Problem Statement
The client, a well known Insurance Company in UAE, faced significant challenges in adapting to the new UAE Corporate Tax Law. They needed to automate Corporate Tax calculations and deductions, ensuring compliance with a 50% deduction on entertainment expenses and a 9% CT rate on taxable income over AED 375,000. Additionally, they had to maintain accurate records for foreign tax credits and related-party transactions, while also ensuring non-deductibility of fines, penalties, non-qualifying donations, and correctly handling interest expenditure and investment gains/losses.
Our Solution
To address the challenges posed by the new UAE Corporate Tax Law, we implemented a comprehensive solution within Oracle EBS. Our approach focused on automating tax processes, ensuring compliance, and enhancing overall tax management. Key aspects of our solution included:
- Automated Tax Calculations: Configured Oracle EBS to automatically apply the 9% Corporate Tax rate on taxable income exceeding AED 375,000 and to deduct 50% of entertainment expenses such as meals, accommodation, and transportation.
- Foreign Tax Credit Management: Developed processes within Oracle EBS to manage and report foreign tax credits, ensuring they do not exceed the Corporate Tax due on relevant income and preventing carry forwards or carrybacks of unutilized credits.
- Related-Party Transactions: Configured Oracle EBS to track and report transactions with related parties and connected persons, maintaining necessary records for compliance and supporting the arm’s length principle..
- Non-Deductible Expenses: Automated the exclusion of fines, penalties, and non-qualifying donations from deductible expenses in Oracle EBS, ensuring correct handling of interest expenditure and investment-related gains/losses.