Sidra Salman & Co Chartered Accountants

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Can total amount of interest paid to determine your taxable profits?

profitable-profits

UAE Corporate Tax Law: Can you use the total amount of interest paid to determine your taxable profit? 

Companies have access to a variety of funding options, and debt finance is one of them. Debt financing can take many different forms, including overdrafts, preference shares, and regular loans from financial institutions. The cost of debt financing, also known as interest, is typically less expensive than the cost of equity. The interest payments are seen as a business expense when borrowed money is used for commercial reasons, which reduces the accounting earnings. If allowed by tax authorities, interest payments can lower taxable profits, resulting in tax savings, as corporate tax is assessed on taxable profits, which are determined after reducing. 

A taxable individual can choose to take on more debt because the cost of debt is cheaper than the cost of equity, therefore they don’t need to think about the best capital structure. To move their profits from a high tax jurisdiction to a low or no tax jurisdiction, taxable individuals can take out large loans from relatives in tax-free countries and zones with lower taxes.  [Read more…]

UAE Corporate Tax Law

UAE Corporate Tax Law 2023

Corporate tax

The introduction of a corporate tax in the United Arab Emirates (UAE) was unavoidable as the country prepared to transition away from an oil-dominated economy.   [Read more…]

uae regulations

uae-regulations5 new UAE regulations that will go into force in 2023 include corporation tax, job loss insurance, and emiratization fines.

As we gear up to step into the Year 2023, several new laws will come into effect this year. These include Emiratisation targets for companies, the introduction of corporate tax, mandatory insurance against job loss, imposition of the plastic ban across more emirates, and personal status law for non-Muslims. [Read more…]

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Sidra Salman & Co Chartered Accountants (SS&CO) provides audit, tax, and advisory services.

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