DMCC ARTICLE OF ASSOCIATION
The Dubai Multi Commodities Centre (“DMCC”) Authority recently enacted new DMCC Company Regulations, effective 2 January 2020 updating the DMCC Company Regulations 2003. The purpose of developing the New Regulations is with a view to increase the ‘ease of doing business’ for new and existing companies in the DMCC by providing greater flexibility and ease of operations. The New Regulations are a step in the direction to bring the DMCC’s company law framework in line with international best practice.
Under the new DMCCA Company Regulations 2020, DMCC have introduced new Articles of Association (AOA) known as the Standard Articles. If any company has been registered before 2 January 2020, they must adopt the AOA within 24 months of the new DMCCA Company Regulations 2020 which came into effect on 1 January 2020.
DMCC has now automated the process for member companies to adopt the new Articles of Association (AOA) via the DMCC Member Portal.
The new Articles must be deposited with the Registrar within 15 (fifteen) Business Days of the Resolution to adopt new Articles or such other date approved by the Registrar.
Articles of Association (“Articles”)
- The New Regulations will afford a certain degree of flexibility to companies in this regard. Companies are now able to either adopt the model ‘Standard Articles’ prescribed by the DMCC, to modify any clause/clauses within the ‘Standard Articles’ or to adopt an entirely bespoke set of articles for its use (Regulation 8.3 of the New Regulations).
- If a company chooses to adopt its own articles, it is required to provide the Registrar with a legal opinion stating that such articles do not contain any provision which is contrary to or inconsistent with the New Regulations (Regulation 8.4 of the New Regulations).
EXCISE TAX AUDIT
Excise tax Audit is a verification of the excise tax liability of a taxable person for particular tax period. This is an examination to check whether the liabilities are reported correctly and are paid within the due date or not.
An Excise Audit by a third-party expert is a good way to identify areas of tax non-compliance that might prove to be a roadblock for your operations in the future. An Excise Audit does not simply identify isolated cases of Tax Compliance failures but also spots areas that are chronic in nature as each failure of Tax Compliance triggers a huge penalty.
Who will be audited?
Federal Tax Authority will determine who all should be audited and at what interval. A person who has registered for Excise tax or supposed to be registered for Excise Tax will be audited at the discretion of the authority. It will be determined by the Tax Auditor or FTA based on the possible risk foreseen by the Authority on account of tax evasion.
A registered taxable entity subject to Excise Tax Audit must cooperate with the auditor and provide him with full support during the tax audit. If the taxable entity has a legal agent or/ and tax consultant then in that case they are also required to fully cooperate with the auditor. The taxable entity/ person must follow the following instructions to aid the auditor with reference to the Tax Audit:
• The auditor must be permitted to enter the taxable person’s registered office(s)
• The auditor must have access to all documents and records considered necessary for audit of entity’s excise tax liability
• Persons responsible for performing activities related to excise tax must be available to the auditor for enquiry during the process of tax audit.
Our knowledgeable team at RVG Chartered Accountants will help you with the practical and technical guidelines for dealing with auditors. We will check whether the documents maintained for the excisable goods are in line with the requirement of the UAE excise tax law. At the time of the audit, our team will invariably be by your side during the stressful and tense phase, exuding a sense of calm in the chaos.
We will ensure that the taxable person will be ready to face a tax audit at any time in future.
VAT RECOVERY EXPO 2020
The UAE government has introduced a separate VAT refund application process for the Participants. The Participants may apply for a VAT refund on the input tax incurred on import of goods or services and for expenses directly related to the Expo 2020.
Participants eligible for the refund scheme shall claim VAT Refund from:
- Where the Official Participant is not registered for UAE VAT, the refund applications can be made through the Bureau by submitting a special refund application to the Bureau.
- Where the Official Participant is registered for VAT, it may reclaim VAT via its UAE VAT return.
The official participants of the 2020 Expo are eligible to recover the input tax paid on the following expenses without using them for making taxable supplies:
- Goods and Services relating to the actual operation of the office of the Official Participant provided that the value of each Good or Service for which a claim is made is not less than AED 200.
- Import of Goods for the personal use of the Official Participant’s Section Commissioner-General, Section Staff and the Beneficiaries
- Goods and Services in direct connection with the construction, installation, alteration, decoration and dismantlement of their exhibition space.
- Goods and Services in direct connection with the operation of their exhibition space and any presentation within the Expo 2020 site.
The UAE government empowers the Federal Customs Authority with authority in requiring inspection of customs-related and commercial documents that are related to the import of goods. The tax authority has been conducting customs audits in recent months on imports and exports. Consequently, it’s absolutely necessary for taxable businesses to comply with regulations.
The Federal Customs Authority may require taxable entities to furnish the following documents from the previous five years:
- Entries on import and export, including all supporting documents;
- Deposit slips, bank statements, check counterfoils, and transfer slips;
- Audited accounts for a period under audit;
- Sale and purchase journal;
- Ledgers regardless of the type;
- Stock records or inventory reports;
- VAT accounting records and VAT returns
The custom department conducts post-clearance audits on all transactions to ensure compliance of Law. This audit can be initiated by the Customs Department at any point in time and for any period.
Abu Dhabi reduces business setup fees by 94% from current rates
As a result of collaborative efforts led by the Abu Dhabi Department of Economic Development (ADDED), in collaboration with multiple government entities including Abu Dhabi Chamber of Commerce and Industry, business setup fees in Abu Dhabi emirate have been reduced to AED1000.
The enterprise setup charges in Abu Dhabi emirate have been lowered to AED1000 – a discount of greater than 90 p.c. License renewal charges even have been lowered to Dh1000.
The new fees include six activities within the business licence, and will cover all fees from Abu Dhabi Government entities such as ADDED, the Department of Municipalities and Transport, membership fees for Abu Dhabi Chamber, CoC (Certificate of Conformity) issuance fee, and fees required by Abu Dhabi regulating entities dependent on the type of business.
Several fees have been removed entirely while others have been considerably reduced.
The new fees are effective from Tuesday, 27 July 2021.
The latest move to introduce a fixed fee will increase transparency and reduce administration for investors while creating a favorable environment for Small and Medium Enterprises, according to ADDED.
Transferring of wrongly paid amounts to the correct registration numbers
A letter of no objection signed by the authorized signatory who received the amount paid by mistake, on the company’s letterhead, with the following details:
- Explanation of the scenario on a company letterhead, a request for exemption from fines, and a pledge not to repeat mistake.
- The correct tax registration number to be paid and the wrong tax registration number.
- Amount paid, tax period, date of payment, copy of transfer or account statement.
- A letter of no objection signed by the authorized signatory who received the amount paid by mistake containing the company letterhead with the following details:
- The amount received
- Wrong TRN
- The correct TRN to which the amount should be transferred
UAE VAT Refund for Foreign Businesses
The UAE Federal Tax Authority (FTA) has made amendments to its guide regarding the ability to refund VAT for business visitors. The said guide highlights specific instances in which non-UAE and non-taxable resident businesses are entitled to claim a refund of VAT on expenses incurred in the UAE. It also states that refunds may only be requested by applicants on expenses sustained on or after the effective date of the agreement between their country and the UAE, as well as applicants are registered as an establishment with a competent authority in the jurisdiction in which they are established.
Only foreign businesses who meet the following conditions (hereinafter referred to as “Foreign Business”) are eligible to apply for a Refund:
• They have no place of establishment1 or fixed establishment2 in the UAE or an Implementing State3;
• They are not a Taxable Person4 in the UAE
• They are not carrying on Business5 in the UAE
• They are carrying on a Business and are registered as an establishment with a competent authority in the jurisdiction in which they are established.
The new VAT refund guide includes the following changes:
- The effective date for business visitors to claim VAT refunds when a country is added to the list of those having reciprocal agreements for VAT refunds for foreign businesses
- Updated documentation requirements when submitting a request for VAT refund request
- System-generated and scanned invoices will now be accepted as original, and scanned copies of the tax invoices or system generated tax invoices may now be submitted via e-mail.
- In addition, business visitors can claim a VAT refund if the minimum amount of VAT is AED 2,000.
Note: The deadline to submit VAT refund requests for this year remains the same — 31 August 2021