A corporate tax, also called corporation tax or company tax, is a type of direct tax levied on the income or capital of corporations and other similar legal entities. The tax is usually imposed at the national level, but it may also be imposed at state or local levels in some countries.

The UAE’s Ministry of Finance made a groundbreaking announcement of implementing Corporate Tax in the region, effective financial years from or after 1 June 2023.

On 9 December 2022, the UAE Federal Tax Authority (FTA) released the final version of the UAE Corporate Tax (CT) law (hereinafter referred to as the law) through Federal Decree Law No. 47 of 2022. The law is largely based on the public consultation document issued earlier during the year 2022. However, it also contains certain new provisions which inter-alia include General Anti Abuse Rules, Small Business Relief, detailed definition of UAE sourced income, etc.

Businesses based in UAE would need to be geared up to adapt to these new changes. The companies need to evaluate the applicability of the provisions, align structure to make it tax efficient in UAE, and align policies for related party transactions

Who is subject to Corporate Tax?

Broadly, Corporate Tax applies to the following “Taxable Persons”:
          ●UAE companies and other juridical persons that are incorporated or effectively managed and controlled in the UAE;
          ●Natural persons (individuals) who conduct a Business or Business Activity in the UAE as specified in a Cabinet Decision to be issued in due course; and
          ●Non-resident juridical persons (foreign legal entities) that have a Permanent Establishment in the UAE (which is explained under Section 8).
Juridical persons established in a UAE Free Zone are also within the scope of Corporate Tax as “Taxable Persons” and will need to comply with the requirements set out in the Corporate Tax Law. However, a Free Zone Person that meets the conditions to be considered a Qualifying Free Zone Person can benefit from a Corporate Tax rate of 0% on their Qualifying Income (the conditions are included in Section 14).
Non-resident persons that do not have a Permanent Establishment in the UAE or that earn UAE sourced income that is not related to their Permanent Establishment may be subject to Withholding Tax (at the rate of 0%). Withholding tax is a form of Corporate Tax collected at source by the payer on behalf of the recipient of the income. Withholding taxes exist in many tax systems and typically apply to the cross-border payment of dividends, interest, royalties and other types of income.

How much is the tax rate?

The UAE introduced the federal corporate tax with a standard statutory rate of 9 per cent starting from the financial year beginning on or after June 1.

It brought the income of companies exceeding Dh375,000 ($102,110) within the taxable bracket. Taxable profits below that level will be subject to a tax of zero per cent.

In May, the Ministry of Finance confirmed that business owners in the country would be subject to corporate tax only if their turnover in a calendar year exceeds Dh1 million, ensuring that only business or business-related activity income is taxed.

That means that a business owner or entrepreneur making Dh500,000 from their business in a calendar year would not pay tax on their earnings.

For example, if a UAE resident operates an online business and the combined annual turnover from the business exceeds Dh1 million, under the new decision, that income would be subject to corporate tax.

However, if the resident also earns income from a rental property and personal investments, these sources of income would not be subject to the tax, as they fall under the out-of-scope categories, the ministry said.

1. What is corporate tax in UAE?

Corporate tax is a form of direct tax levied on the net income or profit of corporations and other business entities. It is also commonly known as 'Corporate Income Tax' or Business Profits Tax.

In simple words, it is a tax levied on the net profit made by the businesses. It requires companies to pay a certain percentage of profit as tax.

2. Who should pay corporate tax in the UAE?

All the businesses whose taxable profit (net) is more than 375,000 AED fall under the purview of corporate tax and are required to pay a certain percentage of net profit as corporate tax.

3. What is the rate of corporate tax in the UAE?

The corporate tax rate is at 9% of the net profit made by the businesses. In order extent support to small businesses and start-ups, the corporate tax rate will be '0' % if the net profit is up to 3,75,000 AED

4. What is the date of implementing the federal corporate tax in UAE?

The date of implementing the corporate tax is effective from the financial year starting on or after 1st June, 2023.

5. When will the corporate tax law be released by the authorities?

The authorities already released the corporate tax law on 9th December 2020. The UAE corporate tax is made available through a 'Federal Decree-Law no. 47 of 2022 on their official website. To download the UAE corporate tax law, you can visit the Ministry of Finance website. 

6. What are the businesses or incomes that are outside the scope of corporate tax?

Given the profit threshold of 3,75,000 AED, all businesses that exceed the threshold have to pay the corporate tax. However, certain types of business or income are exempt from corporate tax. Below is the list of companies or income exempt from corporate tax:

• Individuals will not be subject to corporate tax. As a result, any income from employment, real estate, investments in shares, and other personal income unrelated to a trade or business in the UAE will be exempt from corporate tax
• Not applicable to foreign investors who do not carry on business in UAE
• Corporate tax incentives are currently being offered to free zone businesses that comply with all regulatory requirements will continue.
• Capital gains and dividends received by UAE businesses from its qualifying shareholdings are exempt from corporate tax
• Not applicable on qualifying intragroup transactions and restructurings

7. How is corporate tax in UAE calculated?

Corporate tax in UAE is calculated at 9% of the net profit shown in the company's financial statements. The 9 % corporate tax will be levied only if the taxable net profit exceeds 375,000 AED. In other words, the net profit up to 3,75,000 AED is taxed at 0%.

How to register?

UAE businesses subject to corporate tax are required to register and obtain a tax registration number. Generally, the registration application must be submitted to the Federal Tax Authority.

Taxable businesses must file a tax return to the FTA no later than nine months after the end of the financial year.

The parent companies of tax groups should file one tax return to the authority on behalf of the whole group.

The FTA may also request certain exempt persons to register for corporate tax

Documents required for Corporate Tax Registration in UAE

Documentation and details required for Corporate Tax Registration:
1. FTA Credentials (If you have previously registered with the Federal Tax Authority)
2. Valid Trade License Copy
3. MOA (Memorandum of Association)
4. Valid Emirates ID Copy of all partners associated with the company
5. Valid Passport Copy of all partners associated with the company
6. Business Address
7. Email address
8. Mobile number
9. Landline number

1. Corporate Tax Period

Who is exempt?

Several exemptions are offered for businesses operating in strategic sectors.

Those exempt from corporate tax include government entities, government-controlled entities, extractive and non-extractive natural resource businesses, qualifying public benefit entities and qualifying investment funds, public pension or social security funds, or private pension or social security funds.

Also exempt is an entity that is wholly owned and controlled by an exempt person if it undertakes part or all of the activity of the person, exclusively holds assets or invests funds for the benefit of the person, and only carries out activities that are ancillary to those carried out by the person.

In May, the UAE Ministry of Finance issued three new ministerial decisions that explain exemptions and the preparation of financial statements.

In April, the ministry also clarified that small businesses in the UAE with revenue of Dh3 million or less can benefit from a new corporate tax relief programme.

The UAE Corporate Tax​ will become effective for financial years starting on or after 1 June 2023. It ​is a Federal tax and will therefore apply across all Emirates. The rates will be 0% for taxable income up to AED 375,000 and 9% for taxable income above AED 375,000.

Registration for Corporate Tax in UAE

As per the FTA's Federal Decree Law 47, The corporate tax regime demands every taxable person, which includes a Free Zone Person, requires to register for Corporate Tax and get a Registration Number. The Federal Tax Authority also requested that even the Exempted Persons should register for Corporate Tax. 

Taxable Persons must file Corporate Tax returns for a Tax Period within 9 months from the end of a specific period. This deadline is normally applied in the payment of all the Corporate Taxes due in terms of the Tax Period the return is filed. 

In the cases excluded as declared by the Minister, a Taxable Person must register for the Corporate Tax with the Federal Tax Authority in a specific format, within a timeline declared by the authority. 

The Authority requires the Taxable Person or the Independent Partnership, to register for Corporate Tax and obtain the Tax Registration Number. The Tax Authority should have a unique judgment for Corporate Tax Registration from the day an individual becomes a Taxable Person.

Once the registration of corporate tax is completed, the tax persons have to pay a standard rate of Corporate Tax of 9% on taxable income above AED375,000, while taxable income up to AED375,000 is charged 0%. 

Who should register for Corporate Tax?

Every Taxable person, including Free Zone person, needs to register for Corporate Tax and get a Registration Number. 

As per the UAE Law for Corporate Tax, there are conditions for tax registration, which are as follows: 

• Mandatory Registration
• Registration at the choice of FTA

If your business is taxable under the Corporate Tax policy, you should apply for Corporate Tax registration in the UAE. Once registered you must obtain a Tax Registration Number within a specific period. Tax consultants at BMS Auditing help businesses with the registration process for Corporate Tax. 

The Federal Tax Authority requests certain individuals such as Exempt persons, autonomous partnerships, etc. to register under the Corporate Tax policy, and obtain the Tax Registration Number.

Who is exempt from UAE Corporate Tax?

Although the Federal Tax Authority requested that the Exempted Persons should register for Corporate Tax, the exempted business has to pay a 0% of corporate tax. 

There are categories that are exempted from Corporate Tax. Let us look at some of them:

• The employee’s salary will not be affected by Corporate Tax. However, if the individual gets income from activities conducted under a freelancing license, then he/she will be charged with the company tax
• Shares or similar assets resulted in dividends, capital gain, or any income earned by personal potential 
• Investment in real estate is legal in the UAE until the investor has no business license
• Potential intra-group transactions or reorganizations will not be affected by the Corporate Tax
• Corporate Tax will not be charged on the foreign investor’s income from dividends, gains, royalties, and similar investment returns unless obtained through business or business activity.

Exempt Person

1. 1. Automatically exempt
      • Government entities.
      • Government-controlled entities specified in a cabinet decision.
   2. Exempt if notified to Ministry of Finance (and subject to meeting certain conditions)
      • Extractive business.
      • Non extractive natural resource Business.
   3. Exempt if applied to and approved by FTA and subject to meeting certain conditions
      • Qualifying public benefit entities.
      • Public and private pension and social security funds.
      • Qualifying investment funds.
      • Wholly owned and controlled UAE subsidiaries of a Govt entity, a govt controlled entity, a qualifying investment fund or a public or private pension or social security fund.
      • CT won’t apply to dividends or capital gains that a UAE business makes from its qualifying shareholdings.
      • Qualifying intra-group transactions and reorganizations will not be subject to CT, provided the necessary conditions are met

Scope of Corporate Tax in UAE

The United Arab Emirate introduced a federal tax structure applicable to all business operation and commercial activity carrying out throughout the emirates. Let’s have a look at the scope of corporate taxation given below. CT will apply to:

1. Businesses and individuals conducting business activities under a commercial licence in the UAE.
2. Free zone businesses (Freezone companies shall receive the benefit of the CT incentives if they comply with all regulatory requirements and are not conducting business in the UAE’s mainland).
3. Foreign companies and individuals only if their business is effectively managed and controlled in the UAE.
4. Banking operations.
5. Businesses that encompass construction, development, real estate management, agency, and brokerage activities

Take a look at these things before registering for corporate tax

• Are you aware of businesses which are exempted from CT registration (Ministerial decision no. 43 of 2023)?
• Do you know when to register for CT?
• Do you know your business Tax period as per Article 57, and are you aware of the conditions under which you can change your tax period, as per FTA decision no. 5 of 2023?
• Do you hold multiple Trade License, and are you aware of the requirement to register as a Tax Group as per Article 40? Have you assessed the impact of registering as Tax Group or as an individual registration for each Trade license?
• Are you aware that branch does not require separate CT registration, it’s part of Main Trade license?
• Is your company eligible for Small Business Relief?
• Is your financials chart of account complied with CT requirements?
  Is your business in Free zone, are you aware of the Qualifying criteria to be eligible for 0% Corporate Tax?
• Do you have transactions with connected person, related parties? Are you aware of the requirement of documentation under CT regulations for transactions with such person?
• Have you assessed the impact of Corporate Tax, in your business financials & cash flows?

·         When can a Free Zone Person be a Qualifying Free Zone Person?

• A Free Zone Person that is a Qualifying Free Zone Person can benefit from a preferential Corporate Tax rate of 0% on their “Qualifying Income” only.

In order to be considered a Qualifying Free Zone Person, the Free Zone Person must:

• 
  maintain adequate substance in the UAE;
  ●derive ‘Qualifying Income’;
            ●not have made an election to be subject to Corporate Tax at the standard rates; and
            ●comply with the transfer pricing requirements under the Corporate Tax Law.
• 
  The Minister may prescribe additional conditions that a Qualifying Free Zone Person must meet.
• 
  If a Qualifying Free Zone Person fails to meet any of the conditions, or makes an election to be subject to the regular Corporate Tax regime, they will be subject to the standard rates of Corporate Tax from the beginning of the Tax Period where they failed to meet the conditions.
•  

Why Choose Us?

Keams Canyon Tax Consultants has been a trusted provider of corporate tax services in the UAE since 2018. With our extensive experience and expertise, we understand the complexities of corporate tax laws and regulations, ensuring your business remains compliant and maximizes tax benefits. Our personalized solutions are tailored to meet your needs, helping you optimize your tax position and minimize liabilities. We pride ourselves on delivering excellent service and building long-term client relationships.

Before you register for Corporate 𝙲𝙾𝚁𝙿𝙾𝚁𝙰𝚃𝙴𝚃𝙰𝚇𝙴𝙻𝙸𝙶𝙸𝙱𝙸𝙻𝙸𝚃𝚈𝙰𝚂𝚂𝙴𝚂𝙼𝙴𝙽𝚃

What is a Corporate Tax Assessment in UAE?

A corporate tax assessment is an organized procedure to consider suggestions for businesses, where there is a potential to make relevant changes within and outside the business unit or a group. The ultimate result of an assessment is creating a base for effective Tax Planning, Business reconstructing and executing sufficient compliance verifications. Our corporate tax assessment services are a part of our corporate tax service in UAE  where we provide holistic corporate tax solutions for your business. So, we would like you to check it out!  

Corporate Tax Impact Assessment

Corporate Tax Impact Assessment in UAE is a process of evaluating the potential impact of tax laws, regulations, and policies on a company's financial performance

Corporate Tax Impact Assessment in the UAE typically include:

1. Tax compliance: Evaluating the company's compliance with the tax laws and regulations in the UAE, including the submission of tax returns and payment of taxes owed.
2. Tax planning: Identifying opportunities to minimize tax liabilities and optimize tax benefits, such as claiming tax credits and deductions.
3. Transfer pricing: Evaluating the transfer pricing policies of the company to ensure compliance with tax laws and regulations, including the transfer of goods, services, and intellectual property between related entities.
4. Business structures: Analyzing the current business structure of the company and considering any changes that may be necessary to minimize tax liabilities and optimize tax benefits.
5. Tax incentives and exemptions: Evaluating the company's eligibility for any tax incentives or exemptions offered by the UAE government, such as free zone status.
6. International tax considerations: Analyzing the impact of cross-border transactions on the company's tax position and ensuring compliance with international tax laws and regulations.

𝙲𝙾𝚁𝙿𝙾𝚁𝙰𝚃𝙴𝚃𝙰𝚇𝚁𝙴𝙶𝙸𝚂𝚃𝚁𝙰𝚃𝙸𝙾𝙽𝚂𝙴𝚁𝚅𝙸𝙲𝙴𝚂

Corporate Tax Registration in UAE

How to register?

UAE businesses subject to corporate tax are required to register and obtain a tax registration number. Generally, the registration application must be submitted to the Federal Tax Authority.

Taxable businesses must file a tax return to the FTA no later than nine months after the end of the financial year.

The parent companies of tax groups should file one tax return to the authority on behalf of the whole group.

The FTA may also request certain exempt persons to register for corporate tax.

Corporate Tax Registration Timeline in the UAE

According to information provided on the FTA website, taxable persons have until the date of their first tax filing to register. For example, if a taxable person has a year ending on May 31st, they have a registration period of 26 months available until February 28th, 2025. Similarly, for taxable persons with a financial year ending on December 31st, a registration period of 33 months is available until September 30th, 2025.

UAE Corporate Tax De registration

If your business is a corporation and is registered for corporate tax, you must deregister it before it ceases to be subject to corporate tax. The FTA will deregister your business if you have filed corporate tax returns, settled all of its corporate tax liabilities, and settled any penalties due for periods up to and including the date of cessation.

UAE Corporate Tax Return Filing

The FTA requires that businesses be allowed to file a single consolidated tax return, rather than requiring them to file multiple returns. This consolidated return must be filed within nine months of the end of each relevant tax period.

UAE Corporate Tax deadlines

The corporate tax regime is based on a self-assessment principle which means businesses are responsible for ensuring that the documents they submit to the FTA are correct and comply with the law.

The new UAE corporate tax regime allows taxpayers up to 21 months from the start of their financial year to prepare for filing and making their tax payments.

For example, businesses with a financial year starting on June 1, 2023, and ending on May 31, 2024, have until February 28, 2025 to file their corporate tax returns and make their payments.

For a business whose first tax period begins on January 1, 2024 and ends on December 31, 2024, the return and payment must be filed between January 1 and September 30, 2025.

𝙲𝙾𝚁𝙿𝙾𝚁𝙰𝚃𝙴𝚃𝙰𝚇𝚁𝙴𝚃𝚄𝚁𝙽𝙵𝙸𝙻𝙸𝙽𝙶𝚂𝙴𝚁𝚅𝙸𝙲𝙴𝚂

Registering, filing and paying Corporate Tax

Taxable Persons are required to file a Corporate Tax return for each Tax Period within 9 months from the end of the relevant period. The same deadline would generally apply for the payment of any Corporate Tax due in respect of the Tax Period for which a return is filed.

For instance, businesses with a financial year starting on June 1, 2023 and ending on May 31, 2024 will have from June 1, 2024 until February 28, 2025 (21 months) to file their corporate tax returns and make their payments.

Corporate Timeline for the Business Financial Year (January 1 - December 31)

1. The first tax period will range from January 1 (2024) to December 31 (2024) after which the business will assess whether or not it will need to pay corporate tax after registering and filing for it.
2. The second tax period will range from January 1 (2025) to December 31 (2025) during which the taxpayer will need to file and pay corporate tax for the first tax period.
3. The deadline to file and pay corporation tax will be September 30 (2025). The tax can be paid any time before this due date.
4. The total time period that is available for such a fiscal year becomes 33 months in this case. The taxable business should better get itself registered during this period.

Using the above instances, any business can have an understanding of its corporate tax timeline. However, if any business finds it difficult, it can seek the assistance of corporate tax advisors in the UAE

𝙲𝙾𝚁𝙿𝙾𝚁𝙰𝚃𝙴𝚃𝙰𝚇𝙰𝙳𝚅𝙸𝚂𝙾𝚁𝚈𝚂𝙴𝚁𝚅𝙸𝙲𝙴𝚂

Corporate Tax Advisory Services

Keams canyon has the most qualified and experienced tax consultants with extensive expertise in Corporate Tax registration. Keams canyon has tax advisors who provide quality services in the registration process for Corporate Tax.  

Our team is quite aware of the major changes resulting from the implementation of Corporate Tax. The early preparation of corporate tax compliance saves a lot of costs and minimizes the stress on the team. With the extensive expertise and experience of the tax consultants at keams, you can be assured of smooth and unlimited transformation. 

Keams canyon assists you with updates on Corporate Tax Registration and filing CT returns, so you stay compliant with the regulations and save from fines and penalties.

Advantages of  Tax Advisory Services

The UAE CT regulation has been devised to include best practices and lessen the cost of compliance for businesses. Managing your business’s tax structure is greatly simplified by tax advisers in Dubai. Tax consultation services prove to be a beneficial choice while establishing your business on a global scale, starting your new business setup in the UAE and also for taking advisory services.

• Proven ways to reduce your tax burden
• Focus on saving time by preparing tax returns
• Handle challenging calculations
• Find out how to get an effective tax planning done to have a lesser impact on cash flows
• Latest updates about taxation policies

1. Accurate calculation and filing of taxes
2. Minimization of tax liability through tax planning
3. Compliance with tax laws and regulations
4. Avoidance of penalties for non-compliance
5. Access to professional advice on tax-related matters

Keams Canyon is one of the leading professional accounting firms in UAE, which provides outstanding  bookkeeping and accounting services in and across the UAE. A we provide comprehensive accounting services and strive to understand your business needs and long-term goals so that we can provide tailor-made solutions to meet all your business requirements. Our wide variety of accounting services in UAE comprise Account Reconciliation Services, Updating of Backlog Accounts Services, Bookkeeping Services, Financial Reporting Services and a lot more to make your business run productively in the UAE.

Accounting and Bookkeeping Services in UAE.

Accounting and bookkeeping services in UAE is the most important element for every organization. Therefore, these services help you to keep up a healthy financial status. Our bookkeeping services records and assesses all the financial-related exchanges of your business.

These help you in reducing business risks and increase decision making. Besides, it supports growth in overall development. Both accounting and bookkeeping services in Dubai need unique attention from experts.

SCOPE OF ACCOUNTING and BOOKKEEPING

• Bookkeeping of the financial transactions.
• Accounting of the financial transactions as per the procedures & rules described in the IFRS and International Accounting Standards (ISA).
• Recording and maintaining day to day accounting transactions of payments, receipts, sales and purchases, other miscellaneous expenses and inventory accounting on daily basis.
• Preparation, maintenance and updating of Fixed Assets Register as per the Standards.
• Monthly and quarterly reconciliation of bank account.
• Recording of payroll information as needed.
• Analysis of debtors and creditors and reconciliation of the same on monthly basis.
• Scrutinizing all ledger accounts at regular intervals.
• Posting regular journal entries, creating month end provisions and month end closings.
• Preparation of Monthly trial balance and final accounts like profit and loss account, Balance Sheet.
• Quarterly, Half Yearly and Annual financial statements.
• Preparation of Management information reports as and when required

Bookkeeping

Bookkeeping is often a time-consuming process that many business owners hate. But it is also one of the most critical parts of a business so we’re here to help!

We can streamline your bookkeeping processes by setting up cloud-accounting software with automatic bank feeds. We can help reconcile your accounts, organize your finances as well as review and interpret your numbers, reports, and data. Ultimately, The Accountant can help you understand your business better.

• General bookkeeping duties
• Bank Reconciliation
• Accounts Payable
• Accounts Receivable
• Profit and Loss Statement
• Payroll
• End of Service Benefits
• Financial reporting and analysis
• Software advice, set up, and training
• Other systems implementation

• Benefits of Outsourcing Accounting Services

• Companies can choose to outsource all or part of their accounting tasks, depending on their needs and budget. Outsourcing accounting services in UAE provides several benefits, including cost savings, improved accuracy and consistency, access to the latest accounting software and technology, and more time and resources to focus on core business activities.

Audit is the examination or inspection of various books of accounts by an auditor followed by physical checking of inventory to make sure that all departments are following documented system of recording transactions. It is done to ascertain the accuracy of financial statements provided by the organization.

Audit can be done internally by employees or heads of a particular department and externally by an outside firm or an independent auditor. The idea is to check and verify the accounts by an independent authority to ensure that all books of accounts are done in a fair manner and there is no misrepresentation or fraud that is being conducted.

All the public listed firms have to get their accounts audited by an independent auditor before they declare their results for any quarter

There are four main steps in the auditing process. The first one is to define the auditor’s role and the terms of engagement which is usually in the form of a letter which is duly signed by the client.

The second step is to plan the audit which would include details of deadlines and the departments the auditor would cover. Is it a single department or whole organization which the auditor would be covering. The audit could last a day or even a week depending upon the nature of the audit.

The next important step is compiling the information from the audit. When an auditor audits the accounts or inspects key financial statements of a company, the findings are usually put out in a report or compiled in a systematic manner.

The last and most important element of an audit is reporting the result. The results are documented in the auditor’s report.

Importance of auditing

Auditing ensures the integrity and compliance of your accounts with Generally Accepted Accounting Principles (GAAP). Performing frequent internal and external audits helps in maintaining the credibility of your finances. Unfortunately, many business owners only realize the true value in auditing only after having to face the consequences of error-prone data.

An auditor’s job is to ensure that your bookkeeping activities are on point and to determine if your financial statements are in sync with the real financial position of the business. A well-audited, up-to-date business grabs a place in the good books of the shareholders who want to invest in your company.

However, if an auditor finds out that the financials have been tampered with, your business could face legal punishment. In such situations, businesses often dissolve because of the ruptured reputation in the eyes of customers and stakeholders. To avoid this, you must plan for regular internal audits so that accounting professionals or auditors can detect fraudulent activities or roadblocks to compliance before they affect the business’s reputation

1-𝙸𝙽𝚃𝙴𝚁𝙽𝙰𝙻𝙰𝚄𝙳𝙸𝚃

We offer Internal Audit services across diverse sectors in UAE

As part our internal audit function, our team ensure that family -owned business and other enterprises in the UAE protected from enterprise – level risks

The role of internal audit is to provide independent assurance that an organizations risk management, governance and internal control process are operating effectively.

The greatest advantage of internal audit is that it helps in the management of the organization effectively. Internal audits will highlight any incorrect processes that are followed and help in rectifying the processes that lead to improvement in process efficiency.

2- 𝙴𝚇𝚃𝙴𝚁𝙽𝙰𝙻𝙰𝚄𝙳𝙸𝚃

Tax Audit in UAE

A tax audit in UAE will be conducted by the official representatives of the Federal Tax Authority (FTA). The objective of the tax audit is to determine the VAT compliance and to ensure that the tax liability is correctly determined and paid

Tax audit will be conducted at the offices of the concerned business or at the place of choice of Federal Tax Authority (FTA). FTA will notify the business at least 5 business days in advance. FTA will conduct tax audit in official working hours.

Factors of Tax Audit

Selecting a business for a tax audit lies completely with the FTA’s decision. Certain factors can be considered before selecting a business for a tax audit, such as:

• Large scale businesses
• History of late tax submissions
• The occurrence of incorrect tax filings
• The complexity of a business

Abu Dhabi National Oil Company (ADNOC) introduced a program called the In-Country Value Certificate program, which has been in effect from the 1st of April 2018. The requirement of the program is that all UAE based goods suppliers acquire an In-Country Value Certificate from the ADNOC ICV Certificate agency. Along with this, the suppliers are required to get the calculated ICV score demonstrating their contribution to the previous financial year to deliver the ICV. Suppliers who are not interested in procuring the ICV Certification will be able to take part in the ADNOC group tender, though their ICV score will be considered to be zero.

ICV in UAE is one of the bases in ADNOC’s acquisition process. The evaluation pertains to all awarded contracts. Dealing with ADNOC directly or indirectly will have a different impact on the ICV responsibilities of suppliers. Suppliers will need to get an ICV certification in UAE and formulating an ICV improvement plan in UAE themselves or take the help of contractors supporting them depending on their dealing with ADNOC

1.What is an ICV certificate?

It is a measure of an entity’s contribution towards the local economy, based on a set of pre-determined criteria. All suppliers intending to compete in tenders with any of the ICV implementing companies must submit their ICV certificate, together with other requisites. The ICV score is factored in by the companies in their tender evaluation process.

2.How is ICV measured?

ICV is measured based on the annual cost of procurement incurred by Companies from other mainland/ICV certified Companies. It also takes into account the total value of fixed assets in the UAE, corresponding depreciation and the annual manpower costs expended on Emiratis and Expats.

3.Is there a minimum ICV score?

No, there is no minimum score. Based on each Company’s business and operation model, the scores may vary even among contemporaries in the same industry. That being said, a supplier can always strategize to improve their ICV score.

4.Can multiple entities apply for a combined ICV?

No, Companies cannot apply for a combined ICV. The only exception is if the company has a branch in the same emirate with identical activities and ownership, in which case the company may apply for a single ICV certificate.

Eligibility Criteria

An ICV certificate can be applied for each license held by an entity. The minimum requirements are as under:

• Audited Financial Statements, issued in accordance with IFRS by a Ministry of Economy licensed auditor
• Registration in the Nafis Partner Program, a federal program aimed at empowering Emirati talent to occupy jobs in the private sector.

3 Step Certification Process

Step 1: Fill in the ICV Supplier Template based on the latest Audited Financial Statements

Step 2: Approach one of the authorized Certifying Bodies for evaluation of the score and performance of Agreed Upon Procedures

Step 3: Once the score is approved by MoIAT, you will receive a digital certificate which is valid for 14 months from the date of issue of the Audited Financial Statemen

Key Requirements to Obtain ICV Certification 

The MoIAT has set out a series of requirements for suppliers to achieve the ICV certification. Suppliers who are confused about the process can seek to consult with providers of ICV certification services in Dubai. Here is a list of requirements to obtain an ICV certificate in the UAE:

1. Suppliers should submit Audited Financial Statements prepared as per International Financial Reporting Standards (IFRS). The report should not be older than two years from the certifying year. Moreover, the report should be signed by a licensed auditor.
2. The ICV certificate must be obtained separately for each legal entity of a company. However, companies having different branches in the same Emirate with the same activities and ownership can obtain a combined ICV certificate in the name of the company.
3. If a company has manufacturing and commercial licenses, it should have a separate accounting record for manufacturing and commercial activities; The MoIAT certifying bodies will issue the ICV separately for each license.
4. Newly established companies (less than 10 months old) and entities without audited financial statements can use Management Accounts for up to 9 months for the ICV certification process
5. The figures entered in the ICV certificate must tally with the supplier’s latest audited financial statement
6. The ICV certificate shall be valid for 14 months from the date of issuance of audited financial statements.

Steps to obtain an ICV certificate in UAE

Obtain the Audited Financial statements

Obtain the financial statements prepared based on International Financial Reporting Standards from an approved auditor in UAE. If the company is newly formed, then the management accounts can be used.

Seek the assistance of an ICV Certifying body

ICV certifying body is an entity authorized by the MOIAT to assess the ICV certificate request by suppliers and issue the same, provided all the required conditions are met.

ICV Template

Fill and submit the ICV Template to the certifying body. This template must be completed per the guidelines issued by MOIAT.

Evaluation

The next step involves evaluating the application in which the ICV template is verified with supporting documents per the guidelines and agreed-upon procedures issued by MOIAT.

Approval from ICV Committee

The ICV committee will approve the application after completing the evaluation process. The ICV committee operates under MOIAT, which reviews the certification process and will approve the agreed-upon procedures followed by the Certifying Body.

Supplier approval on ICV

The supplier then reviews and approves the unsigned ICV Certificate sent to the Certifying Body.

Issue of ICV Certificate

The certifying body issues the ICV Certificate, following which the supplier submits it to one of the participating entities

𝙸𝚂𝙾𝙲𝙴𝚁𝚃𝙸𝙵𝙸𝙲𝙰𝚃𝙸𝙾𝙽𝚂𝙴𝚁𝚅𝙸𝙲𝙴𝚂

Our expert team of ISO Consultants is well-versed in various ISO Certification Standards. We will help fast-track your ISO Certification Implementation process in UAE. Depending on the specific organizational requirements, the scope of the ISO Certification process will change and we will adapt to the varying client requirements very effectively

We cover a wide range of certificate expertise and have worked with many organisations to achieve these standards ISO 9001, ISO 14001,ISO 45001,ISO 27001, ISO 17025,HACCP, ISO 22000, GMP, and more

OUR SERVICES

ISO CERTIFICATION

Our team of professionals will work side by side with your company to train, document and facilitate all the requirements to be an ISO Certified organisation.

ISO UPGRADE

All our ISO consultants at Quality Plus are qualified to support the renewal of expiring ISO Certificates or for the upgrade of previous certificates.

ISO AUDIT TRAINING

The aim of our courses is to provide delegates with the knowledge, principles and practices for carrying out effective internal audits throughout the ISO range of systems.

In the present times, organizations have to do more than just mass produce products or provide long-term services for customer demands. They must show that what they are offering is something of high value, created using processes that are nothing but perfect, giving an output that speaks quality and which will satisfy customer needs right away.

Nowadays, organizations are no longer the capitalist companies, which just employed people for the purpose that gave huge profits. They have to show themselves as being socially responsible by putting in their best practices in place while manufacturing a product or when giving a service.

It is not that their output matters in terms of quality but also the measures they have out in place for their employees also matters as well. A healthy organization sustains itself as well as society in the long run. It is such principles that are gaining an ISO 9001 certification striving to achieve. The ISO 9001 certification comes from the international organization for standardization that govern the method in which product, services, and systems are produced or used for the purpose of safety, efficiency, and highest quality.

In this article, we at Quality Plus in Abu Dhabi, UAE have tried to focus on the importance and need of ISO 9001 certification for businesses. We have been serving clients across countries for many years and provide ISO 9001 certifications in Abu Dhabi and surrounding countries in UAE.

The reason why we have put forward this article is to make businesses realize that they need to take strategical steps to move ahead of others in the competition. While on the same time, this article aims to emphasize the importance of quality standards. Customers should get quality for money. Standards like ISO 9001 emphasize on that quality. Let’s scroll down and go through this article to get an understanding how ISO 9001 has become so crucial in the modern times.

ISO 9001 Certification – Why Needed?

ISO 9001 certification is the not just a particular standard but a criteria for quality through which an organization can achieve the kind of quality that is expected from it. It is based on a number of quality management principles such as business continual improvement, customer focus, process approach, etc. It can be used by companies, whether large or small and in any type of industry. In the recent, there are more than a million companies that have gained this ISO 9001 certification.

In order to get the ISO 9001 certification, a company must have sound quality management systems in place. An internal audit must be done to find out if a particular quality management system is working. For this purpose, the organization can invite an independent body or even any of its clients. It is very significant for any business to get an ISO 9001 certification. Here is a look at some reasons for needing it.

Very often, some customers demand that they will do business only with a company that has this ISO 9001 certification. They might be an organization with it and hence will only work with another that has similar quality standards. You can find many organizations like this in your market. Gain access to doing business with them through such a quality specific certification.

𝙴𝚂𝚁𝙵𝙸𝙻𝙸𝙽𝙶

What is ESR UAE? 

If this all feels a little overwhelming, we’ll break down what you need to know ahead of time in this article. In simple terms, ESR is defined as a set of standards that requires companies in the UAE to carry out business activities substantially in the country of their jurisdiction. The sole purpose of ESR would be to discard businesses with underlying intentions of registering their business to enjoy tax and economic benefits. In a country like Dubai, with highly favorable tax concession treatment, it’s logical that entities should establish stricter requirements to ensure sustainability in income generation.

The key industries to which ESR applies to include: shipping, fund management, insurance, banking, lease financing, distribution and service centers, holding companies, company headquarters, and intellectual property businesses. This is not an exhaustive list, so it’s important to do your research to ensure whether you need to take action. It’s worth talking to the experts on this point to ensure you remain compliant. There can be fines of up to AED 300,000, so it is critical to get the best advice.

What are the Relevant Activities?

• Banking Business
• Insurance Business
• Investment Fund management Business
• Lease – Finance Business
• Headquarters Business
• Shipping Business
• Holding Company Business
• Intellectual property Business (“IP”)
• Distribution and Service Centre Business

Once a UAE company has been identified as undertaking relevant activities, the ESR requires the company to satisfy the economic substance test which comprises three elements:

1). It is directed and managed in the UAE in relation to that activity
2). It conducts Core Income-Generating Activities (CIGA) in the UAE
3). It meets the adequate requirements with regard to the level of relevant activity carried on in the UAE.

What is expected if ESR is applicable to your business?

If you are carrying out the relevant activities and you are earning income out of it, you need to;

• Submit ESR notification
• Submit ESR report and
•  
• Make sure to manage the business in the way it is needed as per the law and maintain the adequate documentation

What are the penalties for not complying with ESR?

1. Failure to submit ESR Notification in time: AED 20,000
2. Failure to submit ESR Report in time: AED 50,000
3. Failure to meet the Economic Substantive Test: AED 50,000
4. Failure to provide accurate or complete information: Penalty of AED10,000 to AED 50,000

Ways of Filing ESR Notifications and Report

The primary purpose of ESR is to establish, maintain and illustrate the presence of onshore and free zone companies which undertakes the respective Core Income Generating Activities with regard to meeting the Economic Substance Test.

ESR Notification Filing

In accordance with the Economic Substance Regulations, ESR filing UAE requires the Licensees and Exempted Licensees to file a Notification to their respective Regulatory Authorities for the relevant Financial Year in which the business carries the relevant Core Income Generating Activity. For ESR Notification Filing they are required to submit:

• The nature of respective Core Income Generating Activity being carried out by the Licensee or Exempted Licensee.
• The gross income of the Businesses is carried out under Core Income Generating Activity.
• The end date of the financial year of the Relevant Activity.
• The supporting documents are to provide additional evidence as required by the Regulatory Authorities.

Exempted Licensees are also compelled to file the ESR Notification and along with that, submit supporting documents in order to qualify their exemption.

Read also : Economic Substance Reporting & Guidance in UAE

Exempted Licensees that are tax residents in a jurisdiction outside the United Arab Emirates should submit the following documents:

• Businesses that are tax residents outside the UAE are required to issue a letter or a certificate which affirms their taxability in the foreign jurisdiction. 
• An assessment of business tax, a business tax demand, proof of payment of the business tax, or any additional supporting document, issued by the business that is located in a foreign jurisdiction in which the business claims to be a tax tenant.

However, when a business is unable to provide adequate evidence in order to verify its exemption position, the Regulatory Authorities change the status of the business and repute them as a Licensee.

The time period for the submission of notification is different from that of an Economic Substance Report. The Ministry of Finance Portal is used for ESR Notification Filing which is done within the period of six months from the end of the relevant Financial Year. Also, the Licensees who have submitted an ESR Notification directly to their respective Regulatory Authorities should re-submit a Notification electronically on the Ministry of Finance Portal once available.

Read also : Economic Substance Regulations Notification Form

ESR Reporting UAE

Businesses are required to meet the requirements of the Economic Substance Test and file the ESR Report which entails the submission of information and documentation mentioned in the Economic Substance Regulations within the period of the relevant Financial Year. In accordance with the Ministerial Decision 57 of the year 2020, ESR Reporting should be done within twelve months from the end of the respective Financial Year.

After ESR Reporting, the National Assessing Authority issues its decision showing whether the Licensee has met the Economic Substance Test requirements within six years of the end of the relevant Financial Year.

For ESR Reporting UAE, companies that undertake the Relevant Activities are required to report;

• A relevant activity carried out by a business in the United Arab Emirates.
• Gross income of the business that is subjected to tax outside the United Arab Emirates.
• The date of the relevant financial year of the Licensee.

ESR Reporting UAE is to be submitted by the companies to the respective Regulatory Authority each respective financial year to show that they are carrying out the Relevant Activity. Under Economic Substance Regulations, it is compulsory to submit the details of the Relevant Activity, revenue, expenditures, and resources that show whether the Economic Substance Test of UAE is met.

Deadlines for Filing ESR Notifications and Report

• Licensees or Exempted Licensees that fail to submit their Notification along with the required supporting documents by the mentioned deadline will pay a penalty of AED 20,000 under Article 13 of Decision 57 for failure to provide a Notification.
• Licensees or Exempted Licensees that fail to re-submit their Notification by the mentioned deadline will pay a penalty of AED 20,000 under Article 13 of Decision 57 for failure to provide a Notification.
• Licensees or Exempted Licensees that fail to submit their Economic Substance Report by the mentioned deadline will pay a penalty of AED 50,000 under Article 14 of Decision 57 for failure to provide an Economic Substance Report.

𝙰𝙼𝙻𝙲𝙾𝙼𝙿𝙻𝙸𝙰𝙽𝙲𝙴

Money laundering is a problem for the UAE, despite the steps the country has taken to combat financial, organized, and terrorist crimes. The UAE maintains a strong Anti-Money Laundering (AML) system in an effort to protect against the possibility of money laundering and terrorist financing

A guide to Anti Money Laundering AML Laws in UAE for 2021

Money laundering and the financing of terrorism are crimes that threaten the security, stability and integrity of the global economic and financial system, and of society as a whole. The Anti Money Laundering (AML) Laws in UAE have been enacted to combat money laundering, terrorist financing and other related threats to the nation.

The Latest UAE AML Regulations 2021 for AML Compliance in UAE

The principle AML/CFT legislation applicable is the Federal Decree-Law No. (20) of 2018 On Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organisations (the “AML-CFT Law” or “the Law”) and implementing regulation, Cabinet Decision No. (10) of 2019 Concerning the Implementing Regulation of Decree Law No. (20) of 2018 On Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations (the “AML-CFT Decision” or “the Cabinet Decision”).

Legal requirements as per Anti-Money Laundering Law in UAE

The Anti-Money Laundering Law in UAE requires the FIs and DNFBPs to establish a comprehensive AML/CFT Program including AML Policy for KYC, Screening, Risk Profiling, Governance, STR Filing, and more. The AML Law in UAE requires that the Anti-Money Laundering Policy and AML procedures and guidelines have to be commensurate with the nature and size of the business. The AML Compliance Officer has to ensure that the provisions of the UAE AML Law are complied with.

1. WHAT LAWS IN YOUR JURISDICTION PROHIBIT MONEY LAUNDERING?

The principal federal anti-money laundering (AML) laws include, inter alia:

• Federal Decree Law No. (20) of 2018 on Anti-Money Laundering, Combating the Financing of Terrorism and Financing of Illegal Organisations (as amended) (AML Law);
• Cabinet Resolution No. (10) of 2019 Concerning the Implementing Regulation of Decree Law No. (20) of 2018 on Anti-Money Laundering, Combating the Financing of Terrorism and Financing of Illegal Organisations (Cabinet Resolution); and
• Federal Penal Law No. 31 of 2021 (Penal Code).

Federal and local regulatory and supervisory authorities implement and enforce the AML laws and issue supplementary laws, regulations, rules, guidance, circulars, notifications and other forms of guidance, which can have the force of law.

2. WHAT MUST THE GOVERNMENT PROVE TO ESTABLISH A CRIMINAL VIOLATION OF THE MONEY LAUNDERING LAWS?

To establish the criminal offence of money laundering (ML), the government must prove that a person wilfully commits one of the following acts with knowledge that the funds are derived from a predicate offence:

• transferring or moving the proceeds or conducting any related transaction with the intention of concealing or disguising their illicit source;
• concealing or disguising the true nature, source or location of the proceeds or the manner of their disposal, movement, ownership or rights;
• acquiring, possessing or using the proceeds; and
• assisting the perpetrator of the predicate offence to escape punishment.

„Funds” includes (in summary) assets and economic resources of every kind that may be used to obtain any funding, goods or services, whatever the method of acquisition or form, whether tangible or intangible, movable or immovable, electronic, digital or crypto, such as natural resources, legal documents and instruments, bonds, shares, equities, deeds, bills of exchange, letters of credit and benefits, profits or incomes received or generated from such assets.

„Proceeds” means funds generated, directly or indirectly, from a misdemeanour or felony, including profits, privileges and economic interests, or any similar funds converted wholly or partly into funds.

„Transaction” means „any disposal or use of the funds or proceeds”.

A criminal conviction for the predicate offence is not required for the offence of ML to be established.

The threshold for conviction is knowledge that the funds are the proceeds of crime (ie, suspicion regarding the provenance of the funds is not generally sufficient).

Intention to commit a ML offence may be inferred if a person handles funds with the requisite knowledge.

3. WHAT ARE THE PREDICATE OFFENCES TO MONEY LAUNDERING? DO THEY INCLUDE FOREIGN CRIMES AND TAX OFFENCES?

A „Predicate Offence” is a felony or misdemeanour (crime) that is punishable in the UAE irrespective of whether the crime occurred there. As criminal consequences may arise for certain tax offences, including tax evasion, some tax offences constitute Predicate Offences in the UAE.

The UAE’s 2021 National Risk Assessment found that fraud, counterfeiting and piracy of goods, illicit tracking in narcotics, and professional third-party ML are the most common Predicate Offences connected to ML in the UAE. Tax crimes (related to direct and indirect taxes), insider trading and market manipulation, robbery or theft, illicit arms, forgery and smuggling (including in relation to customs and excise duties and taxes) are also ML threats.

4. IS THERE EXTRATERRITORIAL JURISDICTION FOR VIOLATIONS OF YOUR JURISDICTION'S MONEY LAUNDERING LAWS?

There is extraterritorial jurisdiction for ML offences if any of the acts are committed in the UAE, or if the result is realised or intended to be realised in the UAE.

Similarly, the Predicate Offences may be committed outside of the UAE if the act is punishable in the UAE and the country in which it is committed.

5. IS THERE CORPORATE CRIMINAL LIABILITY FOR MONEY LAUNDERING OFFENCES, OR IS LIABILITY LIMITED TO INDIVIDUALS?

Individuals and corporates can be criminally liable for ML offences. An entity will be liable if the act is intentionally committed in its name or for its account (ie, by those acting for or on its behalf).

6. WHICH GOVERNMENT AUTHORITIES ARE RESPONSIBLE FOR INVESTIGATING VIOLATIONS OF THE MONEY LAUNDERING LAWS?

At the federal level, the police, public prosecution and Financial Intelligence Unit (FIU) of the Central Bank of the UAE (CBUAE) work together to investigate ML crimes. The law enforcement authorities search, investigate and collect evidence related to ML.

The public prosecution has a range of investigatory powers, including ordering the monitoring and review of accounts, records and documents held by third parties, and accessing information or documentary evidence including information stored on computer systems or IT devices.

The public prosecution or the competent court may seize or freeze suspicious Proceeds or Funds without notifying the owner until the investigation or trial is complete.

The police and public prosecution also collaborate with the FIU and seek its opinion on reports of possible ML. The FIU refers suspicious transactions to the relevant law enforcement authorities for the police and public prosecution to investigate further and gather evidence.

7. WHICH GOVERNMENT AGENCIES ARE RESPONSIBLE FOR THE PROSECUTION OF MONEY LAUNDERING OFFENCES?

The public prosecution is charged with prosecuting ML offences and administering or enforcing judgments delivered by the UAE Courts. A number of specialist federal ML courts have been or are being established in the UAE, including in Abu Dhabi, Dubai, Sharjah and Fujairah, to improve judicial expertise and facilitate enforcement of ML offences.

8. WHAT IS THE STATUTE OF LIMITATIONS FOR MONEY LAUNDERING OFFENCES?

There is no limitation period for the prosecution of ML offences in the UAE.

9. WHAT ARE THE PENALTIES FOR A CRIMINAL VIOLATION OF THE MONEY LAUNDERING LAWS?

The penalty for individuals (assuming there are no aggravating factors) is between one and 10 years imprisonment and/or a fine between AED100,000 and AED5 million. The penalty for companies is a fine of AED500,000 to AED50 million. A court may also prohibit the entity from operating for a specific period or revoke its licence, entry or registration.

A penalty of temporary imprisonment and a fine between AED300,000 and AED10 million may be imposed if the perpetrator:

• abuses their influence or power vested in them by virtue of their profession or their professional activity;
• commits the crime through non-profit organisations (NPOs);
• commits the crime through an organised criminal group; or
• has reoffended.

Foreign nationals who receive a custodial sentence for committing a ML offence or other felony stipulated in the AML Law will be deported. If the foreign national receives a custodial sentence for a misdemeanour (crimes that carry a custodial sentence of less than three years), the court may decide to order the foreign national's deportation in lieu of the custodial sentence.

Any failure (whether intentionally or by gross negligence) to make a suspicious transaction report (STR) is punishable by imprisonment or a fine of between AED100,000 and AED1 million, or both.

Any person who warns or „tips off” or reveals that suspicious transactions are under review may be sentenced to imprisonment for at least one year and a fine of between AED100,000 and AED500,000.

Upon conviction, the court shall confiscate (i) the funds, proceeds and instrumentalities used or intended to be used in the crime; or (ii) an amount equivalent to the funds from funds owned by the perpetrator if it fails to confiscate the proceeds of crime.

10. ARE THERE CIVIL PENALTIES FOR VIOLATIONS OF THE MONEY LAUNDERING LAWS? WHAT ARE THEY?

There are no civil penalties prescribed under the AML Law. However, a civil claim for compensation for damages may be brought following a final and binding criminal judgment. Additionally, there may be civil liability for individuals and entities that are subject to AML compliance requirements if they fail to comply with AML obligations.

11. IS ASSET FORFEITURE POSSIBLE UNDER THE MONEY LAUNDERING LAWS? IS IT PART OF THE CRIMINAL PROSECUTION? WHAT PROPERTY IS SUBJECT TO FORFEITURE?

UAE criminal laws provide several mechanisms by which proceeds of crime may be seized. For example, the AML Law requires the court to confiscate the funds, proceeds and instrumentalities used or intended to be used in the crime.

The public prosecution or relevant competent authority can:

• identify, track, seize or freeze assets suspected of being involved in ML activities (ie, the proceeds and instrumentalities of ML);
• prohibit trading or disposing of such funds, proceeds and instrumentalities;
• prevent the evasion of freezing or seizure orders; or
• impose a travel ban on any persons holding such assets.

The freezing of funds held by a financial institution (FI) licensed by the CBUAE may only be requested or executed by the Governor of the CBUAE. The freezing of funds cannot exceed seven business days, unless extended by the competent court or public prosecution that issued the freezing order.

The public prosecution has broad powers to search and seize, for example, criminal proceeds in an accused's dwelling, under the Penal Code.

Local judicial authorities are empowered to cooperate with their foreign counterparts to confiscate assets (principally based on reciprocity or where a relevant treaty is in place).

12. IS CIVIL OR NON-CONVICTION-BASED ASSET FORFEITURE PERMITTED UNDER THE MONEY LAUNDERING LAWS? WHAT PROPERTY IS SUBJECT TO FORFEITURE?

Generally, a conviction for the underlying offence is required before asset forfeiture takes place. However, the public prosecution or competent court may seize or freeze suspicious proceeds or funds until the investigation or trial is complete.

In certain circumstances, the public prosecution or competent court may appoint a third party to manage the funds, proceeds or instrumentalities seized, and sell or dispose of such funds prior to a court judgment. In this case, the sale proceeds would be transferred to the UAE Treasury and the relevant funds earmarked to any rights awarded legally to any party acting in good faith, proportionately to its value.

The Governor of the CBUAE also has a right to freeze suspicious funds deposited at financial institutions for up to seven days (this period can be extended by order of the public prosecution).

13. WHICH LAWS OR REGULATIONS IN YOUR JURISDICTION IMPOSE ANTI-MONEY LAUNDERING COMPLIANCE REQUIREMENTS ON FINANCIAL INSTITUTIONS AND OTHER BUSINESSES?

At the federal level, the Cabinet Resolution sets out AML compliance obligations on all FIs, designated non-financial businesses and professionals (DNFBPs), virtual asset service providers (VASPs) and NPOs (regulated entities).

UAE criminal laws (including the AML Law, Penal Code and Cabinet Resolution) and international treaties apply in each of the Emirates and free zones. Federal and local regulatory and supervisory authorities also issue rules, regulations, circulars and guidance or feedback, some of which also have the force of law.

For example, in the financial free zones (the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM)), regulated entities are supervised by the Dubai Financial Services Authority (DFSA) and Financial Services Regulatory Authority (FSRA). In addition to administering federal AML legislation and supervising regulated entities, the DFSA and FSRA issue Rules, which must be complied with alongside federal law, including:

• The Anti-Money Laundering, Counter-Terrorist Financing and Sanctions Module of the DSFA Rulebook (the DFSA AML Module).
• The ADGM Anti-Money Laundering and Sanctions Rules and Guidance Rulebook (the ADGM AML Rulebook).

Other regulatory and supervisory authorities impose AML compliance requirements on the institutions they regulate, including the Ministry of Economy (MOE), the CBUAE, the Securities and Commodities Authority (SCA), the Ministry of Justice (MOJ) and the Dubai Virtual Assets Regulation Authority (VARA).

14. WHAT TYPES OF INSTITUTIONS ARE SUBJECT TO THE AML RULES?

FIs, DNFBPs, VASPs and NPOs have additional obligations to detect and deter ML or TF. As per the Anti-Money Laundering and Combatting the Financing of Terrorism and Illegal Organisations - Guidance for FIs and Guidance for DNFBPs, issued by the Competent Authorities in the UAE (together, the Guidances):

An FI is anyone conducting one or more financial activities or operations for or on behalf of a customer, and includes:

• banks, finance companies, exchange houses and money service businesses

(including hawaladar and other monetary value transfer services);

• insurance companies, agencies and brokers;
• fund or portfolio managers;
• securities and commodities brokers, dealers, advisers and investment managers; or
• providers of virtual banking services.

DNFBPs include:

• auditors and accountants;
• lawyers, notaries and other legal professionals and practitioners when conducting certain transactions;
• company and trust service providers;

dealers in precious metals and stones, when carrying out any single cash transaction or several transactions that appear to be interrelated or equal to more than AED55,000; and

• real estate agents and brokers.

VASPs include individuals and entities who are engaged in the following activities:

• exchange between virtual assets or flat currencies, or both;
• transfer of virtual assets;
• safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets; or
• providing or participating in financial services or other activities related to an issuer's offer or sale of virtual assets.

15. MUST PAYMENT SERVICES AND MONEY TRANSMITTERS BE LICENSED IN YOUR JURISDICTION? ARE PAYMENT SERVICES AND MONEY TRANSMITTERS SUBJECT TO THE AML RULES AND COMPLIANCE REQUIREMENTS?

Stored value services, electronic payments for retail and digital cash, retail payment services and card schemes are all regulated activities, which require a licence in the UAE. Individuals and entities offering these services must be licensed by the CBUAE and comply with the Cabinet Resolution and AML requirements.

The Cabinet Resolution also extends to providers of money or value transfer services (MVTS) established in the UAE. Providers of MVTS must be licensed or registered with the competent supervisory authority. The supervisory authority must ensure the provider's compliance with AML/CTF controls under section 2, article 26 of the Cabinet Resolution.

16. ARE DIGITAL ASSETS SUBJECT TO THE AML RULES AND COMPLIANCE REQUIREMENTS?

VASPs are required to comply with the federal AML law and the rules and requirements imposed on them by their regulatory and supervisory authorities.

For example, the SCA's Decision No. 23 of 2020 concerning the Crypto Assets Activities Regulation applies to any person who:

• promotes, offers or issues crypto assets in the UAE;
• provides crypto asset custody services, operates an exchange for crypto assets or operates a crypto fundraising platform in the UAE; or
• undertakes financial activities in the UAE in relation to crypto assets, including distribution, fundraising and operating an exchange.

In March 2022, Law No. 4 of 2022 Concerning the Regulation of virtual assets (VAL) became effective in Dubai. VAL introduced a legal framework to regulate virtual assets in Dubai and establishes the Dubai VARA, which is linked to the Dubai World Trade Centre (DWTC). VAL applies throughout Dubai, including the special development zones and commercial free zones (except the DIFC).

VARA is responsible for licensing and regulating virtual assets and VASPs across Dubai's mainland and free zone territories (except the DIFC). VARA is mandated to set rules for conducting virtual asset-related activities including management services, clearing and settlement services, and classifying and specifying types of virtual assets.

The ADGM has published binding guidance on the Regulation of Virtual Asset Activities in the ADGM. The guidance sets out the FSRA's approach to regulating the use of virtual assets in the ADGM, including activities conducted by multilateral trading facilities, authorised persons that are providing custody (virtual asset custodians) and intermediary-type authorised persons.

In October 2022, the DFSA published feedback on a consultation paper issued in March 2022, which codified the DFSA's proposals for a framework regulating crypto tokens. Pursuant to the feedback, issuers of non-fungible tokens and utility tokens will constitute DNFBPs and are subject to the UAE AML laws and regulations.

17. WHAT ARE THE SPECIFIC AML COMPLIANCE REQUIREMENTS FOR COVERED INSTITUTIONS?

As per the AML Law, Cabinet Resolution and Guidances, regulated entities are subject to wide-ranging AML compliance obligations, including those relating to:

• identifying, assessing and understanding ML and TF risks, including conducting customer and enterprise-wide risk assessments;
• identifying and verifying customer identities and conducting customer due diligence (CDD) (including simplified, enhanced and ongoing due diligence);
• appointing a compliance officer with relevant qualifications and expertise;
• developing and implementing risk-based compliance policies, procedures, systems and controls and monitoring the implementation, effectiveness and adequacy of the measures;
• adopting a risk-based approach to identifying and managing ML risk and conducting enhanced risk mitigation measures where higher ML risks are identified;
• implementing indicators to identify suspicious transactions, reporting suspicious transactions, and cooperating with the competent authorities;
• promptly applying the directives of competent authorities for implementing United Nations Security Council decisions;
• maintaining accurate records; and
• screening and monitoring transactions to identify any suspicious transactions.

18. ARE THERE DIFFERENT AML COMPLIANCE REQUIREMENTS FOR DIFFERENT TYPES OF INSTITUTIONS?

Similar obligations apply to all regulated entities in the UAE as all AML laws have been developed in accordance with global best practice and guidance issued by the Financial Action Task Force. However, there are some variations.

For example, the Cabinet Resolution imposes specific obligations on MVTS, including requirements to maintain up-to-date lists of their agents and make them available to the relevant competent authorities.

Article 33 of the Cabinet Resolution requires NPOs to:

• apply the best practices adopted by the relevant regulatory authority;
• develop clear policies to promote transparency, integrity and public confidence; and
• conduct operations through official financial channels, taking into account the different capacities of financial sectors in different countries.

In addition to complying with the obligations on FIs and DNFBPs, VASPs are required to:

• perform CDD measures when carrying out incidental transactions equal to or exceeding AED3,500;
• obtain and retain accurate data of the transferor (where the VASP is the originator), request the data of the beneficiary, and submit such information to the beneficiary VASP or the IT; and
• obtain and retain accurate information of the transferor and beneficiary of the required transfer (where the VASP is the beneficiary).

FIs must also comply with these obligations where they are carrying out a transaction involving the sending or receiving of a transfer of virtual assets on behalf of the customer.

There are also variations between federal and local laws and obligations imposed by federal and local regulatory and supervisory authorities, for example, the specific requirements set out under the Cabinet Resolution and AML Rules in the DIFC and ADGM.

19. WHICH GOVERNMENT AUTHORITIES ARE RESPONSIBLE FOR THE EXAMINATION AND ENFORCEMENT OF COMPLIANCE WITH THE AML RULES?

The financial and capital markets in the UAE are regulated by the CBUAE and the SCA. The CBUAE regulates banks, finance companies, insurance companies and payment service providers. The SCA regulates markets, listed companies and securities brokers, among other entities.

In 2020, the CBUAE established an AML and Combatting the Financing of Terrorism Supervision Department with three objectives:

• examining licensed FIs;
• ensuring compliance with the UAE AML legal and regulatory framework (including CBUAE guidance for specific FIs on regulatory expectations and how to comply with statutory obligations under UAE laws and regulations); and
• identifying „threats, vulnerabilities and emerging risks” relevant to the UAE financial sector.

The MOE is the supervisory authority for DNFBPs at Federal level and within the commercial free zones (with the exception of lawyers and public notaries, which are supervised by the MOJ). The MOE is responsible for developing the regulatory framework and ensuring DNFBPs act in accordance with best practices. The MOE has set up an AML Department, which is responsible for implementing operational strategy for the supervision of DNFBPs.

In the financial free zones, the FSRA is the competent authority for AML/CFT compliance within the ADGM. The DFSA is the competent authority for the administration of federal AML/CTF legislation in the DIFC. The FSRA and DFSA have sole administrative oversight and direct supervision of all regulated entities and their officers, employees and agents for AML compliance in the ADGM and DIFC, respectively.

VARA, which sits in the DWTC as an independent body, operates in coordination with the CBUAE and SCA, to regulate and license the Virtual Asset sector in Dubai and the free zones (except for the DIFC).

20. ARE THERE REQUIREMENTS TO MONITOR AND REPORT SUSPICIOUS ACTIVITY? WHAT ARE THE FACTORS THAT TRIGGER THE REQUIREMENT TO REPORT SUSPICIOUS ACTIVITY? WHAT IS THE PROCESS FOR REPORTING SUSPICIOUS ACTIVITY?

FIs, DNFBPs and VASPs are required to inform the FIU (through detailed reports on the transactions) if they suspect or have „reasonable grounds to suspect that a transaction or funds fully or partially constitute proceeds, or that such transaction or funds are related to a crime or that they will be used for a crime regardless of their value”. Failure to inform (either intentionally or by gross negligence) is punishable by imprisonment or a fine, or both.

Regulated entities are required to register on the UAE's reporting system for STRs to the FIU of CBUAE. STRs are then made directly to the FIU via the goAML platform. An entity must separately register in each jurisdiction in which the entity operates. For example, if an entity is registered in both the DIFC and ADGM, the entity must register on the goAML platform twice.

STRs and suspicious activity reports (SARs) (ie, transactions or attempted transactions, activity or funds which constitute in whole or in part the proceeds of a crime, are related to a crime or are intended to be used in a crime) can be filed through the goAML system.

The FIU has published detailed guidance on how to make reports and what information should be included. Every report should include, at a minimum, the reasons for reporting, the transaction details, relevant parties and other information required by the FIU.

The CBUAE requires FIs to file STR within 35 days. Specifically, FIs must complete their internal investigation within 20 days and file the STR with the FIU within a further 15 days.

Reports must be filed whenever FIs reasonably suspect ML or the provenance of goods or funds. The CBUAE has cautioned against using „defensive SARs” (ie, SARs filed solely to reduce the risk of penalties).

There is no process by which active consent can be sought from the authorities in the UAE to deal with suspected criminal proceeds.

21. ARE THERE CONFIDENTIALITY REQUIREMENTS ASSOCIATED WITH THE REPORTING OF SUSPICIOUS ACTIVITY? WHAT ARE THE REQUIREMENTS? WHO DO THE CONFIDENTIALITY REQUIREMENTS APPLY TO? ARE THERE PENALTIES FOR VIOLATIONS OF THE CONFIDENTIALITY REQUIREMENTS?

The FIU is required to create a database or private register for the information obtained in STRs. Confidentiality and control of the database must be secured, including the processing, storage and reference of such data.

All information obtained in connection with a suspicious transaction or crime (including STRs) is confidential and must not be disclosed except where necessary for its use in investigations, lawsuits or cases involving a violation of the AML Law. Both the information being reported and the fact that a report has been made is confidential. Regulated entities must make reasonable efforts to ensure that the information and data is protected from access by unauthorised third parties.

Sharing information within an organisation or group (for example, between a parent, branch or subsidiary) is permitted provided the purpose is to prevent, detect or report a crime.

Directly or indirectly, warning or tipping off a customer or third party that a report has been made or suspicious transactions are under review is a crime.

Attorneys, the notary public and certain other legal professions and legal independent auditors are exempted from reporting suspicious transactions if the information was collected in circumstances where those persons are subject to professional confidentiality.

Regulated persons may not object to the statutory reporting of suspicions on the grounds of customer confidentiality or data privacy.

22. ARE THERE REQUIREMENTS FOR REPORTING LARGE CURRENCY TRANSACTIONS? WHO MUST FILE THE REPORTS, AND WHAT IS THE THRESHOLD?

There are no specific requirements to report large currency transactions under the AML Law or Cabinet Resolution. However, large transactions may be a red flag for ML in the absence of a reasonable explanation and all suspicious transactions, including attempted transactions, must be reported by regulated entities regardless of the transaction amount.

23. ARE THERE REPORTING REQUIREMENTS FOR CROSS-BORDER TRANSACTIONS? WHO IS SUBJECT TO THE REQUIREMENTS AND WHAT MUST BE REPORTED?

Any person bringing in or taking out of the UAE any currency, bearer negotiable instruments or precious metals or stones valued over AED60,000 is required to declare it, and must provide honest and clear responses and adequate information to the relevant customs authority and its staff upon request.

Regulated entities must also report transactions to the FIU without delay if there are reasonable grounds to suspect that funds are related to a crime, or are for the purpose of committing, concealing, or benefitting from a crime.

If a transaction is made to a foreign individual or entity associated within a high-risk country, EDD on the client/transaction may also be necessary.

24. IS THERE A FINANCIAL INTELLIGENCE UNIT (FIU) OR OTHER GOVERNMENT AGENCY RESPONSIBLE FOR ANALYSING THE INFORMATION REPORTED UNDER THE AML RULES?

The FIU in the CBUAE is the independent body responsible for analysing information related to ML/TF crimes. The FIU actively encourages collaboration and strategic partnerships with local, regional and international stakeholders (ie, similar bodies in other jurisdictions).

The FIU has multiple responsibilities including:

• receiving and reviewing STRs from FIs and DNFBPs;
• requiring FIs, DNFBPs and the relevant authority to provide any further information or documentation as required;
• exchanging information relating to STRs with other similar bodies across the globe; and
• providing information and data to law enforcement authorities.

25. WHAT ARE THE PENALTIES FOR FAILING TO COMPLY WITH YOUR JURISDICTION'S AML RULES, AND ARE THEY CIVIL OR CRIMINAL?

There are both civil and criminal penalties for failing to comply with AML compliance obligations in the UAE.

For example, under Federal law, the Competent or Supervisory Authorities may impose administrative penalties on regulated entities in the UAE, including:

• a written warning.
• fines of between AED50,000 and AED5 million per violation;
• restrictions on working in the regulated sector;
• arresting managers, board members or members of the executive or supervisory management of the entity who are found to be responsible for the failure to comply (this can include the appointment of a temporary controller);
• restricting the powers of board members or members of the executive or supervisory management of the entity; and
• revocation of an organisation'slicence to practise.

The Supervisory Authority can also request regular reports on the measures taken to correct the violation.

Cabinet Resolution No. 16 of 2021 introduced 26 additional administrative penalties for DNFBPs for violations of the Cabinet Resolution, including a fine of AED200,000 for failure to provide additional information requested by the FIU and a fine of AED50,000 for a failure to provide training to employees on combatting ML and TF.

Criminal consequences for failing to comply include if:

• the perpetrator abuses their influence or power vested in them by virtue of their profession or their professional activity;
• the crime is committed through an NPO;
• the crime is committed through an organised criminal group; or
• reoffending has taken place.

Failing (intentionally or by gross negligence) to make a STR is punishable by imprisonment and/or a fine of AED100,000 to AED1 million.

Any person who warns or tips off a person or reveals that suspicious transactions are under review may be sentenced to imprisonment for at least one year and a fine of AED100,000 to AED500,000.

26. ARE COMPLIANCE PERSONNEL SUBJECT TO THE AML RULES? CAN AN ENFORCEMENT ACTION BE BROUGHT AGAINST AN INDIVIDUAL FOR VIOLATIONS?

As per federal law and the Guidances, FIs and DNFBPs must appoint a compliance officer with responsibility for several areas, including:

• reviewing and analysing suspicious transactions and deciding whether to make an STR;
• developing, implementing and documenting an internal AML/CTF programme;
• informing senior management of the level of compliance achieved and reporting this to the Supervisory Authority;
• developing an effective compliance culture to ensure staff are well qualified and well trained to combat ML threats; or
• cooperating with the Supervisory Authority and FIU, providing them with copies of any documents requested and access to any registers or databases.

In the DIFC and ADGM, Relevant Persons are required to appoint a money laundering reporting officer (MLRO) who performs a similar function to compliance officers in the onshore UAE.

The UAE AML framework provides for personal liability including in the event that a compliance officer or MLRO fails to comply with their duties specified above. Enforcement action against individuals can include written warnings, fines, imprisonment and a ban from working in the sector in which the violation occurred for a particular period.

27. WHAT IS THE STATUTE OF LIMITATIONS FOR VIOLATIONS OF THE AML RULES?

There is no applicable statute of limitations in the Cabinet Resolution.

28. DOES YOUR JURISDICTION HAVE A BENEFICIAL OWNERSHIP REGISTRY OR AN ENTITY OR OFFICE THAT COLLECTS INFORMATION ON THE BENEFICIAL OWNERSHIP OF LEGAL ENTITIES?

At federal level, Cabinet Resolution No. 58 of 2020 Concerning the Regulation of Beneficial Owner Procedure requires entities to take reasonable measures to obtain and maintain appropriate, accurate and updated information, on an ongoing basis, related to ultimate beneficial owners (UBOs). Such information must be provided to the relevant licensing authority within 15 days of a change to the initial information provided. This applies to all entities registered or licensed in the UAE, including the commercial free zones but excluding the financial free zones (ie, the DIFC and ADGM).

Local licensing authorities are responsible for maintaining such information including but not limited to International Freezone Authority, Dubai Department of Economic Development and Dubai Internet City.

Article 15 of Cabinet Resolution No. 58 of 2020 states that the MOE and relevant Registrar shall not disclose the information on the register without written approval from the beneficiary or their nominee unless certain, limited exceptions are met (eg, if the disclosure is required by law). Hence, information is not made publicly available.

There are separate obligations relating to the registration of UBOs in the DIFC and ADGM under the 2018 DIFC UBO Regulations and ADGM Beneficial Ownership and Control Regulations.

The information provided above is part of Global Investigation Reviews „Anti-Money Laundering” Know how 2022 guide that provided anti-money laundering regulations and enforcement guidance across 10 jurisdictions.