BENEFITS OF THE FINANCIAL AUDIT FOR YOUR COMPANY IN DUBAI

Financial audit in dubai
Anyone who has a business or a company with a lot of people who are responsible for completing different tasks may face a risk of error or irregularities in the business. The audit is the best solution to point out all these errors if you have your company in Dubai. It can be very beneficial for a company as it will improve the efficiency of the business. The management will better understand the working and financial system of their company. The stakeholders, supplier or the financiers will know that the risk is properly assessed and effective strategies are being used to overcome them. With the help of the auditing process, the employees will know the financial area which needs improvement and the way in which this improvement will take place. Having an audit in your company will also lessen the risk and then the cost of capital. In the process of auditing, the management will be able to identify the flaws in financial records or frauds. Other benefits of having a financial audit of your company in Dubai may include the following:

1. Improves communication:

Mostly higher authorities relay on the data which is provided to them by the management. This data is needed to make a crucial decision about the future plans of the company. There is a high chance of error in the data collected and audit is needed to remove that error. The audited financial statements are important for the success of a company because they provide accurate and timely information about the financial situation of a company. The management will know that the auditing committee will highlight the errors, whether they are intentional or unintentional.

2. Better management:

Researches show that the companies who undergo the audit process are more profitable and have better management system as compared to the companies who does not have the annual financial audit. Selection of a perfect company which will provide the auditing services is a crucial thing for the success of your business. Experienced auditors have a lot of expertise in the field and they will perform the process in a better way. They will also help you identify the small opportunities which can form as a major improvement in the near future.

3. Expert recommendations:

The auditors are trained in a way that they focus on the tightening and improvement in the business processes. This process will reduce the amount of risk in the financial data. An auditor is the one who will provide you with the unbiased suggestion apart from his likes and dislikes. The company may apply some strategies for so long that they become dangerous for the internal control. The auditor will help you identify these type of hazards. By avoiding them, you will be able to develop a new and more effective system of strategies for your business. The auditing process is a short term sacrifice for a long term reward. Once the audit has done properly with the cooperation of the management and the auditor, your business may become more profitable with very less risks. Audits are of different types but we can differentiate them broadly into two categories and they are : Internal and External Auditing. Internal audit is a formal inspection of a company’s internal controls, like accounting and corporate governance, with the aim of proposing improvements in the system and spotting any inadequacies before they are discovered in an external audit. Its role is to verify and ascertain that one or more functions of an organization are operating effectively, efficiently and/or lawfully.

Benefits of an Internal Audit

  • An internal audit functions as a management self-regulating procedure for any company
  • Via an internal audit, one can gauge one’s company’s:
    • Transparency and accuracy of financial transactions
    • Degree of compliance with corporate regulation and institutional policies
  • Internal audit provides an independent assessment of an organization’s financial and operational activities

 Internal Audit in Finance

Internal audit comprises the following activities, which directly impact the financial health of a company:

1. Compliance Review

Compliance review sees to it that an organisation is following norms, regulations, laws, codes of practice and guidelines, as they apply individually and collectively to a company’s business functions.

2. Risk Evaluation

An internal audit helps in identifying key activities and related risk factors, assessing their importance. With time, internal audit practices have evolved to follow a proactive and risk-based approach. This enables a company to apprehend any possible future concerns and opportunities, in addition to identifying current issues.

3. Business Process Analysis

Internal audit invariably reviews a company’s processes and operations to establish if results are in line with business objectives, and if the former are being carried out as planned.

4. Management Advisory

Internal audit looks into the extent of implementation of management policies, as well as the tone and risk management culture of a company. This aids the management to modify or recourse company action plans.

Distinction Between Internal and External Audit

An external audit is carried out primarily for an annual statutory audit of financial accounts, checking its alignment with a company’s actual financial standing. Consequently, external auditors often inspect and verify internal controls instantiated to manage risks which could affect financial accounts, to check if they are in order. Here are the key differences between internal and external audit. Internal Audit 1. Conducted to identify systemic inadequacies, to initiate management action for carrying out recommendations for change leading to improvement in performance and control. 2. Examine issues related to company business practices and risks. 3. An internal auditor is generally an employee of the company conducting the audit. 4. Responsible to the management of the company. 5. Can provide advice and other consulting assistance to the company. 6. Can be conducted anytime, and at desired intervals. External Audit 1.  Conducted to formally check the financial statements of an organization, and to evaluate the effectiveness of internal audit work. 2. Examines the financial/statutory records and checks their regulatory alignment. 3. An external auditor is hired on a temporary basis from a third-party firm. 4. Responsible mainly to the shareholders of the company. 5. Generally not involved in supporting the company being audited too closely. 6. Is commonly conducted on an annual basis.

Reasons For Auditing Your Company

Internal audit services handle affairs that are primarily instrumental to the survival and growth of any organization. An internal audit would look beyond financial risks and accounts to encompass wider issues like a company’s revenue metrics, customer reputation, its environmental impact and employee satisfaction. Internal auditors help an organization to succeed and prosper. This is achieved via a combination of assurance and consulting. Assurance involves telling company stakeholders how well the systemic functions and processes of a company are working. Consulting caters to refining these functions and processes where called for. Here are the top 5 reason to conduct an audit:
  1. To insure the effective operation of an organization.
  2. To review compliance with a multitude of administrative regulations.
  3. To instill a sense of confidence in management that the business is functioning well and you are prepared to meet potential challenges.
  4. To maintain/enhance the organization’s reputation in the community.
  5. To perform a “due diligence” review for shareholders or potential investors. Not all policies, practices, and procedures are committed to writing. It is vitally important that companies have a process to ensure that everything stays up-to-date and legal, AND actually works as intended.
Do you want things to run smoothly? Conducting an audit is one way to accomplish that. Engage Alya Auditing to perform your audit and help you overcome these challenges.If you are a company operating in Dubai, no matter large or small, it is advisable to plan your control strategy with an audit firm in Dubai. Alya Auditors can help you with it. We have experienced hands in auditing and consulting corporations, and are one among the  emerging audit firms in UAE. Contact us for any information on internal audit; our certified internal auditors would be glad to assist.

Company Formation in UAE

Company Formation in Dubai

Incorporating your company on UAE mainland is comparatively easy and profitable. But, one drawback that shouldn’t go unnoticed is the lack of complete ownership. A foreign investor can own maximum of 49% shares and at least 51 percent of the shares should be owned by the local sponsor. Yes, it might sound quite depressing, especially if you have already made up your mind in Company formation in UAE mainland. But hold on, the UAE government understands the consequences of such a clause, that it can pull back investors from establishing their company here. Taking into consideration the same, the government has planned to give complete ownership to foreign nationals. That means you no longer will have to rely on local sponsors to begin your own company.

Economists said the UAE has been working on several other bold reform initiatives, including the bankruptcy law, to boost investor confidence over the past several years. The UAE bankruptcy law, which allows companies in financial distress to restructure, has already come into effect.

Certain sectors are restricted from 100 percent foreign ownership and hence are categorized under a ‘negative list’. The 14 industries that come under the negative list are:

    • Oil exploration and production
    • Investigation, security, military (including manufacturing of military weapons, explosives, dress, and equipment)
    • Banking and financing activities
    • Insurance
    • Pilgrimage and Umrah services
    • Certain recruitment activities
    • Water and electricity provision
    • Fishing and related services
    • Post, telecommunication and other audio-visual services
    • Road and air transport
    • Printing and publishing
    • Commercial agency
    • Medical retail (including pharmacies)
    • Blood banks, quarantines and venom/poison banks

Even though sectors that come under the positive list have not been published, manufacturing and service industries are expected to make it to the list. The UAE cabinet has the authority to add or remove sectors on the negative as well as positive lists, at a later date.

The new move will encourage more investors for Company formation in UAE, which will result in a significant positive effect on foreign direct investments. With the amendment, mainland companies will enjoy the same status or perhaps more than that of free zone companies.

Sultan bin Saeed Al Mansouri, Minister of Economy, has said the final draft of the landmark law is awaiting the UAE Federal National Council approval before it becomes a law by the last quarter of 2018.

Company Formation in UAE

Alya Auditors Dubai,Leading CA Firm in Dubai providing professional services in the field of Auditing,Accounting,VAT/TAX Consultation etc in UAE  also provides complimentary UAE and Dubai company formation consultation to existing and potential clients. We offer many company formation options here in the UAE for Onshore, Offshore and Free Zone companies. Company formation application process begins once all necessary documents are acquired.

For more details contact us @ Tel: +971 4 876 9377, Mob: +971 52 975 0690, +971 52 475 4007

FTA publishes Public Clarifications on public transportation and farm houses/farm land

VAT Public clarification on public transport

The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published new VAT Public Clarifications on public transportation and farm houses/farm land.The new Public Clarifications are important for businesses in the transportation, real estate development, construction and infrastructure industries, and any other sectors where large scale transportation of employees occurs.The Public Clarification on farm houses and farm land is also important for businesses in the agricultural industry, and provides greater clarity on the VAT treatment of some of the supplies they make.

In this alert:

  • VAT Public Clarification on public transportation
  • VAT Public Clarification on farm houses and farm land

VAT Public Clarification on public transportation

VAT Public Clarification VATP007 discusses the definition of ‘public transportation’, and the FTA’s interpretation of which buses and trains qualify to be supplied at the zero rate for VAT under Article 45(4) of Federal Decree-Law No. 8 of 2017 on Value Added Tax (UAE VAT Law).

Article 34(3) of Cabinet Decision No. (52) of 2017 on the Executive Regulations of the Federal Decree Law No. (8) of 2017 on Value Added Tax (Executive Regulations) states that the supply of a bus or train that is designed or adapted to be used for public transportation of 10 or more passengers as a qualifying means of transport shall be zero-rated under Article 45(4) of the UAE VAT Law.

It is important to note that VATP007 addresses only the VAT liability of the supply of the buses and trains themselves, and does not impact the VAT liability of transportation services supplied under Article 45(2) of the UAE VAT Law (which are zero-rated) or under Article 46(4) of the UAE VAT Law (which are exempt).

The Public Clarification includes the following key points:

  • The FTA defines ‘private transportation’ and ‘public transportation’ as the following:

o   Private transportation: all means of transportation used to transport a specific group of people under contracts.

o   Public transportation: all means of transportation used to transport all individuals without specifying any category.

  • The FTA has further explicitly stated that public transportation should be available for all individuals without exception in order to be considered as such.
  • Only buses or trains which are designed or adapted to be used for the mass transport of individuals, without restriction to a specific category of users, qualify to be supplied at the zero rate.
  • Those means of transport which are designed to transport a specific category of individuals, such as school students, employees of a business, or hotel guests to other locations, do not qualify to be supplied at the zero rate and will be standard-rated for VAT.
  • The FTA considers the following factors, among others, to be indicative of public transportation:
    • There are facilities for passengers to pay for the transportation or show their ticket (such as a payment booth or ticket scanner);
    • There is branding within or outside the vehicle advertising the transport service, indicating it is available to all;
    • There is branding indicating that the means of transport is regulated by the entity regulating public transportation in the Emirate of operation;
    • There is evidence that the means of transport is required to comply with certain provisions or specifications, or there is a requirement to pay for a specific test determined by the regulating entity before being approved to transport passengers;
    • There are features for placing advertising materials by third parties on or within the means of transport; and
    • The means of transport is not limited to a specific group.
  • The VAT liability of the original supply of the means of transport has no impact on the VAT liability of a supply of transportation services; the VAT liability of a supply of transportation services will depend on whether the transportation is local (exempt from VAT) or international (zero-rated for VAT).
  • Article 45 of the Executive Regulations, which refers to the supply of local passenger transport services in a ‘qualifying means of transport’ as being exempt, is interpreted by the FTA to include the transport of any passengers, and this can be a defined group. Thus, VAT incurred on the supply of exempt local transport services is not recoverable.

The net effect is that entities that supply transport of a type similar to what the FTA has indicated is now classed as ‘public transport’ will need to review whether they comply with the various requirements set out in the Clarification. If not, and specifically if the transport is not generally available to be used as public transportation, it will not be entitled to zero-rating on supply.

This is likely to be of particular concern to operators of school buses, as well as buses used primarily for transport of employees.

VAT Public Clarification VATP008 on farm houses and farm land

VAT Public Clarification VATP008 addresses the VAT status of farm houses and farm land.

Article 44 of the Executive Regulations defines bare land for the purposes of exemption from VAT, and Article 37 of the Executive Regulations defines residential buildings for the purposes of zero-rating (for the first supply) and exemption (for subsequent supplies) from VAT.

The new Public Clarification contains the following key points:

  • Farm houses which meet the conditions to be considered a residential building will follow the VAT treatment of a residential building; this will typically require that a person occupies the building as their principal place of residence;
  • Other farm buildings not used as the principal place of residence will be considered commercial buildings and standard-rated for VAT; this includes farm houses which are used as weekend homes only;
  • Farm land which is considered ‘covered’ with buildings or civil engineering works will be standard-rated for VAT;
  • Farm land which is considered to be bare land (without buildings or civil engineering works, including in-built irrigation) will be exempt from VAT; and
  • The supply of the farm as a whole must be considered according to the rules regarding composite or mixedsupplies; any consideration must be apportioned appropriately where applicable.

What should you do next?

Businesses should consider the implications of these clarifications on their transactions to ensure the correct VAT treatment on supply of public transport and farm lands or buildings.

How we can help?

Alya Almarzooqi Auditing can assist you to assess the impact of these clarifications, and advise you on the VAT treatment of your affected transactions as well as the recoverability of input VAT.

Please do not hesitate to contact Alya Almarzooqi Auditing Tax Team if you require any assistance

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