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Global Agreement on Tax Reform

    Through the ages, governments everywhere have grappled with different ways to design and implement taxes. But the recent announcement by the G7 Finance Ministers is significant in that governments are coming together to coordinate and synchronise their systems of corporate taxation.

    The proposals involve fundamental changes to international tax rules – they will mean allocating more taxing rights of the largest and most profitable multinational enterprises to where their customers are; and implementing an internationally-agreed minimum effective corporate tax rate for large multinational enterprises (MNEs) wherever they operate. While the agreement is the first step in a long process before it can become a reality.

    The G20, as expected, endorsed the OECD Inclusive Framework political agreement on the key components of international tax reform under Pillar One (reallocation of profits to markets) and Pillar Two (global minimum tax). The G20 has urged the OECD Inclusive Framework to address remaining issues and policy design elements, and prepare a detailed implementation plan, by the next G20 Finance Ministers meeting on 15-16 October 2021.

    What will these changes mean for UAE?

    For now, it is too early to say. What we know for sure is that the international rules for corporate taxation will change, and all jurisdictions will need to adjust their tax systems and rules. As for the revenue impact, it will depend on the parameters being set, the rules to be made, and crucially, how different governments and businesses respond to them.

    UAE’s overall competitiveness has never been based on taxation alone. It’s about ensuring a conducive environment for businesses and entrepreneurs to thrive as an international hub. Trust, lifestyle and geography are ultimately what makes UAE an attractive place for substantial economic activities. UAE will be keen to be seen as part of the global system rather than a tax haven.

    Thoughts:

    Countries needs to support a multilateral consensus-based solution that is anchored on sound economic principles, promotes tax certainty, and ensures a level playing field across all jurisdictions.

    However, the new rules should not inadvertently weaken the incentives for businesses to invest and innovate. Otherwise, countries will all be worse off, fighting over share of a shrinking revenue pie.

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    INTRODUCTION OF VAT GUIDE FOR THE AUTOMOTIVE SECTOR

    FTA has introduced a new guide on Automotive Sector in accordance with Article 73 of the Executive Regulation and provides general guidance in respect of the business activities within the automotive sector in the UAE.

    The guide is applicable for supplies made by motor vehicle dealers in the UAE who deals with:

    • Supply of new cars.
    • Supply of used/ second-hand cars.
    • Leasing of cars.
    • Warranty Supplies.
    • Export and import of cars.

    This is not a legally binding statement, but is intended to aid in understanding and applying the VAT.

    Sale of Cars within the UAE

    The sale of cars within the UAE is subjected to the standard rate of 5%. Sale of cars can be carried out by different types of agreements and in this guide the two most common types of agreements are discussed – Outright sales & Sales through hire purchase arrangements. The guide will explains the VAT implications in respect of the leasing of cars.

    Key highlights of the Guide:

    The guide contains clarifications and VAT implications upon the below mentioned scenarios:

    • Clarification on time of supply of Car Sales and Leased Cars.
    • Display prices for cars.
    • VAT treatment on Trade – ins of being two separate supplies.
    • Clarity on Profit Margin Scheme applicability.
    • Clarity on Salik reimbursement.
    • Various scenarios of Import and Export of Cars.

    ACTIONS TO TAKE

    We recommend all taxpayers who deals with the automotive sector to check out the newly released VAT guide and view the updated information in order to make informed decisions.

    HOW MSATC CAN HELP?

    • Filing the required information.
    • Assist with timely and prompt advises through the process.
    • Advice on better compliance in UAE VAT law.
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    REDETERMINATION OF ADMINISTRATIVE PENALTIES – FTA GIVES YOU A CLEAN START!

    Mature smalll business owners calculating finance bills of their activity. Business people using calculator to work. Closeup hands of man and woman calculating bills and expenses.

    The UAE Cabinet of Ministers issued Resolution No 49/2021 on 28th April 2021 to amend the administrative penalties of the Tax Law, which came into effect on 28th June 2021.

     The Cabinet Decision makes a number of fundamental changes to the Administrative Penalties regime, including regarding the mechanism for calculating the penalties for late payment of taxes and for making errors in tax return, tax assessments or refund applications. The significant among them is that late payment penalties are reduced from 1% per day to 4% per month. It encourages taxpayers to voluntarily correct previous tax declarations, as well as encouraging them to pay due taxes before the tax audit or assessment by the UAE Federal Tax Authority (FTA).

    REDETERMINATION OF ADMINISTRATIVE PENALTIES

    Cabinet Decision No. 49 of 2021 also provides an opportunity for the businesses to redetermine the amounts of unpaid administrative penalties, which were imposed on taxable person under the old penalty regime. Accordingly, the administrative penalties imposed under the previous resolution will be obtaining 70% reduction which are imposed before the effective date of the new administrative penalties under certain conditions as below:

    • The penalties must have been imposed under Cabinet Decision No 40 of 2017 before 28th June 2021.
    • The registrant must pay all taxes due by 31st December 2021.
    • By 31st December 2021, the registrant must pay 30% of the total administrative penalties due and unpaid by the effective date of the New Resolution.

    If the above conditions are met, then FTA will redetermine the administrative penalties payable by the registrant at the end of 2021 and hence shall not be required to pay the remaining 70%.

    On 28th June 2021, the Federal Tax Authority (FTA), has introduced a new dashboard for viewing the calculations relating to the re-determination of the administrative penalties in accordance with the same provision. Here, the taxpayer can view the total unpaid administrative penalties imposed before and after 28th June 2021.

    UPDATES ON ‘MY PAYMENT’ PAGE

    A new feature of the FTA’s ‘My Payment’ page is that the registrants can see the amount of their outstanding balance related to taxes and the amount related to administrative penalties.

    Now, the taxpayer can view the following on the updated ‘My Payment’ page:

    • Tax Payable – The outstanding tax payable.
    • Late Registration Penalty – This is the outstanding late registration penalty.
    • Other penalties – The outstanding penalties other than late registration penalty.
    • Net payable amount – Total outstanding taxes and penalties
    • Total Credit – The total amount of credit the registrants have with the FTA.

    Here are a few highlights from FTA’s workshop:

    • A person who was in a refund position as of 28 June 2021 but previously subject to administrative penalties will have the settlement automated in the system and shall not be subject to re-determination except for the excess unpaid penalties as on June 28, 2021
    • A person can pay 30% of the total penalties as of 28 June 2021 in instalments, and they are not obligated to pay it all at once. However, to benefit from redetermination, the payment of 30% must be made before 31st December 2021.
    • If a voluntary disclosure is made after 28 June 2021, the penalty will be calculated and applied based on Cabinet Decision No. (49) of 2021 and not as per the old penalty regime, even if it is to correct errors from past years.

    ACTIONS TO TAKE

    We recommend all taxpayers to review their new dashboards and make informed decisions by viewing the updated information. Also note that, in order to qualify for a redetermination, the tax payable amount mentioned in ‘My Payment’ page must be paid in full by 31 December 2021.

    HOW MSATC CAN HELP?

    • Determine the amount of penalty due and suggest the action plan.           
    • Advice on better compliance in UAE VAT law.
    • Detailed VAT Health Check.

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    GOOD NEWS!! REDUCTION AND DISCOUNTS OF TAX PENALTIES IN UAE

    The UAE Cabinet of Ministers issued Decision No. 49/2021 amending provisions of Cabinet Decision No. 40/2017 regulating tax penalties, on 28th April 2021, the effective date being sixty days from the issuance date.

    LET’S REVIEW THE HIGHLIGHTS:

    • Late payment penalties reduced from 1% per day to 4% per month.
    • 300% cap still applies.
    • New starting date for calculating late payment penalties.
    • Reductions for prior penalties to be made.

    LATE TAX PAYMENT PENALTIES

    The most notable of the new amendments is that is that the late payment penalties have been reduced from 1% per day to 4% per month.

    The new calculation of late payment penalties, (with a cap of 300%) will be as follows:

    • 2% of the unpaid tax due on the day following the due date for payment.
    • 4% monthly penalty due after one month from the payment due date.

    PENALTIES ON VOLUNTARY DISCLOSURE

    • Fixed Penalties for submitting VD’s for incorrect VAT and Excise Returns has also been reduced to AED 1,000 for First VD and AED 2,000 for subsequent VD’s.
    • Further reductions or waivers also allowed in specific cases.
    • Also, the percentage based penalties for difference in Tax Amounts resulting from VD’s has also been reduced.

    DUE DATE FOR LATE PAYMENT PENALTY CALCULATION

    The new Decision states that the due date for the purposes of calculating late payment penalties shall be:

    • In the case of voluntary declaration, 20 business days from the date of its submission.
    • In the case of tax assessment, 20 business days from the date of its receipt.

    DISCOUNTS FOR PREVIOUS PENALTIES

    The Federal Tax Authority shall define the administrative penalties imposed prior to the effective date thereof that have not been paid, so that they are equal to 30% of the total unpaid penalties, where the following conditions are met:

    • Any of the administrative penalties stipulated in Cabinet Resolution No. (40) of 2017 was imposed on the Registrant and has not been fully paid.
    • The registrant has paid the following:
    • The due and payable tax up to 31 December 2021 at most; and
    • 30% of the total payable administrative penalties unpaid until the effective date hereof up to 31 December 2021 at most.

    HOW CAN MSATC HELP?

    • Check the consequences of delay/late payments or errors in the VAT Returns.
    • Ensure applicability of various provisions under the UAE VAT law.
    • Advice on the probable liability to the Authorities.
    • Suggest the best course of action in case of any liability to FTA.
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    FTA Releases VAT Clarification On Adjustment On Account Of Bad Debt Relief

    msatc-FTA-Releases-VAT-Clarification-uae

    DOWNLOAD THE OFFICIAL FTA CLARIFICATION BY CLICKING HERE

    VATP024-Adjustment-on-account-of-Bad-Debts-17-03-2021-1Download

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    Women’s Week Celebrations at MSATC!

    womens-day-celebrations-msatc-accounting-tax-consultancy-uae-abudhabi

    As achievements were always celebrated, we celebrated womanhood!

    We heard them talk of their unique stories, we heard of the stereotypes they thrived to break, we heard what they thought of International Women’s Day!

    As UAE shares, upholds and sings loud the success stories of incredible women in the land, who has made a beautiful impact, instilled hope, and set a path ahead for other women, without waiting for any specific day; we assure the same – we are always proud to talk about our women and the difference they bring to the space every day. We try and discover new possibilities and opportunities to display the pounding talent and the inbuilt urge in them to make an impact.

    March 8th was not any reminder or a day for special reforms at MSATC. It was a day to rejoice, begin new things and hear them talk a little extra!

    We believe in initiatives, ideas, and new beginnings and MSATC has always looked up to making days memorable with events and start. This women’s day has marked a kickstart to Entrepreneurship talks. Women talked, under the initiative “MSATC – Talks”.

    Their dreams discussed; the vision portrayed. When we sensed major things are waiting for the two incredible women who joined us virtually, they talked about humble beginnings, the support system behind, parenting, and strong achievements.

    Us being always passionate of entrepreneurship, were chilled hearing them talk ideas and growth! We have always believed, communication and learning flows in with each conversation.

    MSATC is grateful for all the strong women in its premises and around the premises, supporting, enhancing, and beautifying its growth. All the incredible women who have made us feel empowered every day – are treasured!

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    Four years of terrifically tireless, exceptionally elegant, abundantly assiduous work! MSATC celebrates its 4th Anniversary in Abu Dhabi !!

    Four years ago, the mission has just started taking its form, the vision taking its shape!

    When the founder C A Mohammed Shafeek, left his tax and advisory-focused position at a UAE based conglomerate, it marked a new beginning. A new start of the passion and the knowledge. Dream – of not just the founder, but now of many. The beginning!

    The company got all set to unleash the power within entrepreneurs and businesses, with one fierce objective: to enable ambitious and driven individuals succeed.

    The company has now approached its fourth Anniversary, with all the grueling efforts, accompanied by the hard work to the core and compassion in its bones. The celebration is not of one big achievement, but it’s a collection of achievements of all the businesses that we’ve helped shape, grow, change.

    When the company grabbed a number of awards in the industry in UAE and multiplied in size expanding the client base, that’s not it. The company has equally celebrated the joyous victory of its clients, with the business acumen the company passed on, with the right decisions at the right time and with the impactful insights the clients have achieved in the last four years – The spark in their eyes is counted and treasured at M S Accounting and Tax Consultancy.

    Our pace was defined by the pace with which we understood the client requirements and our ability to empathize. Clients always came first, if you know us, you know – we are truly obsessed with them!

    The right team was built, leaders fed with passion, and employees gruelled with best training. It is always the satisfaction of the staff and employees. If they have found us, we have also found them! – A fabulous team.

    As we reflect today, the challenges weren’t small, the growth wasn’t minimal, and so is the joy we share with the clients, directors and employees – it is tremendous!

    MSATC is all about unlocking and unleashing the business force that can help you to break through any limit and create the quality of business that you desire and deserve.

    We have planned it unique, executed it with a touch of innovation, and that’s the charm of the four years we have held high!

    Humble beginnings kept us grounded and yet watching the limit beyond the sky. As we look forward to unparalleled success and unrivaled corporate services, on this fourth anniversary, we still count this as the beginning. Beginning of more to come, of the big vision with big dreams!

    As we celebrate Four and we count for more to come, we urge you to dream more for your business!

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    Munawar Salih named Chief Growth Officer at MSATC

    Announcement comes as a part of the 2021 leadership changes at the firm.

    Abudhabi (March 6, 2021) — MSATC announces the appointment of Munawar Salih to the newly expanded role of Chef Growth Officer. The position will lead M S Accounting and Tax Consultancy’s global marketing, innovation insights and analytics composed with the business development strategy for the newer market opportunities.
    Munawar currently serving as Brand strategist & Non-Executive Director, broadens his responsibilities for the Financial services & compliances department growth in the MEA region. The transition comes upon the MSATC’s new strategic leadership changes happening as a part of Vision 2021.

    “I am very much delighted to expand Munawar’s area of actions and bring together the critical core responsibilities required for the brand growth in the newer segments of post-pandemic market. In the newer hat, he will drive excellence in how we utilize our global reach, introduction of pathbreaking Fintech products and timely collaborations to expand the categories for evolution of Brand MSATC,” said Mohammed Shafeek, Managing Partner & CEO of MSATC. “We have had a fantastic partnership from the inception days of MSATC. His energy and authentic leadership initiatives has always helped as stepping stones in the growth of the company. He has made tons of creative contributions to MSATC’s ambition to become the best one stop compliance solution of the region, galvanizing the Marketing & Business growth function by bringing all metrics of growth & capabilities together with immense market experience and insights.”

    Munawar commented: “Being in the process of building MSATC from day zero, I had always got amazed by the immense passion and professional precision of each and every member at MSATC. The purpose-led, principle-driven business is in the core at MSATC. Having seen and explored into various industries, firms and startups that I’ve grown up with, such a gifted team is a huge privilege. Fin-tech products and supporting entrepreneurs in emerging international markets are highly potential and well-formed futuristic segment for growth. I am thrilled to make some positive and scalable development impact for our partners and clients.“

    Since getting on board as Non-Executive Director in 2017, Munawar has been instrumental in the evolution of MSATC’s services and has been a driving force behind the company’s success in recent years. Munawar has established a decade full of experiences across variant industries.
    He has founded few big names in the F&B industry, and has successfully steered & pivoted more than 50 startups.


    About MS Accounting & Tax Consultancy:

    MSATC is a boutique tax and business advisory firm specializing in international tax consulting accounting & tax process innovation. Our clients include private and public companies from emerging businesses to Fortune 500 companies. They include UAE and non- UAE based multinationals operating in a wide array of industries, including industrial manufacturing and distribution, aerospace, oil & gas, food processing and distribution, agriculture, medical and other services. At MSATC, our out-standing team of advisors share one fierce objective: to enable ambitious and driven individuals to succeed. It is about unlocking and unleashing the business force that can help you to break through any limit and create the quality of business that you desire and deserve. For more information, visit www.ms-ca.com. Join us on LinkedIn, Twitter, Instagram or Facebook. For business queries, reach out to [email protected] .

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    3 Important “Ultimate Beneficial Ownership” queries now answered!

    The Department of Economic Development in reference to its Cabinet Resolution No. (58) of 2020 regarding the regulation of the true beneficiary procedures has made the notification submission live.   

    What is the purpose of UBO?

    The main purpose is to enhance transparency of entities registered in the UAE, as well as to develop effective and sustainable executive and regulatory mechanisms and procedures in respect of beneficial owner data.

    Who is an Ultimate Business Owner of a company?

    1. Any natural person who ultimately owns or controls or has the right to vote over at least 25% of the company’s share capital, whether through a direct or indirect chain of ownership or control, or any natural person who has the right to appoint or dismiss most of the directors of the company.
    2. If no natural person meets the criteria under point (a) above or if there are doubts as to the identity of the beneficial owner, the beneficial owner shall be any natural person who manages or administers the company; or

    If no natural person satisfies both conditions above, then a natural person who is responsible for the senior management of the company will be deemed as the UBO. Entities will need to assess who constitutes a UBO and consider whether anyone is a nominee Director / Manager. The Register of Shareholders / Partners is not a new concept as this is a requirement outlined in the UAE Commercial Companies Law, as well as in respective Free Zone Companies Regulations. Although the Resolution requires additional information to be detailed (for example, voting rights). 

    What are the Exceptions?

    All companies in the UAE, both mainland and free zone companies (with the exception of companies incorporated in the free zones (financial) and companies owned by the Federal Government and their subsidiaries), must now maintain at their office premises:
    a. A shareholder register;
    b. A register of beneficial owners; and
    c. A register of nominee directors.

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    Key insights about ADGM’s Data Protection Regulations 2021!

    In today’s Hyperconnected world, it has never been easier to share your personal data with other individuals & organizations. People often share their personal details and many other information to organizations. Don’t you think your personal data must be safeguarded and protected by the businesses you share it with?

    Abu Dhabi Global Market (ADGM), the award-winning International Financial Centre located in Abu Dhabi, has announced that it has enacted the Data Protection Regulations 2021, which will replace the current Data Protection Regulations 2015. Furthermore, it has conducted an international benchmark of international standards and best practices and believes the European Union’s General Data Protection Regulation (which took effect in May 2018) is the leading international standard and best practice for robust Data Protection legislation.

    What does Personal Data consist of?

    • Name
    • Address
    • Phone Numbers
    • Medical Records
    • Income
    • Cultural Profile
    • And many more….

    Purpose of this initiative?

    The new Regulations are adapted to the needs of ADGM and are intended to be proportionate and business friendly, without undermining the key ambition of achieving a high standard of protection for personal data. New regulations aimed at increasing the protection of personal data processed in ADGM.

    What are the best international practices ADGM has placed?

    • Promoting Data Protection
    • Maintaining the register of data controllers
    • Enforcing the obligations upon Data controllers
    • Upholding the rights of individuals

    ADGM recognizes that adoption of the new Regulations will result in significant changes and additional responsibilities for Data Controllers and Data Processors. Accordingly, a transition period is proposed of 12 months for current establishments, and 6 months for new establishments, from 14 February 2021.

    Through applying the new regulations, entities can be assured of the highest standards of data protection, in line with international best practice. In the end, its all about protecting personal data which builds trust and enhances relationships.