Basis of Taxation for Residents & Non-Residents Under UAE Corporate Tax – #EP06

July 29, 2022

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    In order to calculate the taxable income for UAE corporate taxes, it is crucial to understand the concepts of resident and non-resident in the UAE. To discover more about the concept, let’s watch the video.

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    UAE sets tougher action against businesses that delay Employee wages

    HLB News Team

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      To protect employees’ earnings, the Wages Protection System (WPS) in the UAE has been modified by the Ministry of Human Resources and Emiratization (MoHRE). As per the new resolution, there will be a range of administrative actions against businesses that do not adhere to the WPS’s rules based on the duration of the salary late payments, the size of the business, and the number of unpaid employees.

      Khalil Al Khoori, Acting Under-Secretary for Human Resources Affairs at MoHRE said “the changes aim to enhance long-term balance and stability of the relationship between employers and employees, in line with the rights and responsibilities outlined in the contracts between both parties.”

      In the given below two situations, the revisions also let enterprises to request exemptions from transferring their earnings through the WPS:

      • Seamen/sailors employed on board vessels/ships.
      • Workers of foreign companies or their branches functioning in the nation who get their salaries from outside the nation, with the workers’ permission.

      The issuance of new work permits will be suspended for any non-compliant businesses, irrespective of size, that continue to withhold salaries four months after the due date. After informing the impacted businesses of the suspension of work permits, comparable fines will be imposed on each of the owner’s other UAE businesses that are registered with the WPS.

      The new resolution’s revisions also include steps that will be slowly implemented against businesses with 50 or more employees, where the relevant Public Prosecution will be informed and the business information will be forwarded to the appropriate local and federal officials for future legal measures.

       

      Did you find the blog informative?         

       

      Varun R Chandra
      Varun R Chandra
      07:38 25 Apr 21
      HLB Hamt is highly recommended! They have the quality of services that would satisfy your needs. I'm glad I found them.
      Giuseppe Assi
      Giuseppe Assi
      06:20 31 Jan 21
      I HAD A GOOD EXPERIENCE WITH HLB HAMT DUBAI. THEY HAVE A VERY PROFESSIONAL TEAM, GOOD QUALITY OF SERVICES, GOOD VALUE... FOR PRICE.I RECOMMEND THIS COMPANY.read more
      Mohamed Sheriff
      Mohamed Sheriff
      16:16 28 Jun 20
      Experience with HLB Hamt in audit experience is great pleasure. They deploy well qualified accounts team for audits.... And the amount of checking they perform give the management of the company confidence that internal controls are well in place. We are glad to see they have high standard of audit practices.read more
      218141 JOSEPH THOMAS
      218141 JOSEPH THOMAS
      16:20 23 Jun 20
      Professionally managed firm with commitment to the engagements taken. My company and its group are assigning our... requirements for last 12 years to HLB and we don’t have any negative remarks on any assignments.read more
      PMI
      PMI
      07:14 23 Jun 20
      In my opinion, HLB Hamt is one of the best professional firms in UAE after big4. Excellent client service, professional... and competent staff and timely delivery are their strength. Over the years they have developed the infrastructure and skill set to handle multiple verticals ie, audit, tax services, consulting, IT support etc.Wishing HLB Hamt team all the very best.read more
      RAVI CHOKSI
      RAVI CHOKSI
      08:28 21 Jun 20
      Thank you Team HLB hamt...Your internal auditing team put the good amount of time and inputs in helping the... organisation making considerable improvements throughout the organisational working structure and helps in building the better business.Thanks.read more
      Maharajan Subramaniam
      Maharajan Subramaniam
      18:17 06 Jun 20
      High-Performing IT Teams, I'm impressed with the knowledge level of their deputed staff, audit procedures, and... checklist adopted. Mr. Vimal especially understand the requirement and provide solution not only technical feasibility and also considered budgeting. We’re confident in their abilities.read more
      Mohammed L
      Mohammed L
      08:07 05 Jun 20
      We have been working closely with them on payroll services for quite sometime.They provide very professional... services,experts in domain and excellent support. Would recommend them.Cheers.read more
      ROY ROSHAN VIVIAN
      ROY ROSHAN VIVIAN
      06:32 04 Jun 20
      Very professional team. Vimal has always given us good solution advice for various Software and IT Infra projects. We... are very Extremely satisfied working with him and his team. Wishing them success.read more
      Basil Daniells
      Basil Daniells
      05:55 03 Jun 20
      I have worked with HLB as a partner of Sage for about 2 years, they were dedicated to the success of the partnership... and kept aligned with the business plan that was agreed between our two companies. They are always ready to go the extra mile for a customer and don’t shy away from challenging circumstances. Keep up the good work and wish you all the success in the future.read more
      Amar Kashyap
      Amar Kashyap
      19:28 02 Jun 20
      Team of well qualified and organised professionals. Their reports are not based on numbers first they will understand... their client and their business. They are highly recommended and trust worthy.read more
      Radz de Jesus
      Radz de Jesus
      16:03 02 Jun 20
      We're glad to have found HLB Hamt to conduct the IT audit and risk assessment for our organization. We have learned a... lot from their team during that first project. And since then, we've continued to be in touch with them. Mr. Vimal especially is very good at presenting technical concepts in simple yet interesting ways that non-IT and business people alike would easily catch. We are very happy with the professionalism and quality of service they provide. They leave their clients nothing short of satisfied. Highly recommended.read more
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      The New Rate Change in Bahrain’s Social Security Contribution

      HLB Bahrain Payroll Team

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        The social security contribution of the Bahraini national workers’ employers’ contribution will be increased by 2% as of May 2022 and will be increased by 1% at the beginning of each year starting from January 2023 until January 2028, bringing the total percentage of the employer’s contribution to 20% by 2028. The Bahraini employee’s total contribution will be increased by 1%, bringing the total percentage of the worker’s contribution to 8% as of January 2023.

        With this change, the total percentage for Bahraini nationals is 21% with effect from May 2022, of which 14% is employer contribution and 7% is employee contribution. This rate will change again with effect from January 2023.

        Below is the table explaining employer, employee, and total contributions with an effective start date of contribution.

        Effective
        Start Date
        Employer ContributionEmployee ContributionTotal Contribution
        Current rateNew RateCurrent rateNew RateCurrent rateNew Rate
        May 221214771921
        Jan 2315823
        Jan 2416824
        Jan 2517825
        Jan 2618826
        Jan 2719827
        Jan 2820828

         

        For more details about the payroll process in Bahrain, Click the link:  https://hlbhamt.com/payroll-process-in-bahrain

         

        Did you find the blog informative?         

         

        Varun R Chandra
        Varun R Chandra
        07:38 25 Apr 21
        HLB Hamt is highly recommended! They have the quality of services that would satisfy your needs. I'm glad I found them.
        Giuseppe Assi
        Giuseppe Assi
        06:20 31 Jan 21
        I HAD A GOOD EXPERIENCE WITH HLB HAMT DUBAI. THEY HAVE A VERY PROFESSIONAL TEAM, GOOD QUALITY OF SERVICES, GOOD VALUE... FOR PRICE.I RECOMMEND THIS COMPANY.read more
        Mohamed Sheriff
        Mohamed Sheriff
        16:16 28 Jun 20
        Experience with HLB Hamt in audit experience is great pleasure. They deploy well qualified accounts team for audits.... And the amount of checking they perform give the management of the company confidence that internal controls are well in place. We are glad to see they have high standard of audit practices.read more
        218141 JOSEPH THOMAS
        218141 JOSEPH THOMAS
        16:20 23 Jun 20
        Professionally managed firm with commitment to the engagements taken. My company and its group are assigning our... requirements for last 12 years to HLB and we don’t have any negative remarks on any assignments.read more
        PMI
        PMI
        07:14 23 Jun 20
        In my opinion, HLB Hamt is one of the best professional firms in UAE after big4. Excellent client service, professional... and competent staff and timely delivery are their strength. Over the years they have developed the infrastructure and skill set to handle multiple verticals ie, audit, tax services, consulting, IT support etc.Wishing HLB Hamt team all the very best.read more
        RAVI CHOKSI
        RAVI CHOKSI
        08:28 21 Jun 20
        Thank you Team HLB hamt...Your internal auditing team put the good amount of time and inputs in helping the... organisation making considerable improvements throughout the organisational working structure and helps in building the better business.Thanks.read more
        Maharajan Subramaniam
        Maharajan Subramaniam
        18:17 06 Jun 20
        High-Performing IT Teams, I'm impressed with the knowledge level of their deputed staff, audit procedures, and... checklist adopted. Mr. Vimal especially understand the requirement and provide solution not only technical feasibility and also considered budgeting. We’re confident in their abilities.read more
        Mohammed L
        Mohammed L
        08:07 05 Jun 20
        We have been working closely with them on payroll services for quite sometime.They provide very professional... services,experts in domain and excellent support. Would recommend them.Cheers.read more
        ROY ROSHAN VIVIAN
        ROY ROSHAN VIVIAN
        06:32 04 Jun 20
        Very professional team. Vimal has always given us good solution advice for various Software and IT Infra projects. We... are very Extremely satisfied working with him and his team. Wishing them success.read more
        Basil Daniells
        Basil Daniells
        05:55 03 Jun 20
        I have worked with HLB as a partner of Sage for about 2 years, they were dedicated to the success of the partnership... and kept aligned with the business plan that was agreed between our two companies. They are always ready to go the extra mile for a customer and don’t shy away from challenging circumstances. Keep up the good work and wish you all the success in the future.read more
        Amar Kashyap
        Amar Kashyap
        19:28 02 Jun 20
        Team of well qualified and organised professionals. Their reports are not based on numbers first they will understand... their client and their business. They are highly recommended and trust worthy.read more
        Radz de Jesus
        Radz de Jesus
        16:03 02 Jun 20
        We're glad to have found HLB Hamt to conduct the IT audit and risk assessment for our organization. We have learned a... lot from their team during that first project. And since then, we've continued to be in touch with them. Mr. Vimal especially is very good at presenting technical concepts in simple yet interesting ways that non-IT and business people alike would easily catch. We are very happy with the professionalism and quality of service they provide. They leave their clients nothing short of satisfied. Highly recommended.read more
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        VAT Public Clarification On Gold-Making Charge in UAE

        Sreekanth Karicheri, Tax Analyst

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        HLB HAMT - Accounting Firm in UAE
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          Gold-Making Charge

          • The Public Clarification provides guidance on the application of the VAT legislation with regards to making charges received by gold jewellers.
          • This clarification only applies to gold and products consisting mostly of gold, that do not qualify for zero-rating.
          • Tax registrants supplying gold are not required to impose VAT on the supply of gold and products which mostly consist of gold, if the conditions of Cabinet Decision No. 25 of 2018 are met.
          • The reverse charge mechanism only applies to the supply of goods by the registrant.
          • If the supplier charges separate considerations for the gold and the making service or reflects the price of these components separately, the supplier is required to impose VAT on the service component.

          Practical example

          ABC Gold LLC a VAT-registered entity in the UAE mainland supplied gold to another VAT-registered entity XYZ Jewelry LLC in the mainland. The invoice split is as follows:

          1. Gold items: AED 100,000/-
          2. Making charges: AED 6,000/-

          The accountant of ABC Gold LLC is of the opinion that the company is not required to charge VAT on entire consideration i.e., AED 106,000/- as long as the customer provides a declaration as per Cabinet Decision No. 25 of 2018.

          Whether the argument of the accountant is correct?

          Solution: Tax registrants supplying Gold Items, shall not impose VAT on the supply if the following requirements are met:

          • The recipient is registered for VAT
          • The supplier retains a written declaration from the recipient confirming all of the following:
            • The recipient will use the Gold Items to produce or manufacture other Gold Items, or to
              re-sell the Gold Items received.
            • The recipient is registered for VAT on the date of supply.
            • The recipient shall account for the VAT on the Gold Items supplied to him.

          It is important to note that the special reverse charge mechanism under Cabinet Decision No. 25 only applies to goods and not to services. Where the supplier supplies Gold Items and making services, the supplier needs to consider whether the supply constitutes a single composite supply of a Gold Item or multiple supplies consisting of both goods and services.

          If the supplier charges separately for the Gold Items and for the making service, or where the price of these components is separately reflected, the supplier is regarded as making multiple supplies. In these cases, the supplier is required to treat each component as a separate supply and apply the correct tax treatment to each separate component.

          In instances of multiple supplies, only the VAT related to the Gold Items may be accounted for under the reverse charge mechanism, provided all the requirements of Cabinet Decision No. 25 are met.

          The supply of the making services does not fall under the special reverse charge mechanism under Cabinet Decision No. 25 in cases of multiple supplies. Hence, the supplier is required to account for VAT on this service if the supplier is a taxable person.

          In the present case, ABC Gold LLC can supply the gold worth AED 100,000/- to XYZ Jewellery LLC under a special reverse charge mechanism if they provide the declaration under Cabinet Decision 25 of 2018. But the making charges worth AED 6,000/- will attract VAT at standard rate.

          *Important Note: Cabinet Decision No. (25) of 2018 on the Mechanism of Applying Value Added Tax on Gold and Diamonds between Registrants in the State was implemented in 01/06/2018. Therefore, the tax registrants should consider the applicability of this public clarification with effect from this date.

          Any questions or queries on this, please revert to tax@hlbhamt.com

           

          Would you like to rate us on Google?         

           

          Varun R Chandra
          Varun R Chandra
          07:38 25 Apr 21
          HLB Hamt is highly recommended! They have the quality of services that would satisfy your needs. I'm glad I found them.
          Giuseppe Assi
          Giuseppe Assi
          06:20 31 Jan 21
          I HAD A GOOD EXPERIENCE WITH HLB HAMT DUBAI. THEY HAVE A VERY PROFESSIONAL TEAM, GOOD QUALITY OF SERVICES, GOOD VALUE... FOR PRICE.I RECOMMEND THIS COMPANY.read more
          Mohamed Sheriff
          Mohamed Sheriff
          16:16 28 Jun 20
          Experience with HLB Hamt in audit experience is great pleasure. They deploy well qualified accounts team for audits.... And the amount of checking they perform give the management of the company confidence that internal controls are well in place. We are glad to see they have high standard of audit practices.read more
          218141 JOSEPH THOMAS
          218141 JOSEPH THOMAS
          16:20 23 Jun 20
          Professionally managed firm with commitment to the engagements taken. My company and its group are assigning our... requirements for last 12 years to HLB and we don’t have any negative remarks on any assignments.read more
          PMI
          PMI
          07:14 23 Jun 20
          In my opinion, HLB Hamt is one of the best professional firms in UAE after big4. Excellent client service, professional... and competent staff and timely delivery are their strength. Over the years they have developed the infrastructure and skill set to handle multiple verticals ie, audit, tax services, consulting, IT support etc.Wishing HLB Hamt team all the very best.read more
          RAVI CHOKSI
          RAVI CHOKSI
          08:28 21 Jun 20
          Thank you Team HLB hamt...Your internal auditing team put the good amount of time and inputs in helping the... organisation making considerable improvements throughout the organisational working structure and helps in building the better business.Thanks.read more
          Maharajan Subramaniam
          Maharajan Subramaniam
          18:17 06 Jun 20
          High-Performing IT Teams, I'm impressed with the knowledge level of their deputed staff, audit procedures, and... checklist adopted. Mr. Vimal especially understand the requirement and provide solution not only technical feasibility and also considered budgeting. We’re confident in their abilities.read more
          Mohammed L
          Mohammed L
          08:07 05 Jun 20
          We have been working closely with them on payroll services for quite sometime.They provide very professional... services,experts in domain and excellent support. Would recommend them.Cheers.read more
          ROY ROSHAN VIVIAN
          ROY ROSHAN VIVIAN
          06:32 04 Jun 20
          Very professional team. Vimal has always given us good solution advice for various Software and IT Infra projects. We... are very Extremely satisfied working with him and his team. Wishing them success.read more
          Basil Daniells
          Basil Daniells
          05:55 03 Jun 20
          I have worked with HLB as a partner of Sage for about 2 years, they were dedicated to the success of the partnership... and kept aligned with the business plan that was agreed between our two companies. They are always ready to go the extra mile for a customer and don’t shy away from challenging circumstances. Keep up the good work and wish you all the success in the future.read more
          Amar Kashyap
          Amar Kashyap
          19:28 02 Jun 20
          Team of well qualified and organised professionals. Their reports are not based on numbers first they will understand... their client and their business. They are highly recommended and trust worthy.read more
          Radz de Jesus
          Radz de Jesus
          16:03 02 Jun 20
          We're glad to have found HLB Hamt to conduct the IT audit and risk assessment for our organization. We have learned a... lot from their team during that first project. And since then, we've continued to be in touch with them. Mr. Vimal especially is very good at presenting technical concepts in simple yet interesting ways that non-IT and business people alike would easily catch. We are very happy with the professionalism and quality of service they provide. They leave their clients nothing short of satisfied. Highly recommended.read more
          Next Reviews
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          Whatever your question our team will point you in the right direction

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          Arm’s Length Principle & Transfer Pricing Documentation Under UAE Corporate Tax – #EP05

          July 22, 2022

          HLB HAMT - Accounting Firm in UAE
          Phone:- +971 4 327 7775
          Mobile:- +971 50 677 5860
          Email:- dubai@hlbhamt.com

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            In order to fulfill all of your transfer pricing needs, HLB HAMT can help you create tax-efficient solutions that optimize compliance with laws and regulations. Check out the video to learn more about the UAE’s corporate tax laws’ arms-length concept and transfer pricing documentation.

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            Internal Control over Financial Reporting (ICFR) in UAE: Why its a Significant business competitive advantage

            ICFR: An Overview

            Sumesh Krishna, Partner

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            HLB HAMT - Accounting Firm in UAE

            Phone:- +971 4 327 7775
            Mobile:- +971 50 749 0576
            WhatsApp:- +971 56 219 1607
            Email:- dubai@hlbhamt.com

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              Businesses in the UAE can take advantage of the numerous opportunities brought about by the region’s quickening, technology-driven change through reliable and accurate financial reporting. Due to the region’s development and the rising worldwide challenge from rivals using the newest data-driven financial reporting systems, businesses in the UAE may greatly benefit from ICFR. Since the adoption of the Sarbanes-Oxley (SOX) Act in 2002, authorities worldwide have increased the reporting obligations from this viewpoint. Internal controls regarding financial reporting are critical since they ultimately aim to safeguard the rights of investors and other stakeholders by mitigating the chances of fraud and other economic hazards.

              Internal Control over Financial Reporting (ICFR) is a procedure created to give a person or organization a satisfactory level of assurance, ensuring the accuracy of financial reporting and the preparation of financial statements for use by outside parties in compliance with accounting standards guidelines.

              The structure and operational performance of the controls and precautions management has implemented over accounting and financial reporting are critical factors in its capacity to carry out its financial reporting obligations.

              Objectives of ICFR Implementation in UAE

              • In the better interests of diverse business stakeholders, improve the standard of financial reporting procedures.
              • Attempt to increase the accuracy and openness of financial reporting procedures, which will finally aid in integrating the financial data.
              • The importance of internal controls contributes to increasing trust in the accuracy of the financial data in line with international best practices.

              The Key Components of ICFR

              • Control Environment: The set of guidelines, procedures, and organizational frameworks known as the control environment, will help to set up the foundation for implementing internal control throughout the business.
              • Risk Evaluation: The method used by the business to detect the risk in financial statements is referred to as risk assessment concerning ICFR. Individuals qualified to perform risk assessments for ICFR must be aware of the financial reporting, reporting requirements, and fraudulent risks.
              • Control Activities: Another essential element of ICFR is the measures taken through processes and regulations intended to reduce financial reporting risk. The following ideas can aid in understanding control activities:
                • Division of tasks
                • IT (information technology) Controls
                • Controls at the entity and process levels
                • Preventive and Detective Controls
              • Information Systems and Communications: This component in the ICFR relates to much of the information exchange and communication routes. The business needs information to fulfil its internal control obligations and to help it achieve its goals. Both internal and external sources are used by management to gather, produce, and utilize pertinent information of high quality. Communication must provide, share, and acquire information continuously and repeatedly. Internal communication is the process of disseminating information so that everyone in the company clearly gets the same message. In response to demands and expectations, external communication gives information to external parties.
              • Controls Monitoring: This component includes procedures that guarantee the effectiveness of controls with prompt identification and correction of flaws. The monitoring can be carried out by implementing Control Self-Assessment (CSA), in which each process owner regularly evaluates the control.

              ICFR Deficiency

              Suppose management or staffs are unable to deter or identify false statements in a timely manner while carrying out their required duties as part of the usual course of business. In that case, there is an ICFR deficit. Management must determine how seriously the flaws might affect the credibility of the company’s financial reporting procedures when deficiencies in control functioning are discovered.

              The following categories apply to ICFR deficiencies:

              1. Material Weakness: A deficiency strongly indicates that a significant deception of the company’s financial statements won’t be remedied or identified in a timely manner.
              2. Significant Deficiency: A less severe deficiency that should indeed be addressed by those in charge of monitoring the company’s financial reporting
              3. Deficiency: This means a flaw in a control’s design or functioning when it prevents management or staff from promptly preventing or identifying false assertions while carrying out their regular duties.

              Roles and Responsibilities of ICFR in UAE

              Management

              • The company’s management is in charge of developing, implementing, and maintaining ICFR
              • Periodically evaluate ICFR’s performance in compliance with the SOX act
              • To reasonably back its evaluation of the ICFR, keep evidence, including paperwork
              • Establish management’s accountability for ICFR in quarterly reporting
              • Report annually on the management’s assessment of the ICFR of the firm
              • Update the audit committee on the functioning and efficiency of the controls

              Independent Auditors

              • Evaluate the whole financial reporting system using a risk-based approach, but pay more attention to the controls over the financial reporting sections most vulnerable to substantial error
              • Even in a financial statement-only audit, acquire the awareness of each element of the company’s ICFR
              • Any internal control flaws should be reported promptly to management and the audit committee
              • Report on the success of management’s ICFR while conducting an integrated audit

              Audit Committees

              • Supervise the management’s creation of financial statements, as well as the controls’ design and implementation
              • Regulate financial reporting in line with SOX
              • Assess the evaluation of the hazards in financial reporting
              • Examine the management’s anticipated actions to the cited financial reporting threats
              • Monitor and keep an eye on the internal audit’s operations, including its reports
              • Employ and manage the outside auditor

              Bottom Line

              A slew of high-profile corporate scandals in the various industries that happened in the past has highlighted the significance of ICFR for Middle Eastern businesses. Along with the COVID-19 pandemic, these corporate failures warned businesses to examine their financial statements more carefully.

              The organizations are recognizing and viewing ICFR activities as possibilities to improve the quality and efficiency of their business models, elevating them to the top of global practices. The auditors are needed to consider the sufficiency of ICFR and its usefulness. Therefore they must grasp the company’s procedures and regulations. This process will allow them to gather evidence for assessment, proving the controls’ adequacy. Thus, the company will need to provide the required information and supporting documents to identify significant factual errors and lower financial vulnerabilities.

              ICFR Audit in UAE: The Assistance of HLB HAMT

              HLB HAMT is well-equipped to assist you in setting up a robust internal control framework in conformity with the relevant regulatory standards, thanks to its expertise in successfully working with customers in several industries in internal and external audits, including the listed entities in UAE. We can help you by guiding you through each phase of the ICFR implementation.

              Get in touch

              Whatever your question our team will point you in the right direction

              Start the conversation

              Who are Connected Persons? Transaction Between Connected Persons Under UAE Corporate Tax - #EP04

              July 19, 2022

              HLB HAMT - Accounting Firm in UAE
              Phone:- +971 4 327 7775
              Mobile:- +971 50 677 5860
              Email:- dubai@hlbhamt.com

                Get Free Consultation




                The employment of transfer pricing regulations has lately received much interest due to the rising influence it has on corporate tax in the UAE. Let’s watch the video to discover more about Transaction Between Connected Persons as they apply to UAE corporate tax.

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                Proposed Group Reliefs under the UAE Corporate Tax regime

                Suhail Kolakkadan, Tax Analyst

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                HLB HAMT - Accounting Firm in UAE
                Phone:- +971 4 327 7775
                Mobile:- +971 50 677 5860
                Email:- dubai@hlbhamt.com

                  Get Free Consultation




                  The UAE has made considerable tax reforms recently to streamline its tax structure, put it into compliance with global standards, and broaden revenue. The proposed corporate tax (CT) in UAE will be applicable on the taxable profits earned businesses, including persons involved in business, commercial, or any other economic activity, with specific exclusions and restrictions.

                  The UAE corporate tax regime allows UAE groups to seek group relief in respect of losses, intragroup transactions, and restructurings. In order to learn more about the planned group reliefs under UAE corporation tax, let’s keep on reading.

                  Tax Groups

                  Businesses are able to create tax groups under the UAE corporate tax framework, which will go into force in June 2023. The operations of large corporates are frequently carried out by a cluster of businesses, each of which will have a parent company and a number of subsidiaries. Companies create tax groups to restrict or fence responsibilities, which optimizes the expense of your total tax compliance.

                  Criteria for tax group formation

                  Businesses that are liable to UAE corporate tax must determine if they are properly qualified to form a tax group. You must meet specific conditions set out by the UAE Ministry of Finance (MoF) in order to establish a corporate tax group.

                  • The tax group’s members should all follow the same fiscal year.
                  • The parent organization must own at least 95% of the voting rights and share capital of its subsidiaries.
                  • Especially when all of the group members are UAE residents, companies can create a tax group.
                  • A free zone business that enjoys the 0% corporate tax rate or an exempt person can be a part of tax group.
                  • If a subsidiary is indirectly held by the parent firm and other subsidiaries possess at least 95% of its shares, the subsidiary could join a tax group or if it is a UAE branch of the parent firm or one of its subsidiaries

                  Parent entity’s obligations:

                  1. Each tax group subsidiary’s financial accounts must be combined by the parent firm.
                  2. Exclude all transactions between each tax group subsidiary and the parent.
                  3. Tax collection and administration

                  Accountability of Tax Group Members

                  Each subsidiary and the parent business will have joint as well as several liabilities for the CT of the group. However, with FTA permission, the responsibility can be restricted to one or more members.

                  Transfer of losses

                  If certain conditions are met, the UAE CT framework may allow the transfer of tax losses from one group company to another group company with revenues for combinations of businesses that do not meet the required 95 percent common ownership threshold or do not wish to form a tax group.

                  Requirements

                  • At least 75% of UAE group enterprises are held collectively.
                  • No loss transfers from businesses that are immune or gain access to the 0% Free Zone CT system are permitted.

                  The overall tax loss offset may not exceed 75% of the applicable period’s taxable income of the entity obtaining the transferred losses. Balance tax losses can be carried forward indefinitely, provided certain conditions are met.

                  Intra-group transfer of assets and liabilities

                  Transfers of assets and liabilities between UAE-based group entities with a common ownership stake of at least 75% are exempt from the CT requirement as long as they are retained for a minimum of three years from the date of transfer.

                  When intra-group relief is requested, the applicable assets and liabilities are recognized as having been transferred at their tax net book value, preventing the transferor and the transferee firm from having to take responsibility for the gain or a loss when determining their respective taxable income.

                  Any gain or loss that would have occurred upon the first transfer must be computed and included in the transferor’s tax return in the tax period in which the circumstances officially ended, if the applicable criteria for intra-group relief are no longer met.

                  Restructuring Relief

                  1. The UAE CT scheme would exclude or provide a deferral of taxes if a full firm, or separate sections of a business, are conveyed in exchange for shares or other ownership interests in order to assist mergers, spin-offs, and other corporate activities.
                  2. The purchasing firm will be able to use the transferor’s current tax basis in the transferred assets and liabilities, and the natural person will receive immunity from CT in relation of any benefit from the transfer.
                  3. In order to avoid reporting for a gain or loss for determining taxable income, assets and liabilities being transferred as part of a qualified reorganization will be considered to be transferred at their tax net book value.
                  4. If the firm is subsequently transferred to a third party inside three years of the restructuring, any restructuring relief will be “clawed back.”

                  In Summary

                  The month of June 2023 would arrive in an instant! And right now is the ideal time to prepare for corporate taxes. For any organization to be able to attain UAE CT compliance there is a lot of work to be done. It is high time to pass the baton over to expert UAE tax consultants in corporate tax, like HLB HAMT, and relax.

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                  Impact of Transfer Pricing | Transfer Pricing & Related Parties Under UAE Corporate Tax - #EP03

                  July 15, 2022

                  HLB HAMT - Accounting Firm in UAE
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                  Email:- dubai@hlbhamt.com

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                    Given the growing impact of transfer pricing on corporate income tax in the UAE, the use of transfer pricing techniques has recently attracted significant and widespread attention. Let’s explore the video to understand more about the transfer pricing and related parties under the UAE corporate tax.

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                    Savings Scheme for Expats in Dubai Public Sector

                    HLB News Team

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                    HLB HAMT - Accounting Firm in UAE
                    Phone:- +971 4 327 7775Email:- dubai@hlbhamt.com

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                      Dubai has decided to implement end-of-service savings scheme for expatriates working in government departments. Dubai International Financial Centre (DIFC) will be in charge of supervising the scheme and even though the plan targets expats in government sector in the initial stage, it is expected to expand gradually.

                      The major objective of the scheme is to attract and retain employees by offering an integrated system that provides several options for savings. Expats working in Dubai’s public sector will be added to the novel scheme by default. The employers are supposed to contribute the total end-of-service gratuity to the savings plan from the date of joining of the employee, excluding the financial dues for previous years of service.

                      The savings scheme contribution percentage will be equal to the end-of-service benefits due to the foreign employee in the Dubai public sector. The rate of return will depend on various factors that include the investment made by the staff, the method via it is distributed across available investment portfolios and the risks related with it.

                      Employees are also provided with the option to make their own contributions to the savings scheme, with the authority to withdraw it at any time. The employee participation in the savings scheme will cease following the end of their service.

                      The UAE is a country that provides a promising platform for employees from across the world and the country comes up with various schemes frequently to attract ex-pats and give them a sense of security. The scheme will help in boosting the city’s position as a international financial hub, which is seen as an incubator for expertise and competencies.

                       

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