Guide for Corporate tax UAE 2023 effect to Restaurants industry

Dubai has offered many business opportunities for restaurant and bar owners over the past few years and continues to do so. So, the hospitality industry is growing, with sales values of approximately 4.5 billion U.S. dollars since 2022, and poised to grow faster in the future.

Meanwhile, the announcement of the corporate tax UAE 2023 on profit for the upcoming fiscal year, starting on or after June 1, 2023, has confused many restaurant business owners, like you or those planning to start a business in this field.

It seems you have a few questions:

• What is the corporate tax in UAE 2023?
• Whether the restaurant industry will fall under the proposed purview or not, 
• What will be the procedure for tax filing, and most importantly, 
• Is there any automated software that will come in handy, etc.? 

No worries more. In this article, you’ll come to know all the details. Stay tuned till the end.

What is Corporate tax UAE 2023?

UAE has recently announced that all businesses with a profit of more than 375,000 AED (about $100,000) net profit (minus expenses) will have to pay a 9% corporate tax. To support startups and small businesses, the tax system will not impose any tax until the profits go beyond AED 375,000.

In addition, according to the Global Minimum Corporate Tax Rate Agreement, large multinational firms that generate over EUR 750 million in profit will be required to pay 15% of their net profit as corporate tax in UAE 2023. 

However, larger multinational companies have different business conditions, so they could be charged a different tax rate as per a progressive corporate tax system with rates between 9% and 55%.

The new corporate tax UAE 2023 will begin on June 1, 2023, for those companies who do not pay tax so far. For companies who used to pay tax on revenues generated on January 1 of every year, the tax year will remain the same. They can pay their next corporate tax on January 1, 2024.

What Types of Businesses Pay Corporation Tax in UAE 2023?

UAE intends to operate a three-tier federal corporate tax framework. There will be no tax for startups and small businesses with less than 3,75,000 AED in profit. A standard 9 percent tax will be applied to businesses whose net profits exceed 3,75,000 AED. 

The larger multinational companies are subject to a tax-based progressive corporate tax rate of between 9% and 55%, according to their revenue generation.

Businesses involved in the extraction of natural resources, foreign investors, free zone businesses, and individuals who have income from investments in shares, employment, and real estate will fall under the exclusion. 

What Kind of Business Is a Restaurant in the UAE?

Restaurants, bars, and other businesses related to food and drinks generally fall under the hospitality industry. Restaurant and fast-food businesses in Dubai are extremely profitable if they’re well-managed, as the business owners must abide by strict codes, rules, and regulations.

Likewise, the upcoming corporate tax would apply to restaurant businesses, though some exceptions will be there. So, stay well-informed about every rule and regulation to avoid future complications.

Do Restaurants Pay Corporate Tax UAE 2023?

The corporate tax in UAE 2023 will apply to all kinds of businesses and corporate activities in the UAE. The hospitality industry or restaurant business is not an exception. 

The restaurant owners would be liable to pay corporate tax, but the government will not impose any tax on the business until they earn more than AED 375,000 in profit.

Steps to be followed by restaurants for corporate tax filing

The upcoming UAE federal corporate income tax is taking many to a new journey. After all, the process is still unfamiliar to most restaurant business owners in Dubai. However, once you have a solid understanding of the proposed tax structure, you can follow these basics for tax filing-

• Determine the best legal structure for your business according to your established business structure.
• Next, determine how many tax deductions you could write off while estimating the tax return amount.
• After that, you’ll need to estimate how much tax you’ll need to pay on the net profit amount considering the federal authority’s proposed rate, other tax obligations, and exclusion factors.
• Most importantly, file your tax return annually by the due date to avoid penalties or future complications.

As you can see, there are many things to consider, but the time is short.

So, it won’t be a waste of money if you contact any professional tax experts to come up with the most profitable legal agreements. PosBytz is ready to provide the best accounting solution for your restaurant business and can enable a 360 degrees Accounting and Financial to manage your Corporate tax UAE 2023 return form  for your business.

Need for software to manage your business corporate tax UAE 2023 filing for your restaurant. 

The UAE corporate tax regime includes a diverse array of policies. From the VAT system to corporate tax percentage, tax-free zones to the absence of federal income tax will be considered. 

Considering proposed corporate tax rates and all inclusions and exclusions, determining the tax percentage for your business won’t be easy enough.

So, having reliable software is a must for not only tax calculation but also streamlining the tax filing process. Have a close look at PosBytz restaurant management software with accounting  for restaurant businesses.

How PosBytz Can Support Your Corporate Tax in UAE 2023 Filing for Your Restaurant?

The PosBytz tax solution is designed for small to multi-chain restaurant businesses following the latest corporate tax UAE 2023 system of Dubai. 

The platform enables administrators to calculate corporate taxes and other taxes for company-wide transactions, file returns, issue refunds, and store tax-related forms for the company and its employees.

The software will be synchronized with company accounts, automatically importing all transaction and accounting data. With real-time accounting data, tax planning considering exemptions, credits, deductions, and refunds would be easy enough.

You can estimate how much tax will be owed quickly with a few clicks. Moreover, the software will also recommend strategies to reduce tax amounts. Have a glance at the following points to know what to expect from PosBytz POS with Accounting Software:

• Capable of calculating tax for large-scale accounts, making it suitable for multi-chain restaurant business owners.
• Create your own chart of accounts for various ledgers you want to manage your bookkeeping.
• Manage all your expenses from one place
• Sales and purchases get automatically synced to the respective accounting ledgers
• Custom reporting features include all historical and current data, streamlining tax reporting and filling processes.
• Updated with the latest rules and tax rate information of different cities, state, federal, and countries.
• Update business finances and cash flow in real-time.
• Offer unlimited user logins through a unique ID and password.
• It can be integrated with various third-party business applications without compromising data security.
• Supports multiple currencies.
• It can be accessed from any computer, laptop, and mobile device with a stable internet connection.
• Generate various reports like Balance sheet, Day book , Profit & Loss, Trial balance and General ledgers.

Conclusion

With the PosBytz team by your side, there is no need to worry more about tax filing. You can expect a complete personalised accounting solution to meet your business needs. Contact our qualified, experienced tax professional for guidance, and let us handle the tax filing process to save big in the upcoming financial year.