The UAE has strict business regulations, and a sound financial and taxation system is the basis for corporate compliance operations. A sound system can ensure that companies comply with legal requirements in terms of financial accounting and tax declaration, and avoid serious consequences such as fines and reputation damage due to violations. In the UAE, once a company violates financial and tax regulations, it may be included in the list of abnormal operations, affecting its local business cooperation and development. Reasonable financial and taxation management helps companies optimize their cost structure and improve the efficiency of capital use. Through accurate tax planning, companies can reduce their tax burden within the legal scope, invest more funds in key areas such as research and development and market expansion, and enhance their competitiveness in the UAE and international markets.

Table of Contents

1、Why is it necessary to establish a sound financial and taxation system? 2. Key points of establishing the financial and taxation management system for UAE enterprises 3. Reasons to choose us

1、Why is it necessary to establish a sound financial and taxation system?

In recent years, the UAE has continued to strengthen tax compliance supervision, and corporate financial and tax management is facing three rigid challenges:

1. Deepening of tax system reform: Since the introduction of value-added tax (VAT) in 2018, the Federal Tax Authority (FTA) has stepped up its audit efforts year by year, and the number of penalty cases in 2023 increased by 42% year-on-year.

2. Free zone compliance pressure: Free zones such as DMCC and DIFC require companies to submit annual audit reports and economic substance (ESR) statements, and opaque financial and tax data will lead to license revocation.

3. Cross-border business risks: Cross-border transaction transfer pricing review, customs data and financial account cross-checking and other requirements force companies to establish standardized financial and tax processes.

2. Key points of establishing the financial and taxation management system for UAE enterprises

(I) Tax management system

In the UAE, enterprises must strictly abide by the reporting deadlines for various taxes. Enterprises should establish a complete reporting process to ensure that the reporting data is accurate. At the same time, the reporting materials of different taxes should be classified, sorted and kept for inspection by the tax authorities. Regularly assess the tax risks faced by enterprises. Given that the UAE has signed tax agreements with many countries, enterprises must accurately apply the terms of the agreements in cross-border business to avoid the risk of double taxation. Formulate corresponding response measures for the assessed risks.

(II) Invoice management system

In the UAE, invoices must be issued in accordance with the format and content requirements stipulated by the local tax authorities. Enterprises should ensure that the invoice information is true, accurate and complete. For the invoices obtained, their authenticity and compliance must be strictly reviewed, especially for special value-added tax invoices, which must be verified through the verification platform designated by the UAE tax authorities. In accordance with local regulations, invoices should be classified, stored and kept, and the storage period is usually not less than the prescribed period. Enterprises that use electronic invoice storage should ensure the security and traceability of electronic data.

(III) Expense reimbursement management system

Refer to the local price level and industry practices in the UAE to formulate reasonable expense reimbursement standards. It is clear that reimbursement applications must be filled in the local common language (Arabic or English), and the approval process must comply with the management habits of UAE companies to ensure that all links are efficient and smooth.

(IV) Contract management system

When signing a contract in the UAE, it is necessary to focus on reviewing the tax terms involved in the contract, such as the tax payer and the place of tax payment. Since tax policies in different emirates may differ, clarifying the place of tax payment will help avoid tax disputes. If the contract changes, timely assess the impact on taxation. For example, if the contract amount adjustment may lead to changes in the declared data such as value-added tax and corporate tax, the tax treatment needs to be adjusted accordingly.

(V) Salary management system

Understand the local social security policies and personal income tax regulations in the UAE, accurately calculate and withhold employees' social security expenses and personal income tax. The social security payment ratios in different emirates may be slightly different, and companies need to implement them in accordance with local regulations. For companies that employ a large number of foreign employees, special tax policies for foreign employees should be considered, such as the scope of tax exemption subsidies, the relationship between residence time and tax obligations, etc., to ensure compliance with salary management.

(VI) Internal information communication and coordination

In UAE companies, the finance department should work closely with procurement, sales, human resources and other departments. Since employees of UAE companies come from different countries and cultural backgrounds, in information communication and coordination, we must fully consider cultural differences, adopt appropriate communication methods and management methods, and ensure the effective implementation of the financial and tax management system.

(VII) Verification and supervision of financial information

Regularly verify the company's financial information with the local financial reporting standards and tax laws and regulations of the UAE to ensure that financial accounting and tax declarations meet local requirements. Actively communicate with the UAE tax authorities, keep abreast of changes in tax policies, answer questions raised by the tax authorities, and ensure that the company's financial and tax management work is recognized.

(VIII) Implementation and training of the financial and tax management system

Use training methods that are easy for local employees to accept to ensure that employees understand and comply with the financial and tax management system. Integrate the implementation requirements of the financial and tax management system into the cultural construction of the enterprise, form a corporate atmosphere of conscious compliance with the system, and improve the effectiveness of the implementation of the system.

3. Reasons to choose us

In the complex and ever-changing business environment of the UAE, Zhuoxin Enterprise, relying on its profound professional accumulation, provides customers with comprehensive and tailor-made services to help enterprises establish a sound financial and taxation system. Zhuoxin Enterprise has demonstrated outstanding professional capabilities in the key links of establishing financial and taxation systems for UAE enterprises. In terms of tax management systems, Zhuoxin's team of tax experts is familiar with the nuances of taxation policies in the emirates of the UAE, and can assist enterprises in accurately formulating tax declaration processes, reasonably assessing tax risks and providing effective response strategies. The high-quality services provided by Zhuoxin Enterprise's professional team can fully demonstrate the financial performance of enterprises, enhance the reliability and credibility of financial statements, and provide solid guarantees for the effective implementation and continuous optimization of corporate financial and taxation systems.