Wafeq is a flexible accounting system specifically designed to align with the corporate tax laws in the UAE. The system allows for the calculation of taxes according to the new tax standards in the UAE, offering a perspective that surpasses existing market solutions, making it the ideal choice for businesses seeking compliance with tax requirements.
For more details on corporate tax in the UAE and how it is calculated in Wafeq, please refer to the following guides:
- Why Wafeq Is the Only Accounting System Built for UAE Corporate Tax
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Corporate Tax in Wafeq — A Practical Guide
To further facilitate this process, the integration between Wafeq and Tax Star is introduced, where the work starts in Wafeq (as the accounting system) and ends in Tax Star (as the tax compliance tool).
Role of Wafeq: This involves data entry, bookkeeping, and preparing accounts based on International Financial Reporting Standards (IFRS), in alignment with the directives of the UAE Federal Tax Authority (FTA).
Role of Tax Star: After preparing the accounts, Tax Star uses the data from Wafeq as a starting point to make complex tax adjustments and fill out the comprehensive tax return form (which contains over 200 fields), ready to be submitted to the UAE Federal Tax Authority (FTA).
This integration offers significant advantages for accountants and businesses in the UAE, including:
1.Simplifying Tax Calculation in Wafeq
Calculating Taxable Income: Accountants can use Wafeq to determine whether a transaction is deductible or not, either at the account level or for an individual transaction.
Handling Exemptions: Non-taxable revenues, such as dividends received from other companies in the UAE, are managed by deducting them from the net accounting profit.
2.Issuing the Tax Return from Tax Star
Monthly Tax Calculation: The corporate tax feature in Wafeq can be used monthly to calculate the tax liability, which can then be audited and reviewed using Tax Star, simplifying the preparation of monthly accounts.
Extracting Financial Reports: Once connected, Tax Star can pull your financial reports, such as the trial balance, profit and loss statement, and the corporate income report directly from Wafeq. (Note that the reports must be in AED).
AI-Driven Transactions: Tax Star uses artificial intelligence to handle necessary transactions for issuing the tax return, making the entire process more efficient and accurate.
Steps to Integrate Tax Star with Wafeq
Click on "Integrations" in the main menu, then click on the "Add Integration" button if Tax Star does not appear in the list.
Click on the "Connect" button next to Tax Star.
Log in to your Tax Star account or create a new account if you don't have one.
From within Tax Star, click on "Accounting Apps", then select "Connect to Wafeq".
Select the Wafeq account you want to link to Tax Star in order to establish the connection between your Tax Star account and your organization in Wafeq.
After connecting, you have access to many features within Tax Star, such as:
Data Retrieval: Pull the trial balance from Wafeq.
AI Mapping Feature: This feature reads the trial balance pulled from Wafeq and automatically maps between 70% to 80% of the accounts, saving a significant amount of time that was previously spent manually matching accounts.
Automatic Preparation of the Tax Return Form: The corporate income tax report in Wafeq provides the taxable net income, which is the required accounting figure. However, the Federal Tax Authority’s (FTA) tax requirements involve many legal requirements that require lengthy procedures, which can be automated to obtain the final version of the return through integration with Tax Star.
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Handling Legal and Tax Complexities: Tax Star provides tables designed to handle complex calculations such as:
◦ Interest calculations exceeding 12 million AED (using 30% of earnings before interest, taxes, depreciation, and amortization (EBITDA)).
◦ Handling "related parties" and "related party transactions" (RPT), providing fields for information such as names, residence, transfer pricing method, and any necessary adjustments.
Tax Adjustments: The trial balance is used as the "starting point" for making all required adjustments and calculations according to corporate tax law.
Comprehensive Tax Return: Tax Star generates a tax computation summary and fills out the tax return form as much as possible according to the latest guidelines set by the Federal Tax Authority (FTA), with the exception of some options that cannot be assumed.
Audit and Approval: The return is reviewed and sent to you for final approval before submission to the Federal Tax Authority (FTA).
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