A company is starting a new trading entity in Dubai. What would you set up on the accounting side for UAE VAT and corporate tax?

What the interviewer wants to hear

• Assess VAT and corporate tax registration with the FTA
• Configure tax codes for standard-rated, zero-rated, exempt and reverse charge items
• Compliant tax invoices and record keeping
• Plan VAT return filing and reconciliation
• Corporate tax: accounting under IFRS, adjustments to taxable income, transfer pricing with related parties

Model answer

For VAT, I would first confirm when the entity must register with the Federal Tax Authority, based on its taxable supplies and imports, and complete registration on EmaraTax. In the accounting system, I would set up tax codes for 5% standard-rated supplies, zero-rated supplies such as exports, exempt supplies, out-of-scope items and reverse charge on imported goods and services. Invoice templates must meet tax invoice requirements, including the TRN. I would build a VAT return working that ties the ledgers to the return boxes each period and keep records for the required period. For corporate tax, the entity must register too, keep IFRS-based financial statements, and track adjustments from accounting profit to taxable income, such as non-deductible expenses. Since it trades with group companies, I would document arm’s length pricing for related party transactions under transfer pricing rules, and check whether any free zone or small business reliefs could apply.

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