How to reduce the tax burden for business in a crisis?

19 / 08 / 2020

When a crisis strikes, small and medium-sized businesses are the first to feel its consequences. There are a lot of different problems that have to be dealt with very quickly and efficiently. In order to help business survive and cope with the crisis, the best strategy for the state would be to reduce the tax burden, which will largely remove some of the worries from business. The effectiveness of this method is confirmed by the best economists in the world. Unfortunately, many countries are optimizing taxes in such a way that, on the contrary, they tighten control over tax payments and impose unbearable fines. There is only one goal - to replenish the country's budget. At first glance, this goal seems quite reasonable, but let's look a little deeper. The tightening of the conditions for paying taxes leads to the closure of many small and medium-sized businesses, because in addition to the crisis, they are solving problems with taxes. As a result, the overall losses to the country's economy are much greater from the closure of a large number of companies than from the insufficient flow of injections into the budget through tax collection.

There are several ways to remove a share of the tax burden to cope with a crisis situation. There is a completely legal way that is possible thanks to tax optimization. The result of such optimization should be an inflow of greater profits after all tax liabilities have been paid. The bottom line is the transition from one tax rate to another. The main thing is to carefully study everything from the beginning, sometimes such a transition leads to additional fees or even fines, and then the positive effect is completely covered. In this matter, you should be as careful and information-savvy as possible.

Now let's talk about the situation with tax cuts in the United Arab Emirates. On the issue of tax optimization in the UAE, there is a very flexible legislation that does not provide for restrictions in the conditions and forms of various transactions and contracts for companies. Therefore, when a crisis strikes, the company can relieve itself of a share of the tax burden by reducing the rate. The task of a tax specialist is to make it possible to reduce the company's expenses on taxes. It is worth warning that when performing such operations there should be no signs of imaginary intentions, if such are still found, then you will at least get a refusal, and as a maximum - an imprisonment.

Also, in the United Arab Emirates, another way of optimizing the tax burden is practiced. It consists in dividing current activities. You can delegate part of the processes to another person if he has more favorable tax conditions. In the Emirates, it is quite easy to do this, because there are more than 50 Free Economic Zones on their territory. Each such zone has its own rules, and sometimes legislation, therefore, taxes are also different there, and you can definitely find the most suitable option for you.

It doesn't matter which method you decide to use, it is important how you do it. All issues related to taxes must be resolved with the help of professionals in order to avoid negative consequences.