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AUDITING AND ADVISORY
Audit is an independent examination of financial information of an entity, irrespective of its form, nature, and objective, with a view to express an opinion on such financial information.
Auditing in the UAE is regulated, and only qualified and licensed auditors or audit firms registered with the UAE Ministry of Economy can perform audits. These auditors must hold relevant certifications and meet specific criteria to conduct audits in the country.
Financial information is often contained in financial statements. Broadly speaking ‘Financial statements’ are a set of documents which include the following (along with the purpose of each statement).
The Federal Law No. 32 of 2021, known as the Commercial Companies Federal Law, strengthens the emphasis on financial transparency and accountability for enterprises within the mainland UAE. As per this law, all businesses operating in the mainland are required to undergo a thorough examination of their financial records.
For corporate tax purposes in the UAE, only the International Financial Reporting Standards (IFRS) are recognized. However, entities with a taxable income not exceeding AED 50 million in a tax period can opt to use the IFRS for Small and Medium-sized Entities (IFRS for SMEs).
In a financial audit, previous financial records undergo scrutiny to verify their accuracy and fairness. Meanwhile, in a management audit, the performance of management is assessed over a defined period. Subsequently, the auditor reports on identified shortcomings and offers recommendations for enhancement.
The main object of audit is to detect and prevent the frauds and provide the opinion on financial statements to ensure that it gives true and fair view of the accounts.
In the UAE, the audit period usually corresponds to the financial year of a business, spanning approximately 12 months. This timeframe serves as the foundation for reviewing financial records and transactions.
A corporate tax audit in the UAE is a necessary procedure aimed at reviewing the tax liability, ensuring tax compliance, and examining the financial records of companies that fulfill the specified criteria.
The three main types of audits are: a. Financial Audits: These examine financial statements and transactions for accuracy and compliance. b. Internal Audits: Conducted within an organization to assess operational and internal control effectiveness. c. Compliance Audits: Focus on ensuring an entity adheres to specific laws, regulations, or industry standards.
Financial statements which are used by varied users like creditors, lenders, government, shareholders are known as general purpose financial statements. However, if financial statements are prepared only for a specific purpose, such financial statements are known as special purpose financial statements.
For example, financial statements prepared for the purpose of Bankers on Cash basis.
Audit (examination) is conducted with an objective to express an opinion on the financial statements as to whether financial statements:
- prepared by the management give true and fair view of financial position and performance.
- comply with the applicable Financial Reporting Framework; (explained below).
- are FREE from material misstatements, whether due to Fraud or Error
Utilizing internal auditing services in Dubai enables SMEs to identify and address issues within their organization, enhancing internal controls and mitigating the risk of fraud. Certified internal auditors in Dubai are instrumental in averting fraud and safeguarding businesses against financial losses and reputational damage.
A financial audit is an objective examination and evaluation of the financial statements of an organization to make sure that the financial records are a fair and accurate representation of the transactions they claim to represent.
Apart from obligatory auditing, businesses operating in the mainland UAE must retain their financial records for at least five years. This requirement serves various functions, such as facilitating regulatory supervision, assisting in resolving disputes, and bolstering internal management procedures.
For companies registered in free zones in the UAE, audit services are compulsory. These businesses must conduct an annual audit and submit the report to the relevant authorities. Failure to submit the audit report can result in significant fines imposed on the registered business.
According to Article 82, if a taxpayer's revenue surpasses AED 50 million in the tax period and they operate under a zero-rate free zone regime, their financial statements must undergo external audit by independent auditors.
ACCOUNTING AND BOOKKEEPING
- Accounting services involve analyzing, interpreting, and summarizing financial data to provide insights for decision-making. Accountants often have a deeper understanding of financial principles and can offer strategic financial guidance.
- Bookkeeping services focus on the day-to-day recording of financial transactions, such as income, expenses, and receipts. Bookkeepers maintain accurate financial records but may not offer in-depth financial analysis.
Yes, bookkeepers are typically less expensive than accountants because their roles and responsibilities are more limited in scope. Accountants often have more advanced training and skills, which can command a higher fee.
Yes, an auditor can provide bookkeeping services, but they must maintain their independence. It's essential that the same auditor does not perform both the bookkeeping and auditing for the same client to avoid conflicts of interest and ensure objectivity.
Outsourced accounting refers to delegating accounting, bookkeeping, and/or compliance tasks to accounting professionals located in a different country, according to its definition.
Small businesses, startups, freelancers, and individuals often need bookkeeping services to maintain accurate financial records, track expenses, and ensure compliance with tax requirements. Bookkeepers help in organizing financial data for effective management.
You do not necessarily need an accountant for bookkeeping. Bookkeeping and accounting are distinct functions. Bookkeepers primarily focus on recording daily financial transactions and maintaining accurate financial records, while accountants analyze, interpret, and provide financial insights. For many small businesses and individuals, a bookkeeper can handle day-to-day financial record-keeping needs, but if you require in depth financial analysis, tax planning, or strategic financial guidance, you may benefit from the services of an accountant or a certified public accountant (CPA). The choice depends on your specific financial needs and the complexity of your financial situation.
Bookkeeping involves systematically documenting the financial transactions of a company into categorized accounts on a regular basis, often daily. It encompasses various recording methods that businesses can employ. Due to its importance, bookkeeping is an integral component of the accounting process for several reasons.Bookkeeping involves systematically documenting the financial transactions of a company into categorized accounts on a regular basis, often daily. It encompasses various recording methods that businesses can employ. Due to its importance, bookkeeping is an integral component of the accounting process for several reasons.
Corporate Tax in UAE
The UAE introduced corporate tax law to adhere to the new Global Minimum Tax Regime formulated by the Organization for Economic Co-Operation and Development (OECD) and accepted by more than 136 countries. This tax is effective beginning in 2023. It mandates a minimum tax rate of 15%.
Corporate Tax (CT) is a tax on the net income or net profit of a business. Value-Added Tax (VAT) is a consumption tax assessed on the end consumers, not businesses. For VAT, the business collects the tax from the buyers and send it to the government. CT is a tax assessed on and paid by the business and, thus, becomes part of the cost of doing business.
Generally, no, with exceptions. This law, as the name indicates, applies to corporations or businesses. However, if an individual is conducting business as a proprietorship or unincorporated partnership, that person will have to file and pay tax on the profit generated from the business but not on personal income. This is commonly called pass through income tax.
Corporate tax is imposed on UAE registered corporations or foreign corporations that meet certain criteria of residency. The proposed law requires UAE corporations to report and pay taxes on their income within the UAE and in other countries.
Small businesses with net income of AED 375,000 or less will have a 0% tax rate. Businesses that generate income higher than that will be subject to a 9% flat tax rate. Multinational corporations with global net profit greater than €750 million are subject to a 15% tax rate.
The Tax Period aligns with the Financial Year used to prepare financial statements, typically following the Gregorian calendar year (1 January to 31 December). However, if a business employs a different 12-month period for its financial statements, the Tax Period will coincide with that chosen Financial Year.
The Ministry announced that businesses failing to submit their Corporate Tax registration applications within the specified timelines set by the Federal Tax Authority will face an administrative penalty of AED10,000 for late registration.
In Resolution No. 3 of 2024, the Federal Tax Authority has established deadlines for entities to submit their applications for corporate tax registration. The deadline for corporate entities to submit their applications typically varies based on the issuance date of their license. The initial registrations must be submitted by 31 May 2024.
As per the UAE's Corporate Tax Regulations, any taxable income exceeding AED 375,000 will be subject to Corporate Tax. This taxation structure applies to freelancers and self-employed independent contractors in the UAE once their earnings surpass the AED 375,000 threshold.
A few types of income are exempt. This will include dividends received on investments from owning shares of other companies. This is commonly referred to as passive income. Additionally, when a company sells shares of subsidiaries for a profit, that profit (commonly called capital gain) is exempt from taxation.
Generally, businesses incorporated in the free zones will pay 0% tax. However, these businesses are still required to file annual corporate income tax returns. If a free zone corporation conducts business in mainland, the profit generated from such business is taxable.
As we mentioned above, UAE based corporations may be liable to pay corporate tax on global income if the key decisions concerning foreign corporations are made within the UAE. If foreign businesses pay taxes to foreign countries, then the UAE’s corporate tax law allows them to deduct it from the UAE tax.
The law will become effective for the fiscal year beginning June 1, 2023. Tax documents, also known as a tax return, will need to be filed within 9 months of the end of the previous fiscal year. For example, if a corporation’s fiscal year begins June 1st 2023, and ends May 31, 2024, this corporation has to file its tax return and pay the tax liability no later than February 28, 2025. For companies that adopt the calendar year as their fiscal year (i.e., beginning January 1 of each year), they are required to file the firs tax return no later September 30, 2024.
Corporate tax law relies on the honour system of corporations to report the correct amount of net income. However, the FTA will investigate if they have reason to or as part of their routine random audits.
UAE group entities have the option to establish a tax group if they meet the following criteria: The parent company, which must be a tax resident in the UAE, holds directly or indirectly a minimum of 95% of the (i) share capital, (ii) voting rights, and (iii) entitlement to profits and net assets.
The reduction becomes effective for tax years starting after June 1, 2023. The AED 3 million revenue threshold will be applicable to tax periods ending on or before December 31, 2026. To benefit from the Small Business Relief for a specific tax period, a business can opt for it by submitting a notification to the tax authorities.
Value Added Tax in UAE
In the UAE, individuals are not subject to income tax. However, a 5% value-added tax is applied to the purchase of goods and services, imposed at every stage of the supply chain and ultimately borne by the final consumer.
VAT collected amounted to AED 100,000. The total late filing penalty for six quarters (January 2020 to June 2023) is calculated as AED 11,000, comprising AED 1,000 for the first quarter and AED 2,000 for each of the subsequent five quarters. The penalty for the initial month is AED 2,000, calculated as 2% of AED 100,000. Subsequently, the penalty increases to AED 68,000, calculated at 4% per month over 17 months, applied to AED 100,000.
Sectors exempt from VAT in the UAE include financial services, such as life insurance and reinsurance of life insurance, residential buildings (excluding those specifically zero-rated), bare land, and local passenger transport.
Your business in the UAE should register for VAT if it is incorporated there and its annual turnover surpasses AED 375,000. This criterion is determined by your revenue activities over the past twelve months or if you anticipate exceeding the threshold within the next 30 days.
According to UAE VAT regulations, businesses are required to obtain VAT registration if the total value of taxable supplies and imports in a year exceeds AED 375,000. Additionally, businesses in the UAE have the option to voluntarily register if the total value of supplies, imports, or expenditures in a year exceeds AED 187,500.
In the UAE, there are two main VAT rates: the standard rate set at 5% and the zero rate, which stands at 0%.
Access the FTA's e-Services portal and navigate to the VAT tab, then proceed to the VAT Refunds section. Click on the VAT refund request to access the form. Fill out the form accordingly. Once submitted, you'll receive an email notification from the FTA informing you of the outcome of your refund application.
To determine if a business is registered for VAT, start by checking their invoices. A VAT-registered business should display their unique VAT registration number on all invoices. Without this number, you won't be able to reclaim the VAT you've paid to them. Additionally, you can check their website for this information.
If you are not VAT registered you still have to pay the VAT on your purchases but are unable to reclaim it. Those who suffer in paying the actual tax, are the non-VAT registered businesses and individuals, at the bottom of the chain.
The bank account provided must belong to the company; individual accounts will not be accepted. Required details include Account Name, Account Number, IBAN, Bank Name, and Branch Name. Additionally, a turnover declaration for the previous 12 months is optional. This declaration should bear the signature and stamp of the company owner and must be printed on the company's letterhead.
Tourists and visitors in the UAE have the opportunity to reclaim VAT paid on their purchases made during their stay. The reimbursement process occurs through a comprehensive electronic system linking retailers registered in the 'Tax Refund for Tourists Scheme' with all entry and exit points across the UAE.
To calculate the VAT amount for a purchase price, multiply the price by the VAT rate. For instance, if the rate is 15%, it means 15 per 100 or 15/100. Therefore, the VAT amount for a purchase price of x would be (x) multiplied by (15/100). As an example, on a purchase price of R50, the VAT payable would be R7.
Certain goods and services are exempt from VAT. This means that they are not subject to VAT and therefore, do not incur the standard 20% VAT charge. Exempt goods and services include insurance, education, and health services
Until the sale is completed with the final consumer, sales tax isn't collected, leaving tax jurisdictions without revenue. In contrast, VAT (value-added tax) is collected by all sellers at every stage of the supply chain. This includes suppliers, manufacturers, distributors, and retailers, all of whom collect VAT on taxable sales.
A tax registration number, commonly known as a VAT number or VAT registration number (TRN), is used by the government, vendors, or customers to identify and recognize you.
- Trade license: In the UAE, a trade license is a legal document granting authority to run a business.
- Tax Registration Certificate (TRC): The Tax Registration Certificate is yet another crucial document that businesses must possess in order to file their VAT returns.
BANKING CONSULTANCY
A bank service consultant is typically a customer service role within a bank. They assist customers with various banking services, including account inquiries, transactions, account management, and addressing customer concerns.
Several banks in Dubai are known for their services for foreigners, including Emirates NBD, Standard Chartered, and HSBC. The "best" bank may depend on an individual's specific needs, so it's advisable to compare services, fees, and features before choosing one.
Dubai offers several banks suitable for businesses, including Emirates NBD, Dubai Islamic Bank, and Mashreq Bank. The best bank for business can vary based on the business size, industry, and specific financial requirements.
Dubai offers several banks suitable for businesses, including Emirates NBD, Dubai Islamic Bank, and Mashreq Bank. The best bank for business can vary based on the business size, industry, and specific financial requirements.
The role of a service consultant can vary across industries, but in a banking context, they often work in customer service. They assist customers with their banking needs, provide information on products and services, process transactions, and address customer inquiries or issues to ensure a positive customer experience.
TAX SERVICES
The United Arab Emirates (UAE) follows a predominantly tax-free system. There is no federal personal income tax or corporate income tax in the UAE. However, there are certain exceptions and local taxes, such as the Value Added Tax (VAT) and specific taxes on industries like tobacco and energy.
The UAE has a Value Added Tax (VAT) system, which is a type of consumption tax. As of my last knowledge update in September 2021, VAT is applicable to various goods and services at a standard rate of 5%.
Taxes, such as VAT, are typically paid by businesses to the UAE Federal Tax Authority (FTA).
Businesses are required to register for VAT and file periodic VAT returns. Individuals in the UAE generally do not have to pay personal income tax.
In Dubai and the UAE, personal income tax on salary is not levied. This means that individuals receive their full salary without any deductions for income tax, making it a popular destination for expatriates seeking tax free income.
Dubai and the UAE's tax free status is primarily due to their economic model, which relies on revenue sources other than direct taxation. Instead of income tax, the country funds its operations through sources like oil revenue, fees, and taxes on specific goods and services. This model has been designed to attract businesses, investors, and expatriates to contribute to the country's growth and diversification without imposing personal income tax. Please note that tax regulations may change, so it's essential to consult the latest information or a tax advisor for the most current details on taxation in the UAE.
BUSINESS CONSULTANCY
Consulting fees in Dubai can vary significantly based on the type of consultancy, the scope of the project, the consultant's expertise, and market demand. Rates can range from a few hundred to several thousand dirhams per hour or project.
When choosing a consultancy in Dubai, consider factors such as the consultancy's reputation, expertise in your industry or field, client testimonials, experience, and whether they can meet your specific needs. It's important to have clear communication and a good fit with the consultancy team.
A "good" consulting fee is one that reflects the value and expertise the consultant brings to your project. It should be competitive in the market, align with your budget, and provide a positive return on investment. It's often based on the consultant's skills, experience, and the complexity of the project.
Consulting fees are typically calculated by considering factors like the consultant's hourly or daily rate, the estimated time required for the project, any additional expenses, and the perceived value of the service. Fees can also be fixed for a specific project or based on a retainer agreement.
The three major types of consultants are: a. Management Consultants: Offer expertise in improving business operations and strategy. b. Financial Consultants: Provide financial advice, including investment, tax, and financial planning. c. IT Consultants: Specialize in technology and information systems, offering solutions for IT related challenges.
ZOHO IMPLEMENTATION AND CUSTOMISATION
Zoho customization refers to the process of tailoring Zoho's suite of software applications, which includes customer relationship management (CRM), to meet specific business needs. This can involve modifying the software's features, appearance, and functionality to align with an organization's unique requirements.
Yes, Zoho can be customized extensively to adapt its CRM and other software tools to the specific needs of a business. Users can configure and personalize various aspects of Zoho applications, from data fields to workflows and reports.
Zoho implementation is the process of setting up and integrating Zoho's software applications, like Zoho CRM, within an organization. It involves installing, configuring, and deploying Zoho to ensure it functions effectively for the business.
The cost of Zoho implementation can vary significantly depending on factors like the size and complexity of the organization, the specific Zoho products being implemented, the extent of customization required, and whether the implementation is done in-house or by an external consultant. Costs may include licensing fees, setup, training, and ongoing support.
Customization in CRM (Customer Relationship Management) refers to tailoring CRM software to align with an or ganization's unique business processes and requirements. This can involve modifying data fields, automating workflows, creating custom reports, and personalizing the CRM interface to enhance efficiency and better serve customers.