The importance on accounting automation in UAE’s corporate tax era

Image credit: Qashio

In an era of rapid technological innovation, traditional bookkeeping practices are becoming a thing of the past.

Today, a growing number of businesses are embracing cutting-edge accounting techniques that leverage the latest software and machine learning technologies. This shift comes at a critical time for companies operating in the UAE, as the introduction of corporate tax on June 1 underscores the need for businesses to safeguard themselves against economic downturns and ensure long-term sustainability.

As such, the adoption of advanced accounting tools has become an urgent priority for businesses looking to thrive in an increasingly complex and competitive global marketplace.

Facing challenges

Dubai’s Business Registration and Licensing (BRL) department revealed that the emirate granted 45,653 new business licenses in the first half of 2022, which is 25 per cent more than the previous year. However, a group of these businesses are encountering difficulties in establishing best practices and finding the right technology to suit the needs of their business.

To understand how the UAE corporate tax laws will influence their firm, business finance teams should start making future plans and doing impact analyses immediately. This entails evaluating how various laws are applied and creating the systems and practices needed to manage compliance. Businesses must also assess their finance technology stack to ensure the tools they are using are suitably capable of managing the new processes required and assessing whether the different systems in place integrate efficiently to allow for seamless automation.

The UAE is one of the world’s most digitally advanced nations, with nearly 100 per cent internet penetration, making it an ideal environment for digital transformation. The country has doubled down on its efforts to spur innovation across various industries, most notably through the launch of the Dubai Economic Agenda “D33”. This ambitious initiative includes an annual Dhs100bn revenue expected from fostering digital transformation.

The integration of digital technology and sustainability in business operations is creating a positive feedback loop. According to a survey conducted by Bain & Company and the World Economic Forum, 35 per cent of the 400 executives polled from various industries and nations agreed that integrating digital elements into their business models would enhance their sustainability efforts. Additionally, the survey found that 40 per cent of respondents believed that digital technologies were already having a positive impact on their sustainability goals.

Spend management software is quickly gaining traction worldwide, especially in the MENA region where its development is actively promoted. This technology offers valuable insights and helps streamline spending across businesses of all sizes. A recent survey conducted by VISA found that 71 per cent of small and medium-sized firms (SMEs) in the UAE have either gone cashless or plan to do so by 2024, compared to 59 per cent globally. This trend aligns with the goals of the UAE government, highlighting the growing importance of digitisation in the region.

Businesses are realising the benefits of digitising their payments and financial services and adopting technology which can allow them to eliminate laborious manual accounting processes. Early adopters have almost entirely abandoned cash, and macro-environmental changes have facilitated this transition. Many technology-focused businesses are also following suit. As companies become increasingly aware of the challenges and operational issues associated with using cash, they are gradually moving toward a cashless ecosystem.

These methods are meant to take the role of cheques and cash as the main method of payment for most business expenses. Businesses will transition from reactive spending and cash flow management to proactive control as they advance, giving them the ability to decide how to manage their cash flow precisely and intelligently in order to unlock value.

Research suggests that even though 80 per cent of business leaders emphasise improving cash management and payment efficiency, only half are satisfied with their present capabilities, and only about one in three have the technology necessary to improve them.

How spend management platforms can help companies better prepare for corporate tax

This is where spend management platforms can significantly enhance a company’s financial organisation and audit process by keeping a clear and concise digital audit trail of requests, approval and payments made on behalf of a business. This cuts the time and effort invested in yearly audits while ensuring businesses remain consistently compliant with regulations. Effective spend management tools will also allow for seamless integration into a company’s ERP or accounting software to ensure an automated flow of information and financial records from one system to another.

According to the Global Business Travel Association, one in five reports contain inaccuracies. Considering an average, companies handle 51,000 expenditure reports per year, which results in approximately half a million dollars and 3,000 hours being spent annually on correcting errors in cost reports. By implementing an integrated spend management system, companies can automate manual work and reduce the chances of errors, allowing them to be better prepared for corporate tax. Additionally, this software can help businesses utilise their workers more efficiently.

A comprehensive spend management software solution can transform the role of finance professionals, freeing them from the time-consuming task of duplicative bookkeeping and allowing them to automate the manual task to concentrate on critical financial planning and analysis. Gone are the days of pouring over endless stacks of receipts or grappling with transactions lacking crucial background information. With this innovative technology in place, businesses can shift from reactive financial planning to proactive accounting, paving the way for strategic decision-making and more effective resource allocation.

Armin Moradi is the co-founder and CEO at Qashio.