Category: Latest Blog

Due Date:

ESR Notification Due on or before June 30, 2021
ESR Annual Reporting Due on or before December 31, 2021

Announcement!Pursuant to UAE Economic Substance Regulations (Cabinet Resolution No.57 of 2020 as updated by Ministerial Decision No.100 of 2020), filing of the ESR Notification for Companies which financial year ended on December 31, 2020, should be not later than June 30, 2021, and ESR Annual Return submission should be not later than December 31, 2021. Failure to submit ESR Notification and ESR Annual Return on time entails administrative penalty of AED20,000 and AED50,000, respectively.

For Further assistance with the ESR Notification and Reporting please speak with our ESR Consultants.

The UAE government in the last few years has taken few effective measures against money laundering activities and to bring transparency in the country’s economy. One of the decisions made was the Cabinet Decision No. 58 of 2020 on the Regulation of the Procedures of the Real Beneficiary, which required the companies registered in the free zones and the mainland to keep a register of the Ultimate Beneficial Owner (UBO) and submit the same information to the relevant authorities.

The deadline for submitting information according to this decision is fast approaching on June 30, 2021. It also now becomes a part of the license application or incorporation of a company onshore or in the free zones. We, at Asad Abbas Chartered Accountants & Co. ensure that our clients meticulously study their ownership structure to avoid any kind of non-compliance with anti-money laundering and combating the financing of terrorism laws. Henceforth, we have here laid out the what, why and how of these UBO Regulations. According to the Federal Cabinet, the “UBO Regulations” in 2020, applies to:

• Mainland (of onshore) Companies
• Non-Financial Free Zone Companies operating in non-financial free zones, such as DMCC, JAFZA, and DAFZA

UBO Regulations require the Mainland Companies and Non-Financial Free Zone Companies to submit their ultimate beneficial owner (UBO) data to their respective corporate regulators. A UBO is an individual who ultimately holds/ owns/ controls a Mainland Company or Non-Financial Free Zone Company. The UBO Regulations also set out a criterion to determine a UBO. According to Article 17 of UBO Regulations, Mainland Companies/ Non-Financial Free Zone Companies in breach of the UBO Regulations and those that do not submit their UBO data to corporate regulations are subject to administrative penalties.

The Consequences of Violating Anti-Money Laundering Procedures

According to the Ministry of Economy (MoE), the violators of anti-money laundering or ultimate beneficial owner procedures may have to pay administrative fines ranging from Dhs 50,000 to Dhs 1,000,000.

Approach and action against Money Laundering

The United Arab Emirates is a leader in the development of an integrated system to combat money laundering and terrorism financing. Apart from strict rules and regulations, the country has a number of online systems as well as institutional and administrative procedures in place to ensure that the country’s systems are in line with the worldwide guidelines. The Ministry has formed a national team with its partners to raise awareness regarding the issue. Private sector establishments must submit ultimate beneficial owner data to the licensing authorities as a mandatory legal requirement to avoid penalties and fines.

Penalties and Fines

All establishments must submit ultimate beneficial owner data by June 30, as violation detection will commence from July 1, 2021. Companies should register in the system and submit reports of suspicious transactions and activities to avoid license suspension, fines of up to Dhs 5 million, or the closure of the establishment itself. Administrative penalties will include written warnings imposing up to Dhs 100,000 in fines in the event of recurrence and continued non-compliance, license suspension for one year, and restrictions on board of directors’ authority.

How to Submit Ultimate Beneficial Owner Data

Private sector companies can follow the steps below to submit ultimate beneficial owner data.

Step 1: Companies must create and maintain a register of their ultimate beneficial owner data. This register shall be exhibited to concerned entities and individuals. Forms stating the information to be listed in the register are available on the concerned authorities’ official websites.

Step 2: Submit an undertaking to create the registry and ensure data accuracy online through the official websites of the respective licensing authority.

Step 3: Enter the ultimate beneficial owner data in the licensing authorities’ systems through dedicated web pages on their official websites.

Data Confidentiality

Government entities will maintain the highest levels of confidentiality when dealing with the ultimate beneficial owner database of the establishments. Even their employees will not have free access to this information except when required for investigation or disclosure to specific official entities. The data will also not be used for any commercial purposes.

The establishments must notify the relevant licensing authorities about any changes in the ultimate beneficial owner information within 15 days. They should also appoint a resident as a point of contact with the licensing authority.

Inspection Plan for June 2021

The Ministry has prepared an inspection plan to cover 425 establishments across the UAE. The idea is to conduct a comprehensive assessment through over 100 inspectors to ensure that companies with a high risk of money laundering are selected.

The assessment includes:

• Providing support and guidance to enterprises in the Designated Non-Financial Businesses and Professions (DNFBP) sector to reduce the risks they face.
• Examining the company’s systems, policies, and procedures for Anti-Money Laundering and assessing their implementation quality and suitability.
• Assessing other risks after setting Anti-Money Laundering regulations, policies, and procedures.

Targeted establishments must apply a set of basic requirements, including:

• Registration in the Anti-Money Laundering and Combating the Financing of Terrorism systems: The Financial Information Unit system and the automated reporting system for sanctions lists. Reporting suspicious transactions or activities using the go AML platform is also necessary.
• Appointing a qualified and appropriate compliance officer.
• Conducting an internal study of money laundering risks with the following aspects in mind:

1. The business
2. Type of clients
3. Locations the establishment deals with
4. The company’s financial and operational volume
5. Channels for providing a service or product
6. Following appropriate measures against clients by gathering complete KYC information and identifying risk ratings.
7. Providing training for the concerned employees in meeting the general requirements of Anti-Money Laundering procedures, depending on the nature of the business.

If you have any further questions pertaining to UBO in UAE or the procedures are still ambiguous, feel free to contact our professionals at Asad Abbas Chartered Accountants & Co.

We have in-depth knowledge on the UBO registration in UAE, UBO deadlines, maintaining UBO Register, and complying with all the requirements of regulations as to Ultimate Beneficial Owner in UAE.  Our highly skilled experts will ensure that your company is fully compliant with government regulations.

Contact us at: https://abbasaccounting.com/contact-us/.

Today, with globalization taking fast pace, every SME can grow exponentially by conquering international markets. Many companies across the world are considering UAE as their foremost country for business incorporation or continuation.

There are so many reasons to choose the UAE! Starting from less regulation, advantages of the attractive tax regime, multiple business opportunities and favorable investment climate.

ARE YOU LOOKING TO MIGRATE TO UAE?

The ability to migrate companies to UAE opens tax planning dimensions for investors and businessmen. Foreign companies can Redomicile and enjoy various benefits provided by the UAE corporate tax-free regime and its wide network of double tax treaties.

 

The benefits:

• Maintain existing company’s legal status
• Preserve operational and banking history
• Avoid liquidation expenses
• Access common law courts
• Exemptions and freedom to repatriate capital and profits

Asad Abbas and Co. (Chartered Accountants) and AAi are offering a proven and easy process for re-domiciliation*, that can be completed from 1 working week! To start things right, contact our team to support you throughout the process and make application as seamless as possible.

* Transfer of Domicile/Continuation is the process by which a company/enterprise moves its domicile from one jurisdiction to another by changing the country under whose laws it is registered or incorporated while maintaining the same legal identity. Companies re-domicile or opt for Transfer of Domicile for a variety of reasons, the most important being able to take advantage of a tax neutral environment and/or the availability of a network of Double Taxation Agreements, to align their place of registration with their shareholder base, or to access specialist capital markets.

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With constant changes in all business activities and update on legal information, complying with the UAE VAT laws and regulations is a challenge. Accurate information reporting and transparency while staying current on VAT compliance should be met under a time constraint.

A registered taxpayer is responsible to update or amend the Federal Tax Authority (FTA) on any circumstance that has an impact on records kept by the FTA, as provided during the time of initial registration, within the timeframe set by the FTA.

These circumstances that do not require approval from FTA include:

– Business activities

– GCC activities

– Customs registration information

However, some amendments require approval from FTA and certain fields are restricted from the direct amendment.

If you wish to update your VAT registration concerning the fields that require approval from FTA and certain restricted fields, please raise your request with us.

Our team of VAT Compliance professionals can help you prepare, implement and manage your VAT registration amendment. Get in touch and learn more by visiting our website www.abbasaccounting.com or contact Augusto Dela Cruz (augusto.cruz@abbasaccounting.ae) at +971 55 389 1625 or Patrick Pacatang (patrick.pacatang@abbasaccounting.ae) at +971 52 264 5201.

It’s been more than a year since the United Arab Emirates (UAE) has introduced the Value Added Tax (VAT) from January 1, 2018. Taxpayers were obliged to file their VAT return on monthly and quarterly basis depending on the period set by Federal Tax Authority (FTA) on their VAT registration. The taxpayers have to submit their VAT return on or before 28th day of the month following their tax period or first business day after, in case of public holiday or weekend. Failure to meet the specified deadline would mean penalties on the part of the taxpayer.

During the VAT return preparation, a number of certain wrong practices were identified which become a major pitfall across businesses. These wrong practices are summarized below:

• Inclusion/Recovery of the following input VAT which do not meet the rules set out in the VAT Executive Regulations

a. Supplier’s tax invoices issued in other person’s name and not by the registered Company

b. Supplier’s tax invoices issued under the employees name

c. Supplier’s tax invoices issued in other currency (USD and Euro) and not converted in AED

d. Supplier’s tax invoices having no total amount

e. Supplier’s tax invoices that are not clear and cannot be read

f. Supplier’s tax invoices that are in hand writing

g. All expenses related to company vehicle as it available for personal use kindly refer to Article 53 in the Cabinet Decision No. (52) of 2017

h. Invoices issued for meals and entertainment

i. Insurance expenses allocated to employees’ dependents

j. Petrol bills that does not show the plate number of the vehicle and it should be under the ownership of registered Company

• Use of Reverse Charge Mechanism (RCM) on the amount reflected on pre-populated box 6 of the UAE VAT return without proper matching of data on the records of the Company
• Some businesses are not applying the reverse charge to imported services from foreign purchases
• Businesses under Designated Zones were applying VAT on the supplies which should be treated as outside the scope of VAT
• Lack of accounting database for the details such as Tax Registration Number (TRN) of vendors and customers

Taxpayers should be wary of the wrong practices mention and should start to mitigate the issues. You are always beating the deadline for the filing in order to avoid the late filing penalty. Hence, are you filing the correct VAT return?
For consultation and inquiries on your VAT return filing, feel free to reach us! Our team of VAT Compliance professionals can help you prepare, implement and manage your VAT Return Filing requirements. Get in touch and learn more by contacting Augusto Dela Cruz (augusto.cruz@abbasaccounting.ae) at +971 55 389 1625.