United Arab Emirates implemented Value Added Tax (VAT) on 01/01/2018. It was for the first time ever that the taxes on supply of goods and services were levied in the country.
The key priorities for companies includes a robust accrual accounting and reporting framework; documentation; audit trails; and a tax control & compliance framework. Companies should ensure that Reverse Charge Mechanism (‘RCM’) is correctly applied and accounted for. It is equally important to adequately educate its finance personnel to understand and identify VAT issues. The operations in a Designated Zones require special consideration to ensure VAT is correctly charged wherever applicable and the input tax credit is correctly accounted for.
Since the implementation of VAT, the Federal Tax Authority (FTA) has issued numerous clarifications, guides and orders clarifying VAT implications on businesses. As VAT is a tax on transaction, the clarifications issued by FTA for one industry could impact other industries.
For self-assessment tax regimes across the world, penalties work as a deterrent to non-compliance and tax evasion. With technological advances, tax authorities are getting better equipped to detect non-compliance. Additionally, the UAE tax procedures have also been updated on certain critical aspects. The penalty regime is coupled with increased tax audits and in-house trainings hours by the tax authorities.
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Tax Advisory
Taxes such as VAT are a tax on transactions. The manner in which the business transactions are structured will axiomatically determine the tax implications. Tax inefficiencies in the transaction structures, be it in the mainland or in the Free/Designated Zones, could significantly increase business costs.
Ignorance of law, or a misunderstanding thereof, cannot be an excuse to seek waiver of penalties demand of tax arrears.
AskPankaj simplify the complex matrix of tax laws, tax guidance, international jurisprudence, in-house experience and audit insights in an understandable and executable manner. We help you build up tax efficiencies, pre-empt surprise and minimise disputes & penalties.
Tax Compliance
The onus of tax compliance is on the businesses. Any default in compliance, howsoever inadvertent, could spiral into interest, significant penalties, litigation costs and bad press.
Penalty waivers cannot be claimed based on existing industry practice or failure to highlight the errors. Tax compliance is much more than just a timely submission of the VAT returns or a correct calculation of tax payments.
Our compliance services includes:
Due-Diligence/Health Check/Pre-Audit Review
In-house tax & finance teams may inadvertently miss out tax saving opportunities, tax updates and/or tax risks, due to various work commitments. Periodic due-diligence/pre-audit reviews helps to identify tax saving opportunities as well as tax risks.
Due-diligence/ pre-audit reviews aims to review compliance status, identify gaps and assist in corrective actions. Taxpayers need to keep their records and documents ready for tax audits and assessments at a short notice.
AskPankaj conduct comprehensive due-diligence and pre-audit reviews. The process involves discussions to explain the tax laws, a detailed review of transactions & documents, tax implications on the business, identifying tax risks/exposures and assistance in corrective actions.
Tax Registration/De-registration
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Advance Ruling/ Private clarification from FTA
UAE aims to facilitate ease of doing business. The Federal Tax Authority (FTA) provides multiple routes through which businesses could interact with FTA to address their tax queries and issues.
A Private Clarification, akin to an advance ruling, from the FTA is a mechanism to provide business owners with a written confirmation about the FTA’s position on specific tax matters. The FTA’s clarification will not only ensure tax certainty but also avoid any future disputes & penalties.
To seek a private clarification/advance rulings, it is not required that:
AskPankaj is successfully supporting its clients in obtaining detailed private clarifications exception approvals from FTA on a regular basis. Our detailed research and opinion notes facilitates in explaining to the FTA about the transaction nuances, international jurisprudence, appropriate interpretations of the tax provisions and appropriate correct tax positions.
Exception Approval from FTA
An Administrative Exception is a mechanism whereby taxpayers could seek concessions / exceptions from following certain procedural aspects of the VAT Laws. Administrative exceptions categories include:
AskPankaj has successfully obtained exception approvals for its client to bring savings in operational, IT and financial costs.
Submission of Voluntary Disclosures
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Tax Litigation Support
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Tax Trainings and refresher workshops
Tax awareness should be built into an organisation’s culture. Taxation is not just an accounting compliance. A taxation regime impacts a multitude of business functions such sales quotations & margins, business relationships with vendors & customers for correct documentation, human resources for employee recoveries etc. Our trainings/workshops are customised to clients’ business operations, historic issues and applicable tax provisions.
Our training modules include:
Detailed insights on complex issues
Interactive sessions with finance and tax teams along with difference business functions such as legal, procurement, sales, logistics, human resources etc.
Updation on tax developments, amendments, clarifications
Tax Accounting and Book-keeping assistance
The U.A.E. VAT law focuses on maintaining accounting records and commercial books as per prescribed controls. The tax procedures also deal extensively with Tax Audits, administrative penalties and tax evasion penalties.
Key priorities for a taxpayer includes maintaining a robust accrual accounting and reporting framework; documentation; audit trails; and a tax control & compliance framework.
Tax Updates