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

Timeframe for recovering tax

Timeframe for recovering tax - TRC Pamco, Vat firms in UAE

Introduction

FTA recently issued a clarification to provide clarity on the time-period within which input tax should be recovered by a taxable person. This Clarification clarifies the FTA’s position relating to the interpretation of Article 55 of the VAT Law and discusses the time-period within which the input tax must be recovered. This clarification also discusses the recourse available to taxable persons in the instance where input tax is not recovered within the prescribed time-period.

Detailed Discussion

UAE VAT Law defines the time period within which the company can recover its input tax, which is the first tax period in which two conditions are satisfied;

  • The tax invoice is received and
  • An intention to make the payment of consideration of the supply before the expiration of six months after the agreed date of payment is formed.

Hence, the taxable person can claim Input Tax in the period where both above mentioned conditions are satisfied.

As per Article 55(1) of UAE VAT Law, one of the conditions is that the taxable person pays the consideration for the supply or any part thereof, the interpretation of which is the intention to make the payment before the expiration of six months after the agreed date of payment for the supply.

A taxable person may receive a tax invoice but may not have an intention to make the payment until the internal approval process for the invoice is completed. In such cases, the conditions of Article 55(1) of the VAT Law are not satisfied as the intention to make the payment before the expiration of six months after the agreed date of payment is not formed.

The FTA considers that the conditions of Article 55(1) of the VAT Law will only be met when the taxable person completes the internal approval process and forms an intention to make the payment within the prescribed period

Keeping the law and the above clarification in mind, the taxable person needs to evaluate both the conditions together and to make sure that the intention to pay is formed within the prescribed period.

To conclude

  • When a tax invoice is received in one tax period and the intention to make the payment is formed in a later tax period, the input tax can only be recovered in such later tax period.
  • Where the input tax is not recovered in the tax period in which both the conditions are satisfied, the taxable person can recover the input tax in the immediate next tax period.
  • Input tax is not recovered in the first two tax periods, a taxable person is required to submit a voluntary disclosure for any of such periods.
  • Where a taxable person fails to make the payment of consideration before the expiration of six months after the agreed date of payment, the taxable person should reduce the input tax in the VAT Return of the tax period following the expiry of the six-month period. However, once the payment is made, the taxable person will again be entitled to recover the input tax

 

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

How to Manage Auditors When They Come for an Audit?

More often than not, companies rely on auditors to help them with correct financial information and decisions, with reconciling accounts, and writing financial statements. The relationship between accountants and auditors has evolved quite a bit with the management urging all to work closely with auditors.

The relationship between an auditor and company management is one that filled with a bit of friction, given their different roles – although both strive for the same result. Standard and regulatory authorities require the auditor to be independent which doesn’t always go down too well with the client/company creating a very different viewpoint of an auditor. While the management expects a fully independent report on the financial performance of the company, in compliance with accounting standards and tax laws, they seem to be disappointed with the auditor If that’s not the case.

With the introduction of VAT in the UAE, there has been a lot of debate on the matter regarding VAT consultancy firms in Dubai, and whether or not the companies operating here are tax compliant or not. Here is when the need arose to partner with audit firms in Dubai, to avoid any legal issues.

Tax Firms and Vat firms also like to avoid conflict as much as possible, but clients tend to miss out on this very important fact. In fact, the truth it, most auditors actually wish to avoid this confrontation, they just believe that their audit must have minimum issues and their judgements should be in sync with that of the management.

While working with auditors, it’s best to be transparent and provide them with all the support, as they will be the best ones to help you with the financial condition of your business and help you take all the right decisions in your business. Knowing what’s happening to the business is good, but having it on paper in all its glory helps you understand where exactly you stand.

While there are many accounting firms in Dubai, there is TRC Pamco, a boutique consultancy firm ready to assist you with any accounting and assurance services which can help you grow your business further, while keeping in compliance with all the tax laws.