VAT Treatment of Local Passenger Transportation Services in UAE

Sreekanth Karicheri, Tax Analyst

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HLB HAMT - Accounting Firm in UAE
Phone:- +971 4 327 7775
Mobile:- +971 50 677 5860
WhatsApp:- +971 56 219 1607
Email:- dubai@hlbhamt.com

    Get Free Consultation




    Basis of opinion

    • Article 46 (4) of the VAT Decree Law
    • Article 45 of the VAT Executive Regulation

    Applicability

    Applicable to the local passenger transportation service providers in UAE.

    Application of the Law

    Article 46 (4) of the VAT Decree-Law state that the supply of local passenger transportation is exempt from VAT.

    Article 45 (1) of the Executive regulation exempts any supply of local passenger transportation services provided in a qualifying means of transport by land, water or air within the UAE.

    Article 45 (4) of the Executive regulation state that the exemption will not apply if the transportation services are undertaken in the context of a pleasure trip where the principal objective is sightseeing, enjoyment of catering services or other forms of pleasure or entertainment.

    Practical Example

    XYZ rent a car LLC, a UAE mainland company engaged in the business of passenger transportation services within UAE.

    The company is providing below types of services,

    1. Transportation of employees of customers from accommodation to work and vice versa
    2. Transportation of tourists from hotel to tourist areas, sightseeing shopping malls & restaurants
    3. Transportation of tourists from airport to hotel and vice versa

    What will be the taxability of above services provided by XYZ rent a car LLC?

    Solution

    There are three conditions mentioned in Article 45 of VAT Executive Regulation to treat local passenger transportation services as exempted.

    • The transport services must be provided in a qualifying means of transport by land, water or air;
    • The transport services must be provided from one place in the UAE to another place in the UAE;
    • The service should not undertake in the context of a pleasure trip where the manner in which the trip is held out indicates that principal objective is sightseeing, enjoyment of catering services or other forms of pleasure or entertainment.

    Based on the above conditions, the taxability of the services can be concluded as below,

    • Transportation of employees of customers from accommodation to work and vice versa – Exempt supply*
    • Transportation of tourists from hotel to tourist areas, sightseeing shopping malls & restaurants – Taxable at the standard rate
    • Transportation of tourists from the airport to hotel and vice versa – Exempt supply*

    *Since exempt supplies are not “taxable supplies”, the supplier cannot normally recover any of the VAT on expenses incurred in making those supplies.

    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
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    Study Leave in the UAE

    HLB UAE Payroll Team

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    HLB HAMT - Accounting Firm in UAE
    Phone:- +971 4 327 7775
    Mobile:- +971 50 205 9540
    WhatsApp:- +971 56 219 1607
    Email:- dubai@hlbhamt.com

      Get Free Consultation




      Companies across the globe offer various types of paid, partially paid, and unpaid leave to employees. The labour laws of most of the countries stipulate that every employee has the right to certain types of leaves, such as sick leave, maternity leave, annual leave etc. But, not many countries grant study leave to employees.

      UAE understands the significance of education in the career and overall growth of an employee and it is one among the reasons why the country has decided to include paid study leave in the recently amended labour law.

      Ministry of Human Resources and Emiratization (MOHRE) has announced the introduction of Federal Decree-Law No. 33 of 2021 that will regulate labor relations and employment practice in UAE. The New UAE Labor Law has come into effect from February 2, 2022 and it will replace the Current UAE Labor Law entirely. Study leave came into effect with the introduction of Federal Decree-Law No. 33 of 2021.

      Employees in the UAE can avail a paid leave of 10 days to appear for examinations, provided they are studying in one of the certified educational institutions in the country. Only employees who were part of the company for at least 2 years can apply for study leave.

      Employees wishing to further their education shouldn’t be discouraged by employers, as it might curb their enthusiasm and eventually decrease their productivity at work. Ensuring employees are happy and engaged and seeing to it that their needs are taken care of, will encourage them to give their maximum at work.

      Frequently Asked Questions

      1. Are UAE employees entitled to study leave?

        Yes, employees in the UAE studying in one of the approved educational institutions in the country can avail study leave.

      2. How many days of study leave are granted to UAE employees?

        UAE employees can avail a paid leave of 10 days per year to appear for examinations.

      3. Are there any conditions for granting study leave?

        Only employees who have completed at least two years of service with the employer can apply for study leave.

      For a comprehensive understanding of leave policy in UAE, please refer to our articles.

       

      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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      A Brief Overview on Compassionate or Bereavement Leave in UAE

      HLB UAE Payroll Team

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      HLB HAMT - Accounting Firm in UAE
      Phone:- +971 4 327 7775
      Mobile:- +971 50 205 9540
      Email:- dubai@hlbhamt.com

        Get Free Consultation




        The corporate culture is evolving. Businesses are becoming more aware of the value of work-life harmony and are seeking ways to foster better connections with employees. The majority of individuals can comprehend the significance of compassionate leave. But let’s keep reading to find out more about it and how it operates in the UAE.

        Compassionate or bereavement leave may be granted to employees to mourn the death of a close relative. It is never easy to cope with the grief of a relative. The ideal approach to concentrating on what’s important most and being with family while you recoup may be to take time off from work.

        Ministry of Human Resources and Emiratization (MOHRE) has announced the introduction of Federal Decree-Law No. 33 of 2021 that will regulate labor relations and employment practice in UAE. The New UAE Labor Law has come into effect from February 2, 2022 and it will replace the Current UAE Labor Law entirely. Bereavement or Compassionate leave came into effect with the introduction of Federal Decree-Law No. 33 of 2021

        In UAE, a private sector employee is eligible to:

        • 5 days – death of spouse
        • 3 days – death of a parent, child, sibling, grandchild or grandparent

        Compassionate or bereavement leave starts from the date in the event of the death of a family member.

        Frequently Asked Questions

        1. What is compassionate or bereavement leave?

          The employee is qualified to take a leave of absence in the event of the death of a member of their close family.

        2. Are compassionate and bereavement leaves similar?

          Bereavement leave and compassionate leave are both similar. Both terms refer to a type of paid time off after the passing of a  family member.

        3. When may compassionate or bereavement leave be used?

          When a member of the employee’s immediate family passes away, the employee may use the leave.

        4. How long may an employee take compassionate leave?

          An employee may take five days off following the loss of their spouse or partner. Employees may request a 3-day leave of absence if their parents, grandparents, siblings, kids, or grandkids pass away.

        5. When does the period of compassionate leave begin?

          The leave begins from the date in the occurrence of the death.

        Article 32 1a in labor law

        Bereavement leave of (5) five days, in case of death of the husband or wife and (3) three days in case of death of the mother, father, son, brother, sister, grandson, grandfather or grandmother, starting from the date of death.

        For a comprehensive understanding of leave policies in UAE, UAE leave policy.

         

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

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        Final settlement Payment timeline in UAE: A concise overview

        HLB UAE Payroll Team

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        HLB HAMT - Accounting Firm in UAE
        Phone:- +971 4 327 7775
        Mobile:- +971 50 205 9540
        Email:- dubai@hlbhamt.com

          Get Free Consultation




          The UAE is home to numerous expatriates from many different countries, which supports the success and progress of the country. End-of-service benefits are the responsibility of the employer, and they must be handled and paid in a timely and precise way. Employees in the UAE are subject to a specified set of end-of-service rewards under the country’s labour laws. EOS benefits are provided for the time spent with the organisation after the job contract has ended.

          The previous UAE Labor Law (UAE Federal Law No. 8 of 1980), which will be completely replaced by the New UAE Labor Law Federal Decree Law No. 33 of 2021, has seen several significant changes. On February 2nd, 2022, the New UAE Labor Law went into force.

          How does final settlement work?

          Final settlement calculation is the process used to calculate all of the due amounts for an employee who is leaving, quitting their job, or being let go by the business. It comprises the computation of all obligations that must be paid, such as End of Service Gratuity, Repatriation ticket, Notice period pay, Any unutilized leave i.e. Vacation pay, Unprocessed Salary, Any other benefits or compensation mentioned in the Employment Contract, Any other outstanding payment or deduction, etc.

          Deadline for End of Service payment in UAE:

          According to the new UAE Labor Law Federal Decree-Law No. 33 of 2021, All End of Service Benefits must be paid within 14 days of the employee’s last day of employment. There was no such deadline for End of service entitlement under the prior statute, this extra provision was inserted.

          Frequently Asked Questions

          1. Is there really a timeline for giving the employee their EOS payment?

            Yes, the end-of-service benefit must be paid within 14 days of the end of the employment contract or termination.

          2. Would the employee be entitled to payment of the entire final settlement sum within 14 days or just end-of-service gratuity?

            The company is obligated to pay all entitlements and settle any debts Within 14 days after the employee’s final day of employment.

          3. What different pay components are involved when calculating an employee’s final settlement in the United Arab Emirates?

            1. End of Service Gratuity
            2. Repatriation ticket if applicable
            3. Notice period pay if applicable
            4. Any unutilized leave i.e. Vacation pay
            5. Unprocessed Salary
            6. Any other benefits or compensation mentioned in Employment Contract
            7. Any other outstanding payment or deduction

            For more information about Final Settlement calculation in UAE, please follow the link 

          4. What is End of service Gratuity and who is eligible for this benefit?

            Gratuity is a monetary payment eligible to an employee as a lump sum at the end of his tenure provided that the period of service exceeds one year. For more information about End of service Gratuity in UAE, please follow the link

          5. Is the use of WPS Payment Processing required for EOS?

            WPS is preferred but not necessary for EOS payment. The business can also issue checks. Please visit for more information on WPS in the UAE.

           

          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
          Next Reviews
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          Get in touch

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

          Start the conversation

          Parental Leave in UAE

          HLB UAE Payroll Team

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          HLB HAMT - Accounting Firm in UAE
          Phone:- +971 4 327 7775
          Mobile:- +971 50 205 9540
          Email:- dubai@hlbhamt.com

            Get Free Consultation




            Being a parent is a unique and significant transition in a person’s life journey. One of the most important experiences in life is embracing and caring for your newborn. Parental leaves give employees in the United Arab Emirates the chance to extend the focus and attention needed in a child’s formative stages, which benefits their well-being.

            A Quick Rundown

            Recently, a new federal order was put into effect for the UAE private sector, amending the Labor Law No. 8 of the 1980s existing leave rules to include parental leave. In terms of making the private sector more appealing to all employees, there is a consistent effort to match private sector perks with those offered in the public sector. The regulation also modifies the laws governing equal pay.

            Both male and female employees of private sector businesses in the UAE are now entitled to five working days of paid parental leave. During the first six months following the child’s birth, the five days must be used. Regular weekend getaways are not included in the calculation of leave.

            Frequently Asked Questions

            1. In the UAE, what is parental leave?

              According to the new article, a private sector employee must be given paid parental leave for five working days to care for his or her child, applicable from the child’s birth date until he or she is six months old.

            2. When does an employee become eligible for a parental leave?

              After the child is born, an employee has six months to take parental leave.

            3. Who is qualified for parental leave?

              Both male and female employees are qualified for parental leave.

            4. Does parental leave apply to female employees?

              Yes, parental leave applies to female employees.

            5. Do female employees have access to parental leave in addition to maternity leave?

              Yes, female employees are eligible for both maternity and paternity leaves.

            6. Does parental leave in the UAE follow working days or calendar days?

              Parental leave in the UAE follows only working days. Weekends and public holidays are not considered for parental leave.

            Article 32 1b in new law

            A parental leave for a period of (5) five working days, for the worker (either the father or mother), who has a newly born child, in order to take care of the child and the worker is entitled to such leave for a continuous or intermittent period, within (6) six months from the date of the childbirth.

            For a comprehensive understanding of leave policies in UAE, UAE leave policy.

            UAE Payroll Process

            The process of payroll is a little complicated and time-consuming; hence it is always recommended outsourcing 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, please refer to our articles.click here.

            Disclaimer

            Whilst every effort has been made to ensure the accuracy of this information, HLB HAMT will not accept any liability arising out of errors or omissions. Please note that this blog is not all-inclusive. Our guidance is designed only to give general information on the issues/topics covered. It is subject to change and is not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal

            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

            image

            HLB HAMT - Accounting Firm in UAE
            Phone:- +971 4 327 7775
            Mobile:- +971 50 205 9540
            Email:- dubai@hlbhamt.com

              Get Free Consultation




              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
              Next Reviews
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              VAT Public Clarification On Gold-Making Charge in UAE

              Sreekanth Karicheri, Tax Analyst

              image

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

                Get Free Consultation




                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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                Get in touch

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

                Start the conversation

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

                ICFR: An Overview

                Sumesh Krishna, Partner

                image

                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

                  Get Free Consultation




                  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

                  Proposed Group Reliefs under the UAE Corporate Tax regime

                  Suhail Kolakkadan, Tax Analyst

                  image

                  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.

                    Get in touch

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

                    Start the conversation

                    IFRS 17: Insurance Contracts in UAE

                    John Varghese, Managing Partner

                    image

                    HLB HAMT - Accounting Firm in UAE
                    Phone:- +971 4 327 7775
                    Mobile:- +971 50 749 0576
                    Email:- dubai@hlbhamt.com

                      Get Free Consultation




                      A slew of new reporting and compliance rules are gripping the globe in this period of globalisation and international trade, prompting a substantial shift in the way insurers do business. One of the most significant and far-reaching revisions in many years will redefine insurance accounting. The present standard, IFRS 4, will be replaced by IFRS 17 beginning in 2023. For insurers, IFRS 17 constitutes a significant reform initiative that extends across accounting and actuarial departments. With multiple workflows and initiatives, it will have an influence on insurers’ procedures, personnel, and technology.

                      Why IFRS 17?

                      The first unified accounting standard for the whole insurance industry is IFRS 17. Making it simpler to analyze financial statements released by insurance firms is the goal. Additionally, it will improve the industry’s accounting processes’ compliance with those of other industries.

                      IFRS 17 introduces unprecedented degrees of openness, providing users with more information than ever before about an insurer’s financial condition. More data on the revenue of new and existing firms will be available to investors.

                      Significant Impacts of IFRS 17 on today’s Insurers

                      • The impact of utilizing current market discount rates will vary, but it will almost certainly be considerable, leading to higher volatility in financial performance and equity.
                      • If premium claims and expenditures are considered, projected cash flow estimates can be more accurate.
                      • For analysts and users, new views are available. The new International Financial Reporting Standards (IFRS 17) will transform the way analysts analyse and compare firms.
                      • Only revenue, expenditures, and other insurance-related functions are documented.
                      • Drives business communication and optimizes financial reporting status
                      • The manner in which progress is conveyed will vary as a function of new presentation regulations.
                      • Financial risks and investment income will be provided independently from insurance outcomes in order to provide a comprehensive understanding of profit factors.

                      As per existing accounting regulations, the assessment of insurance contracts is usually evaluated from previous factual data available at the commencement of the insurance term. IFRS 17 requires a forward-looking assessment based on best-estimate cash flows. It is primarily interested in the revenue generated by portfolios. It lays forth guidelines for locating, evaluating, presenting, and revealing insurance contracts.

                      1. With a primary focus on technology, data, activities, and people, insurers must take advantage of this chance to simplify their business.
                      2. Insurance companies will be able to achieve real economic gains while adhering to proposed laws by using a methodical strategy that blends accounting, actuarial, and reporting activities.
                      3. Insurance companies must devote considerable resources and technological facilities to IFRS 17’s complicated standards in order to fulfil a timeframe that is nearing.

                      IFRS 17 will strengthen reporting quality, making the insurance industry more invested and enhance collaboration between insurers and investors. Insurers will spend a lot of time and effort in the coming years evaluating, comprehending, and applying the new standard to their insurance contracts and reporting. The new norm will promote worldwide uniformity and enable insurers to compare their policies more easily.

                       

                      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
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