Organisations across the UAE which fail to comply with the rules in place regarding the tax audits conducted by the Federal Tax Authority (FTA) will be liable to pay hefty fines, experts warned at a webinar on Wednesday.

Presented by Khaleej Times & MBG Corporate Services, the event sought to bring clarity to some of the key issues regarding tax audits, and brought together key experts in the field to share their insights.

Vipin Ahuja, director – Tax, MBG Corporate Services, started the event with a presentation on why the Federal Tax Authority is conducting tax audits. He explained that the provisions of the federal law on taxation have mandated the FTA with the legal right to perform a tax audit on any person to determine their compliance with the provisions of the relevant laws. FTA authorities will check the returns and other documents like sales invoices, purchase invoices, Customs & VAT documents related to the import and export of goods and services. The FTA can conduct these for any reason, or whenever they want, as per a set of criteria. It is advisable for all business entities in the UAE to prepare themselves for these tax audits in a timely manner as the FTA allows only five days for responding to their queries.

Under the Self-Assessment System of VAT returns filing, the onus is clearly placed on taxpayers and businesses have to interpret and apply the tax legislation correctly to comply with their respective tax obligations, he explained.

Ahuja also shared probable factors for tax audit selection. “The first has to do with if your company is in a VAT refundable position. Ever audit starts with your risk profile and how your company holds up against the FTA risk profile parameters. If you are in this position, then you will definitely be on the FTA’s radar. Another factor is if you are a large-scale business with high volumes.”

Other reasons include a history of late Return submissions, the occurrence of incorrect filings, a non-reconciliation with Customs Records, delay of payment of Taxes/Penalities, and negative adjustments to imports

Laila Aziki, tax agent, MBG Corporate Services, then revealed that there are several penalties for non-compliance with tax audits. One of the heftiest is a Dh20,000 fine that will be charged for failure to facilitate the work of the tax auditor.

“The submission of an incorrect tax return will result in a penalty of Dh3,000 for the first time, and Dh5,000 for repetition and five per cent, 30 per cent, and 50 per cent based on the time of correction,” she said. “Non-maintenance of any financial records will result in a Dh10,000 penalty; and failure to settle the amount payable as sated in the return will result in a one per cent daily penalty up to 300 per cent when unpaid for one calendar month. This is increased to four per cent due on the seventh day and two per cent due tax immediately.”

Ahuja noted that companies can start their journey towards VAT compliance by ensuring accurate and complete data capture into the system; reconciliation of VAT Returns with Books of Accounts & Custom Records; and the maintenance of all the relevant supporting documents.

Source:https://www.khaleejtimes.com/business/local/failure-to-comply-with-tax-audit-to-result-in-hefty-fines-tax-experts-warn

The Ministry of Economy (MoE) has listed the businesses that need to register in the anti-money laundering systems before March 31.

These include real estate agents, gold dealers, auditors, and service providers for companies.

Referred to as designated non-financial businesses and professions (DNFBPs), they have been asked to register in the Financial Intelligence Unit (goAML) and the Committee for Commodities Subject to Import and Export Control system (Automatic Reporting System for Sanctions Lists).

Such businesses were given an extended grace period till March 31 to register, in order to avoid penalties, which include licence cancellation and closure.

It is among the several measures adopted by the government to combat money laundering and financing of terrorism in the UAE.

The MoE also underlined the importance of adopting measures to counter money laundering. Failure to do so result in fines ranging from Dh50,000 to Dh1 million – which can be doubled to as much as Dh5 million.

Full list

The ministry explained that a wide range of non-financial business and activities are “most exposed to money laundering risks”. These have been divided into four main categories.

>> Brokers and real estate agents: When entering into operations in the interest of their clients for purchase and sale of real estate.

>> Dealers of precious metals and gemstones: When they perform any single-cash transaction or several seemingly related transactions with a value of Dh55,000 or more.

>> Independent auditors and accountants: When they prepare, conduct or implement financial operations for the benefit of their clients, related to the following activities:

– Buying and selling real estate.

– Managing money that the client owns.

– Managing financial, savings or stock accounts.

– Contributing to establishing, operating or managing companies.

– Establishing, operating or managing companies, or legal arrangements.

– Buying and selling commercial entities.

>> Corporate service providers and trust funds: When they undertake or execute an operation for the benefit of their clients or on their behalf in relation to the following activities:

– Work as an agent in establishing companies.

– Working or preparing someone else to work as a director or company secretary, or as a partner in the company.

– Providing a registered office, business address, place of residence, address for correspondence, administrative address of a legal person, or legal arrangement.

– Act as trustee for a direct trust fund or to perform a similar function for another form of legal arrangement.

– Working or preparing another person to act as a shareholder for another person.

Source:https://www.khaleejtimes.com/business/local/uae-businesses-that-must-register-in-anti-money-laundering-systems