Tips to survive your financial stress in business.

With the onset of the pandemic – most businesses have had to suffer. With the loss in revenue and dwindling profits – the financial climate has mostly been out of our control. During these times, running and sustaining a business can cause you quite a bit of financial stress, and hence leading to mental stress as well.

Here are a few tips that can assist you in surviving the financial stress your business is still facing!

  • Effective Communication:

Talking to your family and friends, accepting the reality will help you deal with the situation better. It will give you a better perspective, as well as help you solve the problem faster. It might also give you a solution, something your stressed mind is not able to come up with. So effectively communicate.

  • Prioritize the spends:

Go through your bank statements to analyze spends. Understand the expenditure columns, see your fixed and variable expenses, and try to curb the variable ones as much as possible. This will give you a breather, especially when new money is not coming in.

  • Offload your debts:

Now is a good time to get rid of all your debts. Check which ones have the highest interest rate and start by clearing it out. With the help of accounting firms in Dubai – you can create a plan that helps you reduce your credit card debts, and free up funds for savings and investments.

  • Set realistic goals:

To ensure long-term stability – create a sustainable roadmap about paying off your debts, and regarding your savings. Prioritize your expenses, make a realistic budget plan, and pay off your debts.

  • Save as much as possible:

This one goes without saying. If your business is going through financial stress, take assistance from audit firms in Abu Dhabi and understand the best way to save money for your business.

In such crucial times – financial planning and consultation is extremely important for all businesses. If your business is looking for financial consultation, get in touch with TRC Pamco, one of the leading accounting firms in Dubai – they offer exceptional financial advisory services.

The pros and cons of LLC company formation in Dubai

Are you looking to expand your business and looking for great investment opportunities in Dubai? Well, you are looking right. Now, although Dubai is a hub for emerging entrepreneurs, there are some critical decisions to be taken – the most important one being the legal structure of the organization. The options are: Sole Proprietorship, Civil Company and Limited Liability Company (LLC). For a start-up, LLC is one of the best routes to ensure you are subsequently shielded from the (any) pitfalls of your business.

Read on to know the pros and cons of LLC company formation in Dubai:

Pros of LLC Company

Affordable: It is quite affordable to set up an LLC company, and one of the most followed formats by expats in Dubai. The minimum capital requirement also depends on the nature, size, and type of the business – making it beneficial for most business owners.

Easy and Quick to set up: There is paperwork involved, but with the right company formation partners – the process can be very swift. There are not too many compliances involved, making it feasible.

Taxation: With an LLC company, you avoid the charge of double taxation, and the tax structure aids in avoiding personal stress, incase of any business turmoil.

Investor Visa: Being an investor for LLC companies in Dubai – the investor can enjoy certain leverages in the Emirate.

Cons of LLC Company

 

Trade Limitations: Depending on the free zone you are setting up your business in, you will be faced with certain trade limitations. However, depending on the type of your business, there shouldn’t be any issue in conducting your business activities within the set geographical area.

Local partner: For a Limited Liability Company – it is important to have a local partner, who will be a 51% owner of the company. This is one of the biggest limitations as owners feel the loss of autonomy over their business. However, there is always the option to set up a business in a free zone if you want to retain 100% ownership of the business.

For offshore companies in UAE – looking to actively invest in Dubai – reach out to TRC Pamco, one of the leading audit firms in Dubai, they can help with company formation in Dubai.

How to Select a Reliable Bookkeeping & Accounting Partner for your Business in Dubai?

Accounting and bookkeeping are at the core of any business, and having the right partners is very essential to the growth of your business. But first, let us understand our outsourcing bookkeeping and accounting and benefit your business.

Outsourcing the right bookkeeping services in UAE helps you avoid the payroll and visa costs for an in-house employee. You get access to valuable expertise, and a team that continues working even if a single employee decides to leave. Additionally, it also saves on the training and management overheads.

Once we have understood the benefits, how do you know a partner is right? Read on!

  • Team and Expertise

First and foremost, research a little about the team, their strengths. Given the transition of the economy into new tax structures and changes, it is best to have a firm that is hands on and has the right people in their team.

  • Availability and Support

Sync the audit team with your work structure. Do they fit in? Are they available when you need them? You must have a team that is in sync with your business, helping it grow. This will enable quick decision making, and your business can look out for better growth opportunities.

  • Amount & Structure of Fees

Most firms have different fee structures, and this must be confirmed right at the start. Given the volume of work, you must assess your accounting needs before finalizing your outsourced accounting partners.

  • Goals

Are the firm’s goals aligned to yours? Accounting firms should be able to help you set business goals, and then show you the path required to leverage on the business profits. This is especially important in a dynamic environment.

To know more about some of the best audit firms in Dubai, check out TRC Pamco, your reliable bookkeeping and accounting partners of all times. They are a team of experienced professionals, and can help you with end-to-end accounting solutions, helping your business grow and shine.

Transfer Pricing

TRC Pamco - Transfer Pricing Documentation Dubai, Abudhabi, UAE

Transfer Pricing Documentation and Country-by-Country Reporting (“CbCR”)

Introduction

The United Arab Emirates (“UAE”) joined the OECD Inclusive Framework on Base Erosion and Profit Shifting (“BEPS”) on 16 May 2018, bringing the total number of participating jurisdictions to 116.

By joining the Inclusive Framework, the UAE has committed to implement the following four BEPS minimum standards:

  • Action 5: Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance;
  • Action 6: Preventing the Granting of Treaty Benefits in Inappropriate Circumstances;
  • Action 13: Transfer Pricing Documentation and Country-by-Country Reporting (“CbCR”);
  • Action 14: Making Dispute Resolution Mechanisms More Effective

Action 13: Transfer Pricing Documentation and Country-by-Country Reporting (“CbCR”)

Action 13 is relevant to multinational groups headquartered in the Middle East, since the requirement to prepare a group Master file, Local files and a CbCR may exist due to operational presence in other jurisdictions that have adopted Action 13.

  • Master File: A report which provides a high-level overview of the multinational enterprises (“MNEs”) group business i.e. global business operations, transfer pricing policies, and its global allocation of income and economic activities.
  • Country-by-country report (CbCR): A report which provides aggregate tax jurisdiction, wide information relating to the global allocation of income, taxes paid, and certain indicators of economic activity in which the MNE operate. Further, this report will include list of all entities, branches and Permanent Establishments (PE’s) as well as assumptions and narrative to support and explain the data.
  • Local File: A report which provides detailed information relating to specific intra-group transactions and assures the tax authority that the local entity has complied with the arm’s length principle for its material intra-group transactions.

Applicability:

Action 13 will be applicable on multinational enterprises (“MNEs”) with annual consolidated revenues of AED 3.15 billion or higher (750 million EUR / 800 million USD).

Action points for UAE-based entity of MNE Group:

  • UAE-based entity of an MNE group should notify the UAE Ministry of Finance of their intent to satisfy to the CbCR filing requirements. If multiple entities of the group are UAE-based, each entity is required to notify.
  • The CbCR should be electronically filed within 12 months after the last day of FY 2019.

Applicable Penalties:

  • For the failure
  • To report the information required to be reported under the Resolution
  • To notify the MoF, on or before the required reporting date, of the intention to file a report in respect of a certain accounting period;
  • Penalty: Up to AED 1,250,000 (AED 1M + AED 10K for every day during which the failure continues (maximum of AED 250K))
  • For the failure to report the information in a complete and accurate manner;

Penalty: Up to AED 500,000 (from AED 50,000 to AED 500,000)

  • For the failure to provide the MoF with any information requested in accordance with the Resolution and for the failure to retain documentation and information required to be collected with regards to the Resolution for minimum five years from the date of reporting to the MoF.

Penalty: AED 100,000

Foreign Direct Investment

Foreign Direct Investment - TRC Pamco Dubai, Abudhabi, UAE

Introduction

The government of UAE has recently been venturing into new strategies as to bring economic growth and prosperity in the country, as the oil prices continue to decline the government has taken initiatives to increase the revenue through different sectors, specially through Foreign Direct Investment.

Therefore, UAE has introduced a law namely “Foreign Direct Investment” which will enable and attract foreign investors to contribute in the economy of the country.

An Overview

This law now allows to permit the foreign shareholding percentage from 49% to 100% in many sectors, enabling the foreign investors to invest in the country and no longer requiring the need for local sponsorship which was mandatory previously.

The UAE cabinet has approved 122 economic activities across 13 sectors that will be eligible for up to 100% foreign ownership which includes transport and storage, agriculture, Hospitality and food services, Art and entertainment Construction, Educational activities, Healthcare etc. and also has published a list

of activities where the foreign direct investment will be restricted such as the oil and gas sector as to promote and safeguard the Emirati welfare.

The law has highlighted other provisions as well which have defined the application for investment, the rejection of the application for investment, what constitutes the capital invested and penalties imposed for certain non-compliances.

This step aims to promote the investment environment, economic growth and prosperity in the country and seems like a significant step forward, inviting investors to enjoy the UAE’s geographical location and be a factor in the growth of the country’s economy.

TRC Pamco will be happy to assist you in making this determination; provide preliminary assessments of your company’s current shareholding structure and assist with possible future strategies that can result in strengthening your shareholding, in compliance to UAE legislation.

Please let us know if you have any queries and our team will be happy to schedule a session to address all your queries and requirements.

Targeted Excise Goods

Targeted Excise Goods -TRC Pamco Dubai, Abudhabi, UAE

Customs Notice No. (8/2019) Concerning “Excise Goods and Taxes”

Pursuant to Cabinet resolution number (52) for the year 2019 related to excise goods and taxes imposed on them and how to calculate excise prices, for tobacco products, and the resolution of the Minister of Finance number (236) for the year 2019 on setting a date of implementation for the cabinet resolution number (52) for the year 2019 and number (237) for the year 2019 on setting a date of implementation for the Cabinet resolution number (55) for the year 2019 and the resolution of the Federal Customs Authority number H A J/K J/S 2019/2249 on 12/11/2019 on implementing  expanded excise tax and resolution number H A J/K J/S/2019/2344 on 25th November 2019 regarding addition and amendment of the customs tariff articles, version 2017.

Updates – Stockpiling of Excise Goods

Introduction & Summary

Federal Tax Authority (“FTA”) issued Public Clarification (EXTP003) to explain the Excise Tax obligations for stockpilers of sweetened drinks, electronic smoking devices and tools, or liquids used in such devices and tools and tobacco products, which have been subject to Excise Tax at a price lower than the minimum excise price and which are held for business purposes w.e.f. 1 December 2019.

When a business would qualify as Stockpiler?

A business would be considered as Stockpiler in the UAE if the following conditions are met:

  • The business held excise goods in free circulation in the UAE, intended to be sold in the course of business and Excise Tax on those goods has not been paid, remitted, relieved or deferred; and
  • The business held ‘excess’ excise goods.

Where a business meets the above conditions, they become liable to pay Excise Tax on “excess” excise goods held as on 1st December, 2019.

In order to identify whether stockpiled excise goods are “excess” or not, the business must perform two calculations:

  • Calculation A – Computation of excess stock held as on 1st December 2019 over average monthly stock holding level, and
  • Calculation B – Computation of excess stock held as on 1st December 2019 over two times average monthly sales volume.

Higher of above computation will be consider as “excess” excise goods held by stockpiler.

Note that this calculation must be performed on an individual product level, rather than on the overall category of excise goods.

Important

In addition to the above, in line with the provisions of the Excise Tax legislation, a person, in the course of conducting business, is required to keep audited records, showing the quantity of his stock of excise goods for the 12-months prior to 1 December 2019 for the purposes of ascertaining the stock of excise goods, regardless of whether the stock is considered ‘normal’ or ‘excess’.

TRC Pamco is offering specialized Excise Tax advisory to many of its clients and will be ensuring that the companies are mitigating their risk and exposure while this transition.

We assist in Excise Tax registrations and the compliance obligations; and are committed to assist our clients to obtain the best possible practical knowledge to ensure compliance in a cost-effective way.

Please let us know if you have any queries and our team will be happy to schedule a session to address all your queries and requirements.

Economic Substance Regulations

Introduction

On 30 April 2019, the UAE Cabinet issued the Cabinet of Ministers Resolution No.31 of 2019 (concerning economic substance regulations in the UAE, “the Regulations”), requiring all in-scope UAE entities (“Relevant Entities”) that carry on certain activities (“Relevant Activities”) to have demonstrable economic substance in the UAE from 30 April 2019.

The Regulations apply to all UAE onshore and free zone companies that carry on a “Relevant Activity”.

The following are considered as “Relevant Activities” under the Regulations:

  • Banking
  • Insurance
  • Fund management
  • Lease-finance
  • Headquarters
  • Shipping
  • Holding company
  • Intellectual property (IP)
  • Distribution and service centre.

The UAE entities carrying above mentioned relevant activity, needs to satisfy economic substance test. To satisfy the economic substance requirements in relation to a Relevant Activity, a Relevant Entity must:

  • Conduct the relevant “core income generating activities” in the UAE;
  • Be “directed and managed” in the UAE;
  • With reference to the level of activities performed in the UAE
  • Have adequate number of qualified full-time employees in the UAE
  • Incur an adequate amount of operating expenditure in the UAE
  • Have adequate physical assets in the UAE

Action point

Economic Substance regulation is applicable from 1st January 2019. The companies on which above regulation applicable, has to submit economic substance report to relevant authorities till 31st December 2020 for the year 2019.

Relevant reporting formats, regulation and detailed guidance are yet to be notified by the government.

TRC Pamco will be happy to assist you in making this determination; provide preliminary assessments of your company’s current compliance obligations, and assist with possible future strategies, in response to this new legislation

Please let us know if you have any queries and our team will be happy to schedule a session to address all your queries and requirements.

Updates – Excise Tax in UAE

Introduction

Federal Decree Law No. (7) of 2017 (Excise Law) has applied excise tax to all goods listed in Cabinet Decision No. (38) of 2017 (Decision 38), with effect from 1 October 2017. Decision 38 currently imposes excise tax on “Excise Goods” at the following rates:

  • Tobacco and tobacco products – 100%
  • Carbonated drinks– 50%
  • Energy drinks– 100%

Recently, The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published the Cabinet Decision No.52 of 2019 on Excise Goods, Excise Tax Rates and the Methods of Calculating the Excise price (Cabinet Decision). Same will be applicable from 1st December 2019.

The Cabinet Decision announced that Excise Tax will be levied on sweetened drinks, liquids used in electronic smoking devices and tools as well as electronic smoking devices and tools.

New Products that will be levied with Excise Tax

  1. Liquids used in electronic smoking devices and tools, whether or not containing nicotine or tobacco.

Excise Tax Rate – 100%

  1. sweetened drinks: Sweetened drinks that come under excise tax include any product to which a source of sugar or sweetener is added and is produced either as a ready to drink beverage or Concentrates, powders, gel, extracts or any other similar product that can be made into a sweetened drink. Excise Tax Rate – 50%

Sweetened drinks that are excluded from Excise Tax

  • Ready to drink beverages that contain at least 75% milk or its substitutes
  • Baby formula, follow up formula or baby food
  • Handling of Foods for Special Medical Purposes
  • consumed for special dietary needs
  • Beverages which include alcohol

What Businesses Need to do

The Federal Decree-Law No. 7 of 2017 on Excise Tax stipulates that businesses/ persons that are engaged in any of the below activities must register for tax;

  • Importing of excise goods;
  • Production of excise goods;
  • Releasing goods from an Excise Tax Designated Zone;
  • Stockpilers of excise goods, in certain cases; and
  • Warehouse keepers, in certain cases.

Accordingly, importers, producers, stockpilers warehouse keepers, etc. of electronic smoking devices, liquids used in devices and sweetened drinks need to register for excise tax as soon as possible. Failure in registering within the specified time period can lead to fines and various other obstacles.

When a business would qualify as Stockpiler

A business would consider as Stockpiler in the UAE if the following conditions are met:

  • The business held excise goods in free circulation in the UAE, intended to be sold in the course of business and Excise Tax on those goods has not been paid, remitted, relieved or deferred; and
  • The business held ‘excess’ excise goods.

Where a business meet the above conditions, they become liable to pay Excise Tax on “excess” excise goods held as on 1st December, 2019.

TRC Pamco is offering specialized advisory services to many of its clients for Excise Tax implementation and post implementation support.

Please connect us in case you have any queries.

Similarities & Differences Between Accounting & Bookkeeping

Accounting and Bookkeeping are both very essential financial functions, and while they might be mistaken to be the same thing – they’re actually very different from one another.

Let’s first understand what each one stands for! Bookkeeping is the art of identifying and maintaining accounts and financial statements. Accounting is the process of summarizing, interpreting, and analyzing financial transactions which were classified in the records. This stands to be the basic difference between Accounting and Bookkeeping.

They’re very inter-dependent but they have their share of similarities and differences – and many accounting firms in Dubai can take you through the same process.

The major difference is that the management can never take crucial decisions based on bookkeeping records, they would need a thorough analysis which can be provided by tax firms, to be able to take important decisions in the business. Also, the next major difference would be the objective why both these functions are carried out – Bookkeeping is done to maintain records in one place and to be able to serve it as and when required, while the objective of Accounting is to understand the standing of your business. It helps you gather exactly where you stand in the financial world, and what needs to be taken care of.

Also, another important thing to note is that bookkeeping is a direct process and doesn’t require specialist skills whereas Accounting requires a specialist to make important and relevant inferences and help the management take decisions.

Coming to the similarities, it must be noted that to get into bookkeeping or accounting, one needs to hold basic accounting knowledge. And when working in smaller firms, professionals simply follow the accounting process instead of bookkeeping. While they may not hold the specialist degree, they’re able to do these tasks because accounting software’s make this classification easy.

However, it’s best to let the best audit firms in Dubai, TRC Pamco, handle the process for you, since they are better equipped with a team of knowledgeable and experienced professionals, and are known as the leading VAT firm and Tax firm in Dubai.

For more information and ideas about Vat firm in Dubai, please follow the lin