United Arab Emirates: UAE One Of The Easiest Places In The World For Accounting And Tax Compliance

Ranked 92nd out of 94 jurisdictions according to their financial complexity, the UAE is the least complex place globally for 'tax' complexity.

The United Arab Emirates (UAE) is one of the least complex jurisdictions in the world for Accounting and Tax compliance, according to TMF Group's inaugural Financial Complexity Index 2017.

The leading provider of global business and compliance services ranked 94 jurisdictions across Europe, the Middle East, Africa, Asia Pacific and the Americas; 1 being most complex through to 94 the least complex. The UAE came in at 92 as one of the easiest places for compliance – beaten only by the British Virgin Islands (BVI) and Cayman Islands.

In determining the rankings with its in-house accounting and tax experts, TMF Group used four weighted complexity parameters, considering the accounting and tax rules and regulations in different jurisdictions, and risks associated with non-compliance.

At 7%, the UAE rates as the least complex jurisdiction globally for 'Tax.' Curacao (8%) is least complex for 'Reporting', Cayman Islands (27%) for 'Bookkeeping' and it's also the least complex jurisdiction for 'Compliance' at 32%.

THE 5 EASIEST JURISDICTIONS FOR ACCOUNTING AND TAX COMPLIANCE

MOST/LEAST COMPLEX BY EACH COMPLEXITY PARAMETER

Commenting on the rankings, TMF Group's Head of EMEA Juraj Gerzeni said:

"The five least complex jurisdictions in our Index all have simplified reporting requirements and beneficial tax rates to encourage investment. Any complexity that does exist in the UAE arises from different laws and requirements between the Emirates' 35-plus free zones.

"For example: While a branch of a foreign company is generally exempt from submitting audited reports in free zones, this is mandatory in the onshore market in Dubai and Abu Dhabi. It's exactly the opposite with private limited liability companies.

"The 2018 implementation of VAT in the UAE is expected to increase accounting complexity for businesses, mainly due to the related tax compliance requirements.

"Companies operating in the UAE and those looking to enter should prepare for the change now - and this is where working with in-country experts who understand the local requirements for financial compliance can be very beneficial."

Key factors that reduce financial complexity in the UAE

• The United Arab Emirates is a nil-tax haven with 0% tax, no corporate tax, no personal tax, no limits on repatriation of capital or profits. This greatly reduces accounting complexity.
• It has a strong reputation as an international financial centre and is on a convenient time zone (never more than a few hours in front or behind Europe, Asia, elsewhere in the Middle East and Africa).
• Regulations and controls are in place to ensure that while the UAE attracts international businesses and makes a name in international financial services, it also has reputable standards.

Future developments:

• The Gulf Cooperation Council (GCC) – of which the UAE is a member state – will begin implementing VAT at a rate of 5% from 1 January 2018.
• Strongly anticipated to be based on the European system, VAT will be charged at each step of the 'supply chain'. The UAE's Finance Ministry will issue its own national VAT legislation, and will have the authority to determine specific VAT rules in certain areas.
• The introduction of VAT in the UAE means accounting will become more complex for businesses mainly due to related tax compliance requirements. For example, every single VAT transaction must be documented, VAT returns filed, zero-rated instances and exemptions taken into account.

To download the full report please visit: tmf-group.com/FCI2017

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