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Smart Accounting: Role of an Accountant is Evolving with New Regulations

The way of business in the UAE keeps on evolving with new changes in regulations and technology. For instance, look at the latest regulations such as VAT, Anti-money Laundering (AML), Economic Substance Regulation (ESR) and Ultimate Beneficial Ownership (UBO). The introduction of these path-breaking reforms has enhanced the role of accountants in companies operating in the UAE. Relying on a single in-house accounting professional to meet the new compliance requirements is no longer feasible. The time is ripe for smart accountingand that’s why small businesses anstartups should outsource their accounting requirements to top accounting & bookkeeping firms in Dubai, UAE.

In this highly transformed business landscape, it is important to assess the enhanced role and responsibilities of accountants in Dubai. What are the new bookkeeping requirements? What are the consequences of not complying with the new regulations? Are there any hefty penalties involved? How outsourcing the job to the best accounting firms in Dubai will ease the burden? These are some valid questions that need an answer at this moment. That’s why we decided to write this blog where you can find answers to all these questions. Read ahead:

Role of Accountant in Filing VAT Returns

More than three years passed since the UAE introduced Value Added Tax (VAT) at a meagre rate of 5% in 2018. Unlike in the past, the businesses are now forced to take VAT obligations into account while managing their accounting & bookkeeping. As per article (78) of the VAT Decree-Law, you must maintain the following documents if you are a VAT registrant,

a) Records related to all the supplies and import of goods/services

b). All tax invoices on goods or services received

c). All tax credit notes received

d). All tax invoices & alternative documents issued

e). All Tax Credit Notes & alternative documents issued

f) Records of goods, services that were disposed of or utilised for unrelated matters

g). All records that show tax deducted on good and services purchased by the company

h). Records that show the goods and services exported

i). Records of adjustments made by the company on accounts or Tax Invoices

j). Records of taxable Supplies made or received by the company

Keeping the records specified in the tax law is vital for your company as the Federal Tax Authority (FTA) may conduct a tax audit at any time. Further, you have to pay the FTA a fine of AED 10,000 for failing to maintain the mandatory records specified in the UAE VAT Law. Repeating the violation would attract a penalty of AED 50,000. Businesses hire good accounting firms in Dubai to ensure compliance and avoid VAT administrative penalties.

Maintaining UBO Records is now a Must

With the introduction of UBO rules, you are required to disclose to the authorities name and details of the real beneficiary owner of the company. A Real beneficiary is defined as an individual who owns or controls directly or indirectly, 25 per cent of the capital. Or has voting rights for at least 25 per cent of the shares or who exercises ultimate control over the company. As per the UBO law, the companies are required to maintain a Real Beneficiary Register (RBR) and Partners or Shareholders Register (PSR) and submit to the authorities. The UBO accounting requirements are also applicable to companies that are closing down.

As per Cabinet Resolution No. (58) of 2020 on Ultimate Beneficial Ownership, the owners should hand over the RBR and PSR within thirty days from the date of the liquidator’s appointment. Further, the company administrators or the liquidator need to maintain the Registers for a period of at least five years from the date of liquidation. The assistance of the best accounting firms in Dubai is a cost-effective way to comply with the UBO recording requirements.

Complying with Economic Substance Regulations

Businesses incorporated in Dubai should conduct an in-depth assessment to determine how they would be categorised as per the amended ESR law, i.e. Licensee or Exempted Licensee. Companies licensees by the mainland, free zone anoffshore authorities need to check whether they are carrying out relevant activities such as banking, insurance, shipping, lease-finance, investment fund management, intellectual property, headquarters business, holding company business, and distribution and services.

If they fall within the Licensee category, the investors need to file annual ESR notification and ESR Reports to avoid steep penalties. They also need to meet the Economic Substance Test to prove they have adequate economic substance in the UAE. On the other hand, an Exempted Licensee need only to file ESR notification to substantiate their exempted status and be excluded from filing ESR Reports and undertaking ESR test. Accurately assessing ESR status is a tough job, but the best accounting firms in Dubai will assist you in this regard, apart from helping with the filing of ESR notification and ESR Reports.

How can Jitendra Chartered Accountants Help?

With the change in the regulatory landscape, accountants in Dubai, UAE are required to evolve smartly. The role of accountants has expanded as VAT, AML, UBO, and the ESR regulations came into the picture in recent years. Entrepreneurs can no longer afford to avoid enlisting the best accounting services in Dubai in view of the increased compliance burden. Here is why outsourcing to the top accounting firms in Dubai, such as Jitendra Chartered Accountants (JCA), is considered a viable business idea. JCA’s bespoke assistance enables entrepreneurs to meet the regulatory requirements without fail. Consult with JCA’s Chartered Accountants in Dubai to ensure that obligations such as VAT, UBO, AML and ESR are fulfilled without incurring any form of penalty.

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