Compiled by Vinit Furia
UAE’s emerging market for accounting and bookkeeping services
UAE has far been known as a wealthy nation both by GDP growth rate to $501B and the per capita metric of $50,349 as well. It’s strived to reduce oil dependency of its GDP to less than 25%, which basically means it is focusing a lot on services and other businesses as a major source of its revenue.
It’s been commonly known that America is a country built on immigrants, and how immigrants have shaped and developed the country to be what it is today on the shoulders of talent and subsequently economic growth. UAE has had somewhat of a similar story in recent years, it’s been attractive enough to be a version of “built on ex-pats” with a humongous 89% of the population.
So much attraction to foreign nationals must come at some incentive, right?
Yes, and that is:
Business Friendly laws of UAE. That’s right, apart from the obvious attraction for shorter stays being tourism, the real deal here is the invitation to wealthy individuals or corporations around the world to incorporate here. And it does really well as it does fall under the 20 Best Countries to do business according to an index from the World Bank.
The corporate tax in UAE was 0, but UAE plans to impose a 9% corporate tax from June 2023 on businesses having a net profit north of AED 375,000 or US$102,000. This would almost be for everyone considering the financial status of corporations incorporated.
So, all in all, one of the lowest taxation laws and a conducive business environment incentivizes big firms or HNIs to move to UAE to do business, which means two things if we look at it
A) There are a lot of corporations with huge profitability.
B) For retail businesses and B2C brands, it means a larger ticket size in sales due to the massive GDI per capita of the residents and ex-pats.
This leads to the need for robust financial accounting and bookkeeping, due to hefty and outrageous penalty on default on payment of taxes and other compliances. Although, the lack of CAs and accountants is not a very helpful factor and can hinder and cause unwanted frictions in conducting business. This in turn tells us about the scope of external bookkeeping and Accountancy services in tax havens like the UAE, so that businesses can maximise their profits and pay full attention to what they do best, BUSINESS.
The gap filled here by the Bookkeeping and Accountancy services is only going to get more concrete with the new corporate tax laws and a change in accounting style with it. This only shows an uptrend and growth in the volume and businesses of these services as an industry.
This makes these services an emerging industry for the coming years and a robust market ripe with demand at a growing rate. There are prominent firms rising up owing to the future prospects of the industrial progress of the bookkeeping and accounting service sector at large.