To maximise efficiency, businesses must navigate the various structures and incentives available to them. Here are key strategies to optimise your tax position.

Choosing the Right Business Structure

The structure of your business plays a critical role in optimising tax efficiency. Dubai offers a variety of options:

• Free Zone Companies: These entities often enjoy exemptions from taxes on qualifying income, making them a great choice for businesses in specific industries.
• Mainland Companies: Although subject to corporate tax, mainland companies offer broader operational flexibility within the UAE.
• Hybrid Models: Some businesses benefit from combining both Free Zone and Mainland operations, enabling them to enjoy the best of both worlds.

Leveraging Tax Incentives and Deductions

Take advantage of Dubai’s generous tax incentives and deductions:

• Research and Development (R&D): Claiming deductions for R&D expenses can lower taxable income.
• Capital Asset Depreciation: Depreciating assets like machinery can significantly reduce tax liabilities.
• Interest Deductions: Interest on business loans is often deductible, promoting tax-efficient financing.

International Tax Planning

For businesses operating internationally, Dubai’s tax system provides additional strategies:

• Transfer Pricing: Ensuring inter-company transactions follow arm’s length pricing is essential for compliance with UAE regulations.
• Double Taxation Treaties (DTTs): Leverage DTTs to avoid paying taxes on the same income in multiple jurisdictions.

VAT Optimisation

While the VAT rate in Dubai is relatively low at 5%, businesses can still optimise their VAT position by:

• Implementing accounting software to track VAT transactions.
• Ensuring timely, accurate VAT filings.
• Claiming eligible VAT deductions to reduce the overall tax burden.

Need Expert Tax Advice?

We’d like to introduce you to Taxwise, a British accounting firm based in Dubai, UAE. With over 20 years of industry experience, their skilled accountants specialise in accounting and bookkeeping, taxation, financial planning, and auditing. We’re happy to support you at Luxe Incorporations. Get in touch, and we’ll connect you with Taxwise for expert tax guidance.

Kofi Mensa is a Relationship Manager at Luxe Incorporations.
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+971 50 577 3094