Pluto is the fastest way to reimburse your employees

Under UAE’s corporate tax law, effective from June 1, 2023, resident and non-resident businesses are subject to a 9% corporate tax on their taxable income above AED 375,000. Profits below this threshold are tax-exempt, supporting small businesses and startups. The tax applies to all entities engaging in business activities within the UAE, including branches of foreign companies. 

However, it exempts certain organizations, such as government entities, wholly government-owned entities, and extractive businesses with qualifying income. Also, UAE free zone companies are eligible for a 0% tax rate on qualifying income, provided they comply with regulatory conditions and do not engage with mainland UAE businesses.

Foreign tax credits can be claimed to reduce double taxation, and tax loss carry-forwards are permitted to offset future taxable income, promoting business resilience. 

Compliance requires annual financial reporting, with penalties imposed for non-compliance or inaccuracies. So, in this blog post, we shall look at the step-by-step process for calculating corporate tax in the UAE. 

How to Calculate Corporate Tax in UAE?

When calculating corporate tax, companies tend to misunderstand taxable income thresholds, neglect foreign tax credits, misclassify deductible expenses, and overlook tax loss carryforwards. 

Hence, here's a step-by-step process for accurately calculating corporate tax in the UAE.

Step 1: Prepare Financial Statements

The financial statements, including the balance sheet, income, and cash flow statement, determine the taxable income. 

So, if you fail to report revenue accurately due to faulty financial statements, you will underpay taxes, which will lead to penalties and interest charges from tax authorities.

Moreover, accounting standards, such as International Financial Reporting Standards (IFRS), must be adhered to for consistent and transparent financial statements. 

So, if you recognize revenue prematurely, it will inflate the taxable income, resulting in higher tax liabilities. Hence, following established accounting principles reduces the risk of costly errors and ensures proper tax reporting.

Potential Challenges:

Here are some common pitfalls you must avoid to ensure accurate financial records.

• Misclassification: Incorrectly categorizing expenses leads to inaccuracies in taxable income calculations, affecting overall tax liability. For instance, if a company mistakenly categorizes a capital expense (like purchasing machinery) as an operational expense, it will reduce taxable income, resulting in underreporting taxes owed.
• Incomplete records: Missing documentation results in underreporting or overreporting income, leading to potential penalties from tax authorities. For example, a business that doesn't document AED 50,000 in sales will face penalties for underreporting income during a tax audit.
• Changes in accounting standards: Staying updated with evolving accounting regulations is challenging, and non-compliance leads to financial discrepancies during tax assessments. So, if a company overlooks the IFRS updates requiring different revenue recognition practices, it will misstate its financial position. For example, recognizing revenue from a long-term project too early will inflate income figures, leading to unexpected tax liabilities.

Tips for Preparation:

• Keep all financial documents, including invoices, receipts, and contracts, systematically arranged to facilitate the preparation of financial statements.
• Conduct periodic reviews to identify discrepancies and ensure all transactions are correctly recorded and classified.
• Collaborate with a professional who can provide expertise and insights, helping with complex accounting requirements and ensuring compliance with applicable standards.

Adopt Automated Digital Solutions — Expense Management Software

Preparing accurate financial statements requires meticulous attention to detail, especially when managing expenses. 

Traditionally, companies rely on manual processes to track expenses, which is time-consuming and prone to errors. Employees fill out expense reports by hand, using spreadsheets to compile data from receipts, leading to lost documentation and misclassifications. 

This manual approach creates challenges, including misreporting expenses and inaccuracies in financial statements, which ultimately impact tax calculations.

In contrast, expense management software automates expense tracking and reporting. 

Employees can easily capture receipts using smartphones, categorizing expenses as they occur. This real-time visibility into spending helps ensure that all financial records are accurately recorded and classified according to accounting standards. 

This simplifies the collection of financial records and ensures compliance without overwhelming your team during tax season. Moreover, with a complete audit trail and organized, accurate records throughout the year, you promptly identify and rectify financial discrepancies, reducing the risk of reporting errors and potential tax penalties.

Check our blog post on the top 6 expense management software to find the right solution for your business. 

Step 2: Calculate Net Profit — Making Adjustments

With financial statements ready, determine the net profit by incorporating adjustments aligned with the UAE corporate tax framework. They allow you to leverage tax benefits and meet compliance standards.

Step 3: Other Considerations

When calculating corporate tax, certain elements impact current obligations and future financial planning. Accounting for them accurately ensures compliance and helps you make strategic decisions.

Be Ready for Tax Season

As tax season approaches, teams face intense pressure to gather, review, and report expenses accurately—a process that can overwhelm even seasoned finance teams. Without ongoing tracking, many companies experience “zombie spending” that inflates costs and creates last-minute discrepancies.

Maintaining clear expense visibility year-round ensures that costs are accounted for correctly and that non-deductible expenses, deferred payments, and other crucial details don’t slip through the cracks. By actively monitoring expenses throughout the year, teams reduce surprises during tax preparation, minimizing the chances of misreported data and last-minute adjustments.

Rather than waiting for tax season to compile scattered records, an automated system like an expense management tool captures every transaction in real time, stores data securely and provides instant access to spending patterns. 

This proactive approach alleviates the end-of-year burden on finance teams, enabling them to identify and correct discrepancies early on while ensuring compliance and accuracy.

When employees have to handle business expenses like purchasing supplies or covering travel costs, they often resort to petty cash or pay from their pockets, awaiting reimbursements later. However, this seemingly simple method poses challenges for effective expense management.

From the employee's perspective, the process involves fronting the expense, tracking receipts, and waiting for reimbursement, which can take weeks. This tedious process is prone to errors and increases the likelihood of lost receipts or duplicate submissions.

For businesses, managing these reimbursements entails labor-intensive tasks. Internal teams spend hours manually approving and reconciling expenses, all without real-time visibility. Additionally, there's the constant risk of compliance breaches.

Hence, in this article, we'll explore a better alternative and look at the benefits of corporate cards for simplified expense management.

Benefits of Corporate Cards

Corporate cards are payment cards issued to employees by companies to cover business expenses. Companies can deploy them by distributing dedicated cards to authorized personnel, setting spending limits, specific budgets & controls, and integrating them into expense management systems for real-time tracking and oversight.

Here are 11 advantages of corporate cards that make them a preferred choice: 

1. Offer Custom Spending Controls

You can customize corporate cards according to your company's specific corporate card policies. Right from the start, you can establish budget limits, control what merchant the employee can spend at, and what types of expenses will be allowed on the card budgets, preferred vendors, and payment categories. This enables you to enforce internal policies effectively and implement precise spending controls directly within the card system, eliminating the need for manual intervention.

Moreover, you can assign vendor-specific cards, enabling employees to purchase exclusively from designated vendors. Likewise, by specifying expense categories, you can prevent card misuse, such as limiting card usage to gas stations for drivers. This targeted approach ensures that expenses align with company objectives while enhancing control over spending. 

2. Provide Real-Time Visibility

Corporate cards eliminate the need to wait until the end of the month to get a spending overview. Instead, they offer real-time visibility, allowing businesses to track expenses as they happen. This immediate insight enables proactive compliance management and budgeting, preventing unexpected surprises at the end of the month. 

Additionally, corporate cards provide comprehensive analytics via a centralized dashboard. These analytics can be filtered to discern spending trends, enabling data-driven decision-making.

We wouldn’t know until the statement turned up at the end of the month what had been spent and where.But now, rather than waiting until the end of the week to collect enough receipts, we can actually see the money as it goes.

Christopher Anthony, Global Business Controller

3. Automate Compliance

Corporate cards have features designed to automate compliance controls—like approval workflows and auto-freeze cards—that enforce accountability and prevent unauthorized spending.

With the customizable no-code approval workflow builder, you create custom approval processes. Each transaction undergoes thorough authorization, ensuring transparency and accountability throughout the spending process. Moreover, you can set auto-freeze policies, such as in cases of missing or duplicate receipts, to proactively mitigate risks.

Additionally, corporate cards enable the assignment of zero-balance cards. With this feature, cards initially have zero balance, and employees request additional funds before each transaction. This enables you to authorize each expenditure and minimize the risk of misuse or overspending.

4. Facilitate Agile Needs

Corporate cards provide a versatile solution by offering both physical and virtual corporate cards. These cards can be tailored to specific needs, whether single-use or zero-balance cards, ensuring precise expenditure control. 

Further, employees can withdraw funds from ATMs, with the transactions recorded as unreconciled cash-in-hand, enhancing accountability. Also, the centralized application streamlines the process for requesting additional funds, eliminating unnecessary bureaucracy.

5. Enhance Accountability

Contrary to business credit cards, where companies wait for end-of-month statements to gain insights into spending, individual corporate cards allocate a dedicated card and budget to each employee. This facilitates real-time visibility into transactions, enabling businesses to pinpoint expenditures down to the individual level. This heightened transparency simplifies expense tracking and facilitates swift resolution of any discrepancies that may arise. 

With employees being directly responsible for their allocated cards, documenting expenses becomes a standard practice, ensuring thoroughness and accuracy in financial records.

6. Extend Cashback and Rewards

Corporate cards provide incentives like rewards, cashback, redeemable points and vouchers. These perks differ from company to company; some offer rewards for every transaction, while others provide gifts upon reaching certain spending milestones. 

For example, users enjoy up to 2% cashback (subject to T&Cs) on each foreign transaction within Pluto.

7. Improve Employee Experience

Corporate cards redefine expense management, sparing employees from the inconvenience of reimbursements and petty cash handling. With a dedicated card for business expenses, employees no longer need to dip into their pockets or spend hours filing paperwork. 

Corporate cards offer a dedicated expense management platform, which streamlines the entire process. Especially with Pluto, you get WhatsApp integration that simplifies expense filing by allowing employees to upload documents directly via WhatsApp. This seamless integration, coupled with optical character recognition (OCR) capabilities, ensures that receipts are captured and synced with transactions effortlessly, saving time and reducing administrative burdens.

The beauty in one part that I was amazed about Pluto, in terms of your technology, was your whole integration with WhatsApp and the ease of how easy it was to swipe, make a payment, take a picture, upload it via WhatsApp, and it's there on the platform for approval.

Lee Kersen Mascarenhas

8. Expedite Reconciliation Process

Corporate cards offer a centralized platform for consolidating transaction data and uploading essential documents. With OCR capabilities, receipt capture becomes faster and more accurate, reducing errors and flagging potential fraud. This ensures comprehensive documentation and an easily accessible audit trail within a unified system.

As a result, businesses benefit from streamlined expense reconciliation, significantly reducing errors, compliance breaches, and fraudulent activities. This enhanced efficiency enables a faster reconciliation process and closure of financial records, improving operational effectiveness.

9. Sync With ERPs and Accounting Tools

Corporate cards digitize and automate expense management processes, sparing businesses the hassle of manual data entry. They seamlessly integrate with ERP systems, enabling seamless sync with general ledger entries. 

This automation reduces the likelihood of duplicate entries and errors inherent in manual input. Moreover, corporate cards automate adding general ledger and tax codes to transactions, enhancing accuracy and efficiency in financial record-keeping. 

Overall, this integration saves time and maintains consistency in financial data across platforms, ensuring data integrity and reliability.

10. Eliminate Rogue Spending

Corporate cards effectively eliminate tail spending by implementing preset controls. Even if a card is used beyond its intended scope, managers can promptly flag unauthorized or non-compliant transactions, ensuring adherence to company policies. 

Moreover, the system's advanced OCR capabilities detect duplicate receipts, adding an extra layer of protection against fraudulent activities. This comprehensive approach strengthens fraud prevention measures and promotes financial transparency.

For us, the main benefit of Pluto is that we don't have to think about petty cash and worry about spending at all. It runs on Autopilot and Pluto prompts us when it needs attention, so we can better focus on our core competency without the extra mental load. Another huge selling point has been the incredible customer support across the board. Everyone on the Pluto team has been extremely helpful through any questions we had.

Gabriel García Leyva

11. Support Global Transactions

Corporate cards manage both local as well as global transactions, making them ideal for effective travel and entertainment spending. They support multiple currencies, simplifying cross-border payments and avoiding currency conversion hassle. Their fast and secure transactions minimize payment delays, ensuring smooth business operations.

Get Pluto For More Control and Visibility Over Your Expenses

Transitioning to corporate cards isn't merely about going cashless but increasing visibility, accountability and control. 

However, Pluto offers an extra layer of benefits—simplified expense filing, seamless integration with accounting tools, and a customizable approval workflow builder—ensuring you're always audit-ready.   

Always at the end of this month we used to get these huge groups of receipts to process… but now that we have a system that allows us to process in real time ahead of the month end everything becomes more powerful and controlled for the team

Gabriel García Leyva

Frequently Asked Questions (FAQs)

What are corporate cards?

Corporate cards are budget-controlled payment cards issued to employees by companies for business-related expenses. These cards streamline purchasing processes while providing companies real-time oversight and insights into expenditure, enhancing financial efficiency and transparency.

What are the disadvantages of corporate cards?

Corporate cards can lead to overspending in the absence of strict spending rules. Moreover, tracking expenses is challenging without expense management tools. Additionally, the annual fees add up and limit cost-effectiveness. Also, some vendors may not accept corporate cards, needing other payment methods.

Who can use corporate cards?

Corporate cards are employed by businesses of all sizes to facilitate employee spending on business-related expenses. They are issued to employees authorized to make purchases or payments autonomously, enhancing expense management and transparency and providing various benefits such as rewards and simplified reconciliation.

How many corporate cards can I get? 

While regular banking institutions have a certain limit on the number of corporate cards assigned, Pluto offers unlimited physical and virtual cards. Thus, you can offer dedicated cards to your employees without having to deal with the hassle of shared credit cards.

PlutoCard now becomes GetPluto — your new one-stop solution for all payables.  

What's New?

After much anticipation and hard work, we're excited to announce the migration from plutocard.io to getpluto.com, a step towards redefining corporate payments.

With getpluto.com, we are extending our vision beyond providing corporate cards. 

We understand the challenges that businesses face when handling their finances. It involves more than swiping a card and filing expenses. That's why we've developed a comprehensive suite of products and features to simplify everything from procurement to payables. 

So, whether you want to streamline purchase requests, integrate your ERP without impacting costs, or manage reimbursements — getpluto.com has you covered!

Beyond Cards: The All-In-One Platform

Here's a glimpse of what Pluto has to offer:

1. Procure-to-pay: Streamline your procurement process from purchase requests to invoice matching, all in one place.
2. Bill management: Centralize bill management and payments for faster approvals, better vendor relationships, and more accurate two/three-way matching.
3. Accounting ERP integrations: Sync seamlessly with major ERPs like Xero, Zoho, QuickBooks, Dynamics, and Netsuite to close your books 10X faster.
4. Petty cash management: Digitize cash-in-hand management to eliminate leaks without losing flexibility or visibility.
5. T&E reimbursements: Simplify travel and expense reimbursements with unlimited budget-controlled corporate cards and custom approval workflows.
6. Corporate cards: Get budget-controlled corporate cards with built-in compliance management — from receipt capture to policy enforcement. 

“We have been using Pluto for a few months now, and we literally have everything in one place.”

~ Lee Kersen Mascarenhas, Head of Operations at BloomingBox

From Our CoFounder — Mo Aziz

Pluto's Corporate Cards have been serving the largest businesses in UAE powered by a platform built for companies of all sizes: from small-scale SMEs to businesses with 1000s of employees.

But company spending does not happen just through Corporate Cards…

At Pluto, we believe CFO & Finance teams need a unified, comprehensive platform that solves all types of corporate spending problems end-to-end.

The new Pluto is our step towards this future where UAE businesses get a best-in-class platform, helping manage company spending across Cards, Reimbursements, Invoice Management, Procurement & more.

Join Us At getpluto.com

We're excited about the possibilities that getpluto.com brings. 

We understand the importance of this change and are here to support you at every step of the way, offering a more comprehensive platform to meet all your financial needs.

Sign up for a demo or create a free account at getpluto.com today and discover how Pluto simplifies payments for—finance teams, procurement teams, and employees.

Thank you for your continued support!

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