Shuraa Tax Blog

Author: Afroz

  • Company Liquidation in Dubai: Everything you need to know

    Company Liquidation in Dubai: Everything you need to know

    Company liquidation in Dubai refers to the process of shutting down a business and ceasing all operations. A company liquidation may occur when a corporation is in business loss, payment defaults or when the shareholders decide to shut down operations voluntarily.

    During business liquidation, all the assets of the organization are distributed to owners and creditors based on the hierarchy of claims. The process of winding down a business is termed as liquidation, and the individual or entity responsible for overseeing this process is referred to as a liquidator. The company’s management appoints the liquidator.

    Shuraa Tax Consultancy provides Dubai mainland and free zone enterprises with company dissolution services. We offer company liquidation services to both LLCs and individual proprietorships.

    Company Liquidation Types

    In Dubai, there are two types of corporation liquidation:

    Company voluntary liquidation

    If the firm does not have enough money to run its operations or fulfil its expenses, such as supplier’s bills and salaries, it consistently loses money. In that circumstance, enterprises will seek voluntary company liquidation since they lack the finances to remain competitive in the UAE market.

    Mandatory company liquidation

    If a firm violates the authorities’ rules and regulations or commits a crime such as fraud or any other major offence or bankruptcy. The government or relevant authority will promptly shutter the entity, and as per the court’s ruling, compulsory company liquidation becomes necessary.

    How to Liquidate a Business in Dubai and the UAE

    The first step in de-registering a corporation is to appoint a liquidation firm. Only authorised liquidators may initiate the liquidation procedure, as government legislation defines. The organisation that provides company liquidation services assists in the closure of the company’s operations in accordance with UAE company laws. It is best to appoint a listed liquidator to avoid penalties from local authorities in the UAE. 

    Liquidation of a Limited Liability Company (LLC) in the UAE

    The following major stages are involved in dissolving/winding up an LLC Company:

    • BOD meeting: Minutes of a board of directors meeting declaring the reason for liquidation, like the company’s insolvency in case of mandatory liquidation and appointment of a regulated liquidator. For certain business structures notarised cancellation agreement is needed.
    • Official liquidator’s appointment letter: A letter from the registered liquidator confirming acceptance of the responsibility to liquidate the company.
    • Liquidation application: To secure a company liquidation certificate, it is essential to submit a liquidation form and the required fees to the Department of Economic Development or the relevant licensing authority.
    • Publication in the newspaper: To announce the liquidation of a corporation, place an advertisement in a local Arabic newspaper.
    • Notice period: The licensing authority will provide a 45-day grace period to creditors or clients with financial claims against the company.
    • Visa Cancellation: Cancel all employees’ and partners’ visas and seek NOC from the Ministries of Labour, Immigration, DEWA, and Etisalat/Du 
    • Report of the Final Liquidator: after all cancelations the liquidator will provide the final company audit report as well as a letter noting that no claims have been received from third parties/clients/creditors during the 45-day advertising period.
    • DED will issue a final company liquidation certificate after all of the documentation have been submitted.

    Our best liquidators in Dubai can provide further information on how to close an LLC or a Free Zone Company in the UAE in accordance with UAE Commercial Law.

    Liquidation of a Free Zone Company (FZE) in the UAE

    Almost every free zone has a unique mechanism for company liquidation. The following are the most typical and general procedures for de-registration of a Free Zone Company in the UAE:

    •  BOD meetings: Minutes of a meeting of the board of directors declaring reason of liquidation like the company’s insolvency; In case of mandatory liquidation and appointment of a regulated liquidator. Official liquidator’s appointment letter: A letter from the registered liquidator confirming acceptance of the responsibility to liquidate the company.
    • Liquidation application: To obtain the company liquidation certificate, the liquidation form and fees must be submitted to the relevant free zone authority.
    • : Notice requirement may differ from free zone to free zone.
    • Clearance certificates: You should obtain it from different authorities such as KHDA, RERA (if applicable), and service providers like FZ, DEWA, SEWA, Etisalat, and banks as applicable.
    • Cancellation of Visas: Cancel all employees’ and partners’ visas and receive NOC from the Ministry of Labour, Ministry of Immigration
    • Report of the Final Liquidator: The liquidator will provide the final company audit report as well as a letter noting that no claims have been received from third parties/clients/creditors during the 45-day advertising period.
    • Final Liquidation Certificate: Once all paperwork and liquidation report has been submitted, the Free Zone Authority will issue a final company liquidation Certificate.

    Although, We provide corporation liquidation services to all UAE free zones.

    Services for Business Liquidation in the UAE

    In the UAE, business liquidation is when a company ends its operations and is forced to close when it can no longer sustain its services. This could happen for several reasons. 

    The company’s liabilities may much exceed its assets, putting it on the verge of bankruptcy. If the company cannot continue to operate, it will be closed. A firm’s liquidation may also be elective if the management has opted to close it down for reasons known to them. After liquidation, the company uses all its assets to pay off its debts. After covering liabilities and expenses, any surplus assets are sold, and the proceeds are distributed among shareholders.

    Documents Required for Dubai Company Liquidation

    So, According to the Dubai government, various types of papers must be given for the liquidation procedure. For the liquidation of a company in Dubai, the following documents are necessary:

    • A duplicate of the licence.
    • Copy of the Memorandum of Association (MOA), as amended.
    • If applicable, a power of attorney.
    • Copies of the passports belonging to all shareholders.
    • A copy of your Emirates identification.
    • Shareholders’ resolution.
    • Form for requesting de-registration.
    • NOC from services providers like DEWA, Etisalat / Du 
    • Bank account closure letter
    • NOC from authority like RERA, KHDA in case of regulated business

    Why is company liquidation necessary? 

    The ultimate option for any business team is to liquidate the company. So, this means that the company can no longer operate and must close. A firm liquidation has various advantages, including:

    • Liquidation is an alternative for firms wishing to stop losing business and restart. This process ensures the proper allocation of the organization’s assets. During liquidation, the company first uses its assets to clear its outstanding debts. Any surplus funds are then distributed among the shareholders.

    Why Choose Shuraa Tax Consultants for Company Liquidation in Dubai?

    The company liquidation procedure can be time-consuming and costly because corporations must coordinate with a variety of external parties and authorities to complete everything on time. So, any missing step or document can result in extra delays and issues.

    With the introduction of Value Added Tax (VAT), Economic Substance Regulations (ESR), and Ultimate Beneficial Ownership (UBO) rules in recent years, the company liquidation process in the UAE has also become more complex, requiring companies to approach the winding-up process with greater caution.

    Shuraa offers comprehensive corporate liquidation services for all types of UAE entities, including mainland and free zone companies. Our services cover the entire liquidation process, and we can also assist with specific aspects of the process according to the customer’s preferences and needs. Our liquidators can assist you at every level of the corporate liquidation procedure. For further information on our liquidation services, please contact Shuraa Tax Consultants Dubai. You can contact us by sending an email to info@shuraatax.com  or by giving us a call at +971 508912062.

  • Accounting Outsourcing Checklist for Startups

    Accounting Outsourcing Checklist for Startups

    Starting a business in Dubai or the UAE is a dream come true for many. And why not? The UAE is touted as one of the best places globally to start a business, all thanks to the advanced infrastructure, seamless connectivity to the rest of the world, access to the national and international market, high standards of living, and more. The list could go on and on.

    In fact, the International Monetary Fund (IMF) has recently revised its forecast for the UAE. According to the latest reports and revisions, the United Arab Emirate’s GDP is forecasted to grow at 5.1% this year. The earlier forecast predicted it to grow at 4.2%. But why are these figures so important? That’s because this is UAE’s highest growth in the past 7 years! That’s quite something, isn’t it? 

    Although the booming economy of the UAE entices thousands of entrepreneurs and businessmen – new and already established- you must take care of several things as a business owner. And one of them is accounting. 

    Typically, maintaining accounts and books is a tedious process. Not to forget the daunting tasks like filing returns and paying taxes. Unfortunately, one cannot simply let it be. You must be on top of your accounts and bookkeeping to ensure you have a viable financial plan for your business. 

    Although you could do it within the company, why not outsource it to an expert while you focus on other activities that directly impact your income? Want to know how? Keep reading. This blog will walk you through all you need to know about outsourcing your accounting.

    Why Must Startups Pay More Attention to Accounting?

    Any business’s survival depends on accurate bookkeeping and accounting, but you might need to keep more records as a startup. But Why? 

    Because your investors may need to see the records for evaluation. Furthermore, potential investors may need it to make an educated decision about investing in your business. Finally, a transparent and simple-to-read financial record will play a significant role in helping you get a loan if needed. 

    While you may manage accounting and bookkeeping in-house by hiring accountants and related individuals, outsourcing the job will give your team more time to proactively work on other productive activities. For instance, marketing, sales, customer retention, enhancing customer experience, product launches, and more.

    What Should You Do To Make Accounting and Bookkeeping Simple?

    1. Always Transact via a Bank 

    All of your commercial dealings should be done regularly through the bank. It is simple to keep track of spending when the transactions are being recorded. You can track inflows and outflows using your bank statement. You can use this to compute your taxes and file them. Follow practice of mentioning transaction descriptions during online banking.  

    2. Leverage Technology 

    Utilizing technology to simplify your company’s accounting procedures is a must-do. You can leverage software like Xero, Zoho, QuickBooks, and Tally for assistance in tracking and monitoring your financial actions. Additionally, you can use cloud-based applications. 

    They not only reduce the mundane nature of the job but also eliminate human error. Additionally, since the data is stored in the cloud, it is accessible from anywhere worldwide, making it flexible to work with. 

    3. Stick to a Schedule 

    Make a schedule for the computation and audit of taxes. Experts may also be recruited to perform tax audits and examine other paperwork, like certifications and bills. Furthermore, the financial checks should take place without prior notice. This allows you to check economic activity and ensure that there are no fraudulent actions within the company.

    Also, sticking to a schedule will help keep your books updated. The FTA can barge into your office at any moment for a check. As a result, you should be ready to give them your tax returns and other related documentation.

    4. Plan for the Future

    Any unclear circumstances could jeopardize the success of your business and significantly slow down sales, manufacturing, and other business operations. Getting ready for such events is absolutely essential. 

    Therefore, ensure to assess the dangers. You may want to set out an emergency fund to keep your company in operation for 3-6 months rather than investing everything into future projects. And for this, you must have a proper accounting process with complete financial analysis tools. 

    How To Choose an Outsourcing Partner?

    Deciding to outsource your accounting process is in itself a huge step. Another big step is to decide who to outsource it to because this is the decision that will make or break your accounting process. But worry not. 

    Here is a checklist to help you choose the best outsourcing partner for accounting – 

    1. They Fit Your Scope of Outsourcing 

    To determine whether a certain accounting firm or consultancy meets your scope, you will first have to list down all the tasks you want to outsource. Next, ask yourself – is this a part of my expertise? If not, it’s best to outsource it. 

    Then match it with the services your accounting partner is offering to you. Do these tasks fall under their area of expertise? If yes, they are likely to be a good fit. 

    2. They Are Highly Recommended

    Ask your friends and business competitors about the accounting firm they have partnered with. Discuss the firm you are planning to partner with. Collect as much information as you can about the prospective firm. You may even ask your prospective partner about their testimonials and the companies they are currently or have worked with. Contact these listed companies and discuss their experience. If there is consistency between the recommendations and reviews, they may be a good fit. 

    3. Ask Questions 

    Your accounting partner must be well-versed in accounting principles. Furthermore, they should know how to overcome complex accounting issues and loopholes. And to know about their expertise, it’s best to ask as many questions as possible. Following are some of the questions you can ask – 

    • Will you thoroughly reconcile payroll, sales tax, bank, and other items?
    • Do you accept customer records in any format?
    • Will you provide me with a thorough analysis to inspect the accounts?
    • Will you review the accounts to look for inaccurate income/expenditure calculations made by my clients? 
    • How do you safeguard data while adhering to rules?

    4. Check If They Are Using the Latest Technology and Infrastructure

    Looking at the outsourcing partner’s software, employment, and infrastructural skills is always a good idea. They must be able to find the resources required to complete your assignment. 

    Spending a couple of weeks with your partner could be beneficial to understand their work ethics and culture firsthand. Participate in their activities, attend staff meetings, and communicate with your wider team. 

    5. Know Your Service Provider 

    It’s vital to know your service provider in and out. Ensure you check the corporate profile, experience and qualification of the key personnel and whether they have experience in handling your industry’s financials. Finally, check if they are updated with the latest tax and legal compliances in the UAE. 

    Outsource Your Accounting to Shuraa 

    To summarize, it’s important to see whether your accounting outsourcing partner meets your needs, has a good reputation, is skilled and well-versed in the field, and is up to date with the latest practice. With Shuraa Tax Consultancy, you won’t have to worry about all this. 

    Our tax accountants are the best in the field and will meet all your needs. We are also well-equipped to ensure that your company is tax and accounts-compliant. Our in-house tax-registered tax agents will offer your overall support, including filing your VAT returns. All you need to do is reach out to us at info@shuraatax.com or call us at +971 508912062

  • New Economic Substance Regulations for UAE Companies

    New Economic Substance Regulations for UAE Companies

    The UAE is a popular destination among investors and entrepreneurs to start or conduct their business due to its favourable tax regime. However, a European Union (EU) review of the UAE’s tax framework in early 2019 resulted in the UAE being included in the EU Blacklist. The EU Blacklist is a list of non-cooperative jurisdictions for tax purposes. In response to the review and to remove itself from the EU Blacklist, the UAE introduced new Economic Substance Regulations for UAE companies. Since then, the audit firms in UAE, tax consultancies have been helping businesses comply with this new structure.

    The Economic Substance Regulations (the Regulations) was issued on April 30, 2019, and further Guidance on the application of the Regulations was released on September 11, 2019. By implementing these Regulations, the UAE is making positive progress towards meeting the EU’s requirements to be removed from the EU blacklist.

    What are Economic Substance Regulations (ESR)?

    Economic Substance Regulations are introduced by countries that have low or no corporate taxes. This is done to prevent harmful tax practices such as unlawful avoidance or evasion of tax by entities operating within these countries. The purpose of ESR is to address concerns around the shifting of profits collected from certain activities that do not correspond to local economic activities undertaken in countries with low or no corporate taxes.

    Who does Economic Substance Regulations UAE apply to?

    The UAE Economic Substance Regulations apply to all businesses that covers one or more “Relevant Activities” listed by the UAE government. These include onshore, free zone, and offshore companies, branches, partnerships, and other business forms that have a license to operate in the UAE. However, companies that are directly or indirectly owned (at least 51%) by a UAE Government body or authority are exempt from the Regulations.

    The following businesses are considered as “Relevant Activities” under the Regulations:

    • Banking Business
    • Insurance Business
    • Investment Fund management Business
    • Lease – Finance Business
    • Headquarters Business
    • Shipping Business
    • Holding Company Business
    • Intellectual property Business (“IP”)
    • Distribution and Service Centre Business

    What are the compliance requirements of an entity carrying out Relevant Activities?

    • Notification form to Regulatory Authority
      Businesses should submit a notification form to their respective Regulatory Authority within the prescribed deadline.
    • Filing of annual ESR Return
      Businesses earning an incoming from any of the above-mentioned Relevant Activities, during the financial period, must show proof of Economic Substance in the UAE and must file an ESR return within 12 months from the end of the financial period. They are also required to meet the Economic Substance Test (EST).

    These requirements must be filed with the relevant Regulatory Authority. The Regulatory Authorities set their respective requirements, deadlines, and formats for notification filing. Delay or failure to submit notification form and ESR returns will incur heavy penalties. To avoid any penalty or fine, you can partner with a Tax Consultant in Dubai for ESR compliance.

    For the financial year ending on 31st December 2021, the date of Notification Filing was 30th June, 2022 & the last date of Report Filing is 31st December, 2022. For the next fiscal year which ended on 31st March, 2022, the last day of Notification Filing is 30th September, 2022 & the last date of Report Filing is 31st March, 2023. 

    Get assured services with Shuraa Tax

    To know more about the new Economic Substance Regulations for UAE companies or to get assistance with ESR compliances, feel free to contact Shuraa Tax Consultants and Accountants, the most renowned tax agency in UAE. Our UAE tax expert team will review the applicability of the Regulation to your company and will assist you through compliance fulfilment and reporting on time.

    Call us at +971508912062. You can also drop us an email at info@shuraataxintl.ae and get your queries answered in no time.

  • How to Select a Reliable Bookkeeping & Accounting Partner for your Business in Dubai?

    How to Select a Reliable Bookkeeping & Accounting Partner for your Business in Dubai?

    Accounting is a core aspect of any business. Professionally and precisely maintained books can help a business streamline their finances and even save big on taxes and fines. Moreover, accounting and bookkeeping are crucial for regulation & compliance. For instance, the new VAT laws in UAE require the companies to maintain books as per the new guidelines! SMEs or a start-up might not find it convenient and financially viable to hire an in-house accountant. It makes sense to seek assistance from a professional bookkeeping and accounting partner.

    If you’ve set up a company or are planning for the same, this article will help you choose the right tax consultant in Dubai or right accounting firm.

    Here, you will learn about the top factors to consider before choosing amongst reliable Accounting Services in UAE or tax services in UAE. Let us get going!

    Team & Expertise

    It pays to get associated with a versatile & capable accounting firm and tax agency in UAE that possesses experience in legal, financial & economic domains of the UAE market. The reason behind looking for such bookkeeping expertise is transition of the economy into new tax structures & regulatory changes. For instance, Shuraa Tax Consultants and Accountants bring in robust & reliable accounting outsourcing services. The team is adept in handling any volume of accounting tasks within a short turnaround.

    Industry & Service Specialization

    You must also assess two areas of specialization for any bookkeeping firm- 1) Industries served & 2) service specialization. Find out if the firm serves clients from a particular industry or serves everyone. If they specialize in your industry, it is a best reason to partner with them. If they turn out to serve versatile businesses, then look for their service specialization. Bookkeeping firms usually specialize in Accounting, Tax, VAT & Audit services. You must select the one that caters to your area of interest.

    Availability & Support

    You must look for an accounting & bookkeeping firms that keeps in touch with your business frequently. Which can give the contemporary reports. This enables you, as a business owner, to make quick decisions, solve tax/cost doubts & bolster your planning for further business growth. Accounting firms like Shuraa, that provide regular communication support & guidance to its clients has the following benefits.

    • Stay updated on any anticipated UAE Tax regulations changes
    • Proactive planning for your business growth from a tax perspective
    • Get expert advice whenever you want
    • Professional MIS reports for better decision making
    • Report discussions, meetings with client

    Fee Charging Structure

    You must evaluate the fees structure of different firms to outsource your accounting needs. The fee will vary for each of them (your cost of outsourcing) and the way they charge it will differ too. Payment terns should also be checked. Assess your major accounting needs and outsource your accounting accordingly.

    The right accounting partner will provide you end-to-end support besides the core bookkeeping services. Thus, it is crucial that you ally with an experienced firm with a sizable client portfolio. Outsourced accounting services helps to have accurate accounts which are reviewed by qualified Accounts professional.

    Keep in mind the above factors and do ask these questions to the shortlisted firms for selecting the right accounting partner in Dubai. Get in touch with the expert consultants at Shuraa Tax, one of the top accounting and tax firms in Dubai, specialized in Accounting, VAT, Excise, Internal Audit, Economic Substance Regulation (ESR) compliance, Business Valuations. Reach out to our experts on info@shuraatax.com or give us a call on +971 508912062.

  • Treatment of VAT in Free zones of UAE

    Treatment of VAT in Free zones of UAE

    The VAT in UAE was introduced from 1 January 2019 and applies to those supplies of goods and services which take place within the territorial boundaries of the UAE. As in the case of goods and services supplied within free zones in the UAE, the rules of VAT are applicable to undergo a certain change.

    Free zones are defined as those areas which are specifically designed to promote international businesses in the UAE by providing attractive incentives to foreign investors and businesses. In the UAE, there are currently more than 37 Free Zones such as:

    • Jebel Ali Free Zone
    • Dubai Airport Free Zone
    • Dubai Cars and Automotive Zone and many more

    As per UAE VAT law and Executive Regulations, not all Free zones are ‘VAT Free Zones’ and only those listed in a Cabinet Decision are eligible for the special VAT treatment. These Free Zones are referred to as Designated Zones for VAT purposes, according to Cabinet Decision No. 59 of 2017.

    Few supplies occurring within the Designated Zones will not invite the standard rate of VAT i.e. 5% under circumstances mentioned in VAT regulations. This is only in the case of a supply of goods. However, suppliers of services in the designated zone will be subjected to the usual VAT rate at 5%. It’s important to understand the conditions which businesses need to follow for the VAT-free supply of goods between the Designated Zones as prescribed by UAE VAT Executive Regulations.

    Following are the conditions which are mandatory to consider any UAE free zone as a Designated Zone to

    1. It should be enclosed within a specific fenced geographical area.
    2. It should have security measures and customs controls in place for monitoring the entry and exit of individuals and goods to and from the area.
    3. There should be laid out internal procedures related to the method of keeping, storing and processing goods within the Designated Zone.
    4. The operator of the Designated Zone should show support or comply with the procedures laid down by the Federal Tax Authority (FTA) of UAE.

    If any free zone no longer fulfills the above conditions, it cannot be then treated as a designated zone. It will be considered and treated as a part of the UAE And general VAT rules will be applicable to such free zones.

    Below are few examples of Free zones which are designated zones:

    • Jebel Ali Free Zone (North-South)
    • Dubai Cars and Automotive Zone (DUCAMZ)
    • Free Zone Area in Al Quoz
    • Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port
    • FOIZ (Fujairah Oil Industry Zone)
    • Khalifa Industrial Zone

    As per the registration for VAT is considered, these businesses within the Designated Zone have to register, report and account for VAT as per the UAE laws. In case of failing to register for VAT within the due date, a penalty of AED 20,000/- will be levied as per the UAE Federal Cabinet Decision No.40.

    Consult Shuraa Tax Consultants and Accountants to get assured and accurate help on the VAT laws related to the Free Zones in the UAE. We are a group of FTA approved tax agents in Dubai with a goal to provide accurate services of VAT in UAE (VAT registration and implementation, Tax compliance & VAT Return Filing). Contact us to get complete assistance and guidance on the VAT registration in UAE. All you need to do is reach out to us at info@shuraatax.com or call us at +971 508912062.

  • Impact of UAE VAT on Business-to-Business supplies of Healthcare Services

    Impact of UAE VAT on Business-to-Business supplies of Healthcare Services

    The Federal Tax Authority (FTA) in UAE recently issued a public clarification on business-to-business supplies of healthcare facilities & services. According to it, healthcare services that are necessary to be supplied to patients in need will be subjected to zero-rated VAT in UAE. Below conditions must be fulfilled in order to treat supply of healthcare services at zero rate: –

    • Services must be made by a healthcare body or institution, doctor, nurse, technician, dentist, or pharmacy, licensed by the Ministry of Health or by any other competent authority.
    • Relate to the wellbeing of a human being.

    However, VAT @zero rate on healthcare services is applicable only if the provider is supplying its healthcare services directly to the patient. If in any case, the “recipient of supply” of healthcare services are different people other than end patient then the supply will no longer be qualified as zero-rated and a standard rate of VAT will be charged.

    Let’s understand a little better about VAT implications on healthcare services:

    As per the UAE VAT law, healthcare services are defined as any service supplied that is accepted in the medical profession for the treatment of the patients or “recipient of supply” of the treatment. It also includes preventive healthcare services. The recipient of the healthcare services must be the patient receiving the treatment and if that’s not the case then 5% VAT will be levied on the supply of these services. As a result of this, healthcare providers need to make sure who is on the receiving end of the treatment to determine if the supply shall be zero-rated, else a standard rate of VAT will be charged.

    Here are some of the examples of different health scenarios to help you better understand under what conditions will the supply of healthcare services be zero-rated. Each supplier of healthcare services should consider the VAT rules while supplying their healthcare services.

    1st situation: A doctor has contracted with the hospital to provide its healthcare services to the patient within the hospital premises. This will involve two kinds of supply/transaction situation-

     A) Supply by the doctor to the hospital: The doctor is seen supplying its services to the hospital and not directly to the patient. Even though it’s related to the health of patients, it won’t be treated as “healthcare services” taxable at zero rate. Now, as the doctor has contracted with the hospital to provide its services to the patients, the services will be subjected to 5% UAE VAT

     B) Supply by the hospital to the patients: The hospital is supplying its healthcare services directly to the “recipient of supply” of the services. Therefore, these are subjected to zero-rated VAT.

    1. A hospital suggests a laboratory to a patient for conducting its medical test. As a result, the patient enters into a separate and direct contract with the laboratory for the supply of medical tests. Because the laboratory is directly supplying its services to the “recipient of the supply” it will be subjected to zero-rated VAT as per the UAE VAT laws.
    2. A hospital needs to perform a specialized test/procedure on its patient and therefore enters into a contract with another hospital to perform the test/procedure. It will involve two different supply situations:

     A) Supply of services by hospital 2 (specialist hospital) to hospital 1: The hospital 2 is supplying its specialist healthcare services to hospital 1 and not the patient directly so the cannot be marked as “zero-rated”.

     B) Supply of services by hospital 1 to the patients: Hospital 1 is treating the patient directly so the supply of services from it to the patient will be constituted as a part of the definition of “healthcare services” as defined by UAE law of VAT and therefore will be treated as “zero-rated”.

    To get the best tax consultants in UAE contact Shuraa Tax Consultants and Accountants which is the leading tax agency of Dubai. Their team of dedicated experts promise to resolve all VAT related queries of various businesses. Speak to our tax agents and consultants and get professional guidance and support on managing taxation and VAT issues at affordable rates. Contact us today:

    Email: info@shuraatax.com

    Phone: +971 508912062

  • Refund Policies for VAT levied on goods and services

    Refund Policies for VAT levied on goods and services

    The Federal Tax Authority (FTA) of the UAE made an official declaration regarding the refund scheme for VAT paid on goods and services connected with Expo 2020 (20 October 2020 to 10 April 2021) in Dubai. The Bureau Expo 2020 is a governing body responsible for taking care of the VAT refund procedure.

    According to the statement released by the FTA, an official participant (any country or intergovernmental organization) holding a valid Expo trade license number will be eligible for a VAT refund under the following conditions:

    1. The participant has no intention of using more than 20% of the exhibition space
    2. It does not use the space for unofficial or commercial purposes at the Expo 2020.

    Eligibility for the VAT Refund

    An official participant can claim the VAT incurred on the supply or imports of goods and services used in-

    1. Constructing, installing, altering, decorating and dismantling of their exhibition space 
    2. Operating their exhibition space and any kind of presentation at the Expo 2020 site
    3. Connection with the actual operation of the official participant’s office, given that the value of goods and services that are claimable is not less than the limit set by higher authorities. 
    4. Relation to the personal use by the official participant’s Section-Commissioner-General, Section Staff and the Beneficiaries. 

    The official participants irrespective of their registration for VAT have to obtain the Certificate of Refund Entitlement from the Bureau to claim the refund. Also, they cannot sell or transfer the goods and services on which the refund is to be claimed to other parties free of charge without the consent of FTA’s and Bureau’s established law and; without paying the taxes. The Bureau Expo receives the refund claims from the official participants, and if found correct, has to initiate a request to the FTA to refund the VAT amount. 

    Conditions for VAT Refund

    Any person or official participant who is eligible for claiming the VAT refund should be well versed with the procedures and verification requirements as set by two of the most important authorities- FTA and Bureau Expo 2020. In case an official participant does not fit the criteria of eligibility for claiming the VAT refund, the participant shall inform the Bureau about the same. 

    Powers of the Federal Tax Authority(FTA)

    FTA has the power to review or audit any action or activity of the Bureau Expo and make sure that the rules and procedures are being followed by all the official participants and the Bureau. If it finds any claim violating its set rules, it can cancel the ongoing VAT refund procedure. 

    Get in touch with Shuraa Tax Consultants and Accountants to know more about the VAT Refund scheme as set under Expo 2020 Dubai. We are a group of certified tax agents and consultants who promise to hear all your queries and concerns related to finance and taxes.

  • VAT Implications on Independent Director fees

    VAT Implications on Independent Director fees

    The fees charged by independent Directors to the Companies are subject to VAT in UAE. Independent Directors who provide managerial services to Companies and where their annual revenue exceeds the VAT registration criteria in UAE, such independent Directors must apply for VAT registration and should comply with UAE VAT regulations.

    The Federal Tax Authority (FTA) has levied certain VAT implications on the fees of Independent Directors of Companies. It mandated a basis for accounting VAT for the registered members providing independent Director’s services to Companies. According to which the date of supply for VAT concerning the independent Directors’ services is determined either as per the general laws or special laws of date of supply. The date of supply is greatly determined by whether the Director’s fee is known from the outset or not.

    When the Director knows the fees from the outset, the date of supply shall be determined based on Article 25 or 26 of Federal Decree-Law No. (8) of the year 2017 on Value Added Tax.. While in case such fees are not known from the outset, they shall be determined upon the conclusion of the Annual General Meeting and only then the date of supply shall be known. These could be classified as three conditions for determining the date of supply for the Director’s fees.

     With Shuraa’s excellent consultancy services and guidance, let’s understand it in a more detailed format.

    Independent Director unaware of the fee at the outset and gets to know only after the conclusion of the Annual General Meeting

    In certain cases, to know the Director’s fee, it’s possible only upon the conclusion of the Annual General Meeting. It’s after this point that attempts can be made to determine the Independent Directors’ fees and only then the date of supply shall be triggered. As the Director is not able to issue an invoice or receive any payment before the date of the conclusion of the AGM, the date of supply for VAT would be that date on which provisions of services may have been completed according to Article 25 of the Federal Decree-Law of the VAT law.

    For FTA, the Director’s services seem to be completed only when the fees are known to the Directors which is after the AGM’s conclusion, in spite of the fact that provision of services may have been completed earlier. Hence, according to this view, Independent Directors are required to account for VAT only after they know about their fees as only then the date of supply for VAT could be known. As per Article 67 of UAE’s VAT law, the Director is supposed to issue invoices within 14 days of the date of supply, if there is no periodic/ consecutive invoice issuance system.

    Independent Director knows the fee at the outset and periodic payments and invoices are made timely

    When the Independent Director knows its fee and periodic or multiple payments and invoices are made, the date of supply would be determined under Article 26 of the Federal Decree-Law Nos. (8) of 2017 on VAT law, which is earliest of below dates:-

    1. When the tax invoices will be issued
    2. Due date of payment as mentioned in the Tax invoice
    3. The date on which payment is received

     In situations where none of the events take place, the date of supply shall be triggered by the end of 12 months.

    Independent Director knows the fee at the outset but no periodic payments or invoices are made.

    When Directors make no periodic payments or issue any invoices, the date of supply is known as per Article 25 of UAE’s law on VAT according to which the date of supply would be determined at the earliest of:

    1. Date of issue of the tax invoice
    2. Date of payment receipt
    3. Date when the provision of services was completed

    Enquire now for more updates with Shuraa Tax Consultants and Accountants. Get easy and affordable tax consultation and advice from the best professionals in the industry. VAT Dubai Independent director fees.

  • What is an Input Tax and how you can recover it?

    What is an Input Tax and how you can recover it?

    Input tax is the tax that a taxable person pays or a business on the purchase of various good or services or while during imports related to taxable supplies. E.g., a shopkeeper purchases goods from a wholesaler and pays tax for the same. The Federal Tax Authority (FTA) in the UAE has special provisions in place for Input Tax recovery.

    Input Tax recovery refers to the amount repaid by the FTA to all taxpayers who fulfill the conditions for Input Tax Recovery. According to UAE VAT provisions, a taxable person can reduce the value of eligible input tax from the total tax payable and pay only the balance amount as output tax. It is important as it has an impact on the current cash flows and ongoing expenses incurred by a Company during the financial year.

    Conditions to follow for Input Tax Recovery

    Only VAT registered businesses or a person is eligible for Input tax recovery in the UAE. All the non-tax registrants are ineligible for claiming the input tax recovery. It is mandatory to meet the following conditions for input tax recovery.

    Only taxable supplies are eligible for Input tax recovery

    An important condition for input tax recovery is that it is valid only in connection with taxable supplies. This refers to the supplies on which UAE VAT is levied. One cannot claim input tax related to the exempt supply as they are invalid for input tax recovery.

    Recipient of the input tax recovery to obtain and secure the tax invoice

    Tax invoices contain details of those supplies on which input tax recovery claim is made. The receiver must maintain proper tax invoices for reference as well as maintaining records. This practise is important when claiming input tax recovery on supply. Additionally, the tax invoice must also be as per the FTA guidelines & UAE VAT regulations.

    Timely payment of consideration for the supply

    For recovering input tax, it’s important that the receiver pays or intends to make the payment of consideration for the supply within the tenure of six months which starts from the agreed date of payment for the supply.

    The recipient must be a taxable person and must register for VAT in order to claim input VAT recovery

    Input tax recovery is important for a proper filing of VAT returns in UAE and to avoid any tax penalty. Certain input VAT is not recoverable as per UAE VAT regulations though it qualifies above conditions. Taxable persons or businesses need to identify correct supplies on which input tax recover is possible. They should also meet the necessary conditions for claiming Input Tax.

    With Shuraa tax consultancy services, know everything about input tax recovery and its necessary conditions. Get the best tax service and help with your input tax-related queries with Shuraa Tax Consultants and Accountants qualified team of tax agents and consultants. Call or text us at +971 508912062 or send an email to info@shuraatax.com.

  • Everything You Need to Know About VAT Returns and Payments

    Everything You Need to Know About VAT Returns and Payments

    VAT returns and payment is the medium to report the total amount of VAT payable or VAT receivable for the tax period to the Federal Tax Authority (FTA). The taxable person needs to submit their VAT return by the end of each tax period. There’s a certain procedure that businesses must follow while filing their VAT return. Let’s know everything about it in detail. 

    What is a VAT return?

    VAT returns & payment comprises the total value of supplies and purchases made by a taxable person during the VAT period and related VAT. This highlights the taxable person’s VAT liability/ VAT refund defined as a difference between total output tax charged to a taxable person on supplies of goods and services and input tax recovered on the purchases made. If the output tax over the input tax, then the difference becomes the amount payable to the Federal Tax Authority (FTA). When this input tax amount exceeds the output tax, the excess amount is the amount refundable to the taxable person. 

    When should I submit my VAT return & make payments?

    Following the end of the tax period, on the 28th day of the month, the FTA should receive the VAT return from the taxable person. In case there’s a weekend or a public holiday on that date, the taxpayer must file the return and pay VAT liability on or before the next working day. Also, if you decide to deregister for VAT, you need to provide your last VAT return for till the last return period, as specified by the FTA.

    To answer your any other VAT related query contact Shuraa, one of the best agencies delivering effective VAT consulting services to its clients. 

    How do I submit a VAT return?

    It’s easy to file a tax return in UAE. Log in to the FTA EmaraTax portal using your authentic username and password. Then, the next step is to go through the navigation menu and start with the filing process. Either the taxable person, or a tax agent, or an authorized legal representative can file the return.

    Shuraa Tax and Accounting Services LLC is a professional Accounting and Tax consulting Company which through its qualified team of Chartered accountants offers the clients with reliable services in VAT, accounting, Tax agencies in UAE.

    VAT returns & payment: Inclusions

    There are important details that are relevant when filing for your VAT returns & payment.

    1. Check and confirm the auto-populated details of the taxable person and tax period
    2. Value of supplies at the standard rate and VAT amount
    3. Value of exempt supplies and zero rates made in the tax period made during the tax period
    4. Value of any supplies subject to reverse charged basis VAT made during the tax period
    5. Expenses incurred with which the taxable person is entitled recovers the amount of input tax. 
    6. Total tax amount that is due and is recovered during the tax period
    7. Value of the payable and repayable tax during the tax period

    Contact Shuraa to know in detail about the procedure of VAT registration, UAE. 

    How do I make a VAT payment? 

    The Federal Tax Authorities (FTA) must receive the payments before the deadline date of the VAT returns i.e. 28th day (or following day – if it is public holiday/weekend) after the end of the tax period. There are various methods for payment like you can use e-services like e-Dirham payment method or a credit card, or a bank-to-bank transfer. If you are making payments via an e-dirham card, you will incur an extra charge of AED 3. However, if you use a credit card then there is a charge of 2-3% of the total payable amount.

    Conclusion

    The experts of Shuraa Tax will help you will all your return filings in a timely and efficient manner. Our range of services cover everything from VAT Registration, Return Filing, tax invoices, and more. Together, we will help to take your business to new zeniths. Call or text us at +971 508912062 or send an email to info@shuraatax.com.