UAE: VAT obligations of real estate management entities in Dubai

The tax authority of the United Arab Emirates (UAE) issued guidance informing owners associations and management entities in Dubai of their obligations under the value added tax (VAT) law that reflects changes in Dubai real estate legislation.

Law No. 6 of 2019 provided that the rights and obligations of owners associations were to be transferred to management entities. The recent guidance confirms that owners’ associations are no longer considered to be legal persons and thus not able to register for VAT purposes.

Management entities (for these purposes) are identified as developers, management companies or hotel project management companies that manage common facilities and areas for property owners. In turn, the responsibility for charging and accounting for VAT due on the related management fees falls on these management entities.

When management entities are registered for VAT purposes, the tax authority expects that the previously charged VAT (charged the property owners by an owner’s association) for any management fees must now be accounted for by the management entities, which are now responsible for issuing tax invoices for these taxable supplies. Management entities can recover any VAT incurred in relation to making taxable supplies on receipt of valid tax invoices in their own names, subject to the normal rules for input VAT recovery.

Penalties can be imposed for noncompliance.

Source : KPMG

For more information on these services, please contact us:

Covid impact: UAE reduces penalties on VAT, excise tax

The UAE has reduced old penalties on value-added tax (VAT) and excise tax in order to help companies and individuals better cope with the impact of the Covid-19 pandemic. According to newly-released Cabinet Decision No. 49 of 2021, tax payers who currently have penalties pending can see those reduced to 30 per cent, provided they settle them before December 31, 2021.

Going forward, late payment penalties will be reduced to four per cent per month, a substantial reduction from one per cent per day while an overall cap stays at 300 per cent.

The new provisions will be applicable 60 days as from April 28, 2021.

Thomas Vanhee, founding partner of Aurifer Middle East, said technical provisions now determine that late payment penalties should only be calculated as from 20 weekdays after submitting the voluntary disclosure.

He said the Cabinet decision constitutes a very important reduction in the penalties and provides an excellent opportunity for tax payers to get a fresh start.

Anurag Chaturvedi, managing director of Chartered House, said this is a best relief provided by the government to the pandemic-hit businesses in the UAE.

“A number of businesses in the UAE succumbed to administrative penalties on account of delay in submission of the due tax. The new regime of administrative penalties are at par with global standards. The most relieving change is maximum penalty of four per cent of unpaid tax per month compared to one per cent of unpaid tax for each day of delay as per the old provisions,” said Chaturvedi.

News Courtesy : khaleejtimes.com

For more information on these services, please contact us:

Rules to Follow to Determine VAT on E-commerce Transactions in the UAE

To Determining VAT on e-commerce sales is challenging due to the uniqueness of the mode of transaction. Gleaning insights from the VAT clarifications, we guide you about the rules to follow while determining VAT on e-commerce transactions in the UAE.

VAT on Online Purchase of Goods

Any good or services purchased through online shopping sites are generally subject to five per cent VAT. However, the critical condition here is that the place of supply should be in the UAE. The standard VAT rate is also applicable to most of the goods sold inside the UAE, subject to exceptions granted to medicines sold through websites. Apart from that the import of goods is also is subject to VAT in the UAE.

VAT on Export of Goods in E-commerce Sector

Export of goods from the UAE under e-commerce is eligible for zero VAT rate as per Article 30 of Executive Regulation. However, zero-rating is subject to certain conditions. The VAT treatment differs according to the party who is contractually responsible for the delivery of goods. Consider the following requirements to check if your exports are eligible for zero-rating:

1. If the supplier is responsible for arranging transport of sold goods from the UAE or appoints an agent to do so on its behalf (direct export), the supply may be zero-rated
2. The supply of goods is zero-rated if the customer from an overseas country is arranging the collection of the goods from the supplier in the UAE and then exporting the goods. The zero-rating is also eligible if the customer has appointed an agent to do so on his behalf (indirect export)

Also, exports to the GCC countries are eligible for zero-rated VAT. The businesses, however, must obtain and retain official and commercial evidence for the exports. The official evidence could be a certificate issued by the relevant Customs Department that confirms the exit of goods from the UAE. Acceptable commercial evidence includes airway bills, bills of lading, consignment notes, and certificate of shipments.

Accounting for VAT in the UAE

The FTA deems that accounting for VAT in the UAE as the responsibility of the taxable supplier. However, in certain situations, the responsibility of accounting for VAT may be transferred to the recipient under ‘Reverse Charge Mechanism’. Reverse Charge Mechanism applies in the following cases:

1. If the supplier is not having a place of residence in the UAE
2. The supplier doesn’t charge VAT on the supply (supplier not registered for VAT in the UAE)
3. The recipient is a taxable entity that has a place of residence in the UAE

In case, the Reverse Charge Mechanism applies, the recipient is required to account for VAT to the FTA at the applicable VAT rate. The agreed price of the goods will be treated as VAT exclusive, which means the recipient should charge VAT on top of the agreed price. Consult with the best VAT consultants in Dubai for efficient advice on applying Reverse Charge Mechanism on e-commerce supplies.

E-platforms as Principal or Agent

The tax treatment of the goods & services made through electronic platforms, websites, or markets is dependent upon whether the electronic market functions as the principal or agent. In case, the electronic platform operates as the principal, such online markets are considered as a supplier of goods or services that is responsible for accounting for VAT. If the online market is functioning as an agent on behalf of another supplier, the tax treatment entirely depends on whether the online market is acting as a disclosed or undisclosed agent. For further guidance, seek advice from registered tax agents in Dubai, UAE.

VAT Treatment of Electronic Services

The FTA defines e-commerce services as the services that are automatically delivered over the internet, an electronic network or an electronic market place. Such services include

• Domain names & web hosting services
• Software & updating of software
• Images, text, screensavers, e-books
• Music, films, games on demand
• Supply of online magazines
• Supply of advertising space on a website and any rights associated with it
• Political, cultural, artistic, sporting, scientific, educational or entertainment broadcasts
• Live streaming via the internet
• Distance learning through online services

A service doesn’t meet the definition of electronic services if it is not any one of the services listed by the FTA. Supply of services in which the parties use the internet only to communicate with each other or to facilitate bookings won’t be termed as electronic services for VAT purposes. In this respect, services such as the supply of legal or financial advice, transport services, or hotel accommodation will not constitute an electronic service. Taxable persons get in-depth knowledge about e-commerce services from the best tax agents in Dubai, UAE.

For more information on these services, please contact us:

Penalties for VAT Deregistration In UAE

VAT deregistration in UAE is the cancellation of a taxable entity’s registration for VAT. When the Federal Tax Authority or FTA in UAE approves of the application for VAT cancellation, then the registration will be rescinded.

As per the FTA’s regulations, businesses can apply for either voluntary deregistration for VAT or mandatory VAT deregistration. Whether the VAT cancellation is non-mandatory or mandatory, a taxable entity has to comply with a set of eligibility criteria and conditions in order for the local tax authority to approve of the deregistration.

For compulsory or mandatory VAT deregistration in UAE, the business has to have stopped dealing in any taxable supply or its expenses and/or supplies for the previous twelve months, including in the next thirty days, no longer exceed the threshold for mandatory registration – currently at AED 375,000. A business can voluntarily deregister for VAT in UAE when it’s past twelve months and its supplies and/or expenses already dropped lower than the current threshold for voluntary VAT registration, which is at AED 187,500.

Potential Penalties with VAT Deregistration in UAE

There are a number of penalties that a business can occur when processing its VAT cancellation as the authorities will have to conduct several reviews prior to allowing the taxable entity to cease its registration. Here are the most noteworthy penalties for violations that are best avoided:

• Failure in processing VAT deregistration on time or within the specified timeframe set by the local authority on taxation – the penalty is AED 10,000
• Failure in keeping records that are requested by the tax authorities – AED 10,000 penalty for a first offense or AED 50,000 for a repeated violation
• Failure in providing the authority requested records in the Arabic language – a penalty of AED 20,000
• Failure in informing FTA of an amendment with the tax records, which are requested for VAT deregistration – AED 5,000 if the offense is a first or AED 15,000 if the taxable entity has made the same mistake before of not notifying the authority of tax record amendments
• Failure in notifying FTA a legal representative was appointed by the business in the specified timeframe – penalty imposed on the legal representative will be AED 20,000
• Failure of an appointed legal representative in filing the tax return requested by the local tax authority within a specified timeframe – penalty will be charged onto the appointed representative with the amount of AED 1,000 if it’s the first offense or AED 2,000 for a repeated offense in the span of twenty-four months
• Submission of incorrect final tax return – there will be two penalties for the violation. The fixed penalty can either be AED 3,000 if it’s the first offense or AED 5,000 for a repeated violation. For the percentage-based penalty, it will be applied to the amount that’s unpaid on the FTA because of an error(s). Fifty percent of the amount owed by the business will be due to the FTA if it doesn’t voluntarily disclose the error to the tax authority or when it’s already asked by the FTA to provide information regarding the error. Thirty percent of the amount owed by the business to the FTA will be the percentage-based penalty if the business chooses to make a voluntary disclosure following the receipt of notification of the FTA regarding the error. Five percent of the money owed to FTA will be the percentage-based penalty when the voluntary disclosure is done prior to receiving any notification from the FTA regarding an error.
• Voluntary disclosure of a business regarding errors on any of its previous tax returns, refund applications, or tax assessments – the fixed penalty is either AED 3,000 (for a first offense) or AED 5,000 for a repeated offense. The percentage-based penalty will either be 50 percent (for making a disclosure following FTA review), 30 percent (for voluntary disclosure following receipt of notification from FTA, or 5 percent (for voluntary disclosure prior to getting any notification from the FTA.
• Failure of a taxable entity in facilitating an FTA auditor’s work or review – a penalty of AED 20,000
• Failure of the taxable entity in complying with conditions and processes relevant to the issuance of e-tax invoices and e-tax credit notes – AED 5,000 for every incorrect document
• Failure by taxable business in issuing tax credit notes or the alternative documents – a penalty of AED 5,000 will be imposed on the business for each document that is missing
• Failure by taxable business in issuing a document for a supply – AED 5,000 for the missing tax invoice

When processing your VAT deregistration in UAE, you have to follow the appropriate steps including fulfilling all conditions for VAT cancellation, submitting a final tax return, and paying the dues, especially fines for violations. For assistance with VAT deregistration, call us here in VAT Registration UAE today!

For more information on these services, please contact us:

UAE plans to include 10 new sectors to the company’s law, allowing for 100% foreign ownership

The UAE’s Ministry of Economy is working on new legislation to include 10 sectors to the commercial company’s law, which allows 100 per cent foreign ownership of onshore companies in the country, a senior official has said.

The legislation, which will enable investors and business in ’10 new sectors of strategic importance’ to come under the purview of the law, is in its final stages of formation.

The list of sectors and the regulations associated with their entry into the local market will be announced by the UAE Cabinet soon, confirmed Abdulla Al Saleh, undersecretary of the Ministry of Economy for Foreign Trade and Industry said at the Sharjah Economic Ramadan Majlis.

Al Saleh added that the cancellation of the national service agent requirement came into force on April 1.

He also stated that all current and previously licensed businesses in the UAE can amend their statuses according to the new amendments to the commercial company’s law.

“Legislations that have been issued or those that will be enacted soon seek to increase the country’s competitiveness for both local and international investors, and advance business performance,” he said.

“These legislations are not the outcome of a crisis but follow a clear vision of the country’s economic future envisioned collaboratively by federal, local, and private sector stakeholders. The future depends primarily on attracting innovative talents who will lay the foundations of economies of the future.”

He added: “A comprehensive strategy to attract bright minds from around the region and the world will be announced soon.”

The UAE announced in November that foreign nationals would be allowed to own 100 per cent of commercial companies within the country, eliminating the need for a UAE national to hold the majority share.

Under new legal amendments, businesses can be fully established by non-Emiratis of all nationalities.

Meanwhile a new industrial law is also set to be announced soon, in line with the UAE’s recently unveiled industrial strategy ‘Operation 300bn’, confirmed another official at the Sharjah Economic Ramadan Majlis.

“A new industrial law will soon come into force and will be instrumental to promoting a conducive environment for industry in the UAE,” said Omar Ahmed Suwaina Al Suwaidi, undersecretary of the Ministry of Industry and Advanced Technology.

“We have also tackled financing issues startups face in order to boost their performance. A National Added Value Program will be launched soon to support national products, enhance their competitiveness and find new markets for them”, he added.

Under Operation 300bn, the UAE is aiming to raise the manufacturing sector’s contribution to national GDP to Dhs300bn by 2031.

“We have held meetings and workshops with our industry partners to identify their challenges and discussed priority sectors under three pillars – the UAE’s competitive industries, including the chemical, petrochemical, pharmaceutical, defense and heavy industries; the national food and healthcare security industries; and industries of the future, including space and renewable energy, among others,” said Al Suwaidi.

News Courtesy : Gulf News

For more information on these services, please contact us:

UAE adopts guidelines to combat money laundering and financial crimes

The National Committee for Combating Money Laundering and Financing of Terrorism and Illegal Organizations (NAMLCFTC) of the UAE adopted anti-money laundering and countering the financing of terrorism (AML/CFT) guidelines for financial institutions, designated non-financial businesses and professions.

A set of AML/CFT guidelines have been issued to raise awareness of the importance of adhering to legislation related to financial crimes, and the risks and penalties resulted from the violation. The guidelines will be published on the websites of the NAMLCFTC and other regulatory bodies to ensure circulation and action by licensed entities.

NAMLCFTC held its 3rd meeting for the year 2021 chaired by Khaled Mohamed Balama, Governor of the Central Bank of the UAE (CBUAE) and Chairman of the NAMLCFTC to discuss the latest developments in countering money laundering and combating the financing of terrorism in the UAE.

The meeting was attended by Ahmed Ali Al Sayegh, Minister of State (UAE) and Chairman of Abu Dhabi Global Market.

“Through periodic meetings, we seek to discuss with our strategic partners the latest initiatives of the National Committee for Anti-Money Laundering and Countering the Financing of Terrorism and Illegal Organizations, to strengthening our joint efforts to combat financial crimes,” said Khaled Mohamed Balama, Governor of CBUAE and Chairman of NAMLCFTC.

The National Committee noted the progress made by represented federal entities on the implementation of various actions envisaged in the UAE National Action Plan for anti-money laundering and countering the financing of terrorism (AML/CFT) and decided on further actions.

Assessment reports

The Committee approved six-risk assessment reports related to terrorism financing, trade-based money laundering, misuse of legal persons, non-profit organizations, lawyers and the gold sector. The reports will help to align the legislative and operational frameworks and priorities with the current risks and enhance understanding of risks and to boost cooperation among the competent authorities.

The NAMLCFTC endorsed the initiative of the sub-committee for money laundering crimes investigative authorities regarding the implementation plan of the National Strategy for Combating Money Laundering and Combating the Financing of Terrorism, which aims to define responsibilities of all concerned entities and strengthen cooperation to limit money laundering.

Financial inclusion

During the meeting, the committee discussed an updated national action plan for strengthening financial inclusion efforts through measures that aim at improving the access to all segments of society to financial institutions under the supervision of the Central Bank and minimize the reliance on Hawala providers or informal money transfer services providers.

The Central Bank presented the efforts to enhance financial inclusion in the UAE by developing a Wage Protection System, adopting a risk matrix of product developed by exchange houses and remittance intermediaries, in addition to raising the awareness of and commitment to AML/CFT measures by exchange houses.

News Courtesy : Gulf News

For more information on these services, please contact us:

Oman to levy 5% VAT from April 16

Oman will start implementing five per cent value-added tax (VAT) from April 16, Oman News Agency reported on Sunday

 It is estimated that VAT will contribute 1.5 per cent towards the country’s gross domestic product (GDP) and raise around 400 million Omani riyals (Dh3.8 billion; $1 billion) per year for the country’s exchequer.

The implementation of VAT comes in line with the GCC framework that was agreed between the six-nation bloc. The UAE and Saudi Arabia levied five per cent VAT on January 1, 2018 followed by Bahrain. Saudi Arabia later hiked VAT to 15 per cent amidst shortfall in revenues due to plunge in oil prices.

A study by EY had predicted that the adoption of VAT by GCC countries would generate additional annual revenues of $25 billion.

Saud bin Nasser bin Rashid Al Shukaili, chairman of the Tax Authority in Oman, said all necessary preparations and requirements to implement VAT from April 16 have been completed.

Oman’s tax authority had opened registration process for the companies to register in the special tax system in February last year.

He explained that companies have been given the necessary time to prepare their accounting systems and other measures for tax compliance.

Source : Kaleejtimes.com

For more information on these services, please contact us:

VAT Treatment of Motor Vehicles

Businesses in the UAE are often bewildered by the tax treatment of VAT paid on motor vehicles while self-assessing their VAT liabilities. This could be possible because of two reasons first being a special transaction that is not normal in day to day business and the second being that the amount of tax paid is often significant. VAT Law read with Executive regulations has outlined specific provisions in this regard. We have tried to present them here in a systematic way for the guidance of tax registrants.

Definitions

Before jumping into analysis let’s learn a couple of definitions relevant to our analysis.

• Taxable Supply:
  A supply of Goods or Services for a Consideration by a Person conducting Business in the State and does not include Exempt Supplies.
• Input Tax:
  Tax paid by a Person or due from him when Goods or Services are supplied to him, or when conducting an Import.
• Recoverable Tax:
  Amounts that were paid and can be repaid by the Authority to the Taxpayer pursuant to the provisions of the Decree-Law.

Relevant Provisions in the Law and Regulations

• Clause (5) of Article (54) of VAT Decree-Law
  The Executive Regulation of this Decree-Law shall specify the instances where Input Tax is excepted from being recovered.
• Clause (1) of Article (53) of Executive Regulations
  Inter-alia, Input Tax shall be non-recoverable if it is incurred by a person in respect of the following Taxable Supplies:
  Where a motor vehicle was purchased, rented or leased for use in the Business and is available for personal use by any person.
• Clause (2) of Article (53) of Executive Regulations
  Inter-alia, the phrase “motor vehicle” shall mean a road vehicle that is designed or adapted for the conveyance of no more than 10 people including the driver. A motor vehicle shall exclude a truck, forklift, hoist or other similar vehicles.
• Clause (4) of Article (53) of Executive Regulations
  A motor vehicle shall not be treated as being available for personal use if it is within any of the following categories:

• a taxi licensed by the competent authority within the State;

• a motor vehicle registered as, and used for purposes of an emergency vehicle, including by police, fire, ambulance, or similar emergency service;

• a vehicle which is used in a vehicle rental business where it is rented to a customer.

Analysis

• Decree-Law specifies the list of transactions whereby the Input-VAT can be recovered and also gives the power to Executive Regulations to come up with instances whereby it cannot be recovered.
• Under powers given by Decree-Law, the Executive Regulations includes Article (53) outlining the instances whereby the Input Tax cannot become Recoverable Tax. i.e. cannot be adjusted while assessing VAT liability and hence becomes part of the cost of the tax registrant.
• Among other things, Article 53, provides that whereby a motor vehicle is purchased, rented or leased for business use and is available for personal use by any person, the tax paid cannot be recovered. The important point to note here is actual use is irrelevant, if the motor vehicle is even available for personal use, it’s not qualified for recovering the Input VAT paid.
• The idea here is to disallow VAT credit on motor vehicles that may be used for the personal purposes of any person.
• However, since motor vehicles are a crucial part of running the daily operations of most businesses and particularly those businesses that deal in providing services related to motor vehicles, the Law has provided certain relaxations by defining what will not be termed as a motor vehicle for the purposes of Article 53, and by defining what will not be termed as personal use. So, if a motor vehicle passes either of these tests, the VAT can be recovered in a normal course.
• Vehicles used purely for commercial purposes like a truck, forklift, mini-truck, lorry and other similar vehicles will not be termed as motor vehicles for Article (53) and hence normal provisions will apply to them. i.e. Input VAT paid can be recovered in the normal course.
• Motor vehicles though carrying individuals for their personal purposes shall not be treated as being used for personal purposes if it’s a Licensed Taxi or an emergency vehicle like ambulance, police patrol cars, fire or other motor vehicles being used in other similar emergency services or if the motor vehicles are being used in a Vehicle Rental Business where it is rented to the customer (Rent a Car Businesses).

Conclusion

The law has made its intention amply clear by defining the term Motor Vehicle and by defining Personal Use in a negative approach (i.e. everything is personal use except.).

Therefore a Tax registrant must make sure that either the purchased, rented or leased motor vehicle is not a motor vehicle as per Clause (2) or Article (53) or if it’s a motor vehicle as per the said article, it’s treated as not being used for personal purposes as per Clause (4) of Article 53 and only then must recover the VAT paid on such motor vehicle(s).

For more information on these services, please contact us:

Source :  Protax

UAE VAT Bulletin for Artists and Social media influencers

FTA has published a Tax information bulletin, which clarifies VAT implication of supplies provided by artists and social media influencers.

Bulletin is relating to supplies made by:

• Artists – Individuals who make supplies in their personal capacity as performers, singers, dancers, stage artists, make-up artists, DJs, poets, song writers or any other individuals carrying out other activities.
• Social Media Influencers (SMIs) – Individuals who provide their services using social media to promote products and services such as bloggers, YouTube hosts, etc.

Some of the key highlights of the tax bulletin are as follows:

• Services provided by SMIs are subject to VAT such as promoting a product in a blog/video/social media post, providing access to SMI’s network on social media, physical appearances etc.
• Artists/SMIs need to pay attention on reimbursement of cost from client as this would also fall within VAT scope
• UAE Artists and SMIs who make taxable supplies are required to register for VAT, provided the value of their taxable supplies and imports in the last 12 months exceeded AED 375,000 or is expected to exceed in the next 30 days.
• No registration threshold for non-resident artists and SMIs with place of supply in UAE and no other person obligated to account for VAT on such supplies (e.g. services provided to non-VAT registered recipients in UAE)
• Artists and SMIs should keep into consideration the VAT implications of any barter arrangements e.g. if the artist receives goods in return for their services, goods are treated as consideration for the services. Further, if no consideration is charged for the services, deemed supply provisions will need to be looked at.
• Intermediary between Artist/SMI and clients – In case of agent acting in name and on behalf of Artist/SMI, Artist/SMI would need to account for VAT on amount charged to the client and the agent will account for VAT on the commission charged to the Artist/SMI. However, in case of agents who act in their own name and contract with the client, Artist/SMI would need to account for VAT on the amount charged to the agent and agent would account for VAT on amount charged to client.
• FTA has clarified in the bulletin that if a UAE Artist/SMI has contract with a UAE based company to provide advertising services, this would attract 5% VAT even if the advertising service is performed outside UAE.

Source : premier-brains.com

For more information on these services, please contact us:

Oman to cut income tax on SMEs, offer investors long-term residency

Oman will reduce income tax for small and medium businesses for 2020 and 2021 and will offer long-term residency permits for foreign investors, state TV said on Tuesday.

The plans announced on state media are part of Oman’s Vision 2040 aimed at diversifying the economy away from oil, which makes up the bulk of state revenues.

Oman is one of the Gulf’s weakest economies and was hit hard by the coronavirus pandemic and low oil prices. The International Monetary Fund said last month its economy likely shrank 6.4% in 2020 and estimated it would make a modest recovery to 1.8% growth this year.

The measures also include income tax being reduced for companies in sectors aimed at economic diversification that will begin operating this year.

Oman will also cut rent at the Duqm Special Economic Zone and industrial areas until the end of 2022.

It said granting longer residencies for foreign investors would be done “in accordance with specific controls and conditions that will be announced later after their study is completed by the Council of Ministers, in addition to incentives related to the market.”

The cabinet also approved a long-term urban growth strategy that “is considered a key enabler for achieving Oman Vision 2040,” state TV said citing Oman’s ruler, Sultan Haitham bin Tariq al-Said.

Source : Gulfnews

For more information on these services, please contact us:

How Tax Groups Can Conduct VAT Deregistration in UAE

Two or more related taxable persons conducting businesses are allowed to form a tax group and perform Vat registration in the UAE. Two or more related parties register for VAT as a tax group as the supplies between the members of a VAT Group are considered as out of the scope of VAT. However, there are situations where a tax group is required to conduct VAT deregistration in the UAE.

For instance, if the tax group no longer qualifies for the requirements for VAT registration, they should deregister. Tax groups registered with the Federal Tax Authority (FTA) can consult with accredited tax agents in Dubai to perform VAT deregistration. In this article, we enlist the process and various reasons for VAT deregistration that tax groups should be aware of.

Various Scenarios for Deregistering a Tax Group in the UAE?

The primary reasons for deregistering a tax group and individual VAT deregistration are the same. A tax group can be deregistered if the group companies are no longer making any taxable supplies. Tax groups can deregister if the group companies make taxable supplies but the value in the preceding 12 calendar months is less than the Voluntary Registration Threshold (AED 187,500). Deregistration is also applicable if the group companies make taxable supplies, but the value in the previous 12 months was less than the Mandatory Registration Threshold (AED 375,000).

Apart from the common reasons, the following are the various scenarios in which the tax groups become eligible for deregistration.

1. The entity registered as tax groups no longer meet the requirements to be considered as a tax group

A tax group is eligible for VAT registration if each member entity has a place of establishment in the UAE; the relevant members of the group are related parties, and one or more persons conducting the business should control the other members. If the tax group no longer meets these requirements, then it should mandatorily apply for VAT deregistration in the UAE.

2. The registered entity no longer has any association with the group

In a tax group, the persons should be related parties where one of them can control others either by Law or through the acquisition of shares or voting rights. If the tax group entities no longer have any such association through economic, financial or regulatory practices, the tax group should be deregistered.

3. FTA Initiates a tax group deregistration on its own capacity

FTA can deregister a tax group if the authority has reason enough to believe that the tax group is involved in tax evasion, fraud or any non-compliance that would impact the integrity of UAE’s tax system.

The Process of Deregistering a Tax Group

The process of deregistration of a tax group must be initiated through FTA’s portal in which the VAT registration was made previously. The option for deregistration appears on the dashboard against the Tax Group registration space. The reason for deregistering the tax group and the date from which deregistration is required must be specified.

Along with the application for tax group deregistration, all the relevant documents and information must be submitted. The applicants then need to wait for FTA’s approval for the deregistration application. The FTA will send the result of the application after the authority completes the review. Accredited tax agents in Dubai will perform the entire process of deregistration on behalf of the member entities.

Penalty for Failing to Apply for VAT Deregistration

A tax group should submit the application for VAT deregistration within 20 days of becoming eligible for deregistration. The failure of the VAT registrant to submit a deregistration application would attract an administrative penalty of AED 10,000. Hire the best tax agents in Dubai to avoid such hefty penalties.

How can VAT Consultants in Dubai Help Businesses?

The UAE allows two or more related taxable entities to form a tax group and register for VAT as a single group. There are circumstances where the entities of a tax group will be required to deregister. An entity that fails to deregister within 20 days of becoming eligible for deregistration is liable to pay penalties to the FTA. Tax group entities can avoid such penalties by hiring the best VAT consultants in Dubai, UAE.

For more information on these services, please contact us:

Businesses told to comply with anti-money laundering steps

FOUR CATEGORIES OF BUSINESSES MUST COMPLETE FORMALITIES BY MARCH 31

The UAE’s Ministry of Economy has extended the grace period until March 31 for certain business categories to be in full compliance with anti-money laundering and prevention of terrorism financing.

Businesses that fail to do so will face fines range from Dh50,000 to up to Dhl million and can be raised to Dh5 mil-lion based on the provisions of the law and according to the assessment of the Supreme Committee for Combating Money Laundering, and Financing of Terrorism and Illegal Organizations.

 This applies to activities in four categories — brokers and real estate agents, dealers of precious metals and gemstones, auditors, and corporate service providers.

The ministry issued a list of 26 violations. Three actions will invite fines of Dhl million each.

These are for dealing with fake banks in all ways; opening or maintaining bank ac-counts with fake names or numbers without the names of their canters; and failure to take measures related to clients listed on international or domestic sanctions lists, prior to establishing or continuing a business relationship.

Steps to be taken

These businesses must first register with the Financial Intelligence Unit (goAML) and on the Committee for Commodities Subject to Import and Ex-port Control system (Automatic Reporting System for Sanctions Lists).

 Following the registrations, they should adopt other measures related to the two systems in accordance with the provisions of the Decree-law, its implementing regulations and the relevant decisions.

“We call on all concerned companies to establish internal policies, procedures and controls to avoid money laundering risks in accordance with the measure set forth by the executive regulations of the law, which can be found on the official website of the Ministry of Economy,” Said Safeya Al Safi director of the Anti-Money Laundering Department, Ministry of Economy.

The Ministry called on the companies practicing the four categories of activities to enhance their awareness and knowledge on the risks of money laundering and keep pace with the government’s efforts in this regard.

Registration extended

The Ministry clarified that the grace period for registering on the two systems has been extended until March 31, 2021, and that the companies that fail to do so before this date will be subject to penalties, including suspension of the license and closure of the facility.

 In addition, it underlined the significance of completing the post-registration procedures and measures to avoid the fines set by the Cabinet Resolution No. 16 of 2021.

AI Sail said: “The Department is committed to answering the inquiries of all stakeholders and helping the targeted establishments comply with the requirements of the law, via the Ministry’s call center number 800-1222.

Al Safi explained that the issuance of the violations and fines list supports the UAE’s efforts in combating money laundering crimes and financing of terrorism. It enhances the business sec-tor’s and non-financial professions’ compliance levels as de-fined by the provisions of the law and its implementing regulations, thereby contributing to raising the national economy’s ability to achieve healthy and sustainable growth. Furthermore, the measure reflects the UAE’s keenness, under the guidance of its wise leadership, to continuously develop Its economic legislation to enhance its competitiveness as a safe and stable global business destination. Al Safi also affirmed the Ministry of Economy’s commitment to strengthening partnerships with private sector companies and establishments that belong to the designated non-financial business and professions sector.

For more information on these services, please contact us: