Month: June 2023
The Top five common methods for valuing startup companies
Jovina Varghese
Phone:- +971 4 327 7775
WhatsApp:- +971 56 219 1607
Mobile:- +971 55 807 4568
Email:- dubai@hlbhamt.com
The economic value of a business or company is determined using the process of business valuation. This involves assessing the financial and non-financial aspects of the business, including its assets, liabilities, revenue, earnings, market position, competitive landscape, industry trends, and management team, among other factors.
Importance of valuing startup companies
Business valuation is typically carried out for a variety of purposes, including mergers and acquisitions, initial public offerings (IPOs), raising capital, taxation, financial reporting, and litigation.
Ultimately, the goal of business valuation is to determine the fair market value of a business, which represents the price that a willing buyer would pay to a willing seller in an arm’s-length transaction. This information can be useful for a wide range of stakeholders, including business owners, investors, lenders, and regulators.
Valuing startup companies can be a challenging task since they usually do not have a long track record or historical financial data to assess their performance.
Methods for Valuing Startup Companies
Here are some common methods used to value startup companies:
Discounted Cash Flow (DCF) Analysis:
The present value of future cash flows is typically estimated using the DCF approach. It involves estimating future cash flows, discounting them back to their present value using a discount rate, and summing them up to arrive at a fair value. This approach requires a detailed understanding of the startup’s business model, market potential, and future growth prospects.
Market Comparable Method:
This method involves comparing the startup’s financial metrics (such as revenue or EBITDA) to those of similar companies in the industry. The comparable companies can be publicly traded or recently acquired, and their valuation multiples can be used to estimate the startup’s value.
Venture Capital (VC) Method:
The VC method is a widely used method for valuing startups. This method is commonly used by investors and involves estimating the company’s terminal value (future value) based on projected cash flows and applying a discount rate to arrive at the present value. The discount rate is typically higher than other valuation methods to account for the high risk associated with investing in startups. It takes into account factors such as the startup’s stage of development, market potential, and the amount of capital raised.
Scorecard Method:
This method involves assigning a score to the startup based on various factors such as the quality of the team, market size, competition, and intellectual property. Each factor is assigned a weight based on its relevance to the company’s overall success. The company’s performance is then evaluated against each metric, and a score is assigned based on how well it performs compared to the industry benchmarks.
Cost-to-Duplicate Method:
The cost to duplicate valuation approach is a method used to estimate the value of an asset or property. It is based on the idea that the value of an asset can be determined by the cost of creating a similar asset or property. In other words, it estimates the cost to replicate the asset or property in its current state, including all the necessary components and materials.
Combining Methods for Accurate Valuation
It is worth noting that no single method is perfect, and each approach has its own strengths and weaknesses. Therefore, it is recommended to use a combination of these methods to get a more accurate estimate of a startup’s value.
Factors to Consider in Startup Valuation
It is also essential to consider qualitative factors such as industry trend, business model, the startup’s team, product, and market potential, in addition to quantitative factors such as financial metrics, when valuing a startup. However, it is important to note that valuing a startup is an inherently subjective process, and the final value may depend on negotiations between the buyer and seller.
Bottom Line
Startup company valuation is a complex undertaking that calls for a comprehensive strategy. Despite the difficulties presented by limited historical data and unclear market conditions, there are a number of approaches available to calculate their value. Ultimately, a thorough analysis of all available data and an in-depth understanding of the startup environment are necessary for effective valuation.
HLB HAMT to Assist!
HLB HAMT is an independent member firm of HLB International, UK. HLB international is included in the top 10 global advisory and accounting firms. We have 24 years of service experience in the region and an impressive client base of over 3,000 organizations; HLB HAMT offers expert guidance and assistance to navigate the complexities of today’s dynamic business landscape.
For any related queries, mail us at dubai@hlbhamt.com
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Chat GPT: The Ultimate Trend You Must Try in 2023
Vimal Ramachandran
Phone:- +971 4 327 7775
Mobile:- +971 52 830 7998
WhatsApp:- +971 56 219 1607
Email:- dubai@hlbhamt.com
An Overview of Chat GPT
Computers may simulate human conversations using ChatGPT, or Generative Pre-trained Transformer, which employs artificial intelligence. It uses machine learning techniques and natural language processing (NLP) to provide an engaging and fascinating conversational experience with a user. Chat GPT may be used for a wide range of applications, including customer service, personal assistant apps, automated consumer help, and more. Chat GPT can deliver correct and personalized solutions to customer inquiries by recognizing user intent and context.
What will Chat GPT’s role be in the future?
ChatGPT is an advanced language generation model that is continually being updated and improved by OpenAI. Here are some potential future developments for the ChatGPT tool:
Enhanced Accuracy:
The quality and coherence of the generated text are anticipated to increase as more data is gathered and the model is fine-tuned for specific jobs. Multitask training improves Chat GPT accuracy by helping models learn more effectively from many targets and so talk more authentically. Expect to see more multitasking training installations this year as firms aim for improved accuracy and quicker queries. Companies that capitalize on this trend will gain an advantage over their competitors, resulting in greater client experiences and enhanced chatbot accuracy.
Greater Scalability:
Because the model has been optimized for larger-scale language production jobs, it can handle more complicated and larger inputs, making it more adaptable. Businesses must use technology to lower expenses as much as possible to remain competitive. Expect increased scalability and lower costs in 2023 because of advances in model optimization approaches. From distributed training and AutoML (machine learning) models to batching strategies and early dumping, these technologies offer a quick, scalable solution that is not expensive. Consequently, companies of all sizes may benefit from more efficient deployments at lower costs.
Multilingual Assistance:
Open AI is developing models that handle many languages, making ChatGPT more helpful for organizations and individuals that need to connect with others who speak different languages. Businesses must ensure that they cater to clients internationally to remain competitive. Chat GPT facilitates this by offering multilingual help with no further work on the customer’s behalf. This lets customers communicate in their language and GPT agents react in any language they like, providing a more personalized experience. With breakthroughs in natural language processing projected for 2023, organizations should consider offering multilingual customer care.
Improved Speed:
The model will be able to create text at a quicker pace with more powerful hardware and optimized algorithms, making it more suitable for real-time applications such as chatbots or conversation systems. The improved speed of natural language processing is one of the main developments to watch in 2023. The faster GPT agents can receive user input and reply, the better the customer experience they can provide. Businesses will be able to utilize chatbots on many channels, including websites, applications, and social media platforms, to expand their customer support reach. Furthermore, these developments will enable more advanced dialogue tracking capabilities, resulting in better chatbot encounters and improved user satisfaction.
Additional Use Cases:
The model will become increasingly specialized as it is fine-tuned for various tasks and domains, making it more valuable for specific use cases. Businesses will be able to benefit from more particular use cases because of the increasing speed of natural language processing in chat GPT. Customer service representatives, for example, will be able to instantly access and reply to frequently asked customer inquiries as well as more challenging queries by searching customer knowledge databases and client-specific data provided by back-end systems and AI algorithms. This may provide rapid customer assistance 24 hours a day, seven days a week, and automate substantial aspects of the process to reduce costs.
Increased Interpretability:
Artificial intelligence can now comprehend natural language more precisely than ever before thanks to ChatGPT. Because of the enhanced interpretability, developers will be able to leverage the same AI technology to create more complex and nuanced conversational experiences. ChatGPT’s extensive features enable bots to recognize even small variations in language and reply properly by considering the context of chats and user behaviors. By more properly detecting user intents, the technology might become a key tool for developing powerful AI-powered chatbots for a wide range of applications.
Interoperability with Other Technologies:
ChatGPT is intended to connect seamlessly with current conversational solutions such as bots and virtual assistants. Consequently, developers may rapidly integrate the technology into their current bot solutions without requiring considerable development resources or time. This interoperability enables businesses to build on current solutions to develop unique AI-powered chatbots that can comprehend and respond to customer demands in real time.
Security and Privacy:
ChatGPT provides a safe and private environment for chats. It employs artificial intelligence to detect dangerous information, spam, and censorship to provide a secure environment free of intervention or manipulation. Furthermore, ChatGPT does not retain or transfer personal data to any third party. To ensure users’ privacy at all times, all communication with them is encrypted and kept locally.
How does the ChatGPT tool Work?
ChatGPT is a powerful language generation model that may be used in a variety of NLP applications, including:
Generating Text:
ChatGPT may generate writing that looks human. This may be used for writing, content development, and a variety of other purposes.
Dialogue Generation:
ChatGPT can produce conversational answers, making it helpful for developing chatbots and virtual assistants.
Language Translation:
ChatGPT may be optimized for language translation jobs, which is important for a chatbot or customer support applications.
Text Summarization:
ChatGPT may be customized for text summary jobs, which is beneficial for news stories, large papers, and other materials.
Text Classification:
ChatGPT may be fine-tuned for text categorization tasks, making it helpful for sentiment analysis, intent identification, and other NLP applications.
Question and Answer:
ChatGPT may be optimized for question-answering tasks, making it ideal for chatbots and customer service applications.
Text Completion:
ChatGPT may be set up to do text completion tasks, which might be useful for predictive text input and other applications.
It is critical to highlight that the output quality is determined by the quality of the data used to fine-tune the model, the quantity of fine-tuning, and the unique use case.
Chat GPT’s Benefits for Businesses
Cost-cutting Measures:
Using Chat GPT, you can provide support and customer service at a low cost. Businesses may use Chat GPT to minimize the number of customer support agents required to address customer inquiries, which can help cut overhead expenses.
Increased Efficiency:
ChatGPT can help businesses provide rapid and effective customer service. Businesses may use Chat GPT to swiftly reply to client queries without having to wait for customer care staff.
Improved Customer Service:
When compared to traditional customer service methods, Chat GPT can provide a more personalized experience for clients. Chat GPT can assist in providing clients with a more personalized answer to their concerns, thereby improving customer happiness.
Increased Engagement:
Chat GPT can aid in more engaging customer engagement. Businesses may create a more engaging customer experience using Chat GPT, which can help promote customer loyalty.
Quick Response Times:
ChatGPT can reply swiftly to incoming messages, making it ideal for real-time interactions.
Automated Conversation:
ChatGPT can produce a dialogue on its own, eliminating the need for operator interaction.
Natural Language Processing (NLP):
ChatGPT understands natural language and can answer in a way that is relevant to users.
Flexibility:
ChatGPT is suited for enterprise-level applications since it can be implemented in large-scale applications.
What distinguishes Chat GPT from other AI programs, and what exactly does it do?
Chat GPT (Generative Pre-trained Transformer), a natural language processing (NLP) technology, allows computers to understand and conversationally respond to human language. It employs a deep learning approach known as the Transformer architecture for language processing. It is better capable of understanding and reacting to user input than other AI systems.
It may also produce relevant replies to user requests without relying on pre-defined responses.
Conclusion
Finally, ChatGPT is a cutting-edge language generation model with the potential to dramatically transform how businesses engage with their customers. It may be used to automate time-consuming and repetitive operations such as answering frequently asked questions, providing personalized responses, and even creating content.
Businesses must also be conscious of the ethical implications of utilizing this technology, such as ensuring that the model does not produce biased or objectionable language. ChatGPT, when used correctly, may have several potentials for expansion while also improving a company’s overall efficiency.
ChatGPT is a great tool, but it cannot replace human thought and may create biased or objectionable content if not correctly calibrated. As a result, it is critical to use this tool with caution and with ethics in mind.
To know more about Chat GPT Contact our Digital Transformation Service Consultants today!
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Bank Reconciliations – Case Study
Midhun Menon P
Phone:- +971 4 327 7775
Mobile:- +971 52 830 7998
WhatsApp:- +971 56 219 1607
Email:- dubai@hlbhamt.com
Regardless of their size or location, most financial organizations manually match transactions and submit journals to complete bank reconciliations. Problems with bank reconciliation are not influenced by the size of the organization, yet numerous mid-sized businesses have trouble balancing their books. Reconciliation is challenging for them mostly because of the variety of accounts and institutions they work with, as well as the different payment methods and time zones. The same holds true for the bills. Numerous human errors are caused by the volume of received purchase orders and the number of entries in each order that need to be reconciled.
The Client:- The client is a financial institution based in Dubai, UAE
Challenges Faced
For our client, the clients and cash flows are complex & tedious as it is from various sources and banks. The staff had to spend longer work hours on the manual reconciliation, which was a tedious, time-consuming, monotonous task. It was also prone to human errors creeping in during the manual entry during the reconciliation process. Errors such as date & time discrepancies, and duplicate entries were also a huge issue, this of course led to delays in work and in one case almost led to a loss of reputation with a client. There were also multiple transactions to handle on a single invoice, which led to further delays.
What We Offered
Finding information about the funds received and spent to balance the final figures is made possible by automating reconciliation. By comparing payment information with bank data, RPA helps to automate this procedure. The accounts are said to be reconciled if the details line up. When there are differences in the data, RPA sends the records back for additional verification.
These are the major features of the project we did for the client:
- Retrieval of Bank statements: Automation to create reports and download bank statements, and to securely log into your online banking platform.
- Transaction reconciliation: The bots sign into your desktop or web-based ERP/POS and compare the information in the bank/credit card statements to the transactions in your ERP/POS.
- Verify transactions: A spreadsheet’s Y/N designation can be used to view the status of reconciliation.
- Share reconciliation report: Email a reconciliation report to your accounting team each day, marking any unreconciled transactions as needing further investigation.
How the Client Benefitted
Month-end reporting in real time
- The accounting team can promptly present correct financial statements to the firm’s leadership by using automated bank reconciliation rather than the traditional procedure, which can take an average company 12–24 days to complete.
94% less time spent on human work
- Manual bank reconciliation can take up to three hours of an employee’s time per day if it is done every day. The employee will only need to spend ten minutes examining unposted transactions thanks to automation.
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Assessing Your Digital Quotient: Evaluating Skills and Strategies for a Digital Future
Sumesh Krishna, Partner
Phone:- +971 4 327 7775
Mobile:- +971 50 749 0576
WhatsApp:- +971 56 219 1607
Email:- dubai@hlbhamt.com
Digital knowledge will become one of the skills of finance professionals, and it must be connected to the overall business and how it achieves goals. Proficiency in technology alone is insufficient without alignment with organizational culture. Moreover, the ethical considerations that finance professionals put play a crucial role in digital transformation.
Developing your Digital Quotient
- A digital quotient is a collection of several degrees of skills.
- You must consistently invest in your digital skills as a finance and accounting professional to take advantage of your opportunities.
- Accounting and finance professionals that are effective continue to raise their digital quotient in two areas:
- Recognize the value of the digital landscape to their position and be aware of how technology is used to accomplish the Company’s strategy.
- Use the specific skills related to the organization’s technology – Digital applications.
Four components of the digital quotient are as follows:
- Digital capabilities
- Digital practice
- Strategy
- Existing and emerging technologies
Digital Capabilities
- The skill set required to manage a transformation entails various aspects such as project management, program management, IT governance, data governance, and data labelling.
- With the abundance of data sources available, both internal and external, structured and unstructured, maintaining the credibility and reliability of the data is crucial.
- As finance professionals already possess expertise in this field, expanding by collaborating with others is necessary if needed. Therefore, in transformation management processes, finance professionals can be responsible for regulating data and technology governance.
Digital Practice
- Accountancy and finance professionals must possess skills in data management, operational data utilization, real-time visualizations, data inquiries, cybersecurity, and coding to manage the digital environment effectively.
- The use of data, including structured and unstructured operational data, requires essential skills that enable professionals to provide insight and accurate forecasting.
- Real-time visualization expertise is necessary for effective analytics and forecasting, while coding is a fundamental skill required for success in this field.
Strategy
- The organization’s strategy, which includes IT strategy, finance systems strategy, target operating model and processes, digital transformation, data strategy, and digital culture, is fundamental to any business transformation.
- Despite the growing prevalence of digital transformation in business organizations, it is interesting to note that the expertise of accountancy and finance professionals in broader technology strategy is often overlooked in favour of finance systems strategy.
- The extensive integration of processes in transformed organizations makes considering a separate finance system strategy impractical.
Existing and emerging technologies
The financial professional is well-versed in spreadsheet software. Engineers have used its versatility to develop complicated models and simulations. However, like with many tools, improved solutions are becoming accessible, and failing to use them may mean they cannot obtain the quantity of knowledge that the firm requires.
- Acknowledging the advancement of technology used to help data administration and analysis is critical.
- Audit and assurance professionals increasingly need to analyze how financial statements and predictions are created using these technologies’ assumptions and an increasing need to raise awareness of them.
- However, these latest technologies enable financial professionals to be more forward-thinking and analytical in their findings. It is critical to embrace data management and analysis technologies’ growth.
- These emerging technologies will keep expanding in reach. The development of 5G networks and the potential of the Internet of Things impact the next phase.
When discussing technological expertise, it becomes necessary to contemplate the processes involved in managing their implementation. The need to bring solutions to market rapidly necessitates ability in their management and execution. These are increasingly drawn from diverse teams in which financial experts play an essential role. We must get more familiar with the technology and techniques that enable firms to maintain a competitive advantage over their competitors in the changing business environment.
Conclusion
In today’s fast-paced digital world, it has become crucial for individuals to have a superior level of digital literacy in their personal and professional lives. This evaluation involves assessing one’s proficiency in using digital tools and technologies. It also involves identifying strengths and weaknesses and determining ways to improve digital skills.
A high digital quotient can help individuals and businesses navigate the digital landscape efficiently and effectively, leading to increased productivity, improved communication, and better decision-making.
HLB HAMT to Assist!
HLB HAMT is an independent member firm of HLB International, UK. HLB international is included in the top 10 global advisory and accounting firms. We have 24 years of service experience in the region and an impressive client base of over 3,000 organizations; HLB HAMT offers expert guidance and assistance to navigate the complexities of today’s dynamic business landscape.
For any audit-related queries or assistance, reach out to audit@hlbhamt.com
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Digital Business Consultant in the UAE
Midhun Menon P
Phone:- +971 4 327 7775
Mobile:- +971 52 830 7998
WhatsApp:- +971 56 219 1607
Email:- dubai@hlbhamt.com
Technology is evolving at a rapid pace. The digital revolution is much more than just technology. It consists of altering company processes, activities, and functions. As a corporatedigital transformation consultant in the UAE, HLB HAMT is dedicated to assisting businesses in UAE, in surviving and thriving through advanced strategies and activation.
The essential values or business offers are not altered by a digital transition. Rather, it is intended to foster a connected workplace culture by utilizing digital technology to substantially increase performance and accomplish company goals and objectives. HLB HAMT has extensive expertise in analyzing organizational requirements and recommending business solutions, as well as establishing more efficient processes and systems for continuous business improvement. To drive sustainable innovation and creativity, new and emerging technologies are being applied to all aspects of business. Influences everything the business does, from branding to operations, including what it offers, how it interacts with customers, and how it operates. For example, identifying insights from customer data, behavioral patterns, and purchase history to recommend personalized products and services.
For organizations to optimize their business operations and decrease manual intervention in their core activities, digital automation has become a critical need. Digital automation empowers the digital workforce to undertake up-the-value-chain operations, ensuring true enterprise-wide digital transformation. The stages of digital transformation are presented over three different periods. Modernization, where we simplify and digitize existing business functions and processes, enterprise-wide transformation, which is more cross-functional and requires a wholesome effort for change. These two stages are concerned with altering the current business or operations. The final stage focuses on developing new businesses and finding fresh sources of value. Moving from the sale of goods and services to new subscription-based business models can improve the consumer experience. The use of data and analytics to precisely forecast the operational performance of items or systems can be used in operations. Enhancing corporate operations using digital transformation and digital data should be way forward for many companies.
What We Offer:
Digital Process Automation
To automate procedures that span many applications, we use leverage low-code development tools. Our strategy focuses on automating, or partially automating, processes associated with a wide range of business practices that normally include some type of human interaction. Our digital process automation includes:
- Omnichannel customer experience with the use of iBPM UX components
- A case management system that is dynamic and optimizes end-to-end process workflows
- Careful data collection and centralized data storage
- Predictive analytics for better business decisions
Robotic Process Automation
Without automation, your business runs the risk of becoming outdated and obsolete. Our Robotic Process Automation will assist you in digitizing normal activities, streamlining workflows, operating more quickly, lowering expenses, and improving productivity and efficiency. Our RPA digital transformation comprises the following:
- Automation of manual backend processes
- Digital workforce deployments for complete process automation
- Sales analytics based on structured and unstructured data
- Analyzing consumer behavior for trade promotions, retail planning, market trend analysis, product launches, and so on.
Cognitive Automation
We assist you in a variety of ways to improve business outcomes by merging artificial intelligence (AI) and process automation capabilities. We support a variety of ways that improve automation’s ability to acquire data, automated decision-making, and scale automation. our Cognitive digital transformation automation includes:
- Chatbots and machine learning for automated customer service for structured and unstructured requests.
- Anomaly detection, inventory management, price modifications, and prediction using AI and ML models.
- CRM and sales services: customer service chatbots.
Security Automation
Identifies weaknesses in computer systems, networks, and software programs and works on remedies to strengthen them against hackers as a security consultant. Our expertise can assist you in managing appropriate security technologies. Our security automation digital transformation includes the following features:
- A 360-degree approach to security automation for physical, endpoint, network, and data security
- DevOps manages security assurance services.
- IDAM services for on-premises, cloud, and Internet of Things infrastructure
- Cyber/Risk Intelligence
Infrastructure
In infrastructure transformation, we assist in making the allocation of money and resources to new projects and markets more efficient, as well as making the cost of managing day-to-day infrastructure easier and less expensive. Our digital transformation infrastructure consists of the following components:
- Automation of manual backend processes
- Digital workforce deployments for complete process automation
- Sales analytics based on structured and unstructured data
- Analyzing consumer behavior for trade promotions, retail planning, market trend analysis, product launches, and other purposes.
Not skipping ahead is the secret to a more successful digital transformation: Start with step one and give it your full attention and effort to get it perfect. Your chances of success will rise as your organization becomes more digitally mature through the corporate learning curve of the digital transformation. Our digital transformation consultants will guide you through your entire transition journey. Get in touch with us, today!
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Cabinet Decision No. 56 of 2023 on Determination of a Non-Resident Person’s Nexus in the State
Girish Nair
Phone:- +971 4 327 7775
Mobile:- +971 50 677 5860
WhatsApp:- +971 56 219 1607
Email:- dubai@hlbhamt.com
The adoption of Cabinet Decision No. 56 of 2023 has brought about significant developments in the realm of UAE tax system. This decision aims to redefine the way non-resident persons are subject to corporate tax in the United Arab Emirates. This blog can be your go-to reference if you’re a non-resident and have concerns regarding your tax obligations. In particular, we will emphasize on the role that immovable property ownership has on your tax status.
How are Non-Resident Persons subject to UAE Corporate Tax?
Article 11 (4) – A Non-Resident Person is a Person who is not considered a Resident and either has a:
- Permanent Establishment in UAE (Article 14 of the Corporate Tax Law).
- Derives State Sourced Income (Article 13 of the Corporate Tax Law).
- Has a Nexus in UAE.
This Cabinet Decision deals with UAE Nexus of the Non-Resident Person.
Important Points to be Noted
- Non-Resident Person shall have a nexus in the State if it earns income from any Immovable Property in the State.
What is Immovable Property?
Immovable Property: Means any of the following:
- Any area of land over which rights or interests or services can be created.
- Any building, structure or engineering work attached to the land permanently or attached to the seabed.
- Any fixture or equipment which makes up a permanent part of the land or is permanently attached to the building, structure or engineering work or attached to the seabed.
- Artificial Transfer of Rights in Immovable Property which is not for a valid commercial or other non-fiscal reason which reflects economic reality can invoke General Anti-abuse Rule as per Article 50 of the Corporate Tax Law.
- Non-Resident Person that has a nexus in the State shall be required to register with the Authority.
Illustration
XYZ Pte Ltd., a Singaporean company is a Non-Resident Person who owns a mixed-use building and earns Rental income by letting out the residential and commercial units in the building.
XYZ Pte Ltd., is not incorporated in UAE and does not have PE in UAE. However, by way of owning an immovable property in UAE, XYZ Pte Ltd. has a nexus in UAE.
The income from such immovable property will be subject to UAE Corporate Tax.
XYZ Pte Ltd. will have to apply for CT Registration and file tax returns when due.
Conclusion
A new era of taxes for non-residents in the UAE has begun with the implementation of Cabinet Decision No. 56 of 2023. The ruling assures that non-resident individuals with a nexus in the UAE are liable to corporate taxes by underlining the ownership of immovable property as a crucial component. Non-resident individuals must abide by the registration requirements and submit their tax returns on time in order to complete their tax obligations.
As we have discussed these changes, let us embrace a tax structure that encourages equity, openness, and economic stability.
For any questions, please contact us at tax@hlbhamt.com OR Call us at +971 4 3277 775
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Monthly Tax insights and updates – May 2023
June 12, 2023
Read the most recent developments, trends, and actionable insights happening in the field of taxation to remain updated and make informed decisions. With HLB HAMT’s Monthly Tax Insights for May 2023, you can enhance your tax knowledge and open up new opportunities.
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Navigating the Digital Landscape: A Guide to Digital Auditing
Sumesh Krishna, Partner
Phone:- +971 4 327 7775
Mobile:- +971 50 749 0576
WhatsApp:- +971 56 219 1607
Email:- dubai@hlbhamt.com
The digital agenda is changing how we live, communicate, and do business in numerous ways, transforming from how they were ten or even five years ago. To succeed as an accountant or financial professional, one must have the capacity to oversee these changes.
To ensure that professional accountants are effective, they must widen their expertise beyond the traditional application-focused approach to the awareness of how technology and data create value for organizations.
Although this digital technology is not new, the pace of change we witness is unthinkable. Businesses have made high investments in their digital transformation. One of today’s popular corporate phrases is “digital transformation.” Companies alter their operating procedures to become more customer- and data-focused.
Impact of Digital on the Workplace
As accountants and financial professionals at the core of organizations, we put ourselves at risk if we fail to understand how technology and the digital journey are changing our workplace.
Five forces are identified as the causes of this influence on the finance industry:
- Velocity – Businesses are changing faster than before, forcing businesses to change as well.
- Volume – The number of transactions rises, and the influence on data flow from the linked devices we currently utilize for business is becoming more crucial.
- Value – the need to gain knowledge, analysis, and prediction from the data flow to better understand and model the company and to use data to assist decision-making more effectively.
- Variety – How technology necessitates us to employ technologies, data sources, and project management approaches (such as agile and Kanban). You are being asked to adapt to several systems and figure out how to optimize them in our jobs.
- Veracity – The dependability, quality, truth, and bias of the data on which we make many business choices, using our ethical lens.
The combination of these five forces implies that the workplace is changing, so the role of accounting and finance professionals in organizations is modifying.
It raises the expectation that people working in business or practice will provide an opinion that indicates an in-depth understanding of the business, considering that the data and technologies available make greater insight more easily accessible.
Changing Business Models
- The result of this transformation is that firms’ business models are altering in response. Successful business models are becoming more integrated across the whole organization, built around the customer journeys the company serves and designed to satisfy the customer needs.
- Effective operation of these models is the way to organizational success, and understanding how technology makes this possible is crucial.
- You must understand how technology supports these processes, how data moves across them, and how company success may be evaluated and modelled as a finance professional.
Digital Skills
It is critical to recognize that digital skills are essential in the workplace, and finance and accounting professionals must embrace the constant need for these. Simply accepting the development that occurs is a vital step, but denying it is risky.
- As digital accountants and finance professionals, you must recognize the value of digital skills in your work.
- It is essential to utilize certificates like the ACCA’s Certificate in Digital Innovation for Finance to develop your skills and expertise.
- As a profession, you can see that the work of the accountancy and finance professional includes a critical need for digital capabilities.
- The challenge is to determine whether you can connect it to the changing business model in the transformed organization and identify those skills.
The digital era enables the chance to interact with the new business model. The future position for the accountant and financial professional becomes solid by developing this skill set.
Developing your Digital Quotient
- The collection of various and distinct levels of skills is defined as a digital quotient.
- As finance and accounting professionals, you must continually invest in your digital abilities if you are ready to fulfil your opportunities.
Efficient accounting and finance professional continues to improve their digital quotient in two areas:- Identifying the digital landscape’s significance to their job and comprehending how the company’s strategy gets implemented through technology – the digital context.
- Using talents connected to the organization’s technology – digital applications.
- Emerging technologies can be of as a third category. These two domains reflect a mix of knowledge and talent, but each necessitates a unique set of possible personal growth strategies.
Four components of the Digital Quotient are as follows:
- Digital capabilities
- Digital Practice
- Strategy
- Existing and emerging technologies
Applying the digital quotient includes using digital skills to comprehend the application environment with current and innovative technologies.
The changing nature of digital in the finance workplace
The financial professional has long been familiar with spreadsheet tools. Their adaptability has allowed engineers to create complex models and simulations. However, like with many tools, enhanced options are becoming available, and failing to adopt them may mean it cannot acquire the amount of insight the company demands.
It is essential to accept the evolution of the technologies used to assist data management and analysis. Preparing financial statements and predictions using assumptions backed by these technologies is a topic that audit and assurance professionals get asked to think about more frequently. Considering their business applications, there is a growing need to raise awareness.
- The scope of these developing technologies and digital audits will continue to broaden.
- The introduction of 5G networks and the possibilities of the Internet of Things influence the next stage.
- For instance, these technologies allow gathering more data from devices in real-time, which opens the possibility of using data analytics more often.
- With the introduction of cloud-based apps that address a specific aspect of a company’s operating model, such as human capital or revenue and clients, the role of the hub is evolving into a central repository of information that is queried through analytical and other tools to provide management information, analytics, and visualizations, often in near real-time.
Must be updated with these changes as finance experts. The accounting system is no longer only a repository of records, as was often believed. With the help of technology, there is a more seamless environment where data get exchanged between apps, and the data repositories that support them get interrogated to facilitate analyses and insights.
Conclusion
The corporate environment is evolving due to digitalization. Evolution is advancing at a faster rate. It is no more a question of whether an organization will become digital but how quickly it will seize the chances and stay relevant to its consumers.
- As accountants and financial experts, you must embrace this digital change and acknowledge that the digital world is evolving to be relevant.
- Traditional digital tools, like spreadsheets, are being replaced by innovative technologies that draw on several data sources, visually portray that data, and use machine learning to predict trends.
- Embrace these changes to guarantee you can use these technologies and adopt new business models.
HLB HAMT to Assist!
HLB HAMT is a independent member firm of HLB International, UK. It is one of the top 10 global advisory and accounting firms. With over 23 years of industry experience and an impressive client base of over 3,000 organizations, HLB HAMT offers expert guidance and assistance to navigate the complexities of today’s dynamic business landscape.
Our audit procedures are tailored to client operations and reporting requirements with a specific focus on each business and industry. The experience of the audit team, covering many industries and service sectors, enables us to focus on critical areas of risk, adequacy of internal controls, and potential areas of fraud.
For any audit-related queries or assistance, reach out to audit@hlbhamt.com
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Top Advantages of Cloud ERP Software
Midhun Menon P
Phone:- +971 4 327 7775
Mobile:- +971 52 830 7998
WhatsApp:- +971 56 219 1607
Email:- dubai@hlbhamt.com
Cloud computing is gaining popularity because it allows businesses to scale, be more agile, and save time and money. However, because there are so many options, decision-makers must answer key questions about their goals. This is especially true for a company undergoing a major digital transition, such as implementing new enterprise resource planning software. With today’s technology, the most effective way to stay ahead of the competition is by using ERP software. It enables a company to combine multiple tasks into a single system, streamlining information and processes across the organization. However, it is entirely up to you if you would like to keep these procedures on-premises or move them to the cloud via SaaS. Cloud-based ERP software solutions are accessed online through the software provider’s server. When a company uses a cloud-based server, its applications run on a third-party server, and no capital expenses are involved. Companies can back up their data regularly and only pay for the resources they use. Cloud-based HLB HAMT ERP is ideal for businesses looking to expand globally, as it allows them to interact with clients and partners virtually anywhere and anytime.
The Benefits of Cloud ERP Software
Increased Effectiveness
Organizations can achieve excellent business efficiency by doing things correctly and optimizing resources. Multiple processes are automated to improve business efficiency with ERP in the cloud. Carefully implementing cloud-based ERPs will ensure maximum productivity from all employees involved in various business processes. To avoid multitasking errors, duplication, and information loss, it is necessary to carefully configure each task. Furthermore, utilizing a cloud-based ERP eliminates inefficient and disjointed processes, which would otherwise reduce your bottom line.
Cost-cutting Measures
Entrepreneurs understand that efficiency leads to cost savings. As a result, when developing a budget, it is critical to consider ERP costs. ERP software users spend up to 70% of their IT budgets on maintaining internal hardware, software, and personnel systems. Cloud-based ERP, on the other hand, eliminates the need for dedicated IT staff in addition to the cost of hardware and software. As a result, one does not need to spend a lot of capital but only has to pay for operations because one must subscribe to the service. Because of this shift toward fewer upfront investments, reduced infrastructure spending, and capital savings, organisations can easily redirect funds from these fewer upfront investments to improve other areas of operations.
Streamline your Business’ Paperwork
By reducing paper usage, streamlining operations, and conserving the environment, ERP in the cloud can help you save money. The digitization of all essential procedures, such as accounting, invoicing, collections, payables, purchasing, and inventory, will reduce paperwork. Clutter and mess are unavoidable in a typical office or factory setup that is heavily reliant on paper. With cloud ERP, you can avoid this error-prone process by storing documents and reports in a secure location where they can be easily searched, retrieved, and shared with others. This digitization of manual processes and paper records can increase efficiency, reduce costs, and generate savings while also promoting green initiatives to combat global warming.
Make Knowledgeable Business Decisions
In today’s fast-changing and competitive business world, making quick and correct decisions is critical for making strategic decisions. Despite having little faith in their data, it is difficult for business leaders to make sound decisions based on it. Because of the lack of standardized processes and clear insights, they must act as “guess takers” rather than decision-makers. Using end-to-end ERP on the cloud that seamlessly integrates across all business processes allows managers and employees to be more informed and fosters more innovative thinking.
Cloud ERP Security
Despite widespread belief that cloud ERP solutions are insecure, current vendors are increasingly focused on delivering solutions that meet international security standards. However, effective implementation of these security requirements necessitates excellent IT management, which businesses must keep in mind. Because of the many limitations of on-premises ERP, more businesses are migrating their data, systems, and services to the cloud each year. Moving to a hosted server can provide numerous benefits, including quick storage system additions, team improvement, and built-in security systems. Furthermore, downtime is significantly reduced, allowing businesses to make the most of their resources. To avoid third-party control, many businesses are turning to hybrid alternatives, such as on-premise clouds. This allows you to run applications and services while also deploying workloads to the cloud or on-premise data centers. The cost savings provided by the cloud remain one of the most appealing benefits for newly expanding businesses. On the other hand, on-premise solutions appear to give firms more control, which may be worth the extra cost in some industries, such as banking and finance. On the other hand, more control does not reduce the likelihood of cyberattacks; rather, it increases the organization’s accountability.
Improved Inventory Management
ERP on the cloud offers online inventory management, which can save time for businesses that do not use cloud-based ERPs. Businesses must use tally-checking and checking to manage their operations and inventory on paper. Every task is automated with a centralized operation management system, reducing duplication and errors. This results in higher output and more accurate output in less time. Furthermore, an optimized and standardized process with the best inventory management modules will be possible, lowering inventory carrying costs. As a result, the organization can cut costs and improve efficiency by delivering products on time to their customers.
ERP has increased business speed across the board, resulting in exponential gains in operational efficiency and streamlining every company activity. Even though high-end ERP solutions have greatly benefited large corporations, smaller businesses have failed to follow suit. Firms seeking all of the benefits of ERP at the lowest possible cost have demonstrated that cloud-based ERP software can save them a significant amount of time, money, and effort. HLB HAMT cloud-based ERP software is already reducing costs, increasing accuracy, shortening turnaround times, improving inventory management, and increasing efficiencies across all operational functions.
To know more about cloud ERP software, please contact our experts, today!
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Standard Payroll Reports in UAE
HLB UAE Payroll Team
Phone:- +971 4 327 7775
Mobile:- +971 50 205 9540
WhatsApp:- +971 56 219 1607
Email:- dubai@hlbhamt.com
Standard sets of payroll report help companies to record, review and analyze employee cost and provide information for completing compliance related requirement relating to Social Security and Tax.
Below are the list of standard set of payroll reports.
- Payroll Register
- Payroll Reconciliation Report
- Bank Transfer File
- Loan Outstanding Report
- Loan Deduction List
- Headcount Reconciliation Report
- End of service Gratuity Accrual Register
- Vacation Accrual Register
- GPSSA Register
- Air Ticket Accrual Register
- Finance Reports
Payroll Register
Payroll Register summarizes the net salary payable to every employee for the current period and other payroll details in a comprehensive and detailed manner. Details such as Basic Salary, Allowances, Additional payments and Payroll Deductions for the current period are presented in Payroll Register for easy grasp and payroll analysis. Other positional details like Designation, Department, Sponsor, Cost Center and Date of Joining are presented as well in Payroll Register.
Payroll Reconciliation
Payroll Reconciliation report presents the reconciliation between last month’s Net pay and current month’s Net pay. It explain the comparison between previous period and the current period in a detailed manner and this help to analyze the difference between last month and current month payroll.
Bank Transfer File
Bank Transfer File presents the summary of bank details of employees i.e. Bank Name, IBAN, Beneficiary Name, and Net Pay for transferring funds to their respective accounts. The mode of payment i.e. Direct transfer, WPS transfer, Non WPS payment, Cheque payment, cash payment, etc are also being indicated under the bank transfer file. This report shows how the net pay is distributed through different payment channels with employee wise details.
Loan Outstanding Report
Loan Outstanding Report summarizes the total loan balance as of the current payroll period and the amount outstanding from every employee. The report presents the details such as Loan Amount, Number of Installments, Monthly Installment Amount, Paid installment amount, outstanding loan amount, Repayment Start Date and Repayment End Date. This report will help to get employee wise loan outstanding balance.
Headcount Reconciliation Report
Headcount Reconciliation Report reflects the changes in number of employees as compared from previous month’s head count to current month’s head count. Variance is determined according to the number of newly hired employees, Separated employees, Suspension and reinstatement, transfer, etc during the current payroll period.
End of service Gratuity Accrual Register
Indemnity Accrual Register shows amount of Gratuity payable to each employee at the end of payroll month. This report will also mention about hire date, Accrual basis amount, opening balance i.e., last month closing balance, accrual for the month and closing balance for the month. This report shall be used as a supporting for total Gratuity provision showing in company books of account as provision for End of service Gratuity.
For more details, please refer: UAE End of service Gratuity
Air Ticket Accrual Register
Companies are keeping accrual to manage their yearly or bi-annual air ticket amount paid to their staff. Air Ticket Accrual Register shows home country airport, ticket fare to the home country airport, opening balance i.e., last month closing balance, accrual for the current month and the amount of air ticket payable to each employee at the end of payroll month. This report shall be used as a supporting for total provision coming under air ticket.
Loan Deduction List
Loan Deduction List is a summary file that presents the loan amortization amount for the current month. Amounts reflected are deducted to employees’ current monthly salary as advance deductions.
Vacation Accrual Register
Vacation Accrual Register reflects the outstanding leave balance of each employee as of the current period, leave taken, monthly accrual and closing balance for the month with respect to staff’s annual eligibility.
For more details, please refer: UAE Annual leave
GPSSA Register
GPSSA (General Pension and Social Security Authority) is the social contribution which is applicable to UAE and other GCC national working in UAE. GPSSA register shows GPSSA calculation base amount, Employee contribution and employer contribution. As a standard practice, Company can deduct the employee portion through payroll and pay the total contribution, i.e., both employer and employee contribution to GPSSA. GPSSA register helps companies to keep the track of their total contribution required to be processed in a particular month with the break up of both of employer and employee contribution.
For more details, please refer: GPSSA
Finance Reports
Finance report includes the report to be used by accounting department to complete the accounting entries. These reports are normally shared with accounting team only after completing entire payroll processing of a particular month i.e. after releasing payroll. Finance reports are used for completing accounting entry related to payroll and as a supporting document for the amount mentioned in financial statements. Standard Finance Reports relating to payroll includes below mentioned reports.
- Payroll JV
- Gratuity Accrual Register
- GPSSA Register
- Vacation Accrual Register
- Loan Outstanding Report
Bottom Line
As a leading payroll service provider in this region, standard set of monthly payroll report provided by HLB includes all the reports mentioned here. This will help to handle the payroll in a professional manner that will help to document, review and analyze the payroll. Above report help to keep all the provision and other finance report used for standard accounting reporting requirement for both internal and external audit purpose.
Payroll Process in UAE
The process of payroll is little complicated and time-consuming; hence it is always recommended to outsource your company’s payroll function. Outsourcing payroll will ensure the assistance of a team of trained payroll professionals and it frees up the time of the organization, helping them focus on other projects that add value to their business.
One should be extra vigilant while selecting their payroll provider, as payroll data is highly sensitive, and one should opt for a provider that can ensure high levels of data security.
As a leading payroll outsourcing company, HLB HAMT can help solve your payroll complexities through customized strategies. We take care of our clients’ entire payroll cycle that includes preparation of payroll reports, processing salary payment with WPS compliance, accrual management including Gratuity, pension funds, an online portal for accessing payslips, and many more. Our leadership team spends the necessary hours in every project, ensuring our clients get refined consulting services to take your business forward.
To know more about our payroll process, Click here
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