A glimpse into UAE laws

Jay Krishnan, Partner


Before you plan a visit to any country, be it for a short trip or to start a company, basic knowledge about the laws and regulations governing that place is a must.

UAE has issued several laws related to the economy, trade, trade license and investment since its formation in 1971. There are many local laws pertaining to alcohol consumption, dressing and public displays of affection as well. Expats should be aware of these as ignorance of the law will not be considered or accepted as an excuse in court and breaking the law will get you into legal trouble.

Labor law

Federal Decree Law No. 11 for the year 2008 governs the labor rights of employees in the public sector and in the private sector, the Federal Law No. 8 of 1980 is applicable. These laws oversee issues associated with working hours, vacation and public holidays, sick and maternity leave, employing juveniles, employee records, safety standards, termination of employment and end of service gratuity payments.

Generally, free zones are not governed by the UAE Labor Law as each free zone has its own employment law.

Commercial Companies Law

The law specifies that UAE should be the nationality of every company established in the country. All mainland companies are subject to Commercial Companies Law, whereas free zone companies are exempt from the provisions of this law. The new UAE Commercial Companies Law (Federal Law No. 2 of 2015) (“CCL”) came into force on 1st July 2015.

As per the new CCL, all companies with public accountability are required to use full IFRS as issued by the IASB. IFRS standards play a pivotal role in global financial reporting as they are being embraced by countries across the globe. Companies listed on NASDAQ Dubai, Dubai Financial Services Authority (DFSA), and Abu Dhabi Securities Exchange need to comply with IFRS standards.

Anti-Money Laundering law

Money launder­ing, illegal transfers of money and criminal activity are well monitored in UAE and the country maintains a strong Anti-Money Laundering (AML) system. To better scrutinize cash flows and combat terrorist financing, the government has taken various steps.  This includes the enactment of Anti-Money Laundering law and the counterterrorism law. Two laws serve as the basis for the country’s Anti Money Laundering (AML) and counterterrorist financing (CTF) efforts: Law No 4/2002, the Anti Money Laundering law, and Law No. 1/2004, the counterterrorism law.

Bankruptcy Law

The Federal Bankruptcy Law (under the federal decree No. (9) for 2016) identifies various techniques to avoid bankruptcy cases and the liquidation of debtors’ assets, that include consensual out-of-court financial restructuring, composition procedures, financial restructuring and the potential to secure new loans with respect to the rules and regulations.

Tax laws

The landmark Federal Law No. 7 of 2017 (Law No. 7) issued by The United Arab Emirates (UAE) Ministry of Finance (MoF) “sets the foundations for the planned UAE tax system, regulating the administration and collection of taxes and clearly defining the role of the Federal Tax Authority (FTA).” The law deals with tax procedures, tax implementation, tax rates, tax obligations, cases of tax exemption, as well as procedures and rules of tax registration and cancellation.

There are many more laws in UAE and these are just some of the major laws that primarily concerns businesses.  It’s the responsibility of every one of us to follow and respect the laws of a country, if we wish to live and work there.

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Taxation in UAE

Jay Krishnan, Partner


UAE is basically known to be tax-free country, and this was true to a great extent, until the introduction of Value added tax. VAT was introduced in UAE on 1st January 2018 at a standard rate of 5 percent.

Apart from VAT in UAE, there are certain other forms of tax that one should be aware of.

Property tax/ fee

The property registration fee in UAE is 4 percent on the purchase price. For commercial sector, this has to be paid by the buyer and an additional 5 percent VAT is also applicable. In the case of residential sectors that are ready for occupation, as a general practice, the fee of 4 percentage will be split 2 per cent each between the buyer and seller.

However, the transfer of properties between close relatives are charged at a nominal value which ranges from 0.5 – 0.75 percentage.

Excise tax

Excise tax is levied on specific goods that are harmful to human health or the environment. The excise goods that will be charged tax in the UAE include;

  • Carbonated drinks

This includes any aerated beverage and any concentrations, powder, gel, or extracts intended to be made into an aerated beverage. Unflavoured aerated water is exempted.

  • Energy drinks

Any beverages which are marketed, or sold as an energy drink, and contains stimulant substances that provide mental and physical stimulation or includes caffeine, taurine, ginseng and guarana, will fall in this category. Substances that have similar effects as the ones mentioned above and any concentrations, powder, gel or extracts intended to be made into an energy enhancing drink will also be levied tax.

Tobacco and tobacco products are also categorized as excise goods.

Rate of excise tax

The rates of excise tax in the UAE are;

  • 50 per cent for carbonated drinks
  • 100 per cent for tobacco products
  • 100 per cent for energy drinks.

Excise tax intends to reduce the consumption of unhealthy and harmful commodities. Businesses that are engaged in any of the below activities must register for excise tax;

  • the import of excise goods into the UAE
  • the production of excise goods, wherein the goods are released for consumption in the UAE
  • the stockpiling of excise goods in the UAE in certain cases

Also, anyone who is responsible for overseeing an excise warehouse or designated zone i.e. a warehouse keeper should register for excise tax.

If you are on a vacation and planning to stay in any of the hotels in UAE, do not forget to check the tax charges. Certain restaurants, hotels, hotel apartments, resorts etc. in the UAE charge tax. Hotels charge ‘Tourism Dirham Fee’ per room per night of occupancy in Dubai and the price range from AED 7 to 20 depending on the category/grade of the hotel.

Whereas in Abu Dhabi, a fee of 4 percent of hotel stay bill and AED 15 per night per room will be levied.

In Ras Al Khaimah, hotels charge AED 15 tourism fee per room per night.

The UAE charges corporate tax on oil companies and foreign banks and rest of the industries are exempted. Companies functioning in UAE free zones doesn’t have to pay corporate tax for a specific period.

Unlike many other countries, UAE individuals are exempted from paying income tax.

If you are someone planning to start a business in UAE or going on a vacation to the country, basic knowledge on taxation is a must

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Business Setup In UAE: What makes UAE the best location for your business

Lavin T K


Investing your time and money in something worthwhile, that can promise you higher ROI is really crucial. When it comes to investing for your dream business, the risk level increases. There are quite a few points that you must consider before you go ahead with establishing your business.

And, yes, location is a primary concern.

So, where do you plan to set up your company?  If you are looking for a place that is progressive, has excellent infrastructure and favorable business regulations, then, UAE is the place for you.

We all are aware of the country’s evolution from an impoverished desert village to a sustainable city with excellent standards of living. The strategic location, world-class infrastructure, political and economic stability are some of the factors that attract people to UAE.

All these years UAE enjoyed a tax-free living and its only a year back that VAT got implemented. But, the rate of VAT is on one of the lowest in the world and it doesn’t affect normal life and businesses to greater extend.

So, after the initial confusion regarding in which country to establish your business, now it’s time to select the type of business structure. You are at the liberty to select from various structures like free zone, mainland and offshore.

While all these business forms offer numerous advantages, the one that best suits your nature of work, should be taken into consideration. If you like to reach out to local market without the help of any distributor, then I/we would suggest Mainland.

UAE mainland opens door to a wider market by letting you trade with other mainland companies. Unlike free zones, you don’t have to go through the task of finding a local distribution agent and pay customs duty.

A mainland business license lets you work on government projects that are extremely profitable. Competition will also be less, as free zone companies are not provided with the opportunity to work for government entities.

Moreover, mainland companies don’t demand for a minimum capital requirement, which makes the establishment even easier and affordable.

Selecting the type of license is the first step in starting a business in UAE. You can choose from commercial, professional and industrial license.

Companies engaged in buying or selling of goods can opt for a commercial license. Entities involved in industrial and manufacturing activities, should apply for industrial license. And, professional license will be granted to service providers, professionals, artisans, and craftsmen.

Mainland Companies are of various types and their activities differ.

LLCs can conduct any industrial, commercial, professional and tourism business. In the case of public joint stock companies, any industrial, commercial or professional business activities can be practiced. But, a Private joint stock company can perform only commercial and industrial activities.

A branch of a local or GCC company can conduct activities included on the main company license and a branch of a foreign company can conduct only selected commercial and professional activities. When it comes to branches of free zone companies, commercial, industrial and professional businesses are permitted as long as the activity of the main company is authorized on the mainland.

The UAE government is on a constant lookout to ease the process of doing business in UAE. The recent amendments in policies prove the same

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Implications of VAT on New Entities in UAE

VAT challenges new entities in UAE face

Jay krishnan


VAT is a relatively new concept in UAE and hence it is imposing numerous challenges on entities. Organizations that have been functioning in UAE for quite a long time, have gradually got accustomed to the new implementation. But, that’s not the case with new entities.

A company should be able to identify whether they are eligible to register as per the mandatory threshold limit. The UAE VAT registration threshold is AED 375,000 per annum and for voluntary registration, the turnover should be about AED 187,500 per annum. In certain cases, new entities are not sure whether they should register from day one or do they need to wait for the threshold limit.

A major challenge that companies face is that customers, bankers and free zone authorities ask for TRN number even before these entities get into the registration process. Even when it comes to importing products, businesses registered under VAT will have to provide TRN to the customs department. If TRN is found valid in the system of customs department, you do not have to pay VAT. But if you are not able to provide TRN, 5% VAT will be charged.

Once you get TRN , the next step is to equip your business with correct accounting software, which is FTA accredited. The system should have the ability to automatically generate FTA Audit File, VAT return file and VAT compliant tax invoices and credit/debit notes. Identifying proper software and customizing in terms of VAT accounting will help you sort out complexities at a later stage.

If the software is FTA accredited and if it is able to produce reports as per the guidelines by the authority, then clients won’t face any issues in return filing and it will be error-free. Maintenance of proper records for a minimum period stated by FTA is equally important.

The pre-VAT era in UAE was simple in terms of banking transactions, as in there wasn’t too much scrutiny. But now, authorities such as FTA might check transaction details. If there has been a deposit or withdrawal, you should keep records of the same.

Another area that needs proper planning is VAT grouping. There will be 2 or 3 or even more companies that work as one, may be under the same owner. They can opt for VAT grouping, which will allow them to be treated as a single person for tax purposes. The benefit is that transactions between these entities will be ignored and will be tax-free. On the other hand, if you register as different entities for VAT, one company will have to pay VAT and the other one will have to claim for it. This leads to confusion and complications. Registering as one will benefit the companies in terms of cash flow and it will be easy to comply with.

If you do not meet the threshold limit, and if you stop making taxable supplies,  then you will have to apply for de-registration within 20 days. Failure to submit a deregistration application within the timeframe specified by the tax law, will result in a penalty.

Businesses will have to pay penalties if they violate any of the tax laws.

Hence, we would recommend you comply with the VAT laws and if you face any problem, it is always recommended to seek the help of a tax agent, who can take you through the entire process.

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Technologies that Revolutionize Accounting Industry

Namitha Aiyllath


Technology has had a huge impact on the accounting industry and it is revolutionising how accountants work. Missing out on the technology part, can do real damage to your business and let you out of the competition. We have witnessed the birth of various innovative technologies in the last couple of years, which has game-changing capabilities.


Blockchain is the latest buzzword in technology, that has the potential to transfigure industries. Often called the “future of financial services information”, blockchain technology represents the next step for accounting. The advantages of embracing blockchain in accounting are many. The technology;

  • Enables companies to write their transactions directly into a joint register instead of going through the process of keeping separate records
  • Ensures that there are nil chances of falsification or destruction of entries as all the entries are distributed and cryptographically sealed
  • Secures the integrity of records
  • Leads to fully automated audits
  • Reduces the cost of maintaining and reconciling ledgers
  • Provides certainty over the ownership and history of assets
  • Gives ample time to auditors to add more value to the company

Blockchain impacts all the functions within the record keeping process; the way transactions are initiated, processed, authorized, recorded, and reported.


Artificial Intelligence

Artificial Intelligence is a ground-breaking technology that has promising opportunities and is in fact taking over the world. The rapid increase in the use of artificial intelligence has been of great use to accounts payable process as well. The technology eases their work and accelerates and simplifies data-related tasks.

Artificial intelligence helps in/ by;

  • Handling most of the work related to payment initiation and matching of purchase orders
  • Automating data entry and data categorization, leading to faster analysis of broad financial trends
  • Pinpointing potential complexities in advance
  • Facilitating decision making
  • Delivering functions of higher value such as business strategy implementation and financial advising

AI technology has the capability to reshape accounting firms completely. It leads to a competitive advantage and enhances the overall productivity of an organization.


Cloud accounting

Cloud computing  is “one of the most disruptive forces of IT spending,” which is expected to impact more than $1 trillion in information technology spending by 2020. Using cloud computing in accounting makes the process more flexible and it helps in giving real-time reporting and visibility throughout an organization.

With cloud accounting, data can be accessed from anywhere; all you need is an internet connection. Financial information are updated automatically via the cloud accounting software and the chances of error are minimal as account balances are always accurate.

Cloud accounting enables smooth and efficient management of multi-currency and multi-company transactions. It is highly assessible and at the same time affordable.

Embracing technology in accounting process has become more of a necessity and not just an option.


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Enhancing the productivity of your organization

Internal Audit, an integral part of every organization

Raghunath T


Internal audit and risk advisory service have become an integral part of every organization’s core advisory requirements. It is imperative for organizations to have productive internal audit and risk advisory function, that consistently contributes to business performance.

Why internal audit?

Every entity, whether a conventional for-profit organization, a government entity or NGO, have two things in common. They aim to achieve some specific organizational objective and they are all governed at the very top by owners, shareholders or board.

The people at the top have two critical roles; one is to provide oversight and direction to the organization and then to identify and manage risk.


Internal audit and risk advisory are continuously undergoing change and we at HLB HAMT are drivers of this change.

To our clients, we are trusted advisors, analysists, explorers, reporters and problem solvers. This is what differentiates us from others. Our audits are objective, fact based and there is no room for any sort of bias. We focus only on the issues and the risks that arise out of these issues.

Our auditors focus on process improvement rather than compliance, because we believe that compliance to a process is not an end in itself.

We deploy more auditors in our field and offer a wide bandwidth to our clients. Our access to HLB International resource pool gives us an access to global best practices across several industries.

Within the internal audit spectrum, we provide numerous services such as IA outsourcing, IA co-sourcing, forensic audit, policy drafting and compliance audit.

We have an excellent bunch of auditors in terms of academic excellence and professional experience, who believes in the use of technology for project management and documentation. We offer services across diverse industries that include manufacturing, trading, retail, facilities management, real estate, food and beverage, pharmaceutical and financial services, across Dubai, UAE.

HLB HAMT offers wide cross functional experience and our specialization include right from the top, where we help organizations with the audit of corporate governance and policy formation. We follow a risk based internal audit procedure; there is a risk assessment, risk testing, risk review with auditee and internal risk review with our team. Prior to preparing internal audit reports, we discuss with the auditee and give heed to their inputs. This results in process improvement.

We believe in being an organizational improvement partner and not just a compliance checker.

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Living with Blockchain

Sumesh Kunnath


  Most governments, services firms and accounting bodies around the world have invested their time to explore the opportunities offered by blockchain technology. Blockchain is an accounting technology and is concerned with the transfer of ownership of assets and the maintenance of a ledger of accurate financial information.

  For accountants, using blockchain provides clarity over the ownership of assets and the existence of obligations, and can dramatically improve efficiency and reduce costs. Alongside other automation trends such as machine learning, blockchain will lead to more transactional-level accounting – but not by accountants. Instead, successful accountants will be those who assess the real economic interpretation of blockchain records, marrying the record to economic reality and valuation.

  Blockchain is a replacement for bookkeeping and reconciliation work, and this could threaten the work of accountants in those areas while adding strength to those focused on providing value elsewhere. For example, in due diligence processes in mergers and acquisitions, distributed consensus over key figures allows more time to be spent on judgmental areas and advice and promises an overall faster process.

  The spectrum of skills represented in accounting will change because of the move to a financial system with significant blockchain elements. This will offer many opportunities for the accountancy profession. Accountants are seen as experts in record keeping, application of complex rules, business logic and standards setting. Accountants can also work as advisers to companies considering joining blockchains themselves, providing advice on weighing the costs and advantages of the new system.

  Blockchain also has applications in external audit. Performing confirmations of a company’s financial status will be less necessary if some or all of the transactions that underlie that status are visible on blockchains. Blockchain will result in a profound change in the way audits work.

  Accountants need not be engineers with detailed knowledge of how blockchain works. However, they will need to know how to advise on blockchain adoption and consider the impact of blockchain on their businesses and clients.

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Reasons why you should hire an Accountant

Namitha Ayillath


There might be many reasons that restrict a company from consulting an external accounting team, expense being the primary one. But there are more reasons that make these accountants an inevitable part of your business. Handling things on your own will seem hassle-free in the beginning, but when it comes to the problems, stress and uncertainty that comes along with it, outsourcing your accounting work will seem to be the best option.

Real-time financial information is mandatory to operate in the competitive market.

Why should you outsource accounting?

  • Ensures accuracy

Financial aspects of a business are always complex. Accurate and timely accounting is the cornerstone of business success. An experienced accounting team takes extra effort in double-checking their work and in ensuring that there aren’t any errors.

  • Updated about the changing rules

Local regulations and rules relating to finance, tax, etc, that are most likely to affect your business operations, keep changing. A consultancy will have numerous experienced accountants who will be updated about these amendments and they can help you navigate through the process.

  • Helps in the growth of your business

A professional accountant can help in steering your business and provides insight on cash flow patterns, thus helping you take important decisions within your enterprise. They also aid in identifying opportunities and issues.

  • Saves your time

No business owner would like to spend their precious time slogging through files. Rather, they would like to focus their time and attention on maximizing the potential of their business and enhancing its growth. A good accountant will ensure that there are nil problems and even if one arises, they will be better equipped to handle it.

  • Identifying market trends

Accounting industry has witnessed countless changes in the last couple of years and companies are always on the lookout for latest trends happening in the sector. A professional accountant will help clients spot market trends and assist them adopt latest technologies into their accounting business.

The role of an accountant is not limited to crunching numbers, they are more like advisors who contributes significantly to the growth of an establishment.




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IFRS 16 – An Introduction

Sumesh Krishna, Partner


IFRS 16 was issued by the International Accounting Standards Board in January 2016 and will be effective from January 1st, 2019. IFRS 16 will replace the previous leases Standard, IAS 17 Leases.  The new standard largely impacts the lessees and won’t have much influence on the lessors.

Many positive outcomes are expected out of the introduction of the new lease and the major ones are an increase in leased assets and financial liabilities on the balance sheet of the lessee.

IFRS 16 doesn’t make a distinction between finance leases and operating leases, as in all (material) leases will be treated as finance leases. Short-term and low value leases are exceptions. Under this new standard, you will have to recognize most leases on balance sheets, let your industry be any.

The new accounting treatment will lead to an increase in net debt, a higher EBITDA and a higher invested capital for the lessee. Moreover, it leads to increased visibility of all leases , which will help investors to make better informed investment decisions. Enhanced economic growth is also made possible by IFRS 16, as it improves capital allocation.

IFRS 16 replaces IAS 17, IFRS 4, SIC 15 and SIC 27 leases. If you look into the complete perspective of IAS 17, IAS 17  was introduced with the substance over form and present value concept which was not followed till that time and now it is unchanged almost 27 years.

IFRS 16 requires companies to bring lease commitments on to their balance sheets, which was not mandatory earlier. For instance, take a look at the listed companies that use IFRS or US GAAP, that have around $3.3trillion of lease commitments.  Over 85 percent of these lease agreement do not appear on their balance sheet. The reason is, till date, the  leases were categorized as either ‘finance leases’ or ‘operating leases.

That means the reader is not getting a real picture of how the company is operating, what their financial assets and liabilities are, apart from the leases.

When lease assets and liabilities are not accounted in the financial statements, purchasing of assets becomes difficult. An estimation of lease liabilities is always a difficult task. If you take a proportion of the actual debt related to the lease liabilities, it comes upto 6-10 percent of the liability, only in the balance sheet

With IFRS 16, this problem can be tackled to a greater extend.

So, we have discussed about the pros of IFRS 16, how it is going to bring more transparency to business. But, how difficult will it be for companies to comply with the new standard? It might be quite challenging.

If your company has well-organised lease administration and accounting functions, then this won’t be a difficult process. All you have to do is, evaluate whether adjustments are required in the existing systems to accommodate the changes. Understanding the impact IFRS 16 will have on your organization at an early stage will enable you to sort out issues and reduce implementation costs and compliance risk.

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Embracing Automation In HR And Payroll

Sajin Rasheed, Director


Businesses of today are witnessing massive digital transformation at dizzying speed, and you are left with two options- either embrace the innovations and thrive or remain dormant. If you decide upon the latter, there are chances of your business succumbing to the external market pressure.

There is a large proportion of businesses that are stragglers when it comes to adopting latest technologies. But if you aspire to survive and stay ahead of the game, then adoption is the only option!

Robotic Process Automation(RPA) is a revolutionary technology trend that has been gaining serious traction in the last few years.  RPA uses artificial intelligence and software robots to streamline workflows and it is expected to evolve and soar within no time.

Automating complex processes or routine tasks is of significant importance and as such RPA is the need of the hour. There are diverse industries that benefit from RPA and one such sector that reaps maximum benefit from the technology is HR and payroll.

HR department in any organization is responsible for a plethora of mundane tasks and their plates are always full. With the adoption of RPA, most of these tasks can be automated with greater degree of accuracy and efficiency.

RPA adds new functionalities to HR processes and does not replace HR software suite or employees. The technology rather makes the lives of employees easier and allow them to focus on the growth of their organization.

The robotic software carries out varied functions that range from collecting and copying data, running reports, processing and submitting e-mails to feeding data in HR or payroll systems and pre-populating forms. They are designed with self-learning artificial intelligence (AI) capabilities that ensures response to changes and performs tasks far beyond basic processing.

RPA facilitates the shortlisting of suitable candidates and compresses the onboarding process by taking over many of the tedious tasks that happens at the onset of the tenure of any employee. It acts on your behalf and saves you from the herculean task of manually updating everything. It also enables customization of training based on individual characteristics. Managers need not have to physically monitor productivity as it can be based on actual performance metrics.

Unlike in the past where you had to transfer all the employee data from your HRIS to a document template upon request for a document from an employee, RPA can automatically generate the documents. Smart robots pave way for automatic tracking of pay checks, benefits administration, rewards and reimbursements.

Software robots are far more productive than humans when it comes to monotonous tasks. With RPA, only minimal resources are required for the execution of hire-to-retire processes such as benefits, payroll and recruiting. Modifying or retraining the robot’s automated tasks is a cakewalk and the best part is that it is easier than re-training a staff.

Running payroll manually is not only monotonous but risk worthy; a small error is all it takes to  cause serious effects on the bottom line of a business. RPA replaces the process of checking data and looking for errors prior to running payroll with an automated validation check that can be executed in seconds.

Payroll activities that will benefit from RPA:

  • Contractual changes: Designation, benefits, roles and responsibility
  • Permanent changes like hike and contact details
  • Temporary changes: Bonus and expense payments, overtime
  • New hires / separations or departures
  • Attendance records
  • Validation checks
  • Deductions that include pension, union, travel card and loans

Executives within leading HR global firms are of the opinion that RPA will deliver a 10-20% savings to their HR and overall business processes. Automating HR operations benefits the company as a whole and not just a single department.

While RPA has the potential to make business processes smarter and efficient, finding the right balance between automated tasks and employee responsibilities is what makes the difference. If you fail to achieve it, unlocking the potential of RPA might be quite challenging.

RPA is a huge sensation that has unmatched integration capabilities and the technology is something that you can’t do without in the future. You can trust the process blindly as it accomplishes work exactly as they are programmed to!

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