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 federal corporate tax 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:
No worries more. In this article, you’ll come to know all the details. Stay tuned till the end.
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.
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 UAE corporate tax year 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.
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.
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.
The corporate tax 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.
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-
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. PostBytz is ready to provide the best accounting solution for your restaurant business and can enable good auditors for your business.
Need for software to manage your business corporate tax 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 PostBytz restaurant management software with accounting for restaurant businesses.
The PosBytz tax solution is designed for small to multi-chain restaurant businesses following the latest corporate tax 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 PostBytz Accounting Software:
With the PostBytz 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.
PosBytz is your comprehensive platform to manage everything you need to sell and grow your business.
PosBytz is a product of Bytize, Inc.