08 Apr
Failure to comply with tax audit to result in hefty fines, tax experts warn
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
15 Mar
Oman to levy 5% VAT from next month
It is estimated that VAT will raise around 400 million Omani riyals per year.
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:https://www.khaleejtimes.com/business/economy/oman-to-levy-5-vat-from-next-month
11 Mar
UAE businesses that must register in anti-money laundering systems
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
04 Mar
New AML steps to ensure strict compliance
The Ministry of Economy announced the extension of the grace period for registration in its systems to combat money laundering until March 31, 2021, and warned that companies that fail to register would be subject to penalties including suspension of licences and closure
The new initiatives announced by the UAE, which are in line with the government’s ongoing efforts to combat money laundering crimes, will help ensure strict compliance with the anti-money laundering law (AML) and enhance the economy’s ability to achieve sustainable growth, the Ministry of Economy said.
The latest move by the Ministry of Economy is in accordance with the Cabinet Resolution No. (16) of 2021 regarding a list of types of violations and administrative fines for such violations with regard to combatting money laundering and terrorism financing.
The list includes 26 types of violations and stipulated fines that range from Dh50,000 to up to Dh1 million, which could be doubled up to Dh5 million in certain cases.
In a statement, the Ministry of Economy announced the extension of the grace period for registration in its systems to combat money laundering until March 31, 2021, and warned that companies that fail to register would be subject to penalties including suspension of licences and closure.
The ministry called on companies practicing in four main categories — including brokers and real estate agents, dealers of precious metals and gemstones, auditors and corporate service providers — to enhance their awareness and knowledge on the risks of money laundering and keep pace with the government’s efforts in this regard.
The first step to be taken by these companies is to register on the Financial Intelligence Unit (goAML) and on the Committee for Commodities Subject to Import and Export Control system (Automatic Reporting System for Sanctions Lists).
“Following their registrations on these two systems, 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.”
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, the ministry underlined the significance of completing the post-registration procedures and measures to avoid the fines set by the Cabinet Resolution No. 16 of 2021.
Safeya Al Safi, director of the Anti-Money Laundering Department, MoE, said all concerned companies should establish internal policies, procedures and controls to avoid money laundering risks in accordance with the measures set forth by the executive regulations of the law.
Al Safi said the measures reflect the UAE’s keenness to continuously develop its economic legislation to enhance its competitiveness as a safe and stable global business destination.
The list of violations mentioned in a Cabinet resolution includes three types with a fine of Dh1 million each. These include dealing with fake banks; opening or maintaining bank accounts with fake names or numbers without the names of their owners; and failure to take measures related to clients listed on international or domestic sanctions lists, prior to establishing or continuing a business relationship.
The list includes five violations with a fine of Dh200,000 each; seven violations with fines of D100,000 each; and 11 violations carrying fines of Dh50,000 each.
In terms of administrative fines and the grievance mechanism, the resolution states that the Ministry shall notify the violators of the Designated Non-Financial Businesses and Professions (DNFBPs) included in the administrative fine decision signed on him within 15 days from the date of its issuance.
The violator has the right to grievance against the decision of the administrative fine to the minister or whoever he authorises within 15 days from the date of his notification of the decision or his knowledge of it, the MoE statement said.
Source:https://www.khaleejtimes.com/business/local/20210303/new-aml-steps-to-ensure-strict-compliance
