Affiniax, Author at Affiniax

UAE FOREIGN INVESTMENT LAW CHANGE

September 7, 2023December 7, 2018 by Affiniax

The UAE Government has now enacted Federal Decree-Law No. 19 of 2018 (“FDI Law”) in furtherance of its objective to allow increased foreign shareholder participation in UAE mainland registered companies beyond the current restriction of 49%. To date, foreign investors wanting to own UAE businesses wholly, or to have a majority stake, have been limited to registering their companies in UAE free zones or limiting their operations to a branch/representative office. Free-zone registered companies, and branch/representative offices have limitations to their trading and investment activities in the UAE. Previously foreign investors have often found structuring business for commercial activities in the UAE challenging.

The FDI Law does not represent a wholesale change to business investment in the UAE and, to avoid doubt, it does not allow 100% foreign ownership across all sectors of the economy. Rather, the FDI Law introduces a framework under which the UAE Government (acting through a newly formed FDI Unit and FDI Committee in addition to the existing licensing departments of the Department of Economic Development) may designate certain sectors of the economy as being available to more than 49% foreign ownership. These are deemed to be “priority” economic sectors and are in furtherance of Federal Decree-Law No. 18 of 2017 (an amendment to the UAE Commercial Companies Law), which gave scope to the UAE Cabinet to authorise foreign investors to have an increased shareholding in companies within certain sectors.

FDI Unit and FDI Committee

The FDI Law provides, in summary, for the establishment of:

by decision of the Ministry of Economy, an FDI Unit, which shall, amongst various responsibilities, be charged with: (i) proposing FDI policies, priorities and programmes; (ii) building a base of investment data and information; (iii) consolidating and facilitating registration/licensing procedures for FDI projects;(iv) promoting/advertising the FDI environment; (v) preparing periodical reports on the FDI environment in the UAE; and (vi) attracting FDI to vital/strategic sectors; and
by decision of the UAE Cabinet, an FDI Committee, charged with studying and recommending to the UAE Cabinet, amongst others things: (i) a list of economic sectors that may benefit from additional levels of foreign ownership (“Positive List”); and (ii) adding to the list of sectors that shall not be open to additional levels of foreign ownership (“Negative List”).

Positive List

The FDI Law does not explicitly define the economic sectors or business activities in which foreign ownership beyond the current 49% limitation may be permitted. Rather, it provides that a Positive List will be developed by the FDI Committee based on certain key criteria, including:
Strategic Plans in the UAE
A return on investment for the UAE economy
The business’ approach to UAE innovation
Emirate national’s job and training opportunities
The impact on other Emirati owned businesses
The reputation and competence of the foreign investor
The investment into and the use of modern technology
Positive impact on the environment

The permission of foreign ownership is therefore based on discretion by the FDI, and the award of the business licenses will occur on a case-by-case basis. The FDI Law also provides that the conditions of investment will prescribe:

The legal form of entity which may be established
The percentage of capital capable of being owned, hence there may be a requirement for some Emirati national ownership of a minority investment;
The minimum capital to be invested (with any conditions or controls attached to this investment); and
A prescribed Emirati workforce/employees to be engaged by the company.

Negative List

The FDI Law sets out a number of sectors/activities in the Negative List, which the FDI Committee shall be able to add to. Currently, the Negative List includes:

Exploration and production of petroleum products
Hajj and Umrah services (including labour supply and recruitment)
Insurance services
Banking & finance activities and payment/cash handling systems
Postal, communication, and audio-visual services
Water and electricity services
Land and air transport services
Commercial agents services
Retail medicine (private pharmacies)

Other Welcome Measures

The FDI Law also provides assurances that profits generated in the UAE from any FDI investment, the proceeds from the liquidation of the investment, and funds collected from the settlement of any dispute can be transferred out of the UAE, subject always to existing legislation. This would appear to give comfort and assurance to foreign investors that the UAE’s longstanding friendly investment culture will continue to apply.

Please contact Affiniax Partners for any advice with respect to registering a business with the new FDI entitlements.

VAT IN UNITED ARAB EMIRATES: WHAT IS IT AND WHAT ARE THE IMPACTS?

September 7, 2023November 18, 2018 by ADNAN MANZOOR

What is VAT in UAE, and What Are the Impacts

Why is VAT being introduced?

The Ministry of Finance and the wider GCC have agreed to implement Value added tax (VAT) at a rate of 5% from 1 January 2018. This landmark Agreement marks the start of a fiscal reform across the region.

The increased need to diversify the economy, change operating models, and promote smart initiatives led by technology and employment continue to be key trends. In order to promote such change and create an economy that is safeguarded for the future, governments across the region have introduced various initiatives to reduce the dependency on oil-generated incomes and further stabilize the economy, one of which being the introduction of VAT in Dubai, Abu Dhabi and all of the Emirates.

How will VAT impact your business in UAE?

VAT in the UAE is likely to impact various segments of your business; therefore, it is advisable to conduct a VAT mapping programme of your current procedures and processes in order to identify the VAT transformation required.

Depending on the size and complexity of your business and operations, VAT readiness can take from three months to a year, with an impact being felt across multiple touch points of your business, which include some, if not all, of the functions such as:

Finance, Purchasing, Sourcing, and Imports
Sales and Marketing; Logistics and Customs
Legal and Human Resources; IT Department for Systems and ERP

Standard Rate: 5% to be applied to most goods/services supplied by ‘Chargeable Persons’

Zero Rate: Zero VAT (0%) applied to limited goods and services.

Exempt Supplies: Supplies outside the scope of VAT. Input VAT will not be recoverable.

Who is required to register for VAT in UAE?

Mandatory registration will be required for ‘Chargeable Persons’ (individuals, companies, groups, etc.) making ‘Taxable Supplies’ of AED 375,000 (generally calculated over a 12-month period). The voluntary registration threshold will be AED 187,500.

Points to Consider

VAT Returns: Most Chargeable Persons will need to file quarterly returns. The deadline for VAT returns will be a month from the end of the quarter. Some entities may need to file monthly returns.
Transitional Rules: Transitional rules will apply on stock / WIP as of 31 December 2017. Contracts that cross over the date of implementation of VAT will be affected.
Tax Audits: FTA has been given rights to undertake a Tax Audit on any person to ascertain the extent of compliance with the provisions of the LAW.

What if you decide not to change anything?

If nothing is done, there is a serious risk that your current business methodology will not be compliant with the new legislation. Furthermore, you might not be able to submit a complete and accurate VAT return in a timely manner. Non-compliance could lead to penalties or prosecution, whichever applies.

BAHRAIN VAT: IN COMPARISON

September 7, 2023November 14, 2018 by ADNAN MANZOOR

The government of Bahrain has announced the implementation of VAT from 1st January 2019. An Arabic version of the VAT law has been published. Implementing regulations will be released at a later date which will explain the VAT matters in further detail.Some of the important points and differences to UAE and KSA VAT legislation are as follows:1. Mandatory Registration – ThresholdThe Bahraini legislation refers to the GCC agreement for the mandatory registration threshold which stipulates Saudi Riyal 375,000 as the basis of calculation. The Bahraini legislation has not clarified which rate of exchange rate will be used to determine the final value of threshold. Threshold value is likely to be 37,500 if we look at the example of UAE threshold which is not exactly equivalent to the exchange rate pertaining to, for example, 01 January, 2018. UAE used a rounded off exchange rate of 1AED/SAR to calculate its threshold. Bahrain is likely to use a round off figure of 10 BHD/SAR, hence, BHD 37,500 as the threshold.2. Mandatory Registration – PeriodAnother important distinction when compared to KSA and UAE legislation would be the period of revenue considered for mandatory registration. KSA and UAE consider last 12 months and next 30 days of revenue for the purpose mandatory registration. In contract Bahrain considers last 12 months OR “anticipated revenue” in the next 12 months. Companies may have to provide signed contracts to establish future revenue.3. Voluntary Registration – Threshold and PeriodSimilar to UAE and KSA the voluntary threshold will be half of the mandatory threshold and both revenues and expenses can be considered for this purpose. But similar to the distinction in the period, previous OR next 12 months of revenue and expenses can be considered for the registration.4. Tax Return Submission DateIt will be the last day of the month subsequent to the tax period. For example, for Quarter Ended 31st March, 2019 the last date of submission would be 30th April, 2019. This is similar to KSA.5. Tax Debit NotesThe document titled “Tax Debit Note” is officially recognized when compared to KSA and UAE where only additional invoices can be issued for any increase in the value of a Tax Sales Invoice. For instance, in UAE and KSA, if by error or omission a Tax Invoice was undervalued, you need to issue an additional Tax Invoice describing the change. Bahraini Legislation recognizes a Tax Debit Note which can be officially issued to rectify such an error, instead of an additional tax Invoice.6. Pre-registration ExpensesIn Bahrain, with regards to sale of taxable goods, only those Input VAT credits can be claimed where the respective taxable goods would be sold after the registration date. In terms of taxable services, no Input credits can be claimed prior to 6 months of registration date. This is similar to KSA.The distinction in UAE is with respect to the input credits on services only. Input Credits can be claimed as long back as 5 years prior to registration, provided that these services were used to make taxable services.7. Education Services and related goods/servicesIn Bahrain these are Zero rated supplies. The legislation has not restricted this provision to government institutes only, whether higher education or not. The implementing regulation is likely to further elaborate on this topic specially “related goods/services”, and whether transportation, uniform, educational aids etc. would come under the zero rate or not.In UAE, Higher education is chargeable at 5% VAT where it is a private institute. Otherwise public and private education and related goods and services are zero rated with the exception of uniforms, school trips, food items, electronic devices etc.In contrast in KSA, all education services and related goods/services are subject to VAT at 5%. Though, the VAT payable by KSA citizens on educations services and related goods/services will be borne by the KSA government.8. EnforcementIn Bahrain, the enforcement of VAT legislation will be done through an existing pool of judicial officers and public enforcement officials. So we may expect more inspections and enquiries when compared to KSA and UAE, where new departments are formed for enforcement which would need sufficient time to hire, train and start their inspections.9. Failure to submit VAT return in timeThe time stipulated in Bahrain before a penalty is levied is 60 days, when a minimum of 5% to a maximum of 25% penalty, on the amount of tax, can be levied. In contrast UAE, and KSA apply penalty immediately after the due date is over which is 28 days and last day, of the subsequent month, respectively.10. ProsecutionIn Bahraini legislation there is much more emphasis on criminal charges to be levied upon the violations of the law, when compared to UAE and KSA where financial fines are largely emphasized and higher in value.

TRANSFORMING HR AND STRATEGIZING CHANGE MANAGEMENT

September 7, 2023November 13, 2018 by Affiniax

We were recently honored with “Mark of Excellence” for “Best HR Transformation & Change Management Strategy” at the Future Workplace Awards on November 13, 2018 at Park Hyatt, Dubai.The initiative to transform the HR practices at our workplace was rolled in the last quarter of 2017 by our leadership team with the goals of improving productivity and performance management, automating HR, developing people- friendly policies and redesigning HR processes.Therefore, the focus was on ‘the big picture’ for successful transformation.

“We intended to boldly pursue today’s inevitable journey to transform the traditional HR operating model via fully integrated change management strategies and strategically managed HR transformation.”Sumeet Nayyar-CEO& Partner

“We aimed to develop and execute on the right plan by focusing on the people first.”Nihar Kothari –Partner

“We encouraged curiosity across all facets of the organization which opened people’s minds allowing them to try new things differently.”Abeer Syed – Partner

” We created a vision for change which helped us to direct, align and inspire employees.”Tanmay Saxena – Senior Manager, Tax and Compliance Advisory

ACTION PLAN:

Our leaders recognized the huge trends that are emerging very rapidly and started working proactively to respond strategically every step of the way. The following action-plan was laid down.

Goal	Action
Transform HR practices	Hire a dedicated HR personnel
HR Audit	Audit policies according to UAE Labor Law
Establish retention strategies that promote the Firm as a great place to work/live.	Develop people friendly policies and procedures Employee engagement activities
Employee Handbook	Comprehensive development of handbook including updated policies
HR Automation by ensuring process simplification and retaining the “human touch” and avoid creating a feeling that the HR function has been depersonalized	Employee self service Automating leave management
Revamping Performance Management	Development of a PM model that aligns with business objectives

IMPLEMENTATION

“We adopted a realistic approach towards change management as it concentrated on reinforcing the people side of equation combined with effort to manage and execute the change.”Affiniax Management

“Our most senior leadership believed in and supported the idea of revamping the Performance Management Framework — a framework focused on fueling performance in the future rather than assessing it in the past.”Sheeba Mirza, HR Executive

We introduced the KPI and MSC model to develop our employees by weighting the KPIs and competencies so that there is a clarity of goals and competencies among the employees to deliver business outcomes.Challenge: The challenge was just around change. We were sort of used to the rhythms of the old systemKICKOFF: There were phased roll-outs:

Mid-2018: May- We chose two departments with a pilot approach – Consulting and Corporate.
Training session was held by the HR Executive for the line managers and their direct reports to make them understand the model.
July 2018- We added the other departments – Audit, Accounts, Administration and Taxation later in the year.
Formation of steering groups consisting of HR Executive, Director and the Line Manager of each department.
And by the end of August 2018 we have covered all the departments.

RESULTS

CONNECTING CHANGE TO BUSINESS RESULTS

Project	Purpose
Revamping Performance Management Framework – MSCs and KPIs	Employees are clear in understanding “how” to deliver on the expectations of “what” is expected. 70% weightage: KPIs and 30% weightage: Competencies
Free HR software	Automating HRMS thereby saving time, cost and increasing employees’ productivity. Online Leave application system Employee self service
People friendly workplace	Work from Home – 10 working days in a year. Employee Referral Program Complimentary Paid Leave – 2 festival leaves and a Birthday Leave every year. Harassment Policy & Procedure Team building activities such as monthly birthday celebrations, IWD 2018.
L&D Programs – YLP, FLP and Management Development Program	Development of employees at the entry, mid and senior level through customized learning programs.

KSA VAT: WHAT ARE ZERO RATED SERVICES AND HOW CAN I ENSURE THAT I AM NOT CHARGING TOO MUCH TAX?

March 19, 2024November 7, 2018 by ADNAN MANZOOR

The tax treatment of services provided by registrants under the UAE VAT and KSA VAT legislation is often a complex area, with both sets of tax laws providing strict rules on when such services can be subject to the zero rate of VAT.In KSA, in particular, the law requires suppliers to assess a number of factors prior to zero-rating services.Article 33 of the KSA VAT Implementing Regulations set out the conditions in which services can be subject to the zero rate of VAT. To qualify for zero rating, all the below conditions must be satisfied;

The supply of services must not take place in any GCC Member State* under the ‘special cases’ set out in the VAT laws,
The supplier must not have any evidence that the customer is resident in any GCC Member State and must have evidence that the customer is resident outside the GCC Member States,
The benefit of the services must not be received by the customer or any other person when that person is situated in KSA,
The services must not be related to any tangible goods or property (including real estate) situated within the GCC Member States,
The supplier must intend for the services provided to be consumed by the customer outside the GCC Member States, and
The supplier must have no evidence that the benefit of the services will be enjoyed within the GCC Member States.

* Note that, as the GCC states have not fully implemented the terms of the Unified Agreement on VAT, for the time being the term ‘GCC Member States’ solely refers to KSA for the purposes of the above. i.e. if the supplier has evidence that the customer is resident outside KSA, for the purposes of point 2 above he will be treated as having evidence that the customer is resident outside the GCC Member States for the purposes of the KSA VAT legislation.In practice, determining whether a service to a particular customer satisfies the above conditions for zero rating can be a complex affair. Service providers may need to consider matters including;

Whether the non-resident customer has a presence in KSA, even if temporary, that may result in them not satisfying condition 3 above,
Whether the services concern activities being undertaken in KSA, and
Whether the ultimate recipient of the service is benefiting from the service in KSA.

In light of the above, certain service providers are adopting a strict approach whereby they are by default charging VAT at the standard rate irrespective of whether their services to a particular customer satisfy the above conditions. Such an approach can result in adverse consequences, and in particular, may impose an unnecessary KSA VAT burden for non-resident customers who may not be able to recover such VAT.It is important for suppliers to fully understand the conditions as set out by Article 33 to follow the correct VAT treatment of services provided to clients outside KSA. The GAZT is constantly issuing new guidance to assist registrants in determining the correct tax treatment of their supplies and you should seek advice if you are uncertain of the applicability of KSA VAT on your supplies as appropriate.

UAE VAT AND THE EXCHANGE RATE, HOW DOES TAX AFFECT CURRENCY EXCHANGES AND YOUR BUSINESS?

September 7, 2023November 1, 2018 by ADNAN MANZOOR

UAE VAT: How Currency Exchange Affects VAT

The Federal Tax Authority (“FTA”) published Article 69 in April 2018, of Federal Decree-Law no. (8) of 2017 for the clarification of Currency Exchange rate for VAT purposes with effect from 17 May 2018.When a supply is made in any currency other than AED all taxable persons must use the Central Bank’s published exchange rates for the purposes of converting invoices issued in foreign currencies into the local currency (UAE Dirham) and calculate the VAT liability accordingly.

For tax invoices prior to 17-May-18, exchange rates from reliable sources can be used.
The exact exchange rate must be used, i.e. the same number of decimal places, as published.
These rates are updated Monday to Friday and are based on rates prevailing at 6pm UAE time each day
In instances where specific markets are closed due to local holiday, then the relevant rate to be used for VAT purposes will be the prevailing rate of the previous day at 6pm.
Rates can be reliably sourced from Thomson Reuters and UAE Central Bank.
The customs department shall convert the value to AED for the purpose of Import declaration, and automatically populate it in Box 6 of the VAT return.
When the exchange rate used by the customs department is different from those published by the Central Bank, the former can be used, for declaring the VAT due on imports.

Your next step: Businesses should consider the implications of this update on their transactions involving foreign currency to ensure that the correct amount of input VAT is being recovered, and furthermore understand the impact on their business operations and continuously ensure that the correct VAT treatment is being applied to its transactions.Our role:Affiniax Partners can assist you to assess the impact of this update and advise you on the recoverability of input VAT and VAT treatment of transactions involving foreign currency.

UAE VAT: WHAT ARE DESIGNATED ZONES AND WHAT DOES IT MEAN TO MY BUSINESS?

September 7, 2023October 24, 2018 by ADNAN MANZOOR

Under the VAT guide on Designated Zones (“DZs”) the Federal Tax Authority (“FTA”) has confirmed the VAT treatment applicable to businesses operating in DZs as provided for in the VAT Law and Executive regulations, and clarified the treatment of supplies in specific cases where previously there was some ambiguity.The key noteworthy clarifications are:

If the supply of services from the designated zones is provided within UAE, VAT charged is at the standard rate of 5%. If the supply is of export of services, the VAT is zero rated.
If the supply of goods is within the designated zones, it is not subject to UAE VAT law.
The Onus is on the supplier to ensure that it treats the supply correctly for VAT purpose. Therefore, the supplier should be satisfied that there is no reason to believe that the goods may be used by the purchaser for non-qualifying purposes. A written statement from the recipient of the goods that it will not be consumed in a non-qualifying manner is sufficient.
Transfer from mainland UAE to DZs of goods and services is not considered to be an export and is therefore treated as local supply, and VAT charged is standard rated.
Transfer of goods between DZs is outside the scope of UAE VAT law provided:
goods (in part or in whole), are not released into circulation, nor used or altered in any way during the transfer, and
transfer of the goods is undertaken in accordance with the rules for Customs suspension per the GCC Common Customs Law.
The FTA may require the owner of the goods to provide a financial guarantee for the payment of VAT, which that person may be liable, if the conditions in point 5 are not met.
Upon importing goods from DZs into the mainland, the Import VAT is payable by the importer.

Your next step: Businesses should consider the implications of this VAT guide on their transactions to ensure that the right class of transactions are being taken into consideration and the correct amount of input VAT is being recovered, and further more understand the impact on their business operations and continuously ensure that the correct VAT treatment is being applied to its transactions.Our role:Affiniax Partners can assist you to assess the impact of this clarification and advise you on the recoverability of input VAT and VAT treatment of transactions involving such instances.Appendix:The Cabinet Decision No. 59 confirms that the following Free Zones in the UAE are to be treated as Designated Zones. These Designated Zones will be subject to special rules for supplies of goods within those Designated Zones:

Free Trade Zone of Khalifa Port
Abu Dhabi Airport Free Zone
Khalifa Industrial Zone
Jebel Ali Free Zone (North-South)
Dubai Cars and Automotive Zone (DUCAMZ)
Dubai Textile City
Free Zone Area in Al Quoz
Free Zone Area in Al Qusais
Dubai Aviation City
Dubai Airport Free Zone
Hamriyah Free Zone
Sharjah Airport International Free Zone
Ajman Free Zone
Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port
Umm Al Quwain Free Trade Zone on Sheikh Mohammed Bin Zayed Road
RAK Free Trade Zone
RAK Maritime City Free Zone
RAK Airport Free Zone
Fujairah Free Zone
FOIZ (Fujairah Oil Industry Zone)

UNDERSTANDING VAT ON ENTERTAINMENT EXPENSES

September 7, 2023October 17, 2018 by ADNAN MANZOOR

The Federal Tax Authority (“FTA”) issued a Public Clarification Article 52 of Cabinet Decision no. (52) of 2017 on the Executive Regulation of the Federal Decree-Law No. (8) of 2017 on VAT.Entertainment has been defined as hospitality of any kind, including the provision of accommodation, food and drinks not provided in the normal course of a business meeting, and access to events or trips.When the hospitality provided becomes an end in itself, such costs are considered to be entertainment, and are not recoverable.It is worth noting that:

VAT incurred on any costs which are used for genuine business purpose or is incidental to business purpose shall be recoverable. For example, food and drink provided during meetings, food and drinks purchased by an employee for own consumption during a business trip, and sundry office expenses such as tea and coffee supplies or flowers for display in offices.
Input VAT is non-recoverable on entertainment expenses incurred for non-employees. For example, customers and potential customers, shareholders and officials (except for certain exceptions).
Where a business is uncertain whether hospitality is provided in the normal course of the business then it should not recover input VAT.
For conferences and business events, when a fee is charged, and output VAT is accounted for, Input VAT is recoverable. If no fee is charged, Input VAT is non-recoverable.
Expenses incurred purely for the entertainment of employees such as Staff dinner, and Ramadan Iftar, etc. and free of cost goods and services as rewards are not recoverable unless the employee is charged for the same.
If there is a legal obligation to provide those goods or services under the applicable UAE labour law to employees or a contractual obligation to provide the same to the employees in order for them to perform their role then VAT may be recoverable.

Your next step: Businesses should consider the implications of this clarification on their transactions involving such expenses to ensure that the right class of transactions are being taken into consideration and the correct amount of input VAT is being recovered, and furthermore understand the impact on their business operations and continuously ensure that the correct VAT treatment is being applied to its transactions.Our role:Affiniax Partners can assist you to assess the impact of this clarification and advise you on the recoverability of input VAT and VAT treatment of transactions involving expenses of this nature.

THE VALUE OF BUSINESS CONSULTING IN THE UAE?

September 7, 2023July 10, 2018 by Affiniax

The True Value of Business Consulting in the UAE

Determining the value you can derive from business consulting is one of those things that often comes with hindsight and, on occasion, is overlooked or missed entirely. Having an expert specialist advise or guidance often leads to the right decisions being made on a day-to-day basis, and that can be mistaken for ‘business as usual’ rather than seeing its true benefit.

One way to highlight the real value of business consulting is to think of it in terms of dentistry (let’s think way outside the box here).

Some people are methodical and make regular appointments to visit their dentist for a checkup. During that checkup, they will look at the health and vitality of the teeth and gums and look for any hidden problems or potential future issues that can be resolved and removed before they happen. When bigger problems are present, remedial action can be taken, and they leave with the knowledge and comfort that they are likely to be incident free in the period until their next visit (and even if that is not the case, they know exactly where to go if something does happen)

At the other end of the scale are those who will only visit the dentist once the pain of a problem has reached the point that they can’t continue to operate without remedial action right now. This is often painful, disruptive, and, more often than not, extremely costly, as the actions required to get back on track are far more extensive and potentially difficult to administer.

This principle fits well with business consultancy. Having highly skilled business professionals give your business a check-up on a regular basis helps anticipate and tackle problems of all shapes and sizes on the go. If you consider the cost of remedial action at the dentist to be high, compare that to having to perform a root canal on your corporate finances or poor due diligence, and you start to appreciate the real value of consultancy as a regular input rather than an emergency procedure.

Business consultancy from Affinax covers a broad spectrum of key aspects that absolutely must be delivered with the utmost accuracy and professionalism. Whether you are valuing your business or a potential investment through to drafting commercial agreements or even winding up an organisation, make sure you are best placed to make effective and correct decisions. Few of us are lucky enough to have experience in every aspect of business and commerce, and even larger corporations don’t always have the core competencies on their staff full-time.

Why not speak to the professionals at Affinax and explore their scope of services and what benefits they can deliver to help you maintain a vibrant, healthy smile in your business?

How Much Does An Accountant Cost In Dubai?

September 7, 2023July 10, 2018 by Affiniax

The recent changes in the business world in the UAE, particularly the introduction in VAT, have seen significantly increased demand for accountancy services. Until recently, many small and medium businesses may not have had their financial statements professionally compiled or audited, whereas newer regulations have made this a necessity rather than something that was done for a secondary purpose (applying for financing, for example).

This has, in turn, led to many more business owners and senior managers needing to ask how much these services will cost, and, as is often the case, there isn’t a simple answer.

Rather than try and pick an arbitrary number out of thin air, this article aims to highlight the factors that will impact the cost of accounting and bookkeeping services to help you when making the decision that fits your organisation.

The Scope of Work:

Perhaps the most obvious consideration relates to what type of accountancy you need to be taken care of. This might be registering your company with the FTA for VAT or filing a VAT return. It could be a far broader requirement, such as accounting consultancy or even full-time bookkeeping. This might be an in-house dedicated service or, as is often more appropriate and financially viable, outsourced bookkeeping. To make sure you get the quality of service you require, have a look at testimonials and client comments and consider who your competitors and clients are using for their accounting needs. Most importantly, check that the potential accounting service you are considering is experienced and qualified to handle the type of service you will be paying for.

The Scale of Work:

It goes without saying that handling the books of a multinational corporation is going to have a different cost associated than looking after the accounts of a sole proprietor. Also, consider the complexity of the industry you are involved in. Large-scale construction with multiple sub-contractors and projects spanning multiple financial years are going to have complicated requirements. They may have phased payments agreements and trigger milestones that will require extensive, if not specific, specialist skills and experience compared to a retail outlet, for example. One may require a full-time team of accountants, whereas the other may need part-time assistance, for which the costs are going to be relative.

Sheer Numbers:

Should the gross turnover alone be a factor in determining the cost of accountancy services? This is an interesting question on the surface. It may appear that the amount of chargeable work is the same for an organisation turning over $100 million with 100 transactions compared to another turning over $1 million from 100 transactions. In reality, this is not usually the case, and higher gross numbers, more often than not, will demand a higher fee. There will be different levels of responsibility and risk involved, and making sure your chosen accounting professionals have the relevant experience and confidence with high-value transactions is going to be vital for your own peace of mind.

Employee or Outsource:

This is one area where you are likely to see significant variation in costs. Having an in-house accountant will incur a salary relative to the experience and skills of the employee. Add to that visa costs, medical insurance, and holiday cover, and you will have a fixed and determined cost. Outsourcing, provided you have selected the right partner, is likely to represent a lower overall cost almost by default. Consider also that you may well have a team working on your accounts with broader skillsets and combined experience. You could well be getting considerably more bang for your buck if paying for the time they are dedicated to your books rather than for a full working day, week, month, or year.

So How Much?
When push comes to shove, you are going to get broadly what you pay for, and cheap is rarely the best, and the best is rarely cheap. The important thing to ensure is that you are getting great value and the best service for the cost.

Why not speak to the team at Affinax and let them guide you on what services they can provide and how much value they can deliver for you.