UAE VAT refund scheme an opportunity for business to increase international travel spend

VAT Refund scheme for tourists in UAE

Vat refund UAE

The UAE Federal Tax Authority presented a VAT of 5% in January 2018, and will dispatch Tax Free Shopping in Q4 2018. Tax Exempt shopping is the acquiring of merchandise in the UAE which will be traded (subject to terms and conditions) whereby customers can acquire a discount on the VAT or tourist vat refund uae on these things, giving that they approve their buys as indicated by nearby principles. Dubai has for quite some time been a well-known shopping goal for universal voyagers. Between the twice-yearly shopping celebrations and the multiplication of universal brand name stores, there is no lack of approaches to burn through cash on glossy things.

The presentation of a VAT discount plan ought to go far to keeping the city at the highest point of many travelers’ shopping records. Same time business can take opportunity by registering themselves under VAT refund scheme to increase their international travel spend.

Who is eligible to get VAT refund UAE?

“Overseas Tourist” implies any natural Person who isn’t resident in any of the Implementing States or in other words all non-UAE residents above 18 years old and who isn’t a team part on a flight or on the other hand air ship leaving an Implementing State and the minimum purchase amount is 250 AED.
What are the conditions to get VAT refund?
• Products ought to be purchased by the tourist in the UAE.
• Visitor visiting the UAE must exit UAE inside 90 days from the date of shopping alongside the things purchased.
• With the end goal to get the VAT Refund, visitors ought to make sure only to purchase from enlisted organizations for tourist refund scheme conspire in the UAE.

What all should be done for vat refund for tourists in Dubai?

1. The visitor takes merchandise and labeled receipt from registered buisness under VAT refund scheme to the airplane terminal, seaport or outskirt crossing
2. The tourist goes to a Validation point: – For airplane terminals: Before checking in and going through security
3. When approved, the visitor picks a refund option (money or card discount)
4. VAT refund will be process by the authorized agency.

What amount does the traveler get back?

The tourist will get 85% of the aggregate VAT sum paid, short an administrator charge of 4.80 dirhams per Tax Free form.

What Businesses need to do?

Businesses must be enrolled for VAT with the FTA to give a Tax Registration Number (TRN), be fully informed regarding their VAT returns and settlement of payable expense, be a vender of products qualified to get charge discounts as controlled by the FTA, present their request to join the scheme to the authorized agency and be liable to a credit check. After successful registration business need to report amount paid to the tourists under the Tax Refunds Scheme for Tourists in their regular VAT returns.

What goods are eligible to receive tax refunds?

All taxable goods except for:
1. Services.
2. Goods that are not accompanied by the Overseas Tourist at the time of leaving UAE.
3. Food and drinks intended for immediate consumption.
4. Motor vehicles, boats and aircraft.

UAE VAT Law on Tourist Scheme. {Source ~ Federal Decree-Law No (8) of 2017 on Value Added Tax}
As per the Article 68 Clause 2 of Executive Regulations of the Federal Decree-Law No (8) of 2017 on Value Added Tax following conditions shall apply to the Tax Refunds Scheme for Tourists:
1. The Goods which are subject to the Tax Refunds for Tourists Scheme must be supplied to an overseas tourist who is in the State during the purchase of the Goods from the supplier.
2. At the Date of Supply, the overseas tourist intends to depart from the State within 90 days from that date, accompanied by the Goods.
3. The relevant Goods are exported by the overseas tourist to a place outside the Implementing States within 3 months from the Date of Supply, subject to such conditions and verifications as may be imposed by the Authority.
4. The phrase “overseas tourist” means any natural Person who is not resident in any of the Implementing States and who is not a crew member on a flight or aircraft leaving an Implementing State.
5. The Authority may publish a list of Goods that shall not be subject to Tax Refunds for Tourists Scheme.

Alya Al Marzooqi Auditing Chartered Accountants are the team of Certified Chartered Accountants offering reliable and cost effective accounting solutions to business all over the UAE including Dubai, Abu Dhabi, Sharjah, Ajman, Ras Al Khaimah, Um al Quwain and Fujairah. Our packages are affordable and suitable to all growing business, startups and stabled business.
We have quick solution for all your accounting, bookkeeping and taxation related needs, our expert consultants can help you to solve all your basic to extreme level concerns regarding VAT, accounting and bookkeeping.

Alya can help you solve all your VAT related queries.For more details please contact us on Tel: +971 4 876 9377, Mob: +971 52 975 0690, +971 52 475 4007, email us at : audit@alyaauditors.com

DMCC Approved Auditors List 2020

DMCC Approved Audit Firms in Duba

Dubai Multi Commodities Center (DMCC)

DMCC is one of the fastest and largest growing free zone in Jumeirah Lake Towers (JLT) in UAE and is the prime selection for new business establishment.

Compliance and Rules and Regulation:

DMCC has developed an effective compliance framework to ensure that DMCC operations are in line with local and international laws, regulations and best practice.

The Approved Auditors List Rules also mandate that all DMCC member companies must submit their Audited Financial Statements through a DMCC Approved Auditor, which will be implemented over a transitional period.

DMCC, with Rated A by Standard & Poor’s Ratings Services, is the first entity in Dubai and the second in the UAE to receive a full interactive rating from the world’s leading provider of independent credit ratings.

Steps:

The following are four simple steps in starting a business in DMCC:

  • Decide on your license type and business activities
  • Prepare and submit the online application form. (Initial application fee is AED 1,015)
  • Pay, Sign and Submit the required documents
  • Sign and submit the relevant documents for your new office space.
Requirements:

The following are the documents needed before setting up a new business in DMCC:

  • ONLINE PRE-APPROVAL APPLICATION FORM
  • PROOF OF RESIDENTIAL ADDRESS IN COUNTRY OF RESIDENCE
  • SUMMARY OF BUSINESS PLAN FOR CERTAIN ACTIVITIES
  • THIRD-PARTY APPROVALS FOR CERTAIN REGULATED BUSINESS ACTIVITIES
  • COPY OF YOUR PASSPORT
  • NO OBJECTION CERTIFICATE FROM SPONSOR (Required if holding a valid UAE residence visa.)
  • COPIES OF PARENT COMPANY DOCUMENTS (Required if setting up a subsidiary.)
  • DETAILS OF AN OFFICE ADDRESS IN DMCC FREE ZONE (JLT) (Required after your company has been registered.)
Closing a business: DMCC free zone

According to the website of DMCC, there are three types of closures. They are:

  • Summary winding up – this can be done in cases where a company has either no liabilities or is able to discharge its liabilities within 6 months and commences with a statement of solvency
  • Creditors winding up – this can be done when the company passes a resolution for winding up and is followed by a meeting with the company’s creditors
  • Bankruptcy – this can be done by the court under UAE Commercial Transactions Law No. 18 of 1993.

In DMCC, you need to apply for closing the business through the member portal. The authorities, duties, and responsibilities of the Directors of the company will be terminated as an effect of the submission of the company termination application. The application will be reviewed and processed. This will be followed by an announcement in a local Arabic newspaper. DMCC authorities will then file the final termination of the company and issue termination letters.

Why need Approved Auditors in JLT/DMCC ?

ALYA is a reputed Chartered Accountant Firm in Dubai with its head office at Business Bay and a branch office at SAIF zone with expert professionals who can help you with the registration and formation as well as liquidation and de-registration of your business in any of the UAE Free Zones.

We are approved auditors in Dubai and are listed auditors in almost all major freezones in Dubai including DMCC,DWC,JAFZA,SAIF,Maydan etc.Our market experience and the solid personal relationships which we constantly maintain with the major finance providers and business communities, we behold specialist advisory skills to support you both in the local and global market place.

With ALYA, we can help you identify the needs of your business by:

  • Providing Guidance & Support in strategizing your business plan and providing business advisory.
  • Assisting you in making the best decision in favor of the business by assessing the risk along with the management techniques of the same.
  • Assisting you in preparing the application form to be submitted to the regulatory department
  • Providing proper guidance while selecting the strategic locations of warehouse/s and/or offices.
  • Providing VAT Compliance and Advisory support for VAT Registration, VAT Implementation, VAT Return Filing
  • Tax restructuring
  • Provisions for Accounting & Book Keeping services
  • Provisions for Accounting & Financial Reporting
  • Provisions for Audit & Assurance Services

With the continuous support from our Chartered Accountants, you will get core business advice, qualitative solutions and unique experience that are specifically catered with your business needs. Alya Auditors in one of the top among the approved auditors in DMCC. Approved Auditors List 2020. 

Why You Should Keep a Separate Bank Account for Your Business

bank-account-uae-dubai
bank-account-uae-dubai

If you’re a small business owner, having a separate bank account is not only considered vital, but is also seen as one of the most effective budgeting techniques you can try. Not only will it make it easier for you to keep track of your business income and expenses, but it’ll also make the job easier for your outsourced bookkeeper. But is this the only reason to keep a separate bank account for your business? Not by a longshot. Here are a few more reasons.

 

· It’s required by the FTA if you’re incorporated. Is that a good enough reason for you? We thought so. Forget about whether or not you’re the only person in the company and you’re able to differentiate your business transactions on a personal account. Whether it’s just you, you and a partner, or a small corporation doesn’t matter. To ensure you’re not breaking any rules with the FTA, get yourself a separate business checking account.

It shows the FTA that you’re a legitimate business. Even if you’re not incorporated and you aren’t legally required to have a separate checking account for your business, doing so can accomplish the sometimes tough task of proving to the FTA that you’re legit and that your business isn’t just some surreptitious way to play the system. Having a separate business bank account isn’t the only thing the FTA looks at, but it can help keep you off their radar. It can also help greatly if you’re ever audited, because you’ll be able to provide the FTA a clean record of your transactions without having to sort through your personal finances.

· It makes you look like a bona fide professional. Now, having a few business cards and a check that has the letters “LLC” immediately after your name won’t attract business any more than a fancy pair of shoes will attract the person of your dreams. What it does, however, is legitimize you in the eyes of customers, suppliers, and potential investors as the real deal – and let’s face it, sometimes these things can help.

 

Outsourcing your accounting doesn’t mean you’re off the hook for keeping accurate financial business records. It just means you’ve now got someone on the case who knows what they’re doing, allowing you to spend more time running your business instead of data entering dollar amounts and trying to figure out what those figures mean with regard to the health of your business. An outsourced professional bookkeeping service can also offer guidance on budgeting techniques that can save your company valuable money and effort in the long run.

 

To learn more about how outsourced bookkeeping works, visit alyaauditors.com

How Long Should You Keep Business Records in UAE?

Auditing Firm in DXB

Many businesses aren’t sure how long records must be saved in the paperless era. Record-keeping is a boring, but important business activity, and if you make the wrong choices, you risk litigation, succession planning problems and the wrath of the tax man. Understanding how long should you keep business records will help you avoid these problems.

The General Rule

The Internal Revenue Service has established some basic record-keeping rules for tax documents. Outside the tax arena, there’s remarkably little guidance about how long you should keep business paperwork. Most lawyers, accountants and bookkeeping services recommend keeping original documents for at least five years. As a rule of thumb, five years is sufficient time for defending tax audits, lawsuits and potential claims.

Specific Documents

  • Business Tax Returns and supporting records must be kept until the IRS can no longer audit your return. In most cases, the IRS can audit you for three years after a filing, but that time period extends to six years if the IRS suspects you made a “substantial error” on your return.
  • Payroll tax records, including time sheets, wages, pension payments, tax deposits, benefits and tips must be kept for at least four years after the date the taxes fell due or the date you actually paid them, whichever is later.
  • Current employee files should be retained for at least seven years after an employee leaves, is terminated or retires. However, if an employee suffers a work-related accident or files a claim against the business, it’s advisable to retain your records for up to 10 years after the claim is resolved.
  • Job applicant information must be kept for at least three years, even if you didn’t hire the applicant.
  • Ownership Records, such as business formation documents, annual meeting minutes, by-laws, stock ledgers and property deeds, should be retained permanently.
  • Accounting Services Records should be retained for a minimum of seven years. Accountants, being a conservative bunch, will often recommend that you keep financial statements, check registers, profit and loss statements, budgets, general ledgers, cash books and audit reports permanently.
  • Operational Records, including bank account statements, credit card statements, canceled checks, cash receipts and check book stubs, follow the seven year rule.

These periods are not offered as final authority, but as a guide. Your CPA, outsourced accounting service or tax attorney may recommend a different approach based on the rules of your industry and the specific needs of your business.

Audit Firms in Dubai

Auditing does not need to be an unwanted process. With one of the top audit firms in Dubai, like Alya Auditors., you can be sure that your audit process will not be as tedious or tensed as what you have been accustomed to.

There have been a number of companies from various industries that Alya Auditors auditors in Dubai have audited. We have experience and knowledge in our sleeves.

You can contact us today and book a free consultation with one of our auditors in Dubai for you to find out more about the audit.

Economic Substance Regulations in UAE

economic-substance-law-uae

​ As part of the UAE’s commitment as a member of the OECD Inclusive Framework, and in response to an assessment of the UAE’s tax framework by the European Union (“EU”) Code of Conduct Group on Business Taxation, the UAE introduced a Resolution on the Economic Substance (Cabinet of Ministers Resolution No.31 of 2019, the “Regulations”) on 30 April 2019.  Guidance that provides further clarity on the application of the Regulations was issued on 11 September 2019. The Regulations require UAE onshore and free zone companies and other UAE business forms that carry out any of the “Relevant Activities” listed below to maintain an adequate “economic presence” in the UAE relative to the activities they undertake. 

 
Relevant Activities:
  • Banking Business
  • Insurance Business
  • Investment Fund management Business
  • Lease – Finance Business
  • Headquarters Business
  • Shipping Business
  • Holding Company Business 
  • Intellectual property Business (“IP”)
  • Distribution and Service Centre Business​
 
 
The Regulations provide a definition to each of the above Activities. The provisions of the Regulations shall not apply to Companies in which the Federal Government of the UAE or the Government of any Emirate of the UAE, or any governmental authority or body or any of them has at least 51% direct or indirect ownership in their share capital. The Regulations apply to financial years commencing on or from 1 January 2019. Entities that are governed by the Regulations will need to submit a notification to their Regulatory Authority (defined under Cabinet Decision No (58) of 2019 issued on 4 September 2019) from 1 January 2020 onwards, and prepare and submit to the same Regulatory Authority an economic substance declaration  within 12 months from the end of their financial year (e.g. 31 December 2020 for entities with a financial year ending 31 December 2019). An entity is not required to meet the economic substance test and file an economic substance declaration for any financial period in which it has not earned income from a Relevant Activity. Failure by an entity to comply with the Regulations shall result in administrative penalties, spontaneous exchange of information with the Foreign Competent Authority (as defined in Article 1 of the Regulations), and potential suspension, revocation or non-renewal of its registration.

The Economic Substance Regulations

1.Why has the UAE introduced Economic Substance Regulations?

The UAE introduced Economic Substance Regulations to honour the UAE’s commitment as a member of the OECD Inclusive Framework on BEPS, and in response to a review of the UAE tax framework by the EU which resulted in the UAE being included on the EU list of non-cooperative jurisdictions for tax purposes (EU Blacklist). The issuance of the Economic Substance Regulations on 30 April 2019 (the Regulations), and the subsequent release of the Guidance on the application of the Regulations on 11 September 2019, was a requirement for the removal of the UAE from the EU Blacklist on 10 October 2019. The purpose of the Regulations is to ensure that UAE entities that undertake certain activities (see question 4) are not used to artificially attract profits that are not commensurate with the economic activity undertaken in the UAE.

2.What is the first reportable Financial Year?

The Regulations apply to financial years starting on or after 1 January 2019. Example 

1: A UAE company with 1 January 2019 – 31 December 2019 financial year: First assessable period would be 1 January 2019 – 31 December 2019. Example 

2: A UAE company with 1 April 2019 – 31 March 2020 financial year: First assessable period would be 1 April 2019 – 31 March 2020. No need to comply with the Regulations for the period 1 January 2019 – 31 March 2019.

3.Who are the “Regulatory Authorities”?

The Regulations are administered by the Regulatory Authorities listed in Cabinet Resolution No (58) of 2019 Determining the Regulatory Authorities Concerned with the Business Mentioned in Cabinet Resolution No (31) of 2019 Concerning Economic Substance Regulations 

Does your business fall under Economic Substance Regulations in the UAE?

If your business falls under the entities with the above-mentioned activities in the UAE, then you may need assistance to determine the applicability if Economic Substance Regulations is relevant for you as you need to analyze the implication of this new regulation in the UAE.

The team at Alya Auditors will assist you in providing preliminary assessments of your company’s current compliance obligations, and assist with possible future strategies, in response to this new legislation.

For more details on "Economic Substance" read
Source  :  Ministry of Finance Website

VAT on Designated Zones in UAE

Designated-Zones-VAT-
Designated Zones rules – recent issues

We have seen a number of recent examples where businesses are facing material exposures to tax assessments and penalties arising from the incorrect application of the DZ rules, either in relation to their own supplies or as a result of the VAT treatment applied by vendors.

In our experience, many businesses struggle to apply DZ rules to the practical 
examples they face in their business on a day to day business. As a result, businesses are being required to make adjustments to supplies previously treated as out of scope of VAT, in order to charge VAT at 5% to their customers. Such corrections can attract significant penalties which increase over time and can be up to 350% of the original tax due.

In addition, the recent Public Clarification VATP012 on Importation of goods by agents on behalf of VAT registered persons, raises some important points about the eligibility to recover VAT paid on import. In certain cases, this will lead to businesses being required to make adjustments to the value of import VAT automatically populated in Box 6 of the VAT return. In many cases, businesses appear not to have fully considered the implications of the Public Clarification on their current business and reporting practices.

If you are a business involved in supply chains which include movements of goods within, between, to and from DZ’s there is a risk that VAT rules may be applied incorrectly in many cases, including:

  • Supplies made under a Delivered Duty Paid (DPP) incoterm, or similar arrangements involving delivery of goods to premises in the UAE mainland
  • Supplies where the Importer of Record (IOR) is not owner of the goods at the time of import e.g. where the customer imports the goods under their own import license before legal title transfers·        
  • Supplies where goods are entered into a DZ under an import license which authorizes imports into a different DZ or UAE Free Zone·        
  • Supplies of goods made where the customer intends to consume the goods within its own business or for private purposes·        
  • Supplies of goods where the supplier is unaware of the purpose to which the customer will put those goods·        
  • Supplies involving or related to real estate situated within the DZ, amongst others

Where supply chains involve goods which are also subject to Excise Tax, further
complications can arise.

 

List of Designated Zones in the UAE

Designated Zones – Abu Dhabi
  1. Free Trade Zone of Khalifa Port
  2. Abu Dhabi Airport Free Zone
  3. Khalifa Industrial Zone
  4. Al Ain International Airport Free Zone
  5. Al Butain International Airport Free Zone
Designated Zones – Dubai
  1. Jebel Ali Free Zone (North-South)
  2. Dubai Cars and Automotive Zone (DUCAMZ)
  3. Dubai Textile City
  4. Free Zone Area in Al Quoz
  5. Free Zone Area in Al Qusais
  6. Dubai Aviation City
  7. Dubai Airport Free Zone
  8. International Humanitarian City – Jebel Ali
Designated Zones – Sharjah
  1. Hamriyah Free Zone
  2. Sharjah Airport International Free Zone
Designated Zones – Umm Al Quwain
  1. Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port 
  2. Umm Al Quwain Free Trade Zone on Sheikh Mohammed Bin Zayed Road
Designated Zones – Ras Al Khaimah
  1. RAK Free Trade Zone
  2. RAK Maritime City Free Zone
  3. Al Hamra Industrial Zone – Free Zone
  4. Al Ghail Industrial Zone – Free Zone
  5. Al Hulaila Industrial Zone – Free Zone
Designated Zones – Fujairah
  1. Fujairah Free Zone
  2. FOIZ (Fujairah Oil Industry Zone)
Designated Zones – Ajman

Ajman Free Zone

Which Free Zones should be considered as Designated Zones?

Free Zone = Designated Zone, only if

  • Designated Zone is an area specified by a Cabinet Decision as being a “Designated Zone”
           AND
  • Certain tests of fencing, security controls, and custom controls are in place.

Transfers of goods into Designated Zone from outside the UAE: UAE VAT would not be applicable (Outside the scope of UAE VAT).Transfers of goods into Designated Zone from mainland UAE: These supplies are treated as local supplies, it is not considered to be an export of goods from the UAE. Accordingly, the standard rate i.e. 5% would be applicable.

Transfers between Designated Zones: Transfer of goods between two Designated Zones will be treated as outside the scope of VAT, subject to the previous two conditions being met.

Movement of goods from Designated Zones to Mainland: It will be out of scope supply for supplier located in Designated Zone & it will be considered as an import of goods for mainland buyer. Mainland buyer has to book VAT liability on Reverse Charge Mechamism basis.

Consumption or loss of goods into Designated Zone: Goods which are located in a Designated Zone on which the owner has not paid VAT will be treated as imported into the UAE where the goods are consumed by the owner, unless the goods are incorporated into, attached to or otherwise form part of or are used in the production of another good located in a Designated Zone and that other good is not itself consumed; or the goods are unaccounted for.

Supply of Water & Energy from Designated zone to Mainland or within Designated Zone: Standard rate i.e. 5% VAT will be applicable.

Sales/Lease of Real Estate in Designated Zone: Supplies of real estate (Sales/Lease) made within Designated Zones are outside the scope of VAT.  Raw materials purchased within a Designated Zone for the purpose of constructing real estate in the Designated Zone are also outside the scope of VAT.

Services Related to Real Estate in Designated Zone: Supplies of services related to real estate will be taxable at standard rate i.e. 5% even if supplied within a Designated Zone.

Supply of goods within/between Designated Zones

  • The Authority expects that a written statement from the recipient that the goods will not be consumed, should be sufficient to treat such transaction as “Outside the Scope” of VAT.
  • Where goods are moved between Desig
    ated Zones, the FTA may require the owner of the goods to provide a financial guarantee for the payment of VAT, which that person may become liable for should the conditions for movement of the goods not be met.

FTA’s warning over VAT scam in UAE

VAT-Consultants-Advisors

UAE's Federal Tax Authority issues warning over VAT scam

The UAE’s Federal Tax Authority on September issued a warning after reports of scammers trying to target bank customers over VAT refunds.

In response to reports that some bank customers have received emails from unidentified sources impersonating banks and financial institutions requesting personal data in the promise of helping them claim VAT refunds, the FTA reaffirmed that they can only be processed through its official website.

The authority said that some recipients have been asked to provide personal data, including names, credit card numbers, and PIN codes, claiming that providing the information will allow them to recover VAT.

“Refunding taxes for legally eligible applicants is a direct transaction between the registered business and the FTA, and does not call for any intermediaries,” it said in a statement.

“The process is completed via advanced electronic systems, available on the FTA’s official website, which includes security features for financial transactions. It is done through official channels using the International Bank Account Number (IBAN), and via systems under the authority of – and electronically linked to – the UAE Central Bank.”

The FTA warned all registered businesses, calling on them to remain vigilant and maintain the confidentiality of their personal data.

Alya chartered accountant is a certified firm of business consultancy in the UAE. Accounting service, auditing service, tax handling for business, VAT registration are some of its brilliant services that are provided by the super experienced chartered accountants of Alya. Feel free to Contact Us at any point in your business incorporation.