Things to Consider Before Reclaiming Your VAT Expenses in UAE

 Under the UAE VAT Law, it is the taxpayer’s responsibility to ensure that the VAT computed, accounted and documentation are in accordance with UAE VAT Laws. To know how you can claim your VAT expenses, first let us understand who can claim input tax.

A person who has registered for VAT is entitled to recover the tax that is incurred on the purchase of goods and services, which are then used to make taxable supplies. 

What are the circumstances in which companies can claim the input tax?

• If businesses are registered under VAT – they can file for a refund. However, the end consumer cannot claim any refunds)

• VAT should have been properly and correctly charged.

• Businesses should be able to produce the proper documentation to show that they have rightfully paid the VAT.

• The claims need to be filed within 6 months of the supply date, on the amount paid.

If your company’s VAT accounts are too detailed and if you need assistance, it is best to indulge in VAT consultancy services in UAE, to ensure a smooth and seamless process for your VAT claims, ensuring there are no discrepancies in your accounting methods.

There are also certain exceptions when it comes to VAT claims, and following are a couple of them:

• If the goods and services on which you paid VAT, are used for the purpose of making non-taxable supplies – you cannot recover the VAT paid on those goods and services.

• If the input tax is related to the capital assets that depreciated before your tax registration, then you cannot claim to the extent the assets have depreciated.

• If the services have been received over 5 years prior to the tax registration date – the input VAT cannot be claimed. However, this is only applicable for services, not goods.

• Before registering for tax, if you transferred the goods to another GCC country – you cannot make refund claims.

If you’re tired of running helter-skelter for your tax refunds, reach out to VAT consultancy experts in the UAE, TRC Pamco – and they can help you rightfully file your claims.

Insights on Exempted Licensees under ESR in UAE

 On 30 April 2019, the UAE enacted the ESR in Resolution No. 31 of 2019. Any natural or juridical person licensed by a competent licensing authority in the UAE (licensee) that carries out any relevant activity is subject to the ESR. And on 11 September 2019, the United Arab Emirates (UAE) issued Ministerial Decision No. 215 of 2019 containing guidance for businesses on compliance with the Economic Substance Regulations (ESR), enacted in April. 

The updated ESR states a change in the definition of the Licensees. It now applies to any corporate (within or outside UAE) or any unincorporated partnership conducting relevant activity. Previously, sole proprietors, trusts and foundations also were in the ESR scope, but they are no longer included in the definition of licensees.

The new exempted categories from the ESR notification include:

• Investment funds
• Entities owned entirely by UAE residents, and are not a part of any MNCs, and carry out activities ONLY within the UAE.
• Entities that pay taxes outside of the UAE.
• Branches of foreign parent companies where the income is taxed outside of the UAE.

With the current exemptions, come some changes to the ones that were previously exempted. Government entities are no longer exempt from ESR notifications. Unless they fall in one of the above scopes – they must comply with the updated ESR Dubai rules.

For companies that are outside the UAE but have relevant business operations in the UAE need to evaluate the impact of the updated ESR guidelines on the previous analysis.

It would be advisable to consider and evaluate the impact of the updated ESR on your business and understand if you need to submit or re-submit your Economic Substance Regulation Notification. If you need any assistance for ESR filing in Dubai, get in touch with TRC Pamco, one of the best audit firms in Dubai.

Tips to survive your financial stress in business.

 With the onset of the pandemic – most businesses have had to suffer. With the loss in revenue and dwindling profits – the financial climate has mostly been out of our control. During these times, running and sustaining a business can cause you quite a bit of financial stress, and hence leading to mental stress as well. Here are a few tips that will can assist you in surviving the financial stress your business is still facing!

Effective Communication: Talking to your family and friends, accepting the reality will help you deal with the situation better. It will give you a better perspective, as well as help you solve the problem faster. It might also give you a solution, something your stressed mind is not able to come up with. So effectively communicate.

Prioritize the spends: Go through your bank statements to analyze spends. Understand the expenditure columns, see your fixed and variable expenses, and try to curb the variable ones as much as possible. This will give you a breather, especially when new money is not coming in.

Offload your debts: Now is a good time to get rid of all your debts. Check which ones have the highest interest rate and start by clearing it out. With the help of accounting firms in Dubai – you can create a plan that helps you reduce your credit card debts, and free up funds for savings and investments.

Set realistic goals: To ensure long-term stability – create a sustainable roadmap about paying off your debts, and regarding your savings. Prioritize your spends, make a realistic budget plan, and pay off your debts.

Save as much as possible: This one goes without saying. If your business is going through financial stress, take assistance from top audit firms in dubai and understand the best way to save money for your business.

In such crucial times – financial planning and consultation is extremely important for all businesses. If your business is looking for financial consultation, get in touch with TRC Pamco, one of the leading auditing and accounting firms in dubai – they offer exceptional financial advisory services.

Treatment of VAT in Free zones of UAE

 Free zones, also known as free trade zones, are designed to promote international businesses in the UAE, by providing the business owners 100% ownership of their business. However, all free zones are not VAT-free zones. A VAT free zone is called designated zones and the executive regulation prescribes the conditions in which a designated zone needs to partake.

So, what is the treatment of VAT in the free zones of UAE? Read on!

For commercial businesses: If the supply of goods is to and from the rest of the world (outside the UAE), then unless the goods are exported or used to manufacture taxable supplies (and sold to an individual located in Mainland) – VAT will not be charged. If the supply of goods is between designated zones in the UAE, and they are not altered, used, are as per GCC Common Customs Law and a monetary guarantee is provided – VAT will not be levied. If the supply of goods is to and from the UAE mainland, a 5% VAT will be applicable in both cases.

For service businesses: Services are anything apart from goods. The executive regulation specifies that the place of supply of services is to be considered in the state of UAE. So, whether the service is provided in the designated zones or Mainland – the standard rate of VAT at 5% will be charged. There is a bit of differential treatment when it comes to VAT on goods and services. Tax-free transactions are only allowed for the supply of goods within the designated zones provided the conditions are met, whereas for services - a 5% VAT will always be levied. So, when it comes to planning your tax strategy – it is best to get in touch with VAT Consultancy in Dubai to understand the impact of VAT on their business.

To understand more about VAT returns Dubai, and to help plan your tax strategy – get in touch with TRC Pamco, one of the best VAT consultants in UAE. They can assist you with your strategy and help you make the most out of your business.

The pros and cons of LLC company formation in Dubai

 Are you looking to expand your business and looking for great investment opportunities in Dubai? Well, you are looking right. Now, although Dubai is a hub for emerging entrepreneurs, there are some critical decisions to be taken – the most important one being the legal structure of the organization. The options are Sole Proprietorship, Civil Company, and Limited Liability Company (LLC). For a start-up, LLC is one of the best routes to ensure you have subsequently shielded from the (any) pitfalls of your business. Read on to know the pros and cons of LLC company formation in Dubai:

Pros of LLC Company

Affordable: It is quite affordable to set up an LLC company, and one of the most followed formats by expats in Dubai. The minimum capital requirement also depends on the nature, size, and type of the business – making it beneficial for most business owners.

Easy and Quick to set up: There is paperwork involved, but with the right company formation partners – the process can be very swift. There are not too many compliances involved, making it feasible.

Taxation: With an LLC company, you avoid the charge of double taxation, and the tax structure aids in avoiding personal stress, in case of any business turmoil.

Investor Visa: Being an investor for LLC companies in Dubai – the investor can enjoy certain leverages in the Emirate.

Cons of LLC Company

Trade Limitations: Depending on the free zone you are setting up your business in, you will be faced with certain trade limitations. However, depending on the type of your business, there shouldn’t be any issue in conducting your business activities within the set geographical area.

Local partner: For a Limited Liability Company – it is important to have a local partner, who will be a 51% owner of the company. This is one of the biggest limitations as owners feel the loss of autonomy over their business. However, there is always the option to set up a business in a free zone if you want to retain 100% ownership of the business.

For offshore companies in UAE – looking to actively invest in Dubai – reach out to TRC Pamco, one of the leading audit firms in Dubai, they can help with company formation in Dubai.

Everything You Should Know About GCC VAT System

 VAT (Value Added Tax) was implemented in the UAE in January 2018, to ensure effective fiscal management at the federal level. It has had an impact across individuals and businesses in the UAE.

So, what is GCC VAT? It is nothing but an indirect tax that will be levied on goods and services in the member states of Gulf Cooperation Council (GCC). The member states include Saudi Arabia, Dubai, Qatar, Bahrain, Kuwait and Oman.

• How will VAT be charged?

All the businesses will charge VAT on the goods and services they supply on behalf of the government. Every stage of the supply chain will see the VAT charge, and the end user will bear the charges.

• What types of goods and services are exempted from GCC VAT?

Medicine, medicine supplies, certain foods, the oil sector, international and intra-GCC transport, supply outside the GCC and on supply of precious metals for investments. Apart from this, each of the states can define their own exemptions.

• What is the GCC VAT rate?

The GCC VAT rate is charged at 5%. However, there are certain sectors marked at 0% VAT in the different member states.

• Who is required to register for VAT?

Any business with an annual turnover of AED 375000 (or its equivalent) is required to register for VAT. Businesses whose turnover is lesser than AED 375000 are not required to register for VAT, although if they still wish to – they can. It is not a compulsion. To know more, you can get in touch with a VAT consultancy in Abu Dhabi.

• How can we help you?

We help you with VAT Periodical Compliances, VAT Health Check, VAT Registration / de-registration, Assistance in getting VAT Refunds and more.

TRC Pamco is one of the leading VAT companies in Dubai, and it has the experience necessary to help you to optimize your tax position. Since, VAT compliance involves a complex process, choose an expert from our team of tax (VAT) professionals who know how to build a sustainable tax (VAT) strategy to make your organization tax (VAT) compliant.

Scope of the New ESR Update - Key Changes & Requirements

 The UAE had announced Economic Substance Regulations in April 2019, and have updated it since then, and it is imperative for businesses in the UAE to be aware of the same.

First, who is eligible to hire a ESR filing company in Dubai?

Any natural or juridical person licensed by a competent licensing authority in the UAE (licensee) that carries out any relevant activity is subject to the ESR. On 11 September 2019, the United Arab Emirates (UAE) issued Ministerial Decision No. 215 of 2019 containing guidance for businesses on compliance with the Economic Substance Regulations (ESR), enacted in April.

What are the key updates?

• Initially, government entities were exempt from ESR, but as per updated rules – they also must comply with the updates ESR regulations.

• Offshore companies who operate in the UAE through branch offices, and the ones that concluded they carried out relevant activity of distribution and service center business – will have to verify the impact of the updated ESR on their previous analysis. Previously, for any entity to fall under the scope of Distribution & service center business, goods had to be stored in the UAE, not anymore though.

• Offshore companies conducting relevant activity through a branch in the UAE do not need to show economic substance, provided the relevant income is subject to tax in the jurisdiction where the company is formed.

• All the entities need to now verify if the analysis they conducted under the previous economic substance regulations still hold accurate with the updated regulations.

• If any UAE entity falls under the updated Economic Substance Regulations, they need to re-submit their economic substance notification through the finance portal of the UAE ministry, once available.

To know more about ESR filing companies in UAE, check out TRC Pamco. They have a team of professionals who can guide you through the process and file your Economic Substance Regulations in compliance with the updated rules.