Month: September 2023

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A Company Liquidator: Top Duties

Calx Blog Covers
Calx Blog Covers

If your company is constantly facing issues and is on the verge of a liquidation process, you need a company liquidator to carry out the procedure smoothly. Moreover, it helps dissolve the company professionally, making sure a fair distribution of the company’s assets takes place among shareholders. 

What are the Duties of a Company Liquidator? 

• Inventory of company funds

The company’s manager or the company’s board of directors hands over all the information to the liquidator. It includes all the funds, accounts, books, and documents for making an inventory of the company’s funds and obligations. 

  • Representing the company

The liquidator is responsible for representing the company in court, fulfilling the company’s debts, and selling real estate by public auction. Moreover, he/she might also sell the company’s assets as a whole without taking permission from the partners. 

  • Notifying the creditors 

The company liquidator will inform all the creditors about the opening of the liquidation process along with the acknowledgment of receipt. Furthermore, it invites them to submit their requests and publish the notification in daily local newspapers. Remember that the liquidator will give 45 days for the creditors to submit their reports. 

  • Depositing debts 

The creditors will deposit their debts if they are unable to submit their application within the given time. This is because a sufficient amount of money must be deposited in the treasury of the competent court to proceed with the process. Otherwise, the company will probably decide to postpone the division of its funds until the dispute settles down. 

  • Preparation of a List

The liquidator will prepare a list upon receiving all the information regarding the company funds, obligations, and budgets. Afterward, he/she will present this list to the company’s manager and the chairman of the board of directors to sign it for approval. 

Wrapping it Up

Remember that a company liquidator must perform all his duties responsibly within the specific period. Moreover, if any mistakes are made by the liquidator in the liquidation process, he/she will compensate for them. Hence, it is mandatory for the liquidator to pay attention to all the precise details without missing any information. 

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Using EmaraTax To Claim VAT Refunds

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E628B6F8 9028 46BE A462 EDB7DE0DE42F

Most small businesses in UAE generally doesn’t have any clue on recovering from a tax difference amount. When the VAT charges on the purchased goods becomes more that that of the VAT amount you get through the sales, then a problem arises. Before you start worrying on how to handle such complex situations, discover a way to log into EmaraTax platform. 

Steps for Claiming VAT Return Using EmaraTax 

Step 1: Login to your account 

Firstly, you need to enter your credentials for logging into the EmaraTax platform. Furthermore, you can also use the UAE Pass as well. Now proceed into your account and select the user type. As you’re eligible for tax under the provision of UAE VAT lax, select the Taxable person option. 

Step 2: Choosing the VAT module 

You will come across the Taxable Person homepage which will be displaying your profile. You can then click on the view option to open it. Afterwards, go on the left-side bar and click on the VAT module option. 

Step 3: Creating refund requests 

You will see two different options in front of the screen. Go and select the VAT 311 and click on “create new” for a new refund request. A new window will open letting you know about the guidelines, templates, criteria. After you have completely read and understood it, mark the check box to proceed further. 

Step 4: Verifying information 

Now you have to enter your personal information including your bank details as well. Make sure they are accurate for ensuring a smooth working process. Moreover, double-check the entire information for avoiding any grammatical errors which may lead to payment failure. 

Step 5: Refund your VAT amount 

Choose the VAT return and enter the refund amount while clicking on “Add Supporting Details” for getting a breakdown. Upload a filled template by adding additional refund details. Remember to upload your required documents and download the filed amounts for selected tax period. Finally, submit the refund request and note down the application reference number for future purposes. 

Conclusion 

The EmaraTax platform lets many businesses in UAE to file returns and apply for refunds in a convenient way. The tax difference can affect the business operations. Therefore, stop confusing yourself and make use of this great platform for claiming direct VAT returns. 

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Transfer Pricing Techniques

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2E60AD68 1548 46FB 8F2F 566580F94B99

Transfer pricing is significant for determining the fair prices of goods, and services, and the exchange of intellectual property between two parties. Moreover, firms who work in cross-border transactions with affiliates must adhere to transfer pricing laws. This can include maintaining detailed documents, conducting transactions, and submitting them to FTA upon request. 

Four Transfer Pricing Methods

The Transactional Profit-Split Way

This is a simple technique that includes the involvement of two parties who work closely together. It provides a fair share to each party by analyzing their organization’s contribution and potential profitability. 

  • The Cost-Plus Technique

This method works on the phenomenon of establishing a price for a product that is new to the market. If you’re a seller in a foreign country, you can set up a benchmark price for the product by adding up the standard cost and profit. This way other sellers who will be selling the same type of product will already know the setting price. 

  • The Transactional Net Margin Method 

This a go-to method for checking if the transactions between companies are at arm’s length or not. Moreover, it analyzes if the transactions are fair by comparing the both of the company’s net margin. If the margins between the two companies are similar then you can consider the transaction to be equitable.

  • The Resale Price Technique

When you resale the product to an unrelated party with a profit margin, determine the transfer price. It can be done by checking the resale price instead of its original price. Usually, the calculation of price works on looking into the profit margins of competitors of the same sector. 

Wrapping it Up

Many businesses in UAE use transfer pricing for lowering the total tax burden on the parent company. All these guidelines help ensure a fair pricing for exchange of goods and services between parties with close relationships. Therefore, choose wisely in deciding which transfer pricing methodology is best for conducting your cross-border transactions. 

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Forensic Audit: How Does It Work?

Forensic Audit
Forensic Audit

Forensic audits examines that your company’s financial records are not irregular and ensure compliance with regulatory protocols. It runs an investigation process and analysis of financial transactions, business operations and accounting records to detect any fraudulent activities. Moreover, it differs from a regular audit as it focuses on a much more inclusive and detailed analysis on uncovering financial crimes. 

How Does a Forensic Audit Report Work?

Planning the Audit

    Firstly, the auditor and its team will work on the scope and the planning of the audit by choosing which objectives to achieve. It can be identifying the fraud, or determining the period through which it has been occurring. Furthermore, they can collect relevant evidence that is admissible to the court and suggesting measures to prevent it. 

    • Collecting Data

    Gather enough evidence and analyze it from several sources such as financial records, transaction data etc. You need this data to prove the fraudster’s activity in court and reveal its true scheme. Therefore, a logical flow of evidence will help you to present your case in front of the judges in a more authentic manner. 

    • Investigation Methods

    Now to conduct the investigation step, you may interview certain people, or collect document examination etc. To work extensively, the audits can also take help from other computer forensic specialists and legal professionals. This is because they will not only save time but use advanced techniques to uncover fraudulent activities. 

    • Reporting 

    Formulate a clear and brief report which audits will present it to you to file a case. A written report can include the summary, findings of investigation and explanation of how the fraud was executed. Simplify any complex accounting issues so that people who have no understanding of those terms can understand the fraud clearly. 

    Conclusion

    A forensic audit helps your company to save themselves from facing any sort of fraud, extortion or bribery acts. In addition to that, it covers a wide range of investigative activities. Hence, it is essential to conduct as it protects the reputation, financial well-being and prevent economic issues. 

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    Advantages Of Adopting IFRS In UAE

    IMG 9648
    IMG 9648

    The International Financial Reporting Standards (IFRS) can make your company consistent, transparent, and easily comparable around the world. These set of accounting rules will help decide how transactions and other accounting procedures work in UAE as financial statements.

    Benefits of Incorporating IFRS in UAE

    1. Recognition

    As UAE is becoming a gigantic business hub, it is necessary that your business is in compliance with IFRS. Specially, if you have a multinational corporation (MNC), then it is mandatory for the finalization of financial statements. 

    2. Comparability

    Many stakeholders show quite an interest in looking into the financial statements before establishing business relationships. Moreover, these reporting standards will improve comparability not only for investors but also for stakeholders. Therefore, it will be beneficial for those who use financial records to choose better investment options. 

    3. Global System

    Since your company and all other companies will be preparing financial statements under IFRS, it will promote harmonization and standardization. Furthermore, acting upon these global accounting standards, it makes easier to compare the economic results of the two companies. 

    4. Transparency

    By incorporating these accounting standards, it will promote greater transparency in your financial communications. Moreover, it works on neutrality as it does not allow any room for companies to manage the accounts differently. 

    5. Opportunities

    It will let your company be open to grab more opportunities in any part of the world that offers the same accounting practices. In response to that, you can also gain foreign investments which helps in increasing the capital flow of the country. 

    Wrapping it Up

    With IFRS, you can achieve a global accounting working standard helping you compare the financial statements. Moreover, it gives your company an advantage to use it as a tool of communication for financial statements. Thus, all those stakeholders in UAE and investors will be more inclined to do business with your company as it will be in compliance with those global standards.

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    Benefits of Conducting a Statutory Audit

    Statutory Audit
    Statutory Audit

    Checking whether your company’s financial records are in order or not is essential from time to time. For this purpose, if you have a company which is related to the government, you should conduct a statutory audit. Firms which are subject to conducting this sort of audit are banks, insurance firms, brokerage etc. 

    How Can A Statutory Audit Provides Benefits to a UAE Firm?

    Mainland vs Free-zone

    If you’re having a mainland company, then it becomes a compulsion for conducting a statutory audit. Due to this, you’ll be able to ensure the public that your company adhere to the rules and regulations. Remember that you’re a free-zone company, then there may be certain requirements of conducting it. 

    • Getting Loans

    Before you apply for a loan in bank and do any investments, conduct a statutory audit. This will provide an advantage letting them know that your financial records are correct. Moreover, it helps increase the authenticity of your firm in front of those people as well. 

    • Improves Credibility

    Statutory audit can help improve credibility as your company presents a transparent picture of your business activates and current position. Furthermore, you’ll be seen as a viable business as your financial reports will be free from error, fraud and misinterpretation. Not only that it also minimizes the risk of fraud in your organization. 

    • Share Transfer

    It proves to be beneficial in the course of share of transfer and building trust. It can play an integral role to determine the accuracy and reliability of the accounts and transactions. As it confirms your company’s validity, the trust of shareholders, banks and government will also increase. 

    • Increases Efficacy

    When auditors keep on working on setting your financial reports correct, it will save time and improve efficacy. In that period, they can think of planning other effective strategies. Furthermore, they can come up with suggestions and recommendation to improve business operations. 

    Conclusion

    Conducting a statutory audit is beneficial in presenting the true and fair assessment of your business financial statements. Moreover, it helps to retain the confidence of the public and shareholders. Therefore, if you’re mainland company in UAE, you cannot afford to miss out conducting a statutory audit. 

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    Inventory Accounting Valuation Methods

    Inventory Accounting
    Inventory Accounting

    Inventory accounting is essential for ascertaining the sales of a business. Evaluating the inventory can play a significant role in your business as it maintains the cash flow, maximizes the profit, etc. Moreover, discover the accurate value of inventories with the help of inventories. Note that it also helps your business to reach proper conclusions. 

    3 Different Inventory Accounting Valuation Methods

    1. Periodic Inventory Method 

    It tracks the items in a business for resale. Rather than determining the value after every sale, it checks the periodic inventory counts after every year, three months, etc. Furthermore, implementing this accounting system is frequently simpler and more economical. Many small businesses which are having few employees can actively use this method of inventory valuation as they have moderate sales volumes. 

    2. Cost of Goods Sold (COGS) Inventory Method

    The cost of goods sold (COGS) method includes all those direct sales that businesses use in the production process. Remember that it does not include indirect expenses such as sales, marketing, etc. It generally has three components for calculating it which are:

    • Beginning inventory: This is the company’s starting inventory from the prior period. It can be the preceding quarter, month, year, etc.
    • Purchases: It represents the entire cost of all goods and services your business makes during that specific accounting period.
    • Ending Inventory: It indicates the inventory value that was left over at the end of that time period.

    3. First In First Out (FIFO) Method

    It works on the phenomenon of whichever goods are purchased or produced are sold first. This helps you to get rid of the old inventory by selling it out to the customers before the new stock arrives. Furthermore, it is the most suitable method for e-commerce brands selling time-constraint products. Due to this, you can record the most recent expenses on the balance sheet while deducting the oldest expenses. 

    Final Thoughts

    Using various inventory accounting methods may seem simpler but without understanding them you cannot excel at it. Whether you’re implementing a periodic, COGS, or FIFO method, select them effectively to plan future decisions. So, make the best of inventory valuation and meet your business growth goals.