Virtuzone, company formation specialists and award-winning corporate service provider announced a new initiative to support small and medium-sized businesses in the UAE in adapting to the newly implemented corporate tax regulations.
The company has committed to providing free corporate tax registration and accounting services for three months for over 10,000 SMEs, with a unique compliance guarantee, in a bid to assist businesses in complying with the tax laws and avoid penalties.
Virtuzone’s AED50 million tax initiative
This initiative intends to help businesses meet their reporting requirements for corporate tax, and a region-first compliance guarantee new to the UAE. Virtuzone is investing over AED50 million ($13.6 million) in free corporate tax and accounting services that will enable 10,000 businesses and entrepreneurs to be corporate tax-compliant by December 2023.
“Corporate tax started a few months ago but there is a lot of confusion around it in the business community, many clients and businesses come to us asking if it applies to them since they are free zone companies or just small businesses,” said Virtuzone Accounting and Tax Managing Director John Casey.
“We will help them comply with ease, get their books in order, and allow them to avoid penalties and fines. As a leading corporate service provider in the UAE, we aim to lead and guide SMEs in navigating this new terrain in the UAE’s constantly evolving business landscape,” Casey added.
“As a company whose lifeblood is supporting SMEs in the UAE, we have made this pledge to demonstrate our unwavering commitment to championing the country’s start-up and SME sector,” said Virtugroup CEO George Hojeige.
“By supporting SMEs, we are also supporting the national economy, as SMEs contribute more than 63 percent to the UAE’s non-oil GDP and account for 94 percent of the companies operating in the country. We are pleased and proud to be the first in our industry to take on this trailblazing initiative and lead the UAE’s business community in tax compliance,” Hojeige explained.
Following the introduction of value-added tax (VAT) in 2018, the UAE has now introduced corporate tax, under which firms in the country are expected to pay 9 percent.
While some firms may balk at additional costs, the introduction of tax should be seen as a positive move for both the economy and the wider business community, Casey explained in an exclusive interview with Arabian Business.
Small businesses will broadly be exempted from the new tax scheme, firms that make less than AED3 million a year will be excluded from the payment of tax. However, these firms are still subject to file tax returns.
“There is a severe lack of awareness. I’ve spoken to probably 500 SMEs, and almost 90 percent of these seem to not be aware that they actually have to do steps to comply,” Casey said.
Over 50 percent of UAE-based companies are not ready to comply with the new tax rules, most in belief that the new rules do not apply to them. This initiative by Virtuzone aims to assist such businesses alongside others.
“To help facilitate the smooth implementation of corporate tax and ease the transition for SMEs, Virtuzone has taken this historic initiative to support the local business sector, help boost the nation’s economy and work alongside the government in making the country an even more attractive hub for foreign direct investment (FDI),” said Virtugroup Chairman and Founder Neil Petch.
“We are willing to get 10,000 of them up and running and ready for tax for free, and even the businesses that miss out on the 10,000, at least they will now be aware that they have a requirement to do something,” said Casey.
Why corporate tax?
Corporate tax serves as a pivotal cornerstone in the UAE’s strategy to broaden its government revenue sources. By establishing a more diversified income base, the country is better positioned to enhance its long-term financial resilience. This approach not only bolsters the UAE’s economic stability but also elevates its global stature as a premier business destination on the international stage.
Since its establishment, Virtuzone has set up companies for over 70,000 entrepreneurs in the region from over 180 countries. Services provided includes trade license, visa processing, bank account opening, tax consultancy and more. By offering a helping hand to businesses grappling with the complexities of corporate tax, Virtuzone is not only aiding entrepreneurs but also making a significant contribution to the UAE’s broader economic landscape.
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