RAA-Auditing RAA Auditing - Quality Audits Delivered

September 26, 2023
Uncategorized
Comments : 0

UAE Corporate Tax and External Audit

Over the past few years, the United Arab Emirates has emerged as a leading regional business hub, and it has attracted both local as well as global investors. There are multiple reasons for the economic and business growth of the UAE, including its strategic geographical location, advanced infrastructure and, above all, business-friendly policies.

Many regulatory and compliance-related regulations have been introduced to maintain financial transparency and accountability in UAE. The implementation of Corporate Tax and mandatory external audits are the most prominent examples of these recent developments.

The key aspects of Corporate Tax and the role of external audit in promoting financial transparency and integrity will be discussed.

The UAE Corporate Tax Law (Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses) has been effective from June 01, 2023. The purpose of implementation of Corporate Tax is to comply with the OECD’s BEPS initiative to bring more transparency and equity to the international tax regime as well as to support the strategic objectives of the UAE and to expedite its development and transformation.

The UAE has a unique business environment, characterized by its free zones and mainland jurisdictions. As such, there are many options available to investors to manage their business. There are certain benefits of operating from a freezone from a taxation point of view as some free zone companies are subject to lower corporate tax and sometimes even exempt from corporate tax, depending upon their business models and applicable corporate tax regulations.

The introduction of federal Corporate Tax at a low rate of 9% in the UAE has cemented the UAE’s reputation as a low-tax environment which will bring many benefits, not only for the businesses but also for the overall economy, such as:

Attracting foreign and local investors to set up businesses in the UAE by investing in flourishing UAE economy.
Allows businesses to expand, invest in research, and development by reinvesting their profits and this contributes to the overall economic growth.
Allows the various business segments to enhance the UAE’s competitive edge in the global market by making it an attractive alternative compared to other international jurisdictions with higher taxes.

The corporate tax environment can have a significant impact on external audits conducted by the audit firms. Here are some ways corporate tax can influence the external audit process.

External Audit Requirements

It is a mandatory requirement for all the UAE registered companies to maintain proper books of account. Each jurisdiction emphasizes financial transparency and accountability through its external audit requirements, including UAE Commercial Companies Law which mandates all companies undergo an external audit annually, irrespective of their size and structure, by a UAE registered audit firm.

External or statutory auditors are responsible to review, validate and report a business’s tax provisions. This helps to ensure that the amount of taxes owed are accurately calculated and reported, as any changes in corporate tax laws, tax rates, or even regulations can have a direct impact on tax assessments. An auditor must consider any potential tax-related risks and uncertainties that could have an impact on the financial statements.

External Audit Objectives

There is no doubt that the primary objective of external audit is to ensure financial transparency and accuracy of financial statements, which provide assurance to the different stakeholders that the financial information gives a true and fair view of affairs of a business. Another major objective of external audit is to identify any potential frauds or irregularities to help companies safeguard their assets and prevent financial misconduct.

An external auditor also ensures that businesses adhere to applicable accounting standards, regulatory requirements, and other industry-specific regulations, to promote best corporate governance and secretarial practices. One of the other major benefits of external audit is that it smooths the way for investors and helps to secure financing by building credibility and trust in a business.

Select A Right Audit Firm

It is vital to select the right external audit firm in the UAE as this will ensure an effective and comprehensive auditing process. A business should always look for an audit firm with extensive industry experience and a good track record of providing high quality audit services. At RAA Auditing, we believe that auditing in today’s world is both a science and an art. Science is the accuracy and rigor, the technical, procedural, and methodical. Art is the independent thought, professional scepticism and judgment developed by our people over time. Together, they drive quality, confidence, transparency, and perspective.

Always look for an innovative audit firm to make the audit better, by combining advanced technology and online tools with individual auditor-judgment and expertise to deliver higher quality with more relevance and value. It is important to make sure that the chosen auditor is independent and unbiased to maintain the integrity of the audit process.

Another important element is to look for an audit firm which can offer valuable insights and recommendations to improve a business’s financial reporting elements. At RAA Auditing, we have the resources, technical expertise, and commitment to provide you with the quality service you expect from your auditors. With our dedicated and experienced personnel, we can help you plan new activities as well as review current activities, to ensure the proper approach and take into account all important implications.

Who We Are?

RAA is a leading UAE audit firm with a strong presence in the Middle East business community and is well known for its quality service delivery. We strive to provide not just audit, but proactive advice on how to improve your business.

With our unique approach, we have the requisite expertise and experience to help our clients grow and develop. Through our technical excellence, combined with our personal commitment, we deliver high-quality services to large corporate clients and SMEs alike. We are also fully aware of the prime importance of providing the highest quality independent auditing for our clients.