Month: November 2021

Businesses in UAE have the most important obligation to follow which is to pay their due taxes and comply with the rules of FTA. If the taxpayer follows all rules and regulations of VAT, then it will be easier for him to manage things with the tax authority. However, if taxes business fails to pay taxes on its due time chances of financial damage increase. Businesses will charge heavy penalties by FTA in case of failure in compliance. Having good VAT compliance is essential for all businesses in UAE.

The main objective is to keep a close check of all your taxes and pay them correctly at due time. But there are always some mistakes in submitting your taxes which can be due to several factors: work deadlines, staff shortage or excessive work pressure that all the VAT related tasks businesses ignore. However, some important points are essential to follow to reduce tax mistakes and errors and improve your VAT compliance.

Steps for Good VAT compliance

Firstly, the most important step is to maintain all your VAT records correctly. Records of all the additional documents are also required to have proper records in case they are needed. The Federal Tax Authority has published VAT compliance rules and regulation guides for taxpayers. FTA’s published guides can be very helpful for taxpayers to understand the process of submitting their taxes. Also, the taxpayer must keep himself updated with the new tax laws amendments. This will ensure good compliance and remove errors.

The second step is that taxpayers should define a process under which extracting and collating VAT return information is obtained systematically. Another important aspect is that different business sizes or categories have a different processes of VAT compliance. However, the ground rules remain the same for all the businesses regardless of their size or category. Basics are to keep all the records and information of their VAT returns accurate and submit them at due time.

The most crucial step in the VAT compliance process is people involved in handling VAT compliance tasks. Businesses should be extremely careful when they are giving this responsibility to any firm or an individual. They must have a complete understanding of your business activities and guide you through the process. The maintenance team must keep all records updated. Otherwise, your business will have to face the consequences of poorly maintained records and not submitting them accurately and on time. Problems occur when the compliance tasks are in the wrong hands or without sufficient training or experience. Businesses should take this role very seriously and hire people who will make this job easier for their business.

VAT Takeaways:

Businesses should give VAT compliance a high priority. Taxpayers must ensure all the activities are done properly and are meeting the regulations. They should work with the right people to manage the potential risks or mishaps in their system correctly. Ultimately, their good compliance will keep their business operations streamlined and efficient.

Businesses are widely embracing the use of business analytics to improve their business operations. Data analytics is more easily accessible than ever before. It is easier for businesses to collect data and other related information. Analytics can give valuable insights into your business performance. You can use this data to make improvements in your business operations and make them more streamlined. Moreover, it makes companies more efficient, productive and mitigates risks.

Benefits of business analytics

Make informed decisions

With the use of business analytics, businesses can analyze their business performance and make informed decisions based on that collected data. This will improve their overall system and protect their business from financial downturns. For example Businesses can change their services pricing or product offering according to suggested improvements and analyze what change of patterns they see in their customers.

Improves internal process

Data analytics can help identify businesses with any opportunities to improve their operations or maximize their profits. This process includes analyzing potential problems in the systems and taking timely action. Also, Analytics software gives valuable insights and identifies which areas are working efficiently and giving full results. Furthermore, it also highlights areas that are weaker or error-prone so that you can work on them to improve. Professionals can use this information and solve all the complexities in internal operations.

Personalization of customer experience

Depending on what business you are doing, you can use data to make business predictions, customer behaviors, what they like or dislike about your services. You can get a better understanding of your audience, what can drive more traffic to your website or your services. You can provide a personalized experience to each client depending on their requirement which can ultimately boost your business performance.

Mitigate risks

Every business faces risks and challenges. But business analytics can help businesses understand risks their business is facing and take remedial actions. Using analytics data you can limit the risks and financial losses that can occur in the future. Moreover, you can take security measures to protect your business data and eliminate the risk of a security breach.

Smart analysis yields in developing a deeper understanding of business implications, making crucial decisions. Businesses can improve operational efficiency, gain more profits. Moreover, you can leverage data analytics to gain business benefits and gain a competitive advantage.

.

The term “petty cash” refers to a small amount of money which is a reserve amount for quick everyday office purchases and expenses. These expenses include the purchase of office supplies, payment of food for a meeting, etc. Every business should keep separate funds for such small day-to-day expenses and keep a proper track of how much money is spent on them. However, if these small amounts are not well accounted for, a lot of funds can go unclaimed and misused.

Importance of petty cash management

A Petty cash management system helps businesses ensure that all their funds for small expenses are spent correctly and not misused. Also, all transactions should have a systematic record. This proper management will strengthen the internal controls of a business and protect them against any fraud or theft. Also, businesses should take a hard look at the business expenses and understand its importance.

Here are 3 ways in which you can easily manage petty cash system:

Keep record of transactions

A proper system should be placed in order to keep a record of all your petty cash spending. It becomes much easier to manage petty cash if your business follows certain policies and systems. A specific person is recording every single transaction and monitor if the funds are coming in use for correct things.

Plan your expenses

Every business knows how they function and what their everyday requirements are. Businesses should plan their small spends so that they don’t go overboard. Planning your expenses can help minimize the opportunity of fraud and embezzlement in your business. Businesses must educate their employees about the importance of petty cash and its usage. Furthermore, implement strict policies so that the entire management is aware of the consequences in case of violation. In addition, businesses should allocate a limited amount only for these expenses and restore when needed.

Assigning management task

Businesses should clearly define roles and responsibilities to their employees. Also, without the assignment of roles, there can be unnecessary confusion among them which can create mismanagement in recording transactions. The person who is responsible for this task must assure that all the compliance of all policies by the employees.

What is AML law in UAE?

UAE federal legislation implemented an Anti-Money Laundering regulation in UAE to meet the international AML/CTF standards. This regulation came to combat terror financing and financial crimes. UAE’s sole aim was to build a sustainable Anti-money laundering (AML) and Counterterrorist financing (CTF) structure in the country. Another reason is to tackle money laundering and terrorism financing systematically. However, the following laws are carried out in the UAE that serves as the foundation to AML/CTF measures.

• Federal Law No. 4/2002: Concerning combating money laundering and Terrorism financial crimes
• Federal Law No. 1/2004: Decree of combating Terrorism offences
• Federal Law No.20/2018: On Anti-Money Laundering and combating the financing of terrorism and financing of illegal organizations.

Dubai International Financial Centre (DIFC) which was established in 2004, is one of the world’s most known financial centers. However, there is a high risk of financial threats to the country. To counter these threats, UAE authorities established a strict policy to scrutinize all financial activities of firms. Under the jurisdiction of the Dubai Financial Service Authority (DFSA), AML/CTF regulations are imposed on special economic zones by DIFC regulatory law. Furthermore, under this law, companies within DIFC must comply with the requirements imposed by the federal law.

Anti-Money Laundering Courts

The Minister of Justice announced in November 2020 that specialized courts will be set up for anti-money laundering. These courts are within the structure of federal judiciary in the courts of Ajman, Sharjah, Fujairah and Umm Al Quwain. Also, these established courts will support the country’s cause for tackling financial and money laundering crimes. 

Anti-Money Laundering executive office

In December 2020, the formation of the Executive office of Anti-Money Laundering was adopted by the UAE cabinet. The purpose of establishing this executive office was to counter financial crimes and money laundering-related issues. Certainly, the ultimate goal is to make the UAE an international financial and business hub. 

UAE is making all efforts in combating money laundering and terrorism financing crimes by detecting them timely under the established legislation. Also, an International standard system is built in the country which reviews and checks all financial institutions and their transactions and detects any business violating these crimes. The AML/CTF law is continuously updating with additional terms and conditions to improve the overall structure of the framework and ensure its effectiveness. Therefore, it is important for firms to follow up with the latest developments related to AML/CTF laws and review that their local practices reflect the global standards.

An annual audit is an integral procedure that business owners need to understand. Some business owners find the audit process very difficult. Most small business owners try to bypass the annual audit somehow. But problems arise when disruptions appear in their financial system. This is why it is highly important to conduct an annual audit for every business. However, external audit or internal audit, are the available options for businesses to consider.

Why external audit?

Internal audit and external audit, both audit types, helps companies assess their internal controls, verify their financial records and eliminate discrepancies. It helps companies perform risk assessments, detect potential risks to their business, prepare new strategies and implement the right controls. Auditors help businesses run their operations smoothly and efficiently. But here comes the difference, internal audit is conducted by an internal employee of the same organization. Chances are that he is biased and prepares reports which are not transparent and accurate. However, an external auditor is performed by an independent auditor or firm who is linked with the internal system of the company. Moreover, this type of audit will give more transparency and insights about the business without any biases.

Certainly, external auditors function better ensuring to provide organizations with high credible reports. Knowing the transparency of the prepared audit report will help stakeholders to make better decisions based on audit reports. Also, reports reflect the organization’s integrity, openness, and compliance with rules and regulations that can play a major role in maintaining your organization’s position in the industry. In Addition, the following are the benefits of external audit:

Detect mistakes

The purpose of conducting an audit is to highlight any mistakes in your operational system. Errors in financial records can cost huge damage to the organization. Therefore, it is important to regularly conduct audit checkups to ensure the accuracy of your accounting system.

External audit adds business value

An audit strengthens the internal operations of a business. It removes all inefficiencies and gives new insights which add value to your business. It improves your business performance, attracts new investors, and makes the decision-making process easier.

Helps in attracting stakeholders

Investing in an organization is a difficult decision for stakeholders. This requires an in-depth analysis of the company, it’s financial standing and the organization’s credibility. Therefore, audit reports provide a comprehensive overview of the company which verifies its trustworthiness and integrity. Ultimately, it enhances stakeholders’ trust to invest in an organization.

Risk and fraud prevention

Analyzing your organization’s weaknesses, any loopholes in your financial system, and potential risks can save your business and run smoothly. Business owners should be vigilant in detecting risks timely with the help of auditors to protect their internal controls and implement remedial measures.