Category: News
New Guidelines Issued for Currency Conversion in Corporate Tax Calculations
HLB HAMT News Team
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In a move aimed at enhancing transparency and consistency in Corporate Tax calculations, the authorities have issued new guidelines regarding the conversion of amounts quantified in a currency other than the United Arab Emirates Dirham (AED). These guidelines, outlined in a recent decision, have been introduced to provide clarity and consistency in tax compliance.
The decision, titled “Determination of Conditions for Conversion of Amounts Quantified in a Currency other than the United Arab Emirates Dirham for the Purposes of the Federal Decree Law No. 47 of 2022 on the Taxation of Corporations and Businesses,” introduces a set of conditions to ensure that taxable entities accurately convert foreign currency amounts into AED when calculating their corporate tax obligations.
Conditions for Currency Conversion
The guideline outlines the conditions for converting foreign currency amounts into AED for the purpose of calculating Corporate Tax. Here are the key conditions:
- Conversion Order: Taxable entities are required to convert foreign currency amounts to AED in a specific order:
- Firstly, use the spot rate published by the Central Bank of the UAE as of the transaction date if their accounting system allows for this method.
- If the spot rate isn’t practical, the decision permits the use of the average monthly exchange rate published by the Central Bank, provided it offers a reasonably accurate estimate of the Corporate Tax payable.
- In cases where both spot and monthly rates are impractical, the decision allows for the use of the average annual exchange rate published by the Central Bank of the UAE.
- Continuous Conversion: Taxable entities must consistently apply their chosen currency conversion method throughout the entire tax period.
- Detailed Record-keeping: A vital aspect of compliance is maintaining comprehensive records. Taxable entities are obligated to document the rationale behind their choice of currency conversion method, the rates used, and the mechanisms applied in all currency conversion transactions.
- Changes in Method: Should a taxable entity decide to change its currency conversion method within a tax period, it must maintain detailed records explaining the reason for this change.
Invalidation of Conflicting Provisions
Article 3 of the decision unequivocally states that any provisions conflicting with or contradicting these newly established guidelines will be invalidated. This ensures that the guidelines are uniformly applied throughout the UAE’s Corporate Tax landscape.
Implementation Date
The decision will come into effect on June 1, 2023, as stated in Article 4. It will be published in the Official Gazette, serving as official notice to all affected parties.
These guidelines represent a crucial step towards streamlining Corporate Tax compliance in the UAE and providing clarity to businesses operating in the country. Taxable entities are encouraged to review and adapt their practices accordingly to ensure compliance with these newly issued regulations.
Call our experts at +971 4 327 7775 for any related queries or assistance regarding tax compliance or send an email tax@hlbhamt.com to arrange an appointment. We are available to guide you through the complexity of tax regulations.
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Tax Audit Alert: FTA Implements Unannounced Audits with Strict Penalties
HLB HAMT News Team
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In a significant development in the world of taxation, the United Arab Emirates’s tax law allows the tax administration to conduct tax audits for some companies without prior notification. This will leave businesses and individuals alike on high alert, as the consequences of non-compliance have never been more severe.
Tax Audits Without Prior Notification
The Federal Tax Authority (FTA) holds the power to conduct these audits without prior notice, making it crucial for business owners to be informed and prepared. In this informative journey, we will explore the consequences of non-compliance and provide you with the knowledge you need to protect your business.
Understanding the Implications
Under the tax law, anyone found guilty of the following actions may face imprisonment and fines with penalties not exceeding one million dirhams, or either of these two penalties:
Intentional Submission of False Information
Providing incorrect data, false information, or incorrect documents to the Authority.
Concealing or Destroying Documents
Deliberately hiding or destroying documents, data, information, or materials that you are obligated to provide to the Authority.
Misuse of Authority Documents
Stealing, misusing, or causing the destruction of documents or materials in the possession of the Authority.
Obstructing Authority’s Employees
Intentionally preventing or obstructing the authority’s employees from carrying out their duties.
Penalties for Tax Evasion
If any of the above acts result in tax evasion, facilitation, or concealment, the penalties can be severe.
- Imprisonment
- A fine not less than the amount of tax evaded and not exceeding three times it, or by one of these two penalties.
Don’t risk your business and financial stability. Stay compliant, keep your records accurate, and ensure you are ready for any tax audit.
For any related queries or assistance on tax compliance, call our experts at +971 4 327 7775 or email tax@hlbhamt.com to schedule a meeting. We are here to help you navigate the complexities of tax regulations.
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Dubai Establishes New Inheritance Department for Non-Muslims
HLB HAMT News Team
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The Dubai Courts have recently created a specialized department to handle inheritance cases for non-Muslim residents in the emirate. The department, which is the first of its kind in the UAE, aims to provide a clear and transparent framework for non-Muslims to manage their estates and ensure that their wishes are respected after their death.
The department will be responsible for all aspects of non-Muslim inheritance matters, including the opening of inheritance files, the registration of wills, and the distribution of assets. It will also provide guidance and support to non-Muslims who are dealing with inheritance issues.
How the Department Works?
The non-Muslim inheritance department will operate on a single-session basis, meaning that it aims to reach a decision on all requests within one session. This is designed to speed up the process and make it more efficient for non-Muslims who are dealing with inheritance issues.
To open an inheritance file, applicants will need to provide a set of documents, including:
- A legal notice, inventory of inheritance, legal document, or official document specifying the heirs and their shares.
- To prove the existence of a will, individuals can present an official document issued by the Dubai Courts or any other court within the UAE, except for the Dubai International Financial Centre courts.
- A judicial ruling proving the death of the deceased and identifying the heirs if no will is available.
If a request to open an inheritance file is based on a will not issue by the courts within the UAE, the implementation of Article 18 of Law No. 15 of 2017, which pertains to the management of non-Muslim inheritance matters and the execution of their wills, will be applied in Dubai. This means that a lawsuit for the execution of the will be registered, along with a certified copy of the applicable law for the will.
Benefits of the New Department
The establishment of the non-Muslim inheritance department offers several benefits for non-Muslim residents of Dubai, including:
- A clear and transparent framework for managing estates.
- Guidance and support from experienced professionals
- The opportunity to have their wishes respected after their death.
The department is also expected to boost confidence among non-Muslim investors in Dubai, as it provides greater certainty and clarity around the legal process for non-Muslim inheritance matters.
Conclusion
The establishment of the non-Muslim inheritance department is a significant step forward for the UAE in terms of its commitment to providing a fair and equitable legal system for all residents. It is also a reflection of the emirate’s growing diversity, as the number of non-Muslim residents in Dubai continues to increase.
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MoF Issues New Ministerial Decision to Streamline Tax Residency Certificates
Lavin Nalinababu
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The enforcement of certain provisions of Cabinet Decision No. 85 of 2022 on the determination of tax residency has been announced in Ministerial Decision No. 27 of 2023 by the Ministry of Finance (MoF). On March 1, 2023, this decision was published in the Official Gazette and entered into force.
The Ministerial Decision aims to clarify and offer direction on the application of the Cabinet Decision, which was released last year, regarding the policies and processes for establishing tax residency status for both individuals and companies in the UAE.
The Federal Tax Authority’s website can now be used to instantly issue a UAE tax residency certificate, making the procedure quicker and more convenient for filers.
The Decision further states that when deciding whether the 183-day or 90-day thresholds have been reached, all days or parts of days on which a person is physically present in the UAE will be taken into account. Additionally, the Decision states that a person need not own their “permanent place of residence,” but such place must be continuously available to them.
The decision additionally defines the standards and prerequisites that individuals and companies must satisfy in order to receive the tax residency licence. The prerequisites include having a legal residency permit, staying in the UAE for a predetermined number of days, and meeting any additional requirements outlined in the Cabinet Decision.
The new Ministerial Decision from the MoF is an important step towards improving and harmonising the UAE’s tax residency system with global norms. For individuals and businesses working in the UAE, it offers the clarity and openness necessary to determine tax residency.
HLB HAMT can assist individuals and businesses in complying with the regulations as well as applying for a tax residency certificate as outlined in Ministerial Decision No. 27 of 2023.
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New Visa Rules for Sponsoring Family Members in UAE
HLB HAMT News Team
Phone:- +971 4 327 7775
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Good news has been released for ex-pats in the UAE regarding visa regulations and clarifications by Ali Mohammad Al Shamsi, Chairman of the Federal Authority for Identity, Citizenship, Customs & Port Security of the UAE. The minimum salary required to sponsor family members has been halved.
Previously, the minimum salary required to sponsor parents was AED 20,000. Now, if ex-pats have a monthly salary of AED 10,000, they can sponsor up to five individuals. The regulation, which came into effect on October 3, 2022, has simplified the process of obtaining residence permits and sponsoring kin.
Sponsoring in the UAE
Expats must meet certain requirements to bring their relatives to the UAE. If expats want to bring their relatives to the UAE, their degree of relationship with the foreigner should be as follows:
- The foreigner’s father
- The foreigner’s mother
- Underage siblings (provided they can support them financially)
- The wife’s father and mother
In addition, the foreigner must have adequate monthly income and housing facilities to bring those relatives to the UAE.
- If their monthly income is AED 10,000, they can bring up to five individuals.
- If their monthly income is AED 15,000, they can bring up to six individuals.
- If ex-pats want to bring more than six individuals, the Chairman of the authority shall determine the applicant’s eligibility.
HLB HAMT to Assist!
If you are an expatriate planning to bring your family members to the UAE, you must meet all the criteria mentioned in the recent updates of UAE visa rules. However, HLB HAMT is available to provide assistance in completing your visa application with ease.
If you need any help, please contact hrd@hlbhamt.com
We are always happy to assist you!
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HLB HAMT Bags two Prestigious awards at the SME TECH INNOVATION AWARDS 2023
Midhun Menon P
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The UAE’s SME sector is thriving and significantly boosts the economy of the nation. The SME Tech Innovation Conference & Awards is intended to serve as an annual event for the SME segment, fostering discussions and a better knowledge of as many technologies transformation-related areas as possible that might support business success.
We are pleased to announce that we bagged two awards at the highly anticipated SME Tech Innovation Awards 2023 held at Conrad Dubai on February 16th, 2023. HLB HAMT won the prestigious Outstanding Technology Transformation award and our director of Technology Consulting, Mr. Vimal Ramachandran has bagged the prestigious Technology Transformer of the year award. HLB HAMT got this award for achieving substantial objectives in our technology transformation journey. The Technology Transformer of the year award was presented to various achievers across industries, mainly to CIOs and IT heads of SME entities that are helping organizations drive and pursue digital transformation initiatives.
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CBUAE Issues New AML/CFT Guidelines for the Insurance Industry
HLB HAMT News Team
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New anti-money laundering (AML) and Countering the Financing of Terrorism (CFT) guidelines have been released by the Central Bank of the UAE (CBUAE) for the Licensed Financial Institutions (LFIs) in the insurance sector, which includes insurance and re-insurance firms, agents, and brokers.
The guidelines go through how insurance operators should use preventative measures to detect, analyze, monitor, and prevent money laundering and funding of terrorism risks that are pertinent to life insurance and other investment-related insurance products.
The Role of Due Diligence
- Conduct due diligence on each client,
- Comprehend the type of the customer’s business,
- The purpose of the operator’s relationship with the customer,
- Should maintain transaction monitoring systems, and
- Subject all customers to continual surveillance during the business relationship.
Any activity that may be connected to money laundering, terrorist financing, or a criminal offence must be reported by sending suspicious activity or transaction reports straight to the UAE’s Financial Intelligence Unit via the “goAML” site.
Financial institutions throughout the globe, particularly those in the Gulf region, are discovering that it is more and more challenging to apply new legislation and create complete compliance systems as the regulatory framework evolves and becomes more demanding. However, the government has put in place rigorous regulations to prevent money laundering and terrorist funding in the UAE.
HLB HAMT is a renowned consultancy firm conducting impartial evaluations of anti-money laundering compliance systems in many sectors. Our team of professionals can assist you in developing, implementing, and enhancing your compliance programme for financial and other designated non-financial organisations.
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The UAE’s Ministry of Finance Launches Corporate Tax Awareness Workshops for Business Communities
HLB HAMT News Team
Phone:- +971 4 327 7775
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Following the publication of the Federal Decree-Law on Taxation of Corporations and Businesses, the Ministry of Finance of the United Arab Emirates has commenced a Corporate Tax Public Awareness workshop. The first corporate tax public awareness session will take place on January 9 in Abu Dhabi, according to the ministry announcement.
Schedule of Workshops
| Monday 9th Jan, 2023 11:00 TO 12:30 | ABU DHABI Rosewood Hotel | OVERVIEW OF UAE CORPORATE TAX Session Language: English |
| Monday 16th Jan, 2023 09:30 TO 11:00 | DUBAI Ritz Carlton DIFC | OVERVIEW OF UAE CORPORATE TAX Session Language: English |
| Monday 23rd Jan, 2023 09:30 TO 11:00 | VIRTUAL | OVERVIEW OF UAE CORPORATE TAX Session Language: English |
| Monday 6th Feb, 2023 | SHARJAH | OVERVIEW OF UAE CORPORATE TAX Session Language: English |
| Monday 13th Feb, 2023 | RAS AL KHAIMAH | OVERVIEW OF UAE CORPORATE TAX Session Language: English |
| Monday 20th Feb, 2023 | FUJAIRAH | OVERVIEW OF UAE CORPORATE TAX Session Language: Arabic |
- Closed recordings of CT awareness will take place six weeks from 20th Feb – 27th March 2023
- Virtual sessions on the Webinar platform will be conducted from April to December 2023
Although everyone is welcome to attend the workshops, chief financial officers, tax directors and managers, legal counsels, business owners, and other business executives from all industries are the main targeted group.
The Ministry of Finance’s tax specialists will lead workshops that are intended to increase knowledge, offer a dependable forum for open dialogue, answer inquiries from diverse business sectors, and promote awareness.
In addition to addressing specialised areas like computing taxable income, tax relief, tax groups, transfer pricing, and other subjects, attendees will receive a summary of the corporate tax legislation, including scope, rates, important concepts, exempted individuals, free zones, administration, and deadlines.
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The UAE Visa Rules: No Extension of a visit visa without exit
HLB HAMT News Team
Phone:- +971 4 327 7775
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The requirements for UAE travel visa extensions have already been loosened as a result of COVID-19. However, now that situations are getting back to normal, the UAE’s immigration authority has made the decision to reinstate pre-pandemic rules.
The new regulation, which came into force on December 13, 2022, states that visitors in the UAE must depart the country before submitting an application for a visit visa renewal. From within the nation, it won’t be allowed to extend visitor visas. Instead, they must leave the UAE before applying for a visa extension.
Individuals who are in the nation on a visit visa now have a number of alternatives accessible to them.
- Until further notice, anyone with a visit visa from Dubai who wishes to extend their stay can do so from within the country.
- If an individual has a visa from another emirate and wants to stay in the UAE longer, they must leave the nation and submit new permission.
- If a person with a visit visa wants to alter their status, they must apply for a new visa, and after it is approved, they must leave the nation and return.
Due to humanitarian concerns during the outbreak, when travel was difficult, the UAE approved this alteration. The UAE’s immigration laws have undergone a considerable change as a result of the recently implemented new visa criterias.
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The United Arab Emirates has issued its first federal “Corporate Tax Law”
HLB HAMT News Team
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His Highness Sheikh Mohamed bin Zayed Al Nahyan, President of the United Arab Emirates, has released the federal decree law No. 47 of 2022 on the taxation of corporations and businesses, referred to as the “corporate tax law.” A federal corporate tax will be implemented in the UAE on the basis of the corporate tax law, and it will go into effect for fiscal years beginning on or after June 1, 2023.
For the first time ever in the history of the UAE, corporate tax is being put into effect. The corporate tax will be applicable to all UAE businesses and legal entities or individuals conducting business in all emirates. Corporate tax management, collection, and administration shall be handled by the UAE Federal Tax Authority in conformity with the rules and regulations. The implementation of a corporate tax supports the nation’s goal of expanding its revenue sources and lowering its reliance on oil, which has traditionally served as the foundation of the economy.
Getting ready for and adhering to the new federal corporate tax will be a challenging path through uncharted territory for many UAE enterprises. HLB HAMT can provide you with a clear picture of what to anticipate from the law and what it will entail for the management and operation of your whole company. With our expertise by your side, you won’t have to worry since we have an in-depth understanding of UAE accounting, tax, and free zone operations, allowing us to offer our clients the best answers to the challenges.
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