Revealed: UAE set to see massive influx of specialized accounting firms with new corporate tax to kick in from June

The fast-approaching January 2024 deadline for the imposition of the global minimum tax (GMT) for the corporate sector by members of the bloc will add to the expected entry rush by overseas accounting and auditing firms and professionals to the region.

The UAE’s proposed 9 percent tax for companies will kick in from next month, while other countries in the region such as Saudi Arabia, Kuwait, Oman and Qatar impose taxes on corporate income in a range of 20-10 percent, subject to various stipulations and exemptions.

The OECD’s (Organisation for Economic Cooperation and Development) proposed 15 percent GMT for multinationals with revenues of more than 750 million Euros will come into effect from January next.

“With some of the GCC countries having varying rates for corporate tax and the impending deadline for the GMT, corporate tax [regimes in the region] is set to become more complicated,” Sharron Gunn, COO of the Institute of Chartered Accountants in England and Wales (ICAEW), told Arabian Business.

Gunn said the demand for auditing and assurance services in the region is expected to see a surge in step with the increased financial reporting requirements, and “overseas firms will definitely be looking to take advantage of the expected market expansion”.

“We may see more specialist accounting services coming to market to support these [rising] needs,” she said.

The ICAEW second-in-command however pointed out that the UAE and other countries in the region already have a well-established accounting profession, with a number of domestic and international firms already operating in the region.

Gunn said local GMT frameworks for the participating GCC countries are still being determined, and it is not yet clear if tax rates will be raised to 15 percent or if a “top up” tax will apply.

“However, what is certain is the new and evolving corporate tax regimes will intensify reporting efforts as more data will have to be gathered and scrutinised to ensure compliance. This presents a challenge and opportunity for [more and more] professional accountants and accounting firms,” she said.

The new and evolving corporate tax regimes mean that not only will they [accounting and auditing professionals] need to help companies get their data houses in order, they will have to up their reporting game too, Gunn said.

The sector expert, however, said it is difficult to estimate the size of the accounting and auditing services market in the UAE or region in the coming years.

“Over the next five years, demand for professional accounting services is expected to see a massive increase as a result of intensifying economic diversification and modernisation efforts in the UAE, KSA and wider region. 

“The growing complexity of business operations, as well as the increasing importance of environmental, social and governance factors, are also expected to drive demand for advisory services,” she said.

Gunn, however, said the regional business environment and regulatory landscape could present challenges for firms looking to enter the market.

“They may need to learn to navigate cultural differences as well as the complex legal and regulatory frameworks that differ in each Middle East country,” Gunn said.

She said accounting firms already present in the region will have an edge here in terms of knowledge and experience.

“However, the [expected] increased competition from new market entrants will be healthy for the continued development of the profession and ultimately will help elevate the standard of accountancy services [in the region],” the ICAEW COO said.

As of now, four of the six GCC countries have announced or imposed new corporate tax regimes, with varied rates.

Saudi Arabia has the highest rate of 20 percent, while Kuwait and Oman have 15 percent each and Qatar has 10 percent.

The UAE has announced the lowest corporate tax rate of 9 percent on taxable profits over AED 375,000.