Article image: How to Reduce Taxes for Business in Times of Crisis

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All legal relations between local and federal authorities are stipulated in the constitution of the UAE Full version

All professional economists around the world are aware of the fact that it is absolutely necessary to reduce the tax burden on business in times of crisis, because otherwise small and medium-sized businesses may not cope with the problems they face while the loss of income in the form of taxes from this economic sector due to bankruptcy can cause much more trouble for the country and lead to further aggravation of the crisis. The so-called tax optimization offered by the country at the peak of the crisis only increases demands and tightens control and pressure on business since the aim of the government is to fill the budget. Under such circumstances, the reduction of taxes is hardly possible.

Therefore, the question of how to reduce the tax burden on business in times of crisis remains relevant and highly important. We are going to discuss legal methods of tax reduction – after all the evasion from tax payment is a criminal offense. Therefore, we will consider the possibility of legal costs reduction through tax optimization. Tax optimization implies the opportunity for businesses to get more profit after paying all taxes and fees. It should be noted that switching to other tax rates may require additional fees or even penalties, which may even block the positive effect of switching to another tax rate.

Methods of Tax Burden Reduction in the UAE

The tax legislation of the UAE does not restrict economic entities in terms of forms and conditions of contracts and transactions; therefore, in times of crisis, taxes can be optimized in such a way as to minimize the rate. Thus, a professional consultation with a tax specialist in the UAE will legitimately save your profits. With this approach, it is important for the transaction not to have obvious signs of fictitiousness, since in this case the transaction itself can be recognized as invalid.

Another way to reduce taxes in times of crisis is the partition of economic relations. In this case, one legal entity may delegate part of its operations to another entity with certain benefits, for example, if a part of the company is transferred to another region, or even to another country with more favorable tax conditions. In this respect, the UAE has many opportunities, because there are more than 40 free trade zones in the country – each of these zones has its own tax preferences in specific business areas.

No matter what approach you use, it is very important to have qualified help and be professional, because certain actions aimed at tax optimization can have negative consequences.

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