.
- Basis for Shared Resources: In cases of shared resources, like multiple companies owned by the same individual, written agreements are crucial to prove the value and legitimacy of shared services.
- Free Zone Benefits: To enjoy the benefits of tax-free zones, evidence is required to demonstrate that your company is genuinely engaged in substantive business activities, not merely a nominal presence.
- Transparent Cost Sharing: When multiple companies share costs, it’s vital to maintain clear records of the reasons and methods behind cost allocation.
How to Maintain Good Financial Records?
- Seven-Year Storage: Keep all invoices and documents for a minimum of seven years and ensure easy retrieval.
- Separate Records: If you have multiple companies, maintain separate records for each entity.
- Related Party Documents: Pay special attention to preserving documents related to other relevant parties.
- Consistent Reporting: Ensure consistency in the content of reports submitted to different departments (tax, free zones, etc.).
Consequences of Non-Compliance:
- Fines: Up to AED 20,000 for each violation.
- Interest: Overdue taxes accrue a monthly interest of 14%.
- No Certification Required: Unless mandated by law, there’s no need for certification of records.
- Language Flexibility: Records can be submitted in English or Arabic, although the tax authority may request Arabic versions.
- No Additional Cost: If you have the resources, maintaining records incurs no additional cost (unless audit is mandatory).
Take proactive steps to organize your financial records and avoid unnecessary complications. This effort will not only ensure compliance with the new tax regulations but also contribute to the smooth operation and growth of your business. Act now, and let’s navigate the corporate tax landscape together!