Frequently Asked Questions

An official inspection of an organization’s accounts, typically by an independent body

As per the Institute of Chartered Accountants of India, Auditing refers to “systematic and independent examination of financial records, irrespective of legal form, whether profit-oriented with objective to give an opinion on whether the financial statements give a true and fair view.

The different types of audits are:

Liquidation Audit

Statutory Audit

External Audit

Management Audit

Compliance Audit

Due-Diligence Audit

Forensic Audit

a. According to the Resolution passed by the UAE Cabinet, UBO is a person who directly or indirectly owns and controls a company.

This means:

The person owns 25% or more of an entity’s shares

Has at least 25% of voting shares

Controls the entity through any other means such as appointing or dismissing the majority of directors

b. If such a natural person as mentioned in (1) is not available, UBO will be a person who has control over the company through other means.

c. If no natural person is identified via conditions mentioned in (1) and (2), a person appointed by higher management shall be considered as a UBO

d. If any of the conditions specified above are satisfied by one or more persons, then everyone shall be considered as UBO.

UBO is an individual who holds most amount of control in the company and owns maximum benefits from the business.

To submit online:

Browse to htttps://ded.ae

Go to e-services

Add/ modify beneficiary

Login with UAE pass

Fill in required data and upload documents

To submit in person: Authorized representative of the entity shall go in person to the service center and submit necessary documents

A UBO or Ultimate Beneficial Owner is the person that is the ultimate beneficiary when an institution initiates a transaction.

The UBO is the natural person who, directly or indirectly, owns and controls a company. Individuals with ownership of at least 25% shares or voting rights of a company or someone with the power to dismiss and appoint a majority of a company’s directors is considered a UBO.

A UBO must always refer to a natural human. A UBO has to be a person and cannot be a legal entity, and follows the ownership chain upwards till all persons having the ownership have been identified.

The purpose of the Regulations is to ensure that UAE entities undertaking certain activities report actual profits that are commensurate with the economic activity undertaken within the UAE.

The EU’s efforts to combat tax evasion go beyond the jurisdiction of the EU. The UAE Government introduced Economic Substance Regulations in 2019 as a response to being blacklisted by the EU for tax purposes following an assessment of the UAE’s tax framework by the EU Code of Conduct Group on Business Taxation.

UAE entities undertaking and earning income from a Relevant Activity in a financial year must perform the related “Core Income Generating Activities” in the UAE by demonstrating that:

1. The entity and Relevant Activity are being “directed and managed” from the UAE (through holding and minuting board meetings in the UAE, having a UAE based manager and/or directors etc.); and
2. The entity has an adequate number of qualified employees, premises (e.g. office space), and annual operating expenditures in the UAE relative to the activity undertaken.

It is possible for an entity to carry on more than one Relevant Activity at a time, in which case generally the economic substance requirements will need to be satisfied for each Relevant Activity.

Different economic substance requirements apply depending on the Relevant Activity carried on. For example, pure holding companies are subject to less stringent economic substance requirements, but additional economic substance requirements apply to “high risk” IP-related activities.

Entities that are within the scope of the Regulations are required to submit an annual Notification form to their Regulatory Authority and complete and submit to the same Regulatory Authority an Economic Substance Report within 12 months from the end of their financial year (e.g. 31 December 2020 for entities with a financial year ending 31 December 2019). An entity is not required to meet the Economic Substance Test and file an Economic Substance Report for any financial period in which it has not earned income from a Relevant Activity or if it meets the conditions for being exempt. A Notification form will need to be submitted regardless. Failure to comply with the Regulations can result in penalties, spontaneous exchange of information with the Foreign Competent Authority (as defined in Article 1 of the Regulations), as well as other administrative sanctions such as the suspension, revocation, or non-renewal of the entity’s trade license or permit.

In UAE, the VAT standard rate is 5% on invoice value (excluding special cases, e.g., profit margin scheme). For example, if the Cost Price of the goods/services is = AED 100, knowing the VAT rate is 5%, then Input VAT (VAT paid during buying) will be 100×5%= AED 5.00. Input vat is also called VAT credit or Recoverable VAT.

You are required to register when the VAT law is in force if you are making or expect to make supplies of goods or services in the UAE and there is no other person who is required to account for the VAT due in the UAE on your behalf.

The following categories of supplies will be exempt from VAT: The supply of some financial services (clarified in VAT legislation) Residential properties. Bare land. Local passenger transport.

Arrange an official letter by a registered liquidator accepting the duty. Apply for cancellation by filling the required form through DED or other approved channels. DED will issue a liquidation certificate. Publish the notice of liquidation in two local newspapers.

Including the notice period, it may take 60-90 days to liquidate a company in Dubai.

If the company you work for closes, you are still entitled to outstanding holiday pay and gratuity. The Ministry of Labour would need to be involved though. You are allowed to transfer sponsorship to a new employer, but if you can’t find a new job your visa will be canceled and you will have to leave the country.

Liquidation implies that the business is not able to pay its debts. Liquidation further implies that the business will cease to operate (generally as a result of financial problems). … the company or close corporation may voluntarily decide to be liquidated.