Now that the dust has settled after the MoF (Ministry of Finance) UAE revealed the introduction of a federal company tax, corporate tax in UAE firms must take responsibility for getting themselves tax-ready by June 1, 2023. The country has altered its tax system before.
Everything You Need to Know About the UAE’s New Corporate Tax
The United Arab Emirates (UAE) implemented a 5% value-added tax as a general consumption tax on the taxable supply of goods and services beginning on January 1, 2018. This meant that for the first time, consumers in the United Arab Emirates would have to pay more for taxable goods and services. The implementation of a federal company tax raises crucial questions for firms in the United Arab Emirates.
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While the law has not taken effect as yet, the following is what we know: The corporate tax in UAE is a profit-based tax that is collected in addition to other operational expenses in the United Arab Emirates (UAE), such as the cost of obtaining necessary licenses, visas, and medical insurance. The corporation tax rate for businesses operating in the United Arab Emirates (UAE) ranges from 0% to 15%, depending on the company’s net taxable revenue.
Local businesses will pay a 9 percent corporate tax, while international corporations would pay 15 percent of their consolidated income as corporate tax. Companies whose primary business is the extraction of raw materials like oil will be the only ones excluded. Businesses engaged in all other types of commercial activity should prepare for the changing tax landscape now.
Steps Heading Toward the Preparation of Corporate Tax
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When the federal business tax is finally enacted, the first step is getting ready for it with internal preparation to embrace and even welcome the change. Businesses operating in the UAE after June 1, 2023, will do so in a tax control tax-controlled on and as such, should ensure they have a thorough grasp of the true picture. Rather than viewing tax and transfer pricing as a compliance issue, shift your focus to the strategic implications they can have.
Identify the Regime
This may involve starting with a talent map to determine where your staff has knowledge gaps that can be filled by upskilling, training, or outsourcing in the first year. Consider the potential effects on your daily operations, company finances, and growth strategies. The first step in solving any problem is to identify it.
Spread Awareness
The next thing to do is to make sure there is continual, fruitful contact across all of your organization’s departments and divisions. The aspects discussed in the resealed public consultation document are consistent with commonly accepted tax filing principles, and this allows for inferences to be formed even if the law has not yet been published.
Recent advancements in international and UAE tax law open the way for corporate tax in UAE to have the planned breadth, depth, and breadth of data coverage known as external audit. So, from the company’s owners and board of directors to its key personnel in charge of day-to-day operations, everyone needs to be on the same page about how the company will respond to this change and how it will deal with the financial, operational, contractual, and legal repercussions of the new taxes.
Evaluate Tax Effects
Third, evaluate tax effects from the ground up rather than from on high. It is human nature to multiply net earnings by the tax rate in order to estimate impacts on tax liability, accounting, and bookkeeping. However, you may enhance how you run today and be ready for tax application tomorrow by doing a detailed assessment of the genuine impact across every level of the business, from transactions to entire business units, and then carving out inefficiencies and developing tax reasoning.
Several different critical success factors can be employed in an effort to enhance your UAE operations’ tax status. For example, you could stick with the status quo in low-risk areas (those with a low probability of requiring significant tax intervention), you could fine-tune high-impact areas with minimal tax intervention (if any), or you could do nothing at all. UAE enterprises can shape their new tax profile and governance framework with a step-by-step strategy, an explanation of the tax effect areas, and a focus on implementation.
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Do the Required Changes
You now need to handle the changes you’ve identified as part of the implementation process. In order to properly adapt to new tax and compliance standards, an organization must first be made aware of and educated on those changes. Although these shifts are initiated at the highest levels of an organization, their effects will be felt throughout the whole company. As a result, it will be essential to have “change champions” and influential people who can steer the ship through the inevitable waves of upheaval that accompany any major organizational transformation.
Adopt New Standards
The last thing to do is check that your data and paperwork are up to par with regulatory standards. What was formerly thought of as a best practice is now a requirement for legal and ethical conduct. The time has come to pinpoint inconsistencies in reporting to both internal and external stakeholders, with particular attention paid to data quality and security. The time spent today, whether conducting the analysis in-house or consulting an expert, will pay benefits later by removing a potential roadblock to complete compliance with the new federal company tax code.
Seek the Best Advisory Services
One of the best strategies to get to understand the key depths of the upcoming tax regime, you can seek consultation and advisory services. Corporate tax experts are qualified and can guide you with their knowledge and expertise.
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According to a 2023 report by the Employee Benefit Research Institute (EBRI), only 52% of U.S. adults reported having life insurance. While we may not like to think about it, preparing for the future is crucial. Life insurance offers peace of mind, knowing your loved ones (or your business) will be financially secure in your absence.
This post will guide you through everything you need to know about life insurance planning, from understanding different types of policies to using them for both personal and business needs.
Read along so that you can plan a brighter tomorrow.
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Understanding Life Insurance
Life insurance is a contract between an individual (the insured) and an insurance company (the insurer). The insured pays regular premiums to the insurer, typically on a monthly or annual basis.
In return, the insurer promises to provide a lump-sum payment, known as the death benefit, to the designated beneficiaries (whether an individual or a business owner) named in the policy upon the insured’s death.
How does it work?
Understanding how life insurance works is crucial for both individuals and businesses. Below, we’ll outline the key steps involved in a life insurance policy, from purchasing to the payout process, ensuring financial protection for you and your loved ones, or continuity for your business.
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Policy Purchase: You buy a policy from an insurance company, stating how much coverage you want and who will receive the benefit when you pass away.
Premium Payments: You pay premiums regularly to the insurance company to keep the policy active. This can be done monthly, yearly, or as a lump sum.
Coverage Period: As long as you keep paying premiums, the policy stays active. It can cover a set period of time (term life insurance) or your entire life (permanent life insurance).
Death Benefit Payout: When you pass away, your beneficiaries file a claim with the insurer, providing proof of death.
Claims Processing: The insurer reviews the claim and, if approved, pays out the death benefit to your beneficiaries.
Beneficiary Use: Your beneficiaries can use the money to cover expenses like funeral costs, debts, or daily living expenses, providing them with financial stability during a tough time.
Types of Life Insurance Policies
Here’s a simple overview of various life insurance options, suitable for both individuals and businesses.
Individual Life Insurance
Term Life Insurance: Covers you for a certain time, like 10 or 20 years. Good for things like paying off a mortgage or supporting your family if something happens to you.
Whole Life Insurance: It covers you for your whole life. It has a savings part that grows over time, but it costs more than term life insurance.
Universal Life Insurance: Similar to whole life insurance but more flexible. You can change how much you pay and how much goes into savings.
Variable Universal Life Insurance: This lets you invest part of your premiums in the stock market, so it can grow more, but it’s riskier.
Guaranteed Universal Life Insurance: Gives you fixed growth on your savings, so you know what you’ll get back.
Final Expense Insurance: Covers things like funeral costs so your family doesn’t have to pay.
Business Life Insurance
Buy-Sell Agreements: Help businesses if an owner dies. It pays for the owner’s share so the business can keep running.
Group Term Life Insurance: Businesses can offer life insurance to their employees as part of their benefits package.
Executive Bonus Programs: Businesses can use this to give their top employees extra money and life insurance.
Estate Planning: Businesses can use life insurance to plan for passing the business on to someone else when the owner dies.
Benefits of Life Insurance
More than 100 million Americans are uninsured or underinsured when it comes to life insurance, If they understand the benefits as given below, they can understand how important it is to have life insurance, whether in businesses or for individuals.
For Individuals
Life insurance is vital for individuals to secure their finances and provide for their families in case of unexpected events. Let’s look at how individuals benefit from life insurance.
Financial Protection: Life insurance provides a financial safety net for loved ones in the event of the policyholder’s death, ensuring they are financially secure.
Debt Coverage: It helps pay off outstanding debts such as mortgages, loans, and credit cards, relieving the burden on family members.
Income Replacement: Life insurance replaces lost income, helping beneficiaries maintain their standard of living and meet ongoing financial obligations.
Estate Planning: It facilitates the transfer of wealth to heirs, ensuring smooth estate settlement and minimizing estate taxes.
For Businesses
Businesses need life insurance to stay financially stable and keep operations running smoothly during unforeseen circumstances. Let’s see how life insurance helps businesses.
Key Person Coverage: Life insurance protects businesses against financial losses resulting from the death of key employees or partners, covering expenses like recruitment and training.
Business Continuity: It provides funds to cover operating expenses, debts, and salaries, ensuring business continuity during the transition period after the death of an owner or key employee.
Buy-Sell Agreements: Life insurance funds buy-sell agreements, allowing surviving partners to buy out the deceased partner’s share of the business, ensuring smooth ownership transitions.
Loan Protection: Life insurance can be used to secure business loans, providing lenders with assurance that debts will be repaid in the event of the policyholder’s death.
Employee Benefits: Offering life insurance as an employee benefit helps attract and retain top talent, enhancing employee satisfaction and loyalty.
Using Life Insurance
Life insurance is a valuable tool for both businesses and individuals, helping to meet financial needs and offer peace of mind. Let’s see how it works in different situations.
Life Insurance in Business
Businesses use life insurance to keep running smoothly, protect against financial challenges, and attract talented employees. Here’s how it helps businesses.
Business Continuity Planning: Life insurance can ensure that if something happens to a business owner, like their passing away, the business can keep running smoothly. It provides money to cover expenses and debts so the business can continue operating.
Funding Buy-Sell Agreements: When business partners have an agreement that says what happens if one of them dies, life insurance can provide the money needed to buy out the deceased partner’s share of the business. This ensures that the business can carry on without financial strain.
Estate Tax Planning: Life insurance can be used to help pay for taxes that may be owed when someone passes away and leaves behind a business or other assets. It ensures that the business doesn’t have to be sold off to cover these taxes, preserving it for the next generation.
Corporate Tax Planning Services: Life insurance can offer tax benefits for businesses. Money invested in certain types of life insurance policies can grow without being taxed, and the benefits paid out to beneficiaries are often tax-free. Corporate tax planning services help businesses take full advantage of these benefits.
Attracting and Retaining Talent: Offering life insurance as part of employee benefits can make a business more attractive to employees. It shows that the company cares about their well-being and wants to help protect their families financially. This can help the business attract and keep talented employees.
Life Insurance in Individual Planning
Individuals use life insurance to protect their families, prepare for retirement, and leave a meaningful legacy. Here’s how it helps individuals.
Financial Protection: Life insurance provides financial security for loved ones by covering living expenses and debts in the event of the policyholder’s death.
Income Replacement: Life insurance replaces lost income for primary breadwinners, ensuring that their family’s standard of living is maintained.
Legacy Planning: Life insurance allows individuals to leave behind a meaningful legacy for their beneficiaries, whether it’s providing an inheritance or supporting charitable causes.
Supplemental Retirement Income: Certain life insurance policies offer cash value accumulation, providing additional income during retirement to enhance financial security.
Health Benefits: Some policies offer benefits for terminal illnesses, providing financial support for medical expenses and treatments during challenging times.
Estate Planning: Life insurance helps cover estate taxes and other expenses, ensuring a smooth transfer of wealth to beneficiaries and preserving assets for future generations.
Tax Efficiency: Life insurance offers tax benefits, with the death benefit generally being income tax-free for beneficiaries, providing tax-efficient wealth transfer.
Conclusion
Life insurance planning is essential, but it can be complex. Knowing what you need can give you and your family comfort. Whether you’re just starting to look into life insurance or thinking about changing your current plan, it’s smart to stay updated and ask for advice.
Remember, a staggering 30% of Americans realize the importance of life insurance but haven’t yet taken action. Don’t be part of that statistic; explore your options today for a secure tomorrow with us.
The Forex trading market is a dynamic environment where efficiency and effectiveness are key to success. AlfaXM emerges as a prominent platform, offering a combination of easy-to-use interfaces with advanced technological capabilities, designed to enhance trading experiences for investors of all levels.
Gateway to Forex Expertise
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At the core of AlfaXM’s offerings is an exceptional charting suite, designed to help traders effectively identify market trends and spot valuable trading opportunities. This tool, combined with real-time market analytics, provides traders with the necessary resources to make quick, informed decisions.
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Nowadays, the proliferation of fake videos on stock market operations is increasing and getting viral. In the wake of this, the NSE and the National Stock Exchange have issued certain guidelines on these, reported Livemint.
NSE has extended a stern caution to those investors who make fake videos purportedly recommending stocks by showcasing Shri Ashishkumar Chauhan.
Notably, Shri Ashishkumar Chauhan is the Managing Director and Chief Executive Officer of NSE. NSE said, “NSE in a few investment and advisory audio and video clips falsely created using technology.
The National Stock Exchange (@NSEIndia) cautioned investors on #fake audio and #videos of their MD- CEO @ashishchauhan recommending stocks — which are circulating on social media.
Such videos seem to have been created using sophisticated technologies to imitate the voice and facial expressions of Shri Ashishkumar Chauhan, MD & CEO of NSE.”
As per TimesNow, the national stock exchange has also requested investors to verify information, exercise vigilance and only trust what appears on official NSE channels.
Information can also be verified from www.nseindia.com, the official website. Other official social media handles include, “Twitter: @NSEIndia, Facebook: @NSE India, Instagram: @nseindia, LinkedIn: @NSE India, and YouTube: NSE India.”
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Ashishkumar Chauhan, the MD and CEO wrote on X, “Caution – clarification on fake audio/ videos of NSE MD and CEO recommending specific stocks – circulating on social media for last few days.”
This statement is the follow-up of the surfacing of the manipulated video and audio clips regarding stock recommendations.
These fake videos make use of advanced and sophisticated technology which mimic the MD’s voice and facial expressions. Thus, this creates an alarming and misleading situation for unsuspecting investors.
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NSE Employees Cannot Recommend Stocks
Thus, investors are advised not to fall for such fraudulent content and take investment decisions. NSE also clarified that its employees are “not authorized” to recommend or endorse any specific stocks.
NSE has also asked online platforms to take back potential deceptive videos. Meanwhile, the public and investors are requested to verify the authenticity of information and exercise caution before taking any wrong step which may cause financial loss and personal harm.
