Registration for non-financial entities, individuals for Anti Money Laundering in the UAE extended until April 30

Anti Money Laundering Registration in the UAE extended until April 30

Registration for non-financial entities, individuals for Anti Money Laundering in the UAE extended until April 30

The UAE Ministry of Economy announced the extension of the deadline granted to companies in the “specific non-financial business and professions” sector to register in government regulations approved for countering money laundering and combating the financing of terrorism until the end of April.

The decision is due to the large numbers of companies in the sector seeking to register in the last days of the previous deadline, which expired on March 31, taking into account the conditions of companies and the business sector in general during the period of the Covid-19 pandemic.

The ministry explained that the targeted companies, which include brokers and real estate agents, auditors, dealers of precious metals and gemstones, and corporate service providers, are required to undergo registration, which is mandatory and for free, before the end of the new deadline, in the goAML system and the automatic reporting system for sanctions lists and take the necessary measures to achieve complinace with the requirements of Federal Law No.20 of 2018.

It called on the concerned companies to take advantage of the new period for registration to avoid the penalties and fines stipulated in the law, which will be applied from May 1. Fines start from Dh50,000 to reach Dh5 million, while the penalties for companies that fail to register include the suspension of their licences or their closure.

Abdullah Sultan Al Fan Al Shamsi, Assistant Under-secretary for the supervision and follow-up sector at the Ministry of Economy, said: “Due to the increased level of response in the business sector and non-financial professions identified for mandatory registration, the Ministry of Economy decided, in coordination with its partners from the relevant government agencies, to extend the grace period granted to the target companies and give them more time until the end of the current month to complete the registration process and begin taking the necessary legal measures to comply with the requirements of the law and its implementing regulations.”

“The goal is not to impose violations, but to ensure compliance, and the decision comes with the aim of taking into account the conditions that various companies and business sectors are going through as a result of the Covid-19 pandemic and its repercussions on a global scale, stressing that the Ministry of Economy is keen to build a solid and positive relationship with the private sector based on the principle of partnership.”

Al Shamsi emphasised that the designated non-financial business and professions sector is a major partner in the UAE’s efforts to combat money laundering and has a pivotal role in supporting government efforts to build a safe and stable economic environment away from money laundering and terrorist financing crimes.

He pointed out that many of the companies concerned in the sector in its four categories showed a high level of awareness and commitment and registered, but there is still a percentage of companies that have not registered in the two systems. Extending the grace period to gives an additional opportunity to these companies to rush to register, avoid violations and protect their business and investments from money laundering risks by complying with government control requirements.

Safia Al Safi, director of the Anti-Money Laundering Department at the Ministry of Economy, said that extending the grace period without applying any violations before April 30 allows companies to fulfill their obligations and initiate registration. The Ministry of Economy received more than 6,000 calls and inquiries during March.

How can we help?

If your business in DMCC/JLT Dubai and is looking to understand more about the taxes in the country and conduct an audit for your company, then you can take the assistance of Alya Auditors– Chartered Accountants. Alya is a reputed name in the field of Auditing and Accounting and is also a certified firm in almost all the free zones in the UAE including DMCC, DWC, DWTC. We will assess all the needs and requirements of the company and accordingly provide a solution.

For any more details on the services provided by Alya Auditors -Chartered Accountants, feel free to Contact Us. We will be happy to help.

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Source: Khaleej Times

Temporary Zero Rating – of Certain Medical Equipment in the UAE

VAT Zero Rating in the UAE- of Certain Medical Equipment

Temporary Zero Rating- of Certain Medical Equipment in the UAE

On 1 September 2020, the Cabinet issued a Cabinet Decision No. 9/12 O of 2020 (“Cabinet Decision”).The Decision concerns the temporary application of VAT at the 0% rate on certain supplies and imports of medical equipment. Furthermore, the Ministerial Decision No. 380 of 2020 (“Ministerial Decision”) issued by the Minister of Health and Prevention on 6 December 2020 (with effect from 1 September 2020) specifies the medical equipment that are zero-rated in accordance with the Cabinet Decision. In accordance with Cabinet Decision No. 15/3 O of 2021, the above decisions shall be effective until 31 December 2021.This Public Clarification provides a summary of the zero-rating rules introduced by the abovementioned Decisions.

A supply or import of certain medical equipment may be zero-rated where the supply or import occurs within the period from the effective date of the Cabinet Decision until 31 December 2021.The remainder of this Public Clarification describes the rules for determining which medical equipment are covered by the zero-rating rules and the timeframes for the application of the rules.

The “medical equipment” to which the temporary zero-rating rules apply are personal protective equipment used for the protection from Covid-19, and which contain the features and meet the specifications determined and specified by the Ministerial Decision. Such medical equipment are
limited to:
• Medical face masks that are not included in the Cabinet Decision No. 56 of 2017 on medications and Medical Equipment Subject to Tax at Zero Rate (of approved standards 14683 and UAE.S ASTM F2100);

Half filtered face mask (UAE.S EN 149);

• Non-Medical “community” face mask made from textile (UAE.S 1956);

• Single-use gloves (UAE.S ISO 374-2); and

• Chemical disinfectants and antiseptics intended for use on the human body, but excluding detergents, cosmetics and personal care products (UAE.S EN 1276, EN 1650, and EN 14476:2013+A2).

The medical equipment mentioned in the Ministerial Decision are zero-rated in the following circumstances:

1. In respect of supplies of medical equipment, a supply can be zero-rated where the date of supply takes place, and the medical equipment is delivered to the recipient or placed at the recipient’s disposal in the period from 1 September 2020 to 31 December 2021.

2. In respect of imports of medical equipment, an import can be zero-rated when the medical equipment is imported in the period from 1 September 2020 to 31 December 2021. It should be noted that for the purposes of the Cabinet Decision, the date of supply must be determined in accordance with Articles 25 and 26 4/5 of the Federal Decree Law No. 8 of 2017 on Value Added Tax.

The zero-rating rules do not apply in respect of any supply of medical equipment where the date of supply, or the date the medical equipment is delivered to the recipient or placed at the recipient’s disposal, falls outside the period from 1 September 2020 to 31 December 2021. In such situations, the supply of medical equipment is subject to VAT at 5% and this VAT must be reported in the tax return of the relevant tax period (or periods) where the date of supply occurs.

Similarly, medical equipment cannot be zero-rated where the date of import is either before 1 September 2020 or 31 December 2021. In these cases, the importer would be required to account for VAT on the import at 5% in accordance with the normal procedures for payment of import VAT.

How can we help?

If your business in DMCC/JLT Dubai and is looking to understand more about the taxes in the country and conduct an audit for your company, then you can take the assistance of Alya Auditors– Chartered Accountants. Alya is a reputed name in the field of Auditing and Accounting and is also a certified firm in almost all the free zones in the UAE including DMCC, DWC, DWTC. We will assess all the needs and requirements of the company and accordingly provide a solution.

For any more details on the services provided by Alya Auditors -Chartered Accountants, feel free to Contact Us. We will be happy to help.

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Understanding VAT de-registration, an obligation or an option in the UAE?

VAT Deregistration in the UAE

Understanding VAT de-registration in the UAE in Detail

A VAT-registered person must mandatorily apply for de-registration:

a)if it stops making ‘taxable supplies’; or

b)if the value of its ‘taxable supplies’ in the previous 12 months, and the value of prescribed supplies/taxable expenses for the next 30 days, is less than Dh187,500

VAT-registered companies which have chosen to freeze their licenses or where the turnover for last 12 months was less than Dh187,500 would generally be required to mandatorily de-register for VAT. De-registration criteria for Tax Group members are separate.

Failure to apply for de-registration within 20 business days attracts a penalty of Dh10,000.

Tax Policy conundrums and impact on Designated Zone Companies

A careful analysis of the VAT Decree Law and the VAT Executive Regulations reveals an interesting dichotomy.

The Decree Law mandates that de-registration must be applied for if the ‘taxable supplies’ were less than Dh187,500. However, the Exec. Regulations provide that FTA will accept the de-registration application only if the ‘supplies referred to in Art.19 of the Decree Law’, or the taxable expenses in the previous 12 months, is less than Dh187,500.

‘Taxable supplies’ only covers standard-rated supplies and zero-rated supplies. However, ‘supplies referred to in Art.19’ is wider in scope. It covers both ‘taxable supplies’ and import of goods/services subject to reverse charge (RCM).

The supplies of goods by Designated Zone companies are generally ‘outside the scope of VAT’. If the value of the taxable supplies reported in their VAT returns of past 12 months is less than Dh187,500, such companies could be required to apply for mandatory de-registration.

A moot tax policy issue arises as submission of an application and acceptance of that application by the authorities are two distinct steps. In fact, the penalty of Dh10,000 is on the failure to submit de-registration application within the stipulated timeframe, the penalty is not on the delay in actual de-registration.

It needs to be clarified whether such companies are expected to apply for de-registration or not, if their ‘taxable supplies’ were less than Dh187,500 even if their taxable expenses or supplies including RCM is more than Dh187,500.

Will Dh10,000 penalty be imposed for failure to apply for de-registration even if the taxpayer knows that FTA would not accept the application as per the Exec. Regulations?

Another Catch-22 situation

The interplay between voluntary registration and mandatory de-registration results in another practical challenge.

The VAT law allows companies to voluntarily register for VAT if its taxable expenses in the previous 12 months period exceeds Dh187,500 irrespective of the value of its turnover.

What happens if such companies do not generate enough ‘taxable supplies’ in the next 12 months but the expenses continues? Are such companies still required to apply for VAT de-registration and reapply for voluntary registration? And would a Dh10,000 penalty be imposed for failure to apply for de-registration even though the application would be rejected as per the Exec Regulations?

FTA will certainly look into the aforesaid dichotomies and issue appropriate clarifications and/or amend the law to help businesses.

If mandatory obligation to de-register does not apply, a VAT-registered person has an option to de-register if the value of its ‘taxable supplies’ during the past 12 months was less than Dh375,000. Being optional in nature, there is no penalty for late de-registration in such cases.

The team was visibility delighted to have understood the de-registration rules. And just before we concluded the meeting, I couldn’t help but quip “By the way, have you examined the implication of Public Clarification VATP012? Let’s discuss it in our next meeting.”

How can we help?

If your business in DMCC/JLT Dubai and is looking to understand more about the taxes in the country and conduct an audit for your company, then you can take the assistance of Alya Auditors– Chartered Accountants. Alya is a reputed name in the field of Auditing and Accounting and is also a certified firm in almost all the free zones in the UAE including DMCC, DWC, DWTC. We will assess all the needs and requirements of the company and accordingly provide a solution.

For any more details on the services provided by Alya Auditors -Chartered Accountants, feel free to Contact Us. We will be happy to help.

Source : Khaleej Times

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VAT Public Clarification -Adjustment on Account of Bad Debt Relief

Where a VAT registered supplier supplies goods or services to its customers but is not paid (wholly or partially) within a specified period, such supplier may be able to adjust the VAT on the bad debts, subject to meeting the conditions prescribed in Article 64(1)1 of the Federal Decree-Law No. 8 of 2017 on Value Added Tax (‘Decree-Law’).

A VAT-registered supplier is generally required to account for output tax in the same tax period in which a tax invoice is issued. This is on the basis that no other event which triggers the date of supply has taken place prior to the date on which the invoice is issued.

If that invoice is not paid and a bad debt situation occurs, the VAT accounted for by the supplier is likely to become a real cost to the business. The Bad Debt relief scheme seeks to provide relief to the supplier in such instances by permitting an adjustment of the VAT charged but not paid by the customer.

Conditions to benefit from the bad debt relief scheme are :

a. The goods and services should have been supplied and VAT on the supply should have been charged and accounted for;

b. The consideration for the supply should have been written off in full or in part as a bad debt in the accounts of the supplier ;

c. More than six months should have passed from the date of the supply;

d. The supplier should have notified the customer of the amount of consideration for the supply that has been written off.

How can we help?

If your business in DMCC/JLT Dubai and is looking to understand more about the taxes in the country and conduct an audit for your company, then you can take the assistance of Alya Auditors– Chartered Accountants. Alya is a reputed name in the field of Auditing and Accounting and is also a certified firm in almost all the free zones in the UAE including DMCC, DWC, DWTC. We will assess all the needs and requirements of the company and accordingly provide a solution.

For any more details on the services provided by Alya Auditors -Chartered Accountants, feel free to Contact Us. We will be happy to help.

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Adjustment on Account of Bad Debt Relief – VAT Public Clarification

Adjustment on Account of Bad Debt Relief - VAT Public Clarification

VAT Public Clarification -Adjustment on Account of Bad Debt Relief

Where a VAT registered supplier supplies goods or services to its customers but is not paid (wholly or partially) within a specified period, such supplier may be able to adjust the VAT on the bad debts, subject to meeting the conditions prescribed in Article 64(1)1 of the Federal Decree-Law No. 8 of 2017 on Value Added Tax (‘Decree-Law’).

A VAT-registered supplier is generally required to account for output tax in the same tax period in which a tax invoice is issued. This is on the basis that no other event which triggers the date of supply has taken place prior to the date on which the invoice is issued.

If that invoice is not paid and a bad debt situation occurs, the VAT accounted for by the supplier is likely to become a real cost to the business. The Bad Debt relief scheme seeks to provide relief to the supplier in such instances by permitting an adjustment of the VAT charged but not paid by the customer.

Conditions to benefit from the bad debt relief scheme are :

a. The goods and services should have been supplied and VAT on the supply should have been charged and accounted for;

b. The consideration for the supply should have been written off in full or in part as a bad debt in the accounts of the supplier ;

c. More than six months should have passed from the date of the supply;

d. The supplier should have notified the customer of the amount of consideration for the supply that has been written off.

How can we help?

If your business in DMCC/JLT Dubai and is looking to understand more about the taxes in the country and conduct an audit for your company, then you can take the assistance of Alya Auditors– Chartered Accountants. Alya is a reputed name in the field of Auditing and Accounting and is also a certified firm in almost all the free zones in the UAE including DMCC, DWC, DWTC. We will assess all the needs and requirements of the company and accordingly provide a solution.

For any more details on the services provided by Alya Auditors -Chartered Accountants, feel free to Contact Us. We will be happy to help.

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Different Modes of Winding up/Liquidation in DMCC

Liquidators in DMCC/JLT

Modes of Winding - Up/ Liquidation of Companies in DMCC

The following are the four modes of winding-up of a DMCC Company:

Summary winding-up

A mode of winding-up of a DMCC Company wherein the Director(s) declares (s)that the affairs of the Company are capable of being finally wound-up within six (6) months from the commencement of the winding-up process.

Solvent winding-up

A mode of winding-up of a DMCC Company wherein the Director(s) declares (s) that the affairs of the Company are capable of being finally wound-up within twelve (12) months of the commencement of the winding-up process.

Insolvent voluntary winding-up

A mode of winding-up of a DMCC Company wherein there is the participation of the creditors of the Company.

Involuntary winding-up by the competent Court

A mode of winding-up of a DMCC Company wherein the Registrar of DMCC submits a petition to the Court for the winding-up of the Company after they determines that:
– the Company has been struck-off; or
– the Company has committed a serious or repeated contravention of the DMCCA Company Regulations or any other regulation, rule, policy, or decision applicable in the DMCC Free Zone

How can we help?

If your business in DMCC/JLT Dubai and is looking to understand more about the taxes in the country and conduct an audit for your company, then you can take the assistance of Alya Auditors– Chartered Accountants. Alya is a reputed name in the field of Auditing and Accounting and is also a certified firm in almost all the free zones in the UAE including DMCC, DWC, DWTC. We will assess all the needs and requirements of the company and accordingly provide a solution.

For any more details on the services provided by Alya Auditors -Chartered Accountants, feel free to Contact Us. We will be happy to help.

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When to Be Ready for DMCC Audit in the UAE for the Year 2021

DMCC Audit 2020 and 21

When to Be Ready for DMCC Audit in the UAE for the Year 2021

According to the implementing regulations, a DMCC Member Company has to upload the auditor’s signed and stamped Audited Financial Statements Summary Sheet and the Audited Financial Statements Report via a designated online service request on the member portal within 90 days after the end of each financial year.

As per the Approved Auditors Rules (AAR) issued on 12th January 2017, it is the responsibility of each DMCC member company to ensure that their appointed auditor is registered as an Approved Auditor with DMCCA and is listed in the Approved Auditors List (AAL).

Original documents should be well maintained with the company and made available upon request by the DMCC Inspection Team. Submission of Audited Financials is applicable to all DMCC companies including subsidiaries and branch companies.

DMCC Authority reserves the right to request additional documents at any stage of the process as well as to request the original documents during the inspection.

Documents Required to be Maintained by the DMCC Company

DMCC Audit Documents for 2020 and 2021

Steps for successful submission of the audited financial statement :

1. Members are requested to advise their auditors to download the template “Company Audited Financial Statements Summary Sheet”, which can be found at www.dmcc.ae/managing-a- company > Compliance Services > Company Audited Financial Statements Summary Sheet.

2. The auditor will then need to complete, sign and stamp the Company Audited Financial Statements Report Summary Sheet and print it on the auditor’s letterhead along with the Audited Financial Statements report.

3. Once members have the two documents prepared, signed and stamped by the auditor, they will need to log on their portal and go to Company Services, then click on Compliance Services, where they will need to create a service request titled “Submit Company Audited Financial Statements Summary Sheet and Report”. 

4. Members are requested to fill out the fields by entering the numbers and details as stated in the “Company Audited Financial Statements Summary Sheet”.

5. Members are requested to tick the declaration box to confirm that the information provided is true and correct; noting that it is an offense to enter false information. Then, click “Save”.

6. Members are required to update the Auditors Details by choosing the Listed Auditor Name from the drop-down list.

7. Members will then need to upload the following two documents and then, press “Submit”.

• Audited Financial Statements Report (Only copy is required)
• Audited Financial Statements Summary Sheet (Only copy is required)
Note: The original Company Audited Financial Statements Summary Sheet should be kept safely in the company’s possession and made available upon request by the DMCC Inspection Team.

How can we help?

If your business in DMCC/JLT Dubai and is looking to understand more about the taxes in the country and conduct an audit for your company, then you can take the assistance of Alya Auditors– Chartered Accountants. Alya is a reputed name in the field of Auditing and Accounting and is also a certified firm in almost all the free zones in the UAE including DMCC, DWC, DWTC. We will assess all the needs and requirements of the company and accordingly provide a solution.

For any more details on the services provided by Alya Auditors -Chartered Accountants, feel free to Contact Us. We will be happy to help.

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