In this article, we will talk mainly about sole proprietorship. This includes, what it means, how to register for it, and the several technicalities surrounding it.

So let’s get started with our South African sole proprietorship registration guide!

But before we start, you need to note that although the technical process of applying that we’ve mentioned here is for South Africa, the information is more or less legitimate for the majority of the African Union nations such as Tanzania, Nigeria, Kenya, Mozambique, Zimbabwe, and many more.

Let’s first start by understanding what sole proprietorship is.

What Is Sole Proprietorship?

A sole proprietorship is the simplest and most common type of business structure. In a nutshell, it means that a single person runs and owns the business.

Imagine you have a talent for baking delicious cupcakes, and you decide to start selling them from your home. If you’re doing it all by yourself and haven’t set up a formal company, you’re essentially operating as a sole proprietor.

One of the critical features of a sole proprietorship is that you have complete control over the business, including decision-making and all the profits.

However, you’re also personally responsible for any debts or legal issues your business may encounter. This means your assets, like your savings or home, could be at risk if the business faces financial trouble.

On the bright side, it’s relatively easy to set up and manage a sole proprietorship, making it an attractive choice for small, one-person businesses or freelancers. Just keep in mind that, unlike other business structures, there’s no legal separation between you and your business, which can be a drawback regarding financial liability.

Sole Proprietorship In South Africa: All You Need To Know

In the African guests, becoming a sole proprietor doesn’t come with strict, one-size-fits-all rules. It depends on the situation. Sometimes, if you’re the only person running the show, you won’t need to bother with certain paperwork.

For instance, if you’re a solo professional, there’s no need to go through the hassle of filing for a qualification certificate.

Plus, you can skip the paperwork about who owns what in your business (that’s the “particulars of members or share capital” stuff).

So, in a nutshell, being a sole proprietor in South Africa can be pretty straightforward, especially if you’re a one-person operation.

Sole Proprietor Registration Process In South Africa

Becoming a sole proprietor in South Africa is a straightforward process, with just four simple steps to follow. To keep things clear, it’s essential to figure out the best way to get your company registered. It’s a good idea to consult with a CA before you officially kickstart your venture.

In South Africa, you’ve got two options for registering as a sole proprietor: either file with the revenue service or let the Master know about your trade name.

You’ve got a six-month window from the time you start your business to get this done. The quickest and most commonly used method is filling out the F1 form at the nearest office.

So, what paperwork do you need to launch your sole proprietorship?

Well, you’ll need:

• Form 1, 2, or 9 (the declaration)
• your Personal Identification Number (PIN)
• the Comptroller of Stamps
• and your Memorandum and Articles of Association.

Get these in order, and you’re on your way to becoming a bona fide sole proprietor in South Africa!

If you’re a taxpayer, you’ve got the option to hop on board the SARS eFiling service. This online platform lets you do a bunch of useful stuff like submitting your tax return, sending your payments to SARS, asking for a tax clearance certificate, and grabbing hold of other handy perks they offer.

Registering In A SARS Branch

South African Revenue Service: SARS Home Page

Before, if you wanted to become a sole trader, you had to deal with some paperwork and fill out a form called ‘IT77 registration form for individuals.’

But guess what?

They’ve done away with that now. Instead, you can register by paying a visit to your local SARS branch. The friendly folks there will guide you through the registration process.

Before you head to the branch, be sure to gather some important documents, such as proof of who you are, where you live, and your bank details. For all the nitty-gritty details, just check out the SARS website – it’s got all the info you need.

Once you’re done at SARS, they’ll hand you a tax number, and that’s the magic key to signing up for eFiling.

How Is Sole Proprietorship Taxed In South Africa?

Operating a business in South Africa under a sole proprietorship is a smart choice in a competitive and attractive market. What’s great about this setup is that the taxes you’ll be on the hook for are pretty low compared to what larger companies have to pay.

For small businesses that meet certain requirements (like having only individuals as owners and making less than ZAR 20 million in gross income), here are the tax rates until March 31, 2024:

• You pay 0% on the first ZAR 95,750 of your taxable income.
• Then, it’s 7% on the part of your income that’s above ZAR 95,750 but doesn’t go over ZAR 365,000.
• If your taxable income exceeds ZAR 365,000 but stays below ZAR 550,000, you’ll pay ZAR 18,848 plus 21% on the extra.
• And if your taxable income goes over ZAR 550,000 (for tax years ending on or after March 31, 2023), it’s ZAR 57,698 plus 27% on the surplus.

These tax rates are a lot less compared to the 28% that bigger companies are slapped with.

When it comes to VAT (Value Added Tax), any business has to register if they make more than R 1 million in income over a year. But if you’ve made over R 50,000 in the past year, you can choose to register voluntarily. VAT gets charged at a standard rate of 15% on goods and services provided by registered vendors.

Summing Up

To sum it up, a sole proprietorship is a business owned by just one person, and it’s pretty straightforward to get started – no complex paperwork is needed. This setup works great if you plan to go it alone or run a small operation.

However, there’s a catch: you’re on the hook for everything, both the good and the bad. All the responsibility and risk rest squarely on your shoulders.

This article has given you a quick rundown of what a sole proprietorship is and how to go about setting one up in South Africa. It’s worth noting that the process and the regulations are strikingly similar in most major African Union countries like Kenya, Tanzania, Zimbabwe, Nigeria, Ghana, Morocco, Zambia, Mozambique, Botswana, and many more.

The tax system however may be different for each nation.

The easiest way to manage your sole proprietorship taxes is by using ProfitBooks accounting software. This is the best FREE solution to all tax and finance-related problems.

Get your 100% FREE account now!

The post Sole Proprietorship Registration Process In South Africa appeared first on ProfitBooks.net.

You see, before you even dive into the nitty-gritty of running a company, the very first step is figuring out what kind of business entity is the best fit for your specific needs. This decision isn’t just some minor detail; it’s a big deal because it’s going to shape the way your business operates and how it’s regulated.

So, let’s break it down a bit further for you.

The type of business structure you choose is like the foundation of your business’s house. It affects everything from how you pay taxes to your liability, and even how you make important decisions.

Let’s get started with what business structures mean, and how are they defined in South Africa and other African countries such as Tanzania, Kenya, Zimbabwe, Nigeria, Mozambique, and many more.

What Are Business Structures?

Business structures are like the blueprint for how a company is organized and operates. It’s how a business is legally set up and managed. Imagine it as the foundation of a house – it determines the rules and roles for everyone involved.

There are different types, like sole proprietorships, partnerships, corporations, and LLCs. For Africa specifically, the five types of company formations are mentioned below in the next section.

For example, let’s say you and a friend start a bakery together. You can choose a partnership as your business structure. In this setup, both of you share the responsibilities and profits. It’s like a team effort.

On the other hand, if you decide to open a tech company and want to raise money from investors, a corporation might be better. In a corporation, you can issue shares to investors and have a board of directors to make decisions.

The choice of business structure can impact taxes, liability, and how you can grow your business, so it’s an important decision for any entrepreneur.

What Are The Statutory Business Structures In South Africa?

The five statutory business structures of South Africa are as follows:

1. Sole Proprietorship
2. Partnership
3. Private Company (Pty) Ltd
4. Public Company (Ltd)
5. Non-Profit Company (NPC)

We’ll discuss each one in detail. We’ll see what they mean, and how they operate within the African jurisdiction. This explanation is not only limited to South Africa as other African Union countries also adhere to, more or less, the same business structures.

So let’s get right into it!

1. Sole Proprietorship

In a sole proprietorship, it’s just you running the show. You’re the boss, and when it comes to paying taxes and making decisions, it’s all on your shoulders. No fancy legal stuff here; it’s a simple, one-person operation.

The good part is that setting up a sole proprietorship is a breeze. Small business owners love it because there’s minimal paperwork, and you have total control.

But here’s the catch – your business and you are like two peas in a pod. If your business goes south and racks up debt, your stuff could be on the line.

Still, lots of folks go for a sole proprietorship because it’s straightforward. It’s perfect for testing a business idea, starting small, and seeing if it’ll fly.

Just remember, if things go south, you’re on the hook. As your business grows, you might look into other legal structures.

Taxation: In South Africa, if you’re running a one-person show, you’ll pay taxes just like an individual, not a company. The money you make from your business gets mixed in with your income, and the tax you owe is calculated based on the regular income tax rates. You won’t have to deal with separate taxes like pay-as-you-earn (PAYE) or VAT.

Who’s It For? A sole proprietorship is a good fit for individuals who want to run their own small business without a bunch of partners or a complex corporate structure. It’s perfect if you’re looking for simplicity and full control over your business decisions.

2. Partnership

In simple terms, a partnership is when you and a few others team up to run a business together. This means you’re not in it alone; you all pitch in money, skills, and resources to make the business successful. You share the highs and lows of your business journey.

Advantages of Having Partners:

Having partners’ business structures is like having a squad for your business. More people means more knowledge and expertise. You’ve got more cash to work with because everyone contributes. Plus, you can split the costs and workload, making things easier. It’s a team effort, so you’re not swamped with all the work, and you can maintain a better work-life balance.

Disadvantages of Having Partners:

But, having partners isn’t always smooth sailing. Everyone’s on the hook for business debts, whether you caused them or not. You also have to share the decision-making, which can be a bit tricky. Sometimes, there might be disagreements, which could strain your relationship with your partners. And if you want to sell the business but your partners don’t, that could be a challenge.

Taxation: 

In simple terms, when you’re in partnership business structures, it’s not like a company with its legal status. It’s not registered for income tax, but the tax laws do talk about partnerships. Here’s the deal: all partners file one joint tax return for the business, and each partner also has to file a separate tax return.

Now, when it comes to the money part, each partner pays taxes based on their share of the partnership’s profits. So, it’s not the partnership itself getting taxed, it’s each person individually.

And yes, every partner is responsible for paying their regular income tax.

But here’s the catch: unlike regular employees, partners can’t claim certain tax perks like “fringe benefits.” However, there’s a cool section in the tax law (Section 11(k)) that treats partners like employees.

This means you can deduct contributions to things like a Pension Fund, Provident Fund, or medical scheme from your income when you’re a partner.

3. Private Company (Pty Ltd)

In Australia and South Africa, there are business structures called a “Proprietary Limited Company” or Pty Ltd for short. We’ve discussed this in our Australian business structures guide, where a Private or Proprietary Limited Company is discussed along with its taxation and other details.

It’s like a separate legal identity for your business.

This structure is great if you have just a few shareholders and a single director, and you can even do it if you’re running the show solo. The cool thing is that it keeps your business stuff completely separate from your stuff. So if your business runs into financial trouble, your assets are safe.

Pty Ltd is a private business setup and it’s a top choice for small businesses in South Africa. One big perk is that you don’t have to spill the beans about your finances to anyone. Plus, it can offer some tax advantages.

But here’s the thing: setting up a Pty Ltd can be a bit of a bureaucratic hassle. You’ve got to play by the book, following loads of legal rules and regulations. Registering a Pty Ltd business isn’t a walk in the park, and it can be pricey too. Also, because it’s a private gig, you can’t put your company on a public stock exchange or sell your shares to the general public.

Taxation: 

When you officially register your private company with the Companies and Intellectual Property Commission (CIPC), the tax stuff takes care of itself. The tax people at the South African Revenue Service (SARS) also get the memo, and your company gets its very own tax reference number, which is a 10-digit number starting with 9. You can find this number on your company’s COR14.3 certificate (that’s the fancy name for your CIPC registration document), or if you can’t locate it, just give SARS a ring at 0800 00 7277, and they’ll spill the beans.

Below, you can see a sample picture of a COR14.3 Certificate:

Sample COR14.3 Certificate

(Disclaimer: This is a sample certificate and all details mentioned in it are examples)

Now, let’s talk about the tax registration process. See, your private company is like a separate legal entity in the eyes of the law.

So, it has to register for taxes under its name. But here’s the twist: depending on things like your company’s revenue, your relationship with your employees, payroll size, and whether you’re into imports and exports, you might also need to sign up for other tax-related stuff like VAT, PAYE, UIF, Customs and Excise, and Skills Development Levy (SDL). It’s like a tax buffet.

Now, here’s the part about filing tax returns.

Unlike regular folks whose tax year runs from March 1st to February 28th, companies have a tax year that matches their financial year. You get to choose your company’s year-end when you set it up, and you can even change it later using the CIPC website if you want a switcheroo.

The deal is that companies have to do the tax return, called ITR14, annually. You’ve got 12 months after your financial year ends to get this done. So, make sure you mark your calendar because SARS doesn’t like tardy tax returns.

4. Public Company

When a private company decides to go public, it means they’re sharing their ownership with the general public. This process is called an Initial Public Offering (IPO).

Basically, they start selling new shares to anyone who wants to buy them, and those buyers become shareholders.

Going public is a way for the company to raise more money by selling shares. If the company is successful in the stock market, it can attract more investors and opportunities. Plus, the risk isn’t all on the founders; it’s spread out among all the shareholders. Going public can also serve as an exit strategy for the founders, giving them a chance to cash out.

However, taking a company public is no walk in the park.

It can change how decisions are made because you have more shareholders to answer to. As a public company, you have to share certain company documents with the public, which promotes transparency but could reveal some trade secrets.

Also, going public means you’re opening the door for people to buy your business. So, if you can’t maintain a majority ownership (51% or more), you might lose control of the company.

Advantages:

• More Money to Work With – When you go public, you can sell your company’s shares to the public. This gives you a boost in capital to use for your business.
• Increased Attention – Getting listed on a stock exchange means that fund managers and traders are watching your business closely. The more interest your business generates, the more opportunities will come your way.
• Shared Risk – With numerous shareholders, the risk is spread out. The more shareholders you have, the less risk each person holds.

Disadvantages:

• Complex Setup – Creating a public company is more complicated compared to other business structures.
• Slower Decision-Making – Since there are more shareholders, directors, and managers involved, making decisions can take a lot more time.
• Loss of Privacy – You’ll have to disclose some of your documents, and your annual accounts become public for anyone to inspect. This boosts transparency but may not help you keep your business secrets effectively.
• Ownership Change – When you go public, you sell a portion of your company to strangers. It can be tough to raise the necessary funds while maintaining a 51% majority.

Who’s it for? Many times, when a company starts as a partnership, the folks in charge decide to take it public, which means they want to offer shares on the stock market to get more money and boost the company’s worth. This setup works great for businesses that have expanded a lot.

Taxation: The taxes for a public company are the same and follow the same process as a private limited company’s, as mentioned above.

4. Non-profit Company (NPC)

An NPC, which stands for a Non-Profit Company, is created to help out the public or a local community. The folks running it can’t make money from it – all the funds must go toward the goals they set out to achieve.

The business structures need at least three owners and three directors to get going.

A non-profit company, often referred to as an NPC, is an organization that doesn’t exist to make money for its owners or shareholders. Instead, its primary purpose is to benefit the community or a specific cause. Any funds it generates must be used to achieve its mission, not for personal profit.

For example, imagine a “Clean Beaches NPC” where people come together to clean up polluted beaches. They might organize beach clean-up events and gather donations, but all the money raised goes back into buying cleaning supplies, hiring staff, and supporting their environmental mission. In the end, no one’s getting rich – it’s all about making the world a better place.

Once you’ve figured out that this is the right way to go, it’s time to get your NPC registered with the CIPC.

What You Need:

1. Proof of where your business is located.
2. The latest three months’ worth of bank statements.
3. Identification proof for the person incorporating the company.
4. Identification proof for the directors.
5. A tax registration document from SARS with your tax number.

Who’s it for? These business structures are ideal for a bunch of people who want to make a positive impact, address an unmet need, and raise money to keep things going.

Conclusion

In South Africa, you’ve got five key business structures to consider, and these business structures play a crucial role in shaping your overall business strategy.

Understanding these structures is vital for making informed choices that will have a lasting impact on your business. Now that you’re done with this article, you should have a solid grasp of the fundamentals of all business structures we’ve covered.

So, when it’s time to make that important decision, you’ll be well-prepared because the choice you make among these business structures will have a significant and enduring influence on the path your business takes.

Once you’ve made your decision to register your business, you’ll have to be compliant with all the tedious legal financial work. A powerful accounting system like ProfitBooks can solve this problem!

Our 100% free-to-use software manages all taxes while providing multi-currency support so that you can handle finances in any country.

Our happy customers from Tanzania, South Africa, Kenya, Zimbabwe, Mozambique, Zambia, Nigeria, and many other African countries love and use this software to help their businesses grow!

Get your 100% FREE account now!

The post The 5 Business Structures In South Africa Explained appeared first on ProfitBooks.net.

As VAT is the major tax in the UAE, in this article, we’re going to understand what a tax invoice is, and how to prepare a UAE VAT invoice.

So let’s get started with what a tax invoice is in general.

What Is Tax Invoice?

A tax invoice is a fundamental piece of paper that pops up when you make a purchase, especially in a business context. It’s kind of like a supercharged receipt. Do you know how a regular receipt lists what you bought and what you paid?

Well, this invoice takes it a step further.

When a seller hands you such an invoice, it not only lists the items or services you purchased and their prices but also spells out the taxes involved.

This is a big deal because it helps the taxman keep an eye on things. The tax invoice shows how much tax you’ve paid, like sales tax or value-added tax, and it breaks down the costs. So, it’s not just proof of your shopping spree; it’s also proof that you’ve paid the required taxes.

Why Business Owners Need to Prepare a Tax Invoice (or What It Is Used For)

Business owners use tax or VAT invoices for several important reasons:

• Tax Compliance: To follow the tax rules and regulations set by the government. An invoice ensures they’re paying the right amount of tax.
• Expense Tracking: It helps track business expenses accurately. Business owners can see where their money is going and plan accordingly.
• Reimbursement: In case employees make business-related purchases, tax invoices are crucial for reimbursement and record-keeping.
• Legal Proof: It’s a legal document that can be used as proof in case of disputes or audits.
• Input Tax Credit: Business owners can claim a credit for the tax they’ve paid on their purchases when filing their taxes. This can reduce their overall tax liability.
• Financial Records: It contributes to maintaining organized financial records, vital for managing the business efficiently.
• Professionalism: Providing customer invoices shows professionalism and transparency, which can build trust and credibility.

In a nutshell, a tax or VAT invoice is the bridge between your shopping cart and the tax collector. It’s a key tool for businesses to keep their financial house in order and stay on the right side of the tax authorities.

UAE Tax Invoice Format & Checklist

UAE VAT or Tax Invoice Checklist

Businesses in the Emirates need to get their VAT invoices right. The Federal Tax Authority (FTA) has specific rules on how these invoices should look, and following them is a must. These rules are there to make sure that businesses accurately report their VAT dealings and pay the right amount of taxes.

Why is it so crucial?

Well, if you keep your VAT invoices in the correct format, you won’t have to worry about getting slapped with penalties and fines by the FTA. Plus, it makes your life easier because you can easily track your VAT transactions and calculate what you owe.

Alright, let’s dive into what a VAT invoice should look like for smaller transactions.

First things first, you want to make sure that “Tax invoice” is written clearly at the top. Then, include the supplier’s name, address, and tax registration number, which is often called TRN.

Don’t skip the invoice date, and be sure to describe the goods or services. Of course, show the total amount that needs to be paid, and don’t leave out the total VAT charge.

But if your business deals with larger transactions, your VAT invoice should include a bit more:

• Include the supplier’s name, address, and TRN.
• Also, include the recipient’s name, address, and TRN if they’re a registrant.
• Use a unique or sequential invoice number.
• Mention the date of the invoice and the date of supply if they’re different.
• Describe the goods or services.
• Show the unit price, quantity, or volume of what’s supplied, the tax rate, and the amount to be paid in AED (that’s the local currency).
• If you’re giving any discounts, state their value.
• Display the gross amount to be paid in AED.
• Don’t forget to show the tax amount you owe in AED.
• And if the reverse charge applies to your situation, make sure you mention that too.

Simplified Tax Invoice Format

Simplified Tax Invoice UAE

(source: Tally)

You can see that a Simplified Tax Invoice is a simpler version of a regular one. They both start with ‘Tax Invoice,’ but the big difference is that the simplified version doesn’t need the recipient’s details.

So, making a simplified version of this is easier than a regular tax or VAT invoice.

But for retail businesses and those selling things worth less than AED 10,000 to registered folks, it’s crucial to use Simplified Tax Invoices for taxable goods or services.

Just like a regular VAT invoice, these Simplified ones prove that taxable stuff was sold, and they’re used for tax returns and input tax credit claims.

If your business needs to use Simplified Tax Invoices, it’s a smart move to use VAT software.

It’ll do the hard work for you, creating these invoices automatically based on the transaction type, filling in the necessary details, and keeping them safe for future reference.

Tax Invoice Under VAT In Foreign Currencies

When dealing with tax invoices issued in foreign currencies, there are specific requirements you must follow:

• Tax Amount in AED: The tax amount you need to pay should be expressed in AED (United Arab Emirates Dirhams). This ensures uniformity and simplifies the tax calculation process.
• Exchange Rate: The exchange rate you should use for conversion must align with the rates published by the United Arab Emirates Central Bank on the date of the supply. This means that you need to stay up to date with these rates to ensure accurate invoicing.

Now, let’s delve deeper into the concept of rounding on tax or VAT invoices.

Estimation of Values in Tax Invoices:

When you need to issue a VAT invoice, and the calculated tax on a supply ends up as a fraction of a Fils, you have the option to round it to the nearest Fils. This rounding process is based on standard mathematical rounding principles, making it easier for both businesses and tax authorities to manage fractional amounts.

It’s essential to highlight that this rounding should be applied to each line item on a full tax invoice. This practice ensures that rounding is carried out consistently across all the products or services you’re invoicing for.

By doing this on a line-by-line basis, you maintain accuracy and transparency in your invoicing process.

In summary, ensuring that your invoices meet these requirements and follow proper rounding practices is crucial for tax compliance and clarity in financial transactions.

It’s a process that helps businesses and tax authorities alike in ensuring that tax calculations are accurate and transparent, even when dealing with foreign currencies and fractional amounts.

Conclusion

This article talks extensively, so it might not have all the answers for your unique situation. Whether you should follow the advice in this article depends on the specifics of your situation. We strongly suggest you reach out to a professional for guidance before you make any decisions based on what you read here.

It’s crucial to consult with an expert or leverage powerful accounting software that can offer tailored guidance to ensure your actions align with your unique circumstances.

ProfitBooks is just the right software for creating your tax invoice in the UAE or anywhere in the world, as it is a cloud accounting software. Get your 100% FREE account now, and start creating invoices for your small business!

Also Read:

VAT In UAE: A Comprehensive Guide

UAE VAT Return Filing – Comprehensive Guide

UAE Corporate Tax: What It Is & How It Works

How To Calculate UAE Corporate Tax?

The 11 Types Of Company Formations In The UAE | Dubai

The post Tax Invoice Under VAT In UAE appeared first on ProfitBooks.net.

If you’re a business owner in the UAE, it’s crucial to know how to calculate your UAE corporate tax to ensure you’re on the right side of the law and your finances are in order.

So, in today’s detailed guide, we’ll take you on a step-by-step journey through the UAE corporate tax calculation process, demystifying the complexities and making it a breeze for you to manage your tax obligations.

Let’s get started!

A Brief On What UAE Corporate Tax Is

Starting June 1, 2023, the UAE will introduce a 9% corporate tax for businesses with fiscal years beginning on or after that date, aligning with international tax standards to boost its global appeal. This new development requires businesses to quickly grasp the implications of UAE corporate tax.

Scope of UAE Corporate Tax

The UAE’s new national tax system applies to all businesses and commercial activities, with exceptions:

1. Resource extraction companies follow emirate-specific tax regulations.
2. Individuals with non-business income won’t be taxed, except for licensed business activities.
3. Businesses in Free Trade Zones can avoid this tax if they meet the specified criteria.

Foreign banks will transition to the UAE’s national tax law, necessitating adaptation to the new UAE corporate tax regulations.

UAE Corporate Tax Calculation

How Taxable Income Is Determined

In the CT regime, we start by using a business’s accounting net profit (or loss) as reported in its financial statements as the initial figure for calculating taxable income. We then make necessary adjustments to arrive at the final taxable income.

• For corporate tax in the UAE, the calculation is as follows:
• Corporate tax is assessed on a business’s annual taxable income.
• If the taxable income is AED 375,000 or less, the corporate tax rate is 0%.
• For taxable income exceeding AED 375,000, the UAE corporate tax rate is 9%.

It’s important to note that any foreign taxes paid can be subtracted from the profit reported in the financial statements.

Additionally, in the UAE, financial statements are typically prepared following the International Financial Reporting Standard (IFRS).

IFRS UAE Jurisdiction Homepage

Deductible Expenses

Entertainment Expenses – 50% Allowable

When it comes to expenses related to entertaining clients, shareholders, suppliers, and other business associates, like covering the costs of meals, accommodations, transportation, admission fees, and the use of facilities or equipment for entertainment, you’re allowed to deduct up to 50% of the total amount spent. This includes any other expenses specified by a decision from the Cabinet.

Interest Expenses – 30% of EBITDA Allowed

You can deduct net interest expenses (referred to as NIE) up to 30% of your EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). If, under the interest capping rules, there are interest expenses that you couldn’t deduct, you have the option to carry them forward and apply them as deductions in the ten subsequent tax periods.

In addition to the general interest limitation rule mentioned above, there will be no allowance for interest deductions if the loan was obtained, either directly or indirectly, from a related party for the following transactions with those related parties:

• Dividends or profit distribution.
• Redemption, repurchase, reduction, or return of share capital.
• Capital contributions.
• Acquiring ownership interest in a legal entity, who is or becomes a related party after the acquisition.

100% Non-Deductible Expenses

• Income that is exempt from taxation.
• Expenses of a capital nature. (Expenses that don’t fall under a capital nature and are incurred solely and exclusively for your business’s purposes are generally eligible for tax deductions).
• Fines and penalties, excluding compensation for damages due to a breach of contract.
• Dividends or profits distributed.
• Illicit payments, including bribes.
• Donations made (except when they are directed to a Qualified Public Benefit Entity).
• Recoverable input VAT.
• Non-business expenses, such as personal expenses.
• Any other expenses that may be specified by the Cabinet Minister.
• Taxes imposed outside the UAE.

In summary, this information outlines the deductibility and non-deductibility of various types of business expenditures, including entertainment and interest expenses, while highlighting specific categories of non-deductible expenses. Businesses must be aware of these rules and guidelines when managing their financial affairs.

Tax Losses Offset in the UAE Corporate Tax Context

In the UAE corporate tax landscape, businesses can set off tax losses against their taxable income for subsequent tax periods. However, there are some specific rules to bear in mind.

Utilization Limits: When calculating the taxable income for a particular period, businesses can offset their tax losses. However, this offset cannot exceed 75% of the taxable income for that particular period. If there’s still a portion of tax losses left, don’t worry – you can carry them forward indefinitely to offset against future taxable income.

Group Entities: The UAE Corporate Tax Law allows for the transfer of tax losses between entities within the same group, under certain conditions:

• There should be 75% or more common ownership.
• Other conditions include having the same financial year and using the same accounting standards, while not being classified as an exempt person or a qualifying free zone person.

Conditions for Carrying Forward Tax Losses: To carry forward and use tax losses, a Taxable Person must meet these conditions:

• The same shareholder(s) must hold at least 50% of the share capital from the beginning of the period in which a loss is incurred until the end of the period in which the loss is offset against taxable income.
• If there’s a change in ownership of more than 50%, you can still carry forward tax losses as long as the new owners are engaged in the same or similar business.

Exceptions: Keep in mind that tax loss relief is not available for the following losses:

1. Losses incurred before the effective date of Corporate Tax.
2. Losses incurred before a person becomes a taxpayer for Corporate Tax purposes.
3. Losses from activities or assets that generate income exempt from Corporate Tax.
4. Losses incurred by a Free Zone Person that is not attributable to a Permanent Establishment (PE) in the mainland.

Unrealized Gains or Losses

Unrealized gains or losses happen when the value of an asset or liability that a business holds changes, but no actual buying or selling transaction has occurred.

For instance, if a business owns a property that increases in value, but the property hasn’t been sold, the profit is considered unrealized. These gains or losses can be documented for accounting purposes, even though they haven’t been realized as actual cash or losses yet.

Now, let’s talk about how this relates to the CT Law (Corporate Tax Law). A business subject to CT Law can choose how they want to handle these unrealized gains and losses for tax purposes:

(a) Realization Basis for All: The first option is to recognize gains and losses only when they become real, meaning you wouldn’t pay taxes on unrealized gains, and you couldn’t deduct unrealized losses until you make a transaction.

(b) Realization Basis for Capital Assets: The second option is to use the realization basis, but only for assets and liabilities that are considered capital assets. This means that you’d defer taxation on unrealized gains and losses related to capital assets until they are realized.

It’s important to note that unrealized gains and losses from assets and liabilities classified as revenue accounts will still be included in your taxable income on a current basis. In other words, if these gains or losses are part of your day-to-day operations, they’ll be taxed as they happen.

Exempt Income

In the UAE, resident companies are liable for Corporate Tax (CT) on their global income, including capital gains. However, to prevent double taxation, certain types of income are exempt from CT under the following categories:

Participation Exemption

• If a UAE corporate shareholder owns a participating interest of at least 5% in a foreign entity, they won’t be subject to UAE corporate tax on dividends and other profits received from that entity.
• Various income types, such as foreign exchange gains, impairment, and capital gains and losses, received from either residents or non-residents will be exempt from UAE corporate tax if the participating interest criteria are met.

For a participation to qualify, the following conditions must be met:

(i) The ownership interest should be at least 5%;
(ii) The shareholder must hold the interest for a continuous 12 months (or intend to do so);
(iii) The participation must be subject to a tax rate in its home country of residence that’s no lower than 9%;
(iv) No more than 50% of the participation’s assets can consist of interests that wouldn’t qualify for a CT exemption if held directly by the taxable person;
(v) Any conditions specified by the Minister must be satisfied.

A participation is considered to meet the subject-to-tax requirement if:

• Its primary objective and activity involve acquiring and holding qualifying shares or interests;
• Most of the income during the relevant tax period comes from participating interests.

However, the participation exemption is not applicable for 2 years if the participation interest was acquired in a way that didn’t meet the participation interest conditions or was part of a group or restructuring relief.

Foreign Permanent Establishment Exemption

A resident entity might establish a permanent establishment (PE) in another country according to that country’s tax laws, and the income attributed to this foreign PE will be taxed in that country.

The UAE CT Law offers a choice to the resident entity to exempt this income in the UAE under the following options:

(a) Opt for an exemption of foreign branch profits.
To qualify for this exemption, the Foreign PE must be subject to UAE corporate tax or similar taxes at a rate not lower than 9% in the foreign jurisdiction. If this option is selected, the resident entity cannot consider losses, income, expenses, or foreign tax credits related to the Foreign PE in the UAE.

(b) Claim a foreign tax credit for taxes paid in the foreign branch country.
The maximum Foreign Tax Credit available is the lower of the foreign tax paid or the UAE corporate tax payable on the foreign-sourced income.

International Transportation Exemption
Income generated from leasing or operating aircraft or ships is not subject to UAE corporate tax as long as the following conditions are met:

• The income is earned by a non-resident.
• The leased aircraft, ship, or associated equipment is used for international transportation and there is a reciprocal arrangement with the foreign jurisdiction.

Group UAE Corporate Tax Benefits

Intra-Group Asset and Liability Transfers

In the realm of corporate taxation, the UAE Corporate Tax Law extends certain fiscal privileges for the exchange of assets or obligations between affiliated entities within what we call a “Qualifying Group.”

Now, let’s define a Qualifying Group: This category encompasses legal entities residing in the UAE or non-resident entities with a permanent presence in the UAE. To qualify, either one entity must own 75% or more of the other, or a third party should possess a 75% or higher stake in both entities.

Notably, neither entity can be an Exempt Person or a Qualifying Free Zone Person, and both entities must follow the same accounting standards and share the same fiscal year.

The core benefit here is that when assets or liabilities are transferred between two Taxable Persons within the same Qualifying Group, there will be no tax implications in terms of gains or losses.

However, it’s essential to be aware of a two-year clawback period if there’s a subsequent transfer outside the permitted group or if either the transferor or transferee ceases to be a member of the permitted group.

Business Restructuring Tax Relief

The UAE Corporate Tax Law also offers tax relief for situations involving business reorganization, such as mergers, spin-offs, or other corporate restructuring activities where a portion or the entirety of a business is transferred in exchange for shares or other ownership interests.

This benefit comes into play when certain criteria are met:

• The transfer must comply with UAE regulations.
• All involved Taxable Persons must be either Resident Persons or Non-Resident Persons with a Permanent Establishment in the UAE.
• None of the Persons can qualify as an Exempt Person or a Qualifying Free Zone Person.
• The entities must share the same fiscal year and adhere to identical accounting standards.
• The transfer must be justified by valid commercial or economic reasons.

In the case of transferring shares or ownership interests of UAE corporate tax, between two Taxable Persons during a business restructuring, there will be no taxable gains or losses stemming from this exchange. But, similar to intra-group transfers, a two-year clawback period is relevant.

If there’s a subsequent transfer to a third party or if the shares or ownership interests received are transferred or disposed of, any gains or losses from the initial transfer will be accounted for in the period when the subsequent transfer occurs to the third party.

Bonus: Small Business Relief For UAE Corporate Tax

Small Business Relief is a UAE corporate tax benefit available to individuals or businesses residing in the UAE, provided their revenue in the current tax period and previous ones fall below 3 million AED for each tax period.

However, Small Business Relief cannot be claimed by:

• Individuals or businesses operating in qualifying free zones.
• Companies that are part of multinational enterprise (MNE) groups with combined group revenues exceeding 3.15 billion AED.

If you’re eligible for Small Business Relief, you can carry forward UAE corporate tax losses and excess net interest expenditure to future tax periods where you do not choose to apply for this relief.

It’s important to note that anti-abuse provisions will be enforced if there’s an artificial separation of businesses to exploit the Small Business Relief, so be cautious about that.

Conclusion: An Accounting Software Makes This Easier

Tax management or accounting software is crucial, especially for businesses in the UAE.

This software is essential because it uses your declared net profit from financial statements to calculate corporate taxes. It’s the key to generating accurate financial and business reports.

Having precise financial statements is vital to paying the correct corporate tax. Errors in your business data or financial statements can result in overpaying taxes, hurting your business, or facing fines.

The best part?

You save time, effort, and money while staying compliant.

ProfitBooks – 100% FREE Accounting Software

ProfitBooks accounting software does exactly this, on the cloud, so your business can travel with you. Manage your UAE corporate tax or UAE VAT, using our easy-to-use software that enables you to be compliant.

The best part is that it is 100% free to use. So, get your FREE account now!

Also Read:

UAE Corporate Tax: What It Is & How It Works

VAT In UAE: A Comprehensive Guide

UAE VAT Return Filing – Comprehensive Guide

Top 5 Accounting Software In UAE (Pros & Cons)

The 11 Types Of Company Formations In The UAE | Dubai

The post How To Calculate UAE Corporate Tax? appeared first on ProfitBooks.net.

There are many legalities surrounding MSMEs in India, however, we’ll discuss the benefits and advantages enjoyed by entrepreneurs who have registered for MSMEs.

So let’s get into it!

What Is MSME?

MSME India – Official Home Page

MSME stands for “Micro, Small, and Medium Enterprises.”

These are businesses that are relatively small in size but play a crucial role in a country’s economy. MSMEs are the backbone of many economies around the world, providing employment, promoting entrepreneurship, and contributing to economic growth. Here’s a breakdown:

Micro Enterprises: These are the smallest of the small, often run by just one or a few people. They could be local shops, small online businesses, or even street food vendors. An example could be a neighborhood bakery operated by a family or a freelance graphic designer working from home.

Small Enterprises: Small businesses are a bit larger than micro-enterprises and may have a few employees. Examples include a local clothing boutique, a small software development company, or a family-owned restaurant in your town.

Medium Enterprises: These are bigger than small businesses, with more employees and higher revenue. A medium-sized enterprise might be a regional chain of stores, a mid-sized manufacturing company, or a technology firm with a broader market reach.

For instance, let’s take a look at a typical example.

Imagine a family-owned bakery (a micro-enterprise) that grows and expands into a small regional chain of bakeries (a small enterprise) and later evolves into a well-known regional or national pastry and confectionery brand with numerous outlets (a medium enterprise).

MSMEs are important because they create jobs, foster innovation, and contribute significantly to the economic health of a country. They’re often considered the engines of economic development and are supported through various government programs to help them grow and thrive.

Benefits of MSME Registration in India

One will get to enjoy several advantages after registering his/her business and obtaining Udyog Aadhar. The best thing about obtaining Udyog Aadhar is that the process is quite simple and in addition to that, one won’t have to handle the paperwork for obtaining Udyog Aadhar.

Check out the top 10 benefits derived from the numerous schemes that are offered by the Ministry of MSME to protect small enterprises and assist them in growth and development.

1. Reduced rate of Interest from banks
2. Collateral-free loans from banks
3. Protection against delayed payments
4. Fast resolution of disputes
5. After getting registered with MSME, your business will be eligible for availing government scheme benefits which will include loans without guarantee, low-interest rates on loans, and easy loans.
6. 15% subsidy under the CLCSS scheme for technology upgradation
7. The exemption under the direct tax laws
8. Carry forward the minimum alternate tax (MAT) credit for up to 15 years instead of 10 years
9. Benefits under the Credit guarantee scheme
10. Octroi Benefits
11. Waiver of Stamp duty and registration fees
12. Reimbursement of payment made for obtaining ISO registration
13. Reimbursement of payment made for obtaining Trade Mark, Patent, or Intellectual Property
14. Benefits for Industrial Promotion Subsidy (IPS)
15. Benefit up to 75% of registration fees for Barcodes.
16. You will have financial backing from the government for participating in foreign business expos.
17. You will also get to enjoy other forms of subsidies that will help you in increasing your company’s revenue.
18. Concession in electricity bills
19. Your company gains preference for government certification
20. You will get an exemption when your enterprise applies for government tenders.

You can read in detail about MSME Schemes from this official document of the Government of India.

Conclusion

In conclusion, the world of MSMEs in India is filled with immense potential and benefits for small business owners. Through the MSME registration process, entrepreneurs can unlock a wide array of advantages that pave the way for business growth and development.

With the added advantage of preference in government certifications and tender applications, the registration process simplifies many aspects of running a small business.

So, if you’re a small business owner in India, embracing MSME registration can be a game-changer, just like choosing the right software to manage your finances and books.

ProfitBooks is a cloud accounting system that manages all accounting and bookkeeping needs on the go. With this simple-to-use tool, you can raise invoices, be tax-compliant, manage books, and much more. The best part? It is 100% free to use, so get your account now!

Also Read:

MSME Registration Process In India

ONDC: A revolutionary digital network for small business

What is a Debit and Credit?

Trademark Registration Online Easy Process In India

How To Get Working Capital Loans In India

The post Benefits of MSME Registration In India appeared first on ProfitBooks.net.

In this article, we’ll discuss what MSMEs are, how they are defined in India, and how MSME registration is done in India.

What Is MSME?

MSME stands for “Micro, Small, and Medium Enterprises.”

These are businesses that are relatively small in size but play a crucial role in a country’s economy. MSMEs are the backbone of many economies around the world, providing employment, promoting entrepreneurship, and contributing to economic growth. Here’s a breakdown:

Micro Enterprises: These are the smallest of the small, often run by just one or a few people. They could be local shops, small online businesses, or even street food vendors. An example could be a neighborhood bakery operated by a family or a freelance graphic designer working from home.

Small Enterprises: Small businesses are a bit larger than micro-enterprises and may have a few employees. Examples include a local clothing boutique, a small software development company, or a family-owned restaurant in your town.

Medium Enterprises: These are bigger than small businesses, with more employees and higher revenue. A medium-sized enterprise might be a regional chain of stores, a mid-sized manufacturing company, or a technology firm with a broader market reach.

For instance, let’s take a look at a typical example.

Imagine a family-owned bakery (a micro-enterprise) that grows and expands into a small regional chain of bakeries (a small enterprise) and later evolves into a well-known regional or national pastry and confectionery brand with numerous outlets (a medium enterprise).

MSMEs are important because they create jobs, foster innovation, and contribute significantly to the economic health of a country. They’re often considered the engines of economic development and are supported through various government programs to help them grow and thrive.

MSME Registration & Definition In India

MSME India – Official Home Page

The investment limit has been revised upwards and additional criteria for turnover are also being introduced. Most importantly, the distinction between the manufacturing and service sectors is to be eliminated.

Following is the existing and revised Definition of MSMEs

To avail of the benefits of being an MSME, the business has to get registered. The registration process is an Aadhar-based process and can be done free of cost. Businesses can register as MSMEs from the Udyog Aadhar website.

Know more about Udyog Aadhar and the benefits of registration. 

Also Read: Benefits of MSME Registration In India

MSME Registration: Documents Needed

The documents needed for MSME registration are pretty straightforward:

1. Your Aadhaar card
2. Your PAN card

The good news is that there are no charges for registering as an MSME, and you don’t have to provide any additional documents. The Udyam Registration Portal makes it easy for you because it automatically fetches your PAN and GST-related info from government databases.

This is possible because the portal is connected to the Income Tax and GSTIN systems.

Now, if your business doesn’t require GST registration, you’re all good. You don’t have to bother with it. But, if your business is one of those that must have a GST registration according to the GST law, then you’ll need to enter your GSTIN when you’re getting your MSME Registration or Udyam Registration.

It’s a simple step for those businesses that are required to have it.

MSME Registration: Step-by-Step Process

To get your Udyam Registration online, here’s a simple guide to follow on the Udyam registration portal:

Step 1: Start by going to the Udyam registration portal.

Step 2: Once you’re on the homepage, click on the option that says ‘For new entrepreneurs who haven’t registered as MSMEs yet or those with EM-II.’

Step 3: You’ll need to enter your ‘Aadhaar Number’ and your ‘Name’ as the entrepreneur. After that, hit the ‘Validate & Generate OTP’ button.

Step 4: An OTP (One-Time Password) will be sent to your mobile number that’s linked to your Aadhaar card. Put in the OTP and click ‘Validate.’

Step 5: Once your Aadhaar is confirmed, you’ll be directed to the PAN verification page. Here, you should enter your ‘Type of Organization,’ ‘PAN’ number, and click ‘Validate.’ You’ll also need to mention whether you filed your previous year’s ITR and if you have a GSTIN.

Step 6: The Udyam registration application form will pop up. Here, you’ll need to provide all the necessary information. This includes your name, mobile number, enterprise name, where your plant/unit is located, your enterprise’s address, enterprise status, bank details, your unit’s activity, NIC code, and the number of people you employ.

Step 7: You’ll also have to provide details about your investment in plant and machinery and your turnover. Make sure to select the declaration. After that, click ‘Submit’ and get your final OTP.

Step 8: Enter the final OTP you receive and submit the form. Your Udyam e-registration certificate will be sent to your email.

By following these steps, MSMEs can easily complete the Udyam Registration process and gain access to the benefits and support provided to registered businesses in the MSME category.

Conclusion

There are innumerable benefits to MSME registration in India. The government has finally defined MSMEs clearly and has simplified the process of registering for them.

Now that the entire process is online, it is easier than ever to start up and let the money flow.

But to manage the flow of finances effectively, you need simple-to-use accounting software. ProfitBooks is exactly the right solution for it!

With our cloud accounting system, you can manage your books on the go. The best part? It is free to use, so get your 100% FREE account now!

Also Read:

Benefits of MSME Registration In India

ONDC: A revolutionary digital network for small business

What is a Debit and Credit?

Trademark Registration Online Easy Process In India

How To Get Working Capital Loans In India

The post MSME Registration Process In India appeared first on ProfitBooks.net.

In today’s world, it is extremely important to showcase your ware and ideas in front of the right people, at the right time. Due to the growing popularity of startups and the need for a place for entrepreneurs to come together, many startup events are being organized in order to give such interested people a platform for networking and socializing.

This has led to the need for networking with the correct group of people from investors to future employees.

What Is Startup Networking?

Since there are so many different platforms for people to initiate a startup on, it is becoming quite a common thing.

But this also means that the system is becoming saturated in terms of resources. So if you are planning to initiate a startup, you need to make sure that you are putting a certain edge to the idea, in order to get the attention you need to make your business a success.

In this context, one of the most important aspects is building a strong network.

What is networking?

It is essentially communication – communicating with the right set of people who can help you to give your startup al the elements it needs to become a success. Each business idea requires a lot of different types of resources to make it a success.

What’s The Need For Effective Networking?

A startup is a long process that includes a lot of intricacies.

Handling a start up on your own or with your team of professionals, might seem easy but in actuality you will need a lot of support from numerous groups of people if you want to accomplish in the task and establish yourself a s a success.

Among these groups of people, one of the most important set of people whose support will take you a long way are the investors and the network people.

The process involves talking and making people interested in your business model.

This group of people will include investors, customers and even future employees. Proper network strategies play a pivotal role in the success of your business as the right interest of people can make or break your business.

Now that the importance of building a professional network has been established, here are a few tips and hacks to help you network effectively in networking events.

5 Ways For Startups To Network Effectively

While networking, it is very important to get the attention of the person who you are trying to engage in conversation. Here are 5 tried and tested ways in which you can network efficiently.

1) Introduce and get introduced

In most of the different networking events, you will find different groups of people huddled together on their own. This technically shows that people often like to stick to their own group of peers who they know from before. They create sub groups that include people they are comfortable with. But in actuality, you need to step out of your comfort zone if you want to meet new people.

So if you have the option to meet new people and get them to talk to you, you need to introduce yourself well. If you do not find the option to do the introductions yourself, you can ask your peers who know new [people in the group to do the introductions. This will take you a long way.

2) Have a pitch plan in mind

When you are done being introduces, the person on the other side will want some kind of pitch from you. In these event meets, you will be required to pitch the ideas for your business if you want to get investors and customers. The pitch needs to include the details of your business along with any kind of information that the other person might want. So it is a very important step to keep the different information ready in the form of a pitch.

3) Place your questions well

The best way to understand the people who you are trying to network with is by asking a lot of questions. Asking questions will help you to know the persona and at the same time, they will feel that you are interested in them. This helps you to get into their good books which are a very important part of networking.

While asking question make sure to sound genuinely interested and also ask relevant questions. Since a networking event is rather a professional event, you need to make sure that you stick to your professional etiquettes.

4) Offer to help

Staying selfish during such events will get you nowhere. If you want a piece of the pie, you need to offer others a piece of that pie as well. Networking is not only about getting things or resources for yourself, you are essentially expected to talk to a lot of people and get them to show interest in your business. So it is rather important to help out others with the same cause as this helps you to get their attention. If you are able to help these people, they will gladly return the favour.

5) Diligently follow up post event

The network building never ends with the event. You need to make sure to continuously follow up with the people with whom you have spoken to if you want to keep them interested in your work. While you network during the event, you need to make sure that you take some kind of contact information that will help you to stay connected to them post event. This ensures that you are able to follow up on the work and keep their interest intact.

Bonus: 5 Hacks For Positive Networking

If you are able to keep the above tips in mind you should be able to network efficiently. But a lot of different entrepreneurs are networking at the same time. So how do you stand out among such competition? Here are a few hacks that you can follow in order to stay ahead of competition and create a strong impression on the mind of the people.

1) Prepare a battle plan

When you are heading to one of these events, consider this to be a battle. And hence you need a proper battle plan in place. You need to strategies on the different things you need to talk about, in such a way that it is very informative but at the same time not boring. You will have to plan on how you can introduce yourself and then get the attention of the people.

2) Try to get behind the scenes

Getting behind the scenes can open up a world of information for you. If you know that there is a place in the organizing committee or they require a keynote speaker, it is a very good idea to make yourself available. This will help you to connect to a lot of different people who might be able to help you network. This is also a great way to know the details of the people who you are planning on networking with.

3) Know the bio of the speakers

Most of these network events have some speakers who are accomplishes persons from their fields. Many a time these speakers have the capability to invest in your startup or help to get connections in the industry where you want to function in. So if you have a proper bio of such speakers you can get a chance to network with them better.

4) Have attractive business cards

Everyone has business card that contains the contact information. But if you really want people to remember your card details or store it, you need to make it stand out. Design a very attractive and creative business card, which will help you to network better.

5) Bring something new to the table

Always remember that most people are at the networking event for the same thing. So you need to do your research and try and stand out among the entrepreneurs so that you are able to bring something new to the forum.

Final Thoughts

These are some of ways in which you can stay ahead of competition when you are at a networking event. With the growing number of startup and limited resources, you need to make sure that you stand apart among them in order to get the resources allocated to you.

There are numerous mixers being hosted and you need to visit as many of them as possible if you want the best impact. It is quite important for you to network well, if you want people to invest in your startup or offer their expertise for the same.

Also Read:

Best Business Blogs For Entrepreneurs

Franchise Business: All You Need To Know

How To Use Pareto’s 80-20 Rule To Grow Your Business

ChatGPT and other free AI Marketing Tools

(This post was contributed by our guest author – Nidhi. She often writes for Booksrun.) 

The post How To Do Effective Networking In Startup Events appeared first on ProfitBooks.net.

All software cannot be like ProfitBooks, which offers powerful and 100% free inventory management and is also easy to use.

In this article, we discuss how inventory management works, and what free inventory management software you should use as a small business owner.

How Inventory Management Works

In simple words, inventory management refers to the process of ordering, storing, and using a company’s inventory. These include the management of raw materials, components, and finished products, as well as the warehousing and processing of such items.

A company’s inventory is one of its most valuable assets. Be it retail, manufacturing, food service, and other inventory-intensive sectors, a company’s inputs, and finished products are the core of its business.

A shortage of inventory when and where it’s needed can be extremely detrimental.

At the same time, inventory can be thought of as a liability. A large inventory carries the risk of spoilage, theft, damage, or shifts in demand.

Inventory must be insured, and if it is not sold in time it may have to be disposed of at clearance prices—or simply destroyed.  Read more on how surplus stock can be managed so that you don’t incur losses.

Anyway, for the above reasons, inventory management is important for businesses of any size. Knowing when to restock certain items, what amounts to purchase or produce, what price to pay—as well as when to sell and at what price—can easily become complex decisions.

Small businesses often keep track of stock manually and determine the reorder points and quantities using Excel formulas. This is often hectic and cumbersome.

Thankfully, technology has transformed inventory management systems for both online and offline retailers. Now retailers can sell more, grow faster, and run smarter.

Many businesses are now using free inventory management software to stay up in the game and scale their business.

Free Inventory management software makes accessing and updating a business’ stock possible from any location at any time using smartphones and tablets.

Many apps also include features like customer-facing product catalogs and processing sales; supplier and customer data management; order entry, editing, and tracking; as well as direct integrations with other physical and digital tools.

If you want to learn more, read our in-depth article on Inventory management.

Benefits of using software for inventory management

Simplified inventory management

The biggest benefit to using free inventory management software is that it makes the process of managing your inventory a whole lot easier, saving you time and money.

With supply and demand changing throughout the year and your stock levels continuously fluctuating, inventory management software helps to avoid the risk of human error by automating your key business processes.

Reduced risk of overselling

Overselling is a major challenge for online sellers, often resulting in loss of control, disappointed customers, and in some instances, being suspended from marketplaces such as Amazon and eBay.

That said, it is a selling challenge that is preventable by using the software. An inventory management software synchronizes your orders and inventory across each of your online marketplaces and eCommerce platforms.

This ensures that your stock levels are adjusted each time you make a sale.

Greater cost-savings

By streamlining your inventory management processes, you not only stand to eliminate the inventory costs associated with human error, but you can also benefit from further cost savings

Well to start with, it can improve your chances of shortening your supplier lead time through better supplier management relationships.

It also allows you to reduce excess and obsolete stock, not to mention the subsequent costs incurred, by establishing your par levels and calculating your safety stock.

Perhaps the biggest cost saving comes from automation. Poor inventory management can cause significant revenue losses, driven by avoidable errors including stock-outs and overstocks.

Want to know more effective ways to save yourself from losses? Check out our article on various inventory management techniques that you can use to cut losses.

Avoidance of stock-outs and excess stock

When it comes to managing your inventory, trying to maintain the right balance is a challenging task. After all, too little stock can lead to a stock-out, unhappy customers, and potential loss of sales.

On the other hand, having excess stock, can take up valuable warehouse space and incur unnecessary charges. Either way, you look at it, it comes at a cost to your business.

Fortunately, with free inventory management software, you can track low stock levels and identify the re-order points for each product, in turn avoiding the occurrence of stock-outs.

The ability to make more profitable business decisions

Effective free inventory management software can provide invaluable sales data, allowing for more data-driven business decisions.

As an example, with a more informed understanding of supply and demand, you can go some way to forecast sales trends, giving you a more competitive edge.

With access to reporting features and inventory metrics, many inventory management systems equip you with the tools needed to make strategic decisions.

But, why choose free software?

If you’re not sure which inventory management software to use then you should consider available free options, so you don’t have to commit to something you may find difficult to use.

Free inventory management software will get you used to using various features so you have a better idea of what you’re doing, and what you need. Moreover, it will help you at least get started!

It is such a good idea to have something in place and organized at the start of your business for managing your inventory, and if you have to change later you can usually export the data into whichever program you decide to switch to!

Also, it doesn’t cost you anything. This provides the ROI justification to implement it. Second, it helps you improve the customer experience you have to offer.

The free software automatically tracks your inventory and alerts you in case of a shortage. With this automation, you can significantly reduce the chances of order cancellation.

A free inventory management solution will trigger business growth in two ways: you save on software costs and reduce revenue losses due to canceled orders.

Let’s have a look at the top 10 free inventory management software:

1. Odoo – Free Inventory Management Software

Odoo Free Inventory Management Software

Pros

Odoo’s free inventory management software comes with a free downloadable version.

Its modern interface allows you to control and monitor your incoming orders, manufacturing orders, scrap products, pack products, receipts, and much more easily and quickly without any complications

Odoo Inventory is fully integrated with manufacturing, purchase, and sales and thus keeps every function on the same page.

The software allows you to automatically schedule all your orders based on your sales order request. It has various features like a mobile dashboard, advanced routing facility, and smart scheduling.

Cons

It gets expensive if you are planning to purchase multiple Odoo apps. One single standalone Odoo app is not sufficient to use.

2. Zoho Inventory

Pros

Zoho Inventory’s free version is perfect for small and growing businesses. It is a complete inventory control system that helps with creating sale strategies, managing reorder points, generating insightful reports, and much more.

With Zoho, Inventory status is automatically updated across all sales channels. Also, can track transfer orders using a specific batch or serial number. The key feature is its dashboard that gives you a quick view of sales order status- pending, invoiced, delivered.

Cons

The lack of BOM (Bill of Material) functionality is a huge disadvantage of this free inventory software. Companies are forced to use a more time-consuming functionality instead of this feature.

Also, there are issues in syncing real-time data when you are managing e-commerce orders.

3. Zhenhub

ZhenHub Inventory Management Software

Pros

ZhenHub is a cloud-based logistics and inventory management solution for small and midsize businesses (SMBs). Its free version offers inventory tracking, shipment tracking, and warehouse management.

ZhenHub’s USP is its shipping management functionality that integrates with multiple shipping solutions such as DHL and FedEx. It lets you schedule, manage, and track orders from these providers.

Cons

ZhenHub charges both sender and receiver fees for international transfers, which can make billing costly. It can sometimes take time for the shipping status to sync up with the shipper’s account.

4. InFlow

Inflow Free Inventory Management Software

Pros

Inflow is another ideal free inventory management software to keep your business running. It saves your time given to paperwork, helps in accurately meeting your customer’s requirements, and generates insightful reports.

It has a cloud-based as well as on-premise free inventory management system. All their plans include unlimited customers, warehouses, orders, and products. There is easy navigation because of the simple user interface.

Cons:

There are a lot of differences between the functionalities of on-premise and cloud-based solutions.

5. Ornavi – Free Inventory Management Software

Ornavi – Free Inventory Management Software

Pros

Ornavi combines a lot of business management processes, monitoring, and HR practices in a single hub from where users can also maintain inventory and purchase control.

The system offers simple, yet powerful stock management capabilities, such as importing suppliers’ price lists, rapid quote generation, and multiple units for monitoring and management (boxes, metrics, etc.).

A separate part of this system is dedicated to purchasing orders, where you get a clear view of your minimal stock levels, store manufacturer information, auto-generate orders for shortfalls, and record both lists and prices for each item.

Cons

It doesn’t give a comprehensive overview of tasks.

6. Partkeepr

Partkeepr – Free Inventory Management Software

Pros

PartKeepr is an open-source free inventory management software application developed to help companies reorder items in their stock, and always have a clear overview of the products they have for disposal.

With a blazing-fast search function and a variety of part data parameters being tracked, PartKeepr is a master of its skill, helping companies streamline relationships with distributors, and keeping their customers satisfied.

Cons

Parker requires some technical expertise to operate.

7. RightControl

Right Control – Free Inventory Management Software

Pros

RightControl offers you full control over your stock and inventory.

This inventory management software product is ideal for centralized warehouse management and is perfect for freelance and small-biz service providers.

But it can also be tailored to cater to larger enterprises due to its unlimited size ventures and functionality.

Some of its features include a modern and simplified system that puts in place accurate invoice management, constant stock level monitoring, order management, barcode scanning, and enterprise-level reporting mechanisms for you to enhance stock control.

Cons

Users can play around with it all they want, but with one catch: With the free version, all stock data is removed when the program is closed.

Make sure you’re aware of this before you enter your inventory, or you may end up wasting a whole lot of time.

8. Delivered

Pros

Delivered is a free inventory management software cloud solution, ideal for everyone from small online retailers to large E-commerce businesses. This software allows users to track and control both regular and damaged inventories.

Whenever you create a new customer order in Delivrd, a check is performed to ensure that you have enough available stock to fulfill your custom order.

Another unique feature of the Delivrd Inventory management system is that it allows one to control even the packaging materials.

Cons

It is not that powerful and doesn’t have advanced features

9. Stockpile

Stockpile – Free Inventory Management Software

Pros:

Stockpile Inventory is ideal for small businesses and individual users. It is simple and makes online inventory management efficient, easy, and quick. The software is a big time-saver.

Users, locations, and managed products are not limited. It has various features like an easy-to-use interface, a tiered access model to manage multiple locations at the same time, and excellent technical support.

Cons:

Some users consider the wait time for money transfers from account to bank a bit too long.

10. Profitbooks – 100% FREE Inventory Management Software

ProfitBooks – 100% FREE Inventory Management Software

ProfitBooks is the easiest-to-use free inventory management software on this list!

ProfitBooks offers endless advantages to using its free inventory management software solution. We’ve mentioned their top features and pros below.

Pros:

• Simplify Purchase Workflow: Create Purchase Orders and email them to your vendors with one click. You can allocate the inventory to desired warehouses at the time of recording purchase.
• Stock Control & Adjustments: Record stock transfer between warehouses, stock wastage, raw material consumption, and production of finished goods – from a super simple interface of this free inventory management software.
• Maintain Product Batches: Organise products in different batches and specify batch numbers, manufacturing dates, and expiry dates. This helps a lot if you are a manufacturer or deal with perishable goods.
• Create Multiple Users: You can add multiple users and even assign them specific roles. For example, an employee with an ‘inventory manager’ role can only access the inventory function.
• Maintain Multiple Warehouses: Create multiple warehouses to store inventory. You can even call them Store, Location, or Godown as per your business needs.
• Support Multiple Currencies: ProfitBooks Trade supports all the major currencies. You even get a report that shows gain or loss due to currency fluctuation.

ProfitBooks’s cloud-based inventory management system automates your unique workflows and accelerates purchase requisitions.

You can convert Purchase Orders to Purchases in one click. The system connects with accounts payable, cash management, and inventory, so you don’t have to enter the same information twice.

Cons: The mobile application of ProfitBooks’ free inventory management software can be improved, as the UI is not at par with the easy-to-use software on a desktop or PC.

Conclusion

In conclusion, finding effective and free inventory management software can be a challenging task. However, not all inventory software is created equal, and ProfitBooks stands out as a powerful, user-friendly, and 100% free inventory management software solution.

While there are many inventory management software options available, we’ve highlighted the top 10 free choices, with ProfitBooks standing out as a standout solution. It streamlines purchase workflows, offers robust stock control, and supports multiple currencies.

Choosing free inventory management software is a wise move, allowing you to get acquainted with various features, improve the customer experience, and reduce the chances of order cancellations.

ProfitBooks, in particular, offers a user-friendly experience. So, make the right choice for your business needs and watch it thrive. Get your 100% FREE account now!

Also Read:

Top Ten Business Software With A Free Plan

Best FREE Lead Generation Software For SMBs

Top 5 Software To Help Sole Traders.

5 Kickass Cold Email Software

Free accounting software for small businesses

The post Top 10 Free Inventory Management Software For Your Small Business appeared first on ProfitBooks.net.

This decision is seen as a well-thought-out move aimed at broadening the UAE’s sources of income beyond its reliance on oil revenues, all the while ensuring its continued prominence as a major commercial hub in the region.

This article will dive into how UAE corporate tax was introduced, what are the rates, and how it operates within the country.

So let’s start with what corporate tax is in general, and then we’ll see how UAE corporate tax is defined.

What Is Corporate Tax?

Corporate tax is a type of tax that businesses, like companies and corporations, pay on their profits.

Just like how you pay income tax on the money you earn from your job, companies pay corporate tax on the money they make from their business activities.

This tax money helps the government fund important things like schools, hospitals, and infrastructure.

It’s an essential part of how countries manage their finances, and it ensures that even big companies contribute to the well-being of the society they operate in.

What Is UAE Corporate Tax & How’d It Start?

The folks in the UAE have some news to share. They’re starting corporate tax from June 1, 2023. What this means is that if you’re running a business, you’ll need to pay 9% of your profits in taxes, but only if your business year begins on or after that date.

This news has stirred up a lot of excitement among businesses and tax experts. With this move, the UAE is now the fourth country in the GCC (Gulf Cooperation Council) to have a national corporate tax.

The goal behind bringing in this federal corporate tax is to make the UAE an even stronger global hotspot for businesses and investments. It also helps the country meet international tax standards and prevents any tricky tax tricks.

Since this corporate tax is brand new in the UAE, businesses must wrap their heads around the concept.

The scope of UAE corporate tax

The UAE has brought in a new national tax system that applies to all businesses and commercial activities across its seven emirates. However, there are some exceptions:

1. Companies involved in getting stuff from the ground, like oil or minerals, will still follow the tax rules set by their specific emirate.
2. Regular folks making money in their capacity, like from their job or investments, won’t be taxed unless it’s a business activity that needs a license.
3. Businesses located in Free Trade Zones can avoid this new tax as long as they follow all the rules and don’t do business with the rest of the UAE.

Here’s the interesting part: Foreign banks used to follow their emirate’s bank tax rules, but now they’ll have to follow the UAE’s national tax law. How this change affects them and local banks will be explained later.

It’s a big deal because they’ll all need to adapt to these new UAE corporate tax rules.

Brief On UAE Corporate Tax Rates

The new tax rules in the UAE work like this: They have three different rates based on how much money a company makes.

1. If a company’s annual profits are less than AED 375,000, they don’t pay any tax.
2. If a company’s annual profits are more than AED 375,000, they pay a 9% tax on the extra money they make.
3. Big multinational companies, the ones covered by international tax rules called Pillar 2 of BEPS 2.0, pay taxes based on those global rules if they make more than AED 3.15 billion.

This tax is applied to the money a company makes after making some adjustments to its accounting profits.

Are there any exemptions?

In simple terms, some types of income won’t be taxed in the UAE. These include:

1. Money a UAE company makes from shares it owns in certain other companies (the specific rules will be in the law).
2. Profits from selling assets like property or investments.
3. Profits when companies within the same group reorganize.
4. Profits from transactions between companies in the same group.

Also, there won’t be a tax when you send money within the UAE or to other countries.

Because of these income exemptions, it’s expected that the law will have rules like those used in other countries. Businesses will need to check if they meet these rules to get the tax exemptions.

Wrapping Up: Common Questions Regarding UAE Corporate Tax

As the UAE corporate tax is newly introduced, many common questions are being asked by the UAE citizens and people conducting business in the country.

We’ve listed some of them for you below:

Q1. Who has to pay UAE corporate tax?

A1. If a company makes more than 375,000 AED in profit, it has to deal with corporate tax. They’ll have to give a portion of their profit as tax to the government.

Q2. What’s the UAE corporate tax rate?

A2. The corporate tax rate is 9% of the money businesses earn as profit. But here’s some good news for small businesses and start-ups: If your profit is less than 375,000 AED, you won’t have to pay any corporate tax at all. It’s like a special break to help out the little guys and those just getting started.

Q3. When can we get our hands on the corporate tax law from the government?

A3. They put out the corporate tax law on December 9, 2020. You can find the UAE corporate tax info on their official website under ‘Federal Decree-Law no. 47 of 2022. If you want to download it, just head over to the Ministry of Finance website.

Q4. What businesses or incomes are outside the scope of UAE corporate tax?

A4. If a business in the UAE makes more than 375,000 AED in profit, they have to pay corporate tax. But, there are some exceptions. Here’s a list of things and people that don’t have to pay corporate tax:

• If you’re an individual and your money comes from things like your job, real estate, or investments, you’re in the clear. It’s only business-related income that gets taxed.
• Foreign investors who aren’t running a business in the UAE don’t have to worry about corporate tax.
• If you’re a business in a free zone and you’re following all the rules, you might get some tax benefits.
• Any money a UAE business makes from selling shares or getting dividends from certain investments won’t be taxed.
• If you’re moving money around between different parts of the same company or doing a major business overhaul, you won’t be hit with corporate tax either.

Q5. How do you calculate UAE corporate tax?

A5. In the UAE, they figure out how much a company has to pay in corporate tax in a specific way. They take 9% of the profit that the company shows in its financial documents. But here’s the catch – they only start taxing when the profit goes beyond 375,000 AED. Anything less than that is tax-free.

So, let’s say a company makes 475,000 AED in profit. They’d only pay tax on the extra 100,000 AED (475,000 – 375,000). To calculate that tax, you’d multiply the extra profit (100,000 AED) by 9% (which is the tax rate), and that gives you 9,000 AED. So, in this example, they’d pay 9,000 AED in corporate tax.

It’s like you have to pay taxes on your income, but only on the part that’s above a certain amount. This system helps businesses and encourages them to grow while contributing to the country’s finances.

In the world of compliance, having good tax accounting software is essential for businesses. You need to choose software that will make the transition to the new VAT rules smooth, simplify your VAT accounting, and streamline the process of filing returns.

ProfitBooks is exactly the right tool for this. The best part? It’s a FREE-to-use accounting software with customer support that answers within the same business day!

Get your FREE account now!

Also Read:

VAT In UAE: A Comprehensive Guide

UAE VAT Return Filing – Comprehensive Guide

The 11 Types Of Company Formations In The UAE | Dubai

Top 5 Accounting Software In UAE (Pros & Cons)

The post UAE Corporate Tax: What It Is & How It Works appeared first on ProfitBooks.net.

This article is all about how to file returns for UAE VAT. The UAE government has special provisions, under which UAE VAT returns can be filed and businesses can save a lot of money.

So let’s get started with what UAE VAT is all about, and how to file returns for it.

What Is UAE VAT?

We have talked about UAE VAT in its entirety in our comprehensive guide on UAE VAT. It is recommended that you check our first if you’re unaware of the legalities surrounding UAE VAT.

Value Added Tax, often called VAT, is like an undercover tax that sneaks into most of the things you buy.

Here’s the lowdown on how VAT plays the money game.

You, the customer, ultimately foot the bill, but businesses play middlemen by collecting and sending that tax money to the government. So, businesses are like tax superheroes for the government.

These businesses not only pay what they collect but can sometimes get a tax refund from the government for what they pay to their suppliers. So, it’s all about the “value add” as it moves through the supply chain. To make it crystal clear, check out this simple example (assuming a 5% VAT in UAE rate):

What Is Value Added Tax (VAT) In The UAE?

(source: Ministry of Finance, UAE)

What Is VAT Return In UAE?

In simple terms, a tax return is like a report that lists all the stuff you bought and sold during a specific period for tax purposes.

It covers things like the stuff you imported, exported, or didn’t have to pay tax on, and it also shows how much tax you paid or collected on those transactions. To create this report, you use your invoices and send them through the FTA e-portal, which is like an online tax platform.

Now, if you’re a registered taxpayer in the UAE, you’ve got to make one of these tax reports for each tax period. That period could be a whole month or three months, depending on what the FTA says in your VAT certificate.

So, it’s a routine task for businesses in the UAE to keep track of their financial activities and report them to the tax authorities.

What Are The Filing Dates?

When it comes to submitting your VAT returns, whether you do it every month or every quarter, you’ve got to do it by the 28th day of the month after the end of that VAT period.

So, for example, if you’re dealing with a quarterly VAT return for February to April, you need to file it by May 28th.

One important thing to remember is that the first VAT period for a business in 2018 can differ depending on instructions from the tax authority. If your first period is from January 1st to January 31st, 2018, you should file your VAT return by February 28, 2018, or the next business day if February 28th is a weekend or a holiday.

In some cases, a business’s first VAT period can be longer than three months. For instance, if your first period is from January 1st to April 30th, 2018, you’d need to file your VAT return by May 28, 2018, or the next business day if May 28th is on a weekend or a holiday.

Detailed UAE VAT Return Filing Process

The VAT Return form you need to complete and submit is called ‘VAT 201.’ This form is split into 7 main sections, and here’s what they cover:

1. Your details as a taxpayer.
2. The specific period for your VAT Return.
3. How much VAT do you collect from sales and other sources?
4. How much VAT do you pay for expenses and other inputs?
5. The net amount of VAT you owe or are owed.
6. Any extra information you need to report?
7. Your declaration and authorized signature.

In each of these sections, there are various boxes where you’ll need to provide the necessary information to finish your VAT Tax return filing. We’ll go over each of these sections and what you need to fill in the relevant boxes of VAT Return Form 201 in the following discussion.

Step-by-Step UAE VAT Filing Procedure Using VAT Return Form 201

If you want to fill out your VAT Return Form 201, just hop onto the FTA e-Services portal with your username and password. Once you’re in, go to the Form Navigation menu, select ‘VAT,’ then click on ‘VAT 201 – VAT Return,’ and finally hit ‘VAT 201 – New VAT Return’ to start the process of filing your VAT return.

When you click on ‘VAT 201 – New VAT Return’ as you see in the picture above, different parts of the VAT return form will pop up. Now, let’s go through how to file your VAT Tax return step by step and talk about what details you need to provide in each of these sections.

Details of the taxable individual

In the section above, we’re going to grab some important info from taxpayers, like their “TRN” (Tax Registration Number), name, and address. It’ll fill in automatically.

If a tax agent is doing the VAT return for a taxpayer, we’ll also put in the agent’s “TAAN” (Tax Agent Approval Number), the related “TAN” (Tax Agency Number), and the names of the agent and their agency right at the top of the VAT Return form.

Understanding the Significance of Tax Year-End and UAE VAT Returns

The information in the previous section, including the VAT return period you’re currently reporting for, the end of the tax year, the reference number for your VAT return period, and the due date for your VAT return, will be automatically filled in for you.

The tax year end is important for businesses that can’t reclaim all of their input VAT and need to make an annual adjustment for their input tax. You can only make this adjustment in the first return after the tax year ends. The VAT return period reference number tells you which VAT return period falls within that tax year.

If your VAT return period reference is 1, businesses affected by this rule should include their input tax adjustment in that VAT return. But don’t stress about it right now, because this rule applies after the first year of VAT returns, starting from January 1, 2019.

VAT on sales in the UAE

In the part just mentioned, you should provide information about things like regular taxable stuff in the Emirates, tax-free stuff, things that don’t get taxed, and stuff where the tax is paid by the buyer.

It’s all about different types of supplies and their details.

What to Include in Your UAE VAT Report

UAE VAT on expenses and all other inputs

In this section, make sure to provide information about the stuff you bought or the money you spent, which had a 5% VAT, and the supplies which you pay the tax later. Also, include any recoverable tax that you can get back.

Understanding Your VAT Payment and Refund

In simpler terms, this section is all about your UAE VAT, the tax you pay on goods and services. Here’s the breakdown:

1. Box 12 – Total Due Tax: This shows the total VAT you need to pay for this tax return period. It’s based on what you’ve earned from sales and other outputs. So, it’s the sum of the VAT you’ve charged on your sales.
2. Box 13 – Total Recoverable Tax: This is the VAT you can get back. It’s based on what you’ve spent on expenses and other inputs. Think of it as the VAT you’ve paid on stuff you needed for your business.
3. Box 14 – Payable Tax: This is the key number. It’s the difference between what you owe (Box 12) and what you can get back (Box 13). If Box 12 is bigger, you owe that extra amount. If Box 13 is larger, you can either get a refund or use it in the next tax period.

So, in a nutshell, if you make more in VAT than you spend (Box 12 > Box 13), you pay the extra. But if you spend more (Box 12 < Box 13), you can either get a refund or save it for later.

Profit Margin Scheme Reporting for Eligible Businesses

Additional reporting requirements in UAE VAT

Only businesses that have used the Profit Margin Scheme during this time need to pay attention to this part. If you haven’t used it, simply check ‘No’ and move on to the next section. This is just an extra bit of info you’re sharing, and it won’t affect your VAT Return financially.

The final step towards filing UAE VAT returns

Declaration and authorized signatory

In the section above, make sure to enter the details of the person authorized to sign, and then check the box in the declaration section to send in your VAT Return. You also have the option to save your progress as a draft if you’re not ready to submit it right away.

But here’s the important part: Before you hit that submit button, be sure to double-check all the information.

Only when you’re 100% confident that everything is correct should you click the submit button. Once your VAT Return is successfully filed, you’ll get an email from FTA confirming that they’ve received it.

Note that you can file UAE VAT in its entirety by logging on to the EMARATAX portal and following the detailed instructions we have provided you. The process is pretty straightforward and does not require any accountant assistance.

EMARATAX portal login page

However, it is still recommended that you consult a professional before you take any steps towards finances, especially related to tax.

You should also refer to the official UAE VAT return filing guide by the UAE’s Federal Tax Authority, or even the UAE Government Portal’s detailed video guides will work wonders in clearing your doubts regarding UAE VAT return filing.

UAE Federal Tax Authority Infographic on VAT return-filing

Conclusion

When it comes to filing your UAE VAT returns, you need to provide a summary of your sales, purchases, output VAT, and input VAT.

This summary should follow the format set by the Federal Tax Authority (FTA). However, it’s not just about putting all your sales and expenses together. Some parts require you to give more detailed information, especially if you’re eligible to recover input VAT.

For instance, if you have standard-rated sales at the Emirates level, you should only report the expenses or purchases for which you can recover input VAT. Trying to collect and organize all this information manually can be tough, and it might cause you to miss deadlines, which leads to non-compliance.

That’s why businesses must use the right tax accounting software such as ProfitBooks. This software not only helps you keep track of your UAE VAT transactions but also makes it easy to create the correct UAE VAT Return in the required format.

With the right software, you can do this with minimal effort and avoid hefty penalties, which can range from AED 1,000 to 3,000 for not filing or filing incorrectly.

In the world of compliance, having good tax accounting software is essential for businesses. You need to choose software that will make the transition to the new VAT rules smooth, simplify your VAT accounting, and streamline the process of filing returns.

ProfitBooks is exactly the right tool for this. The best part? It’s a FREE-to-use accounting software with customer support that answers within the same business day!

Get your FREE account now!

Also Read:

VAT In UAE: A Comprehensive Guide

The 11 Types Of Company Formations In The UAE | Dubai

The post UAE VAT Return Filing – Comprehensive Guide appeared first on ProfitBooks.net.