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3 Feb 2023|Uncategorized
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Importance of Anti Money Laundering

Impact Of Money Laundering And Importance Of AML

Tax evasion is the method involved with disguising the returns of criminal operations as genuine assets. Terrorist financing, on the other hand, refers to the provision or collection of funds, by any means, directly or indirectly, with the intention that they should be used or in the knowledge that they are to be used, in full or in part, in order to carry out terrorist acts.

Both money laundering and terrorist financing are serious crimes that can have significant negative impacts on national security, the integrity of the financial system, and the global economy. To combat these crimes, governments and financial institutions implement AML to combat both of them.

Impacts Of Money Laundering

Money laundering, the process of disguising the proceeds of illegal activities as legitimate funds, can have a number of negative impacts on organizations. Some of the key impacts include:

  1. Financial loss
  2. Reputation damage
  3. Legal and regulatory penalties
  4. Loss of licenses and certifications
  5. Difficulty in obtaining credit
  6. Difficulty in maintaining banking relationships
  7. Difficulty in hiring and retaining employees

 

  • Financial loss

Money laundering can result in significant financial loss for organizations, as illegal funds may be invested in or funneled through the organization, leading to great losses.

  • Reputation damage

Organizations that are found to have been involved in money laundering may suffer significant damage to their reputation and credibility, which can result in lost business and customers.

  • Legal and regulatory penalties

Organizations that are found to have violated anti-money laundering laws and regulations may face significant fines, penalties, and even criminal charges.

  • Loss of licenses and certifications

Organizations that are found to have been involved in money laundering may lose important licenses and certifications, which can limit their ability to operate and do business.

  • Difficulty in obtaining credit

Financial institutions and other organizations that are involved in money laundering may find it difficult to obtain credit, as they may be viewed as high-risk.

  • Difficulty in maintaining banking relationships

Financial institutions and other organizations that are involved in money laundering may find it difficult to maintain relationships with banks, as they may be viewed as high-risk.

  • Difficulty in hiring and retaining employees

Organizations that are involved in money laundering may find it difficult to hire and retain employees, as they may be viewed as high-risk.

Importance Of Anti-Money Laundering (AML)

Anti-Money Laundering (AML) refers to a set of laws, regulations, and procedures that financial institutions and other regulated entities are required to follow in order to detect and prevent the illicit use of their services for money laundering and terrorist financing.

The importance of AML can be summarized as follows:

  1. Protecting The Integrity Of The Financial System
  2. Protecting Against Financial Crime
  3. Protecting Against Terrorism
  4. Compliance With Laws And Regulations
  5. Protecting The Reputation And Credibility Of Financial Institutions
  6. Maintaining The Trust Of Customers
  7. Risk Management
  • Protecting The Integrity Of The Financial System

Tax evasion is a significant danger to the integrity of the financial system. By detecting and preventing it, AML helps to protect the system from being used to facilitate illegal activities.

  • Protecting Against Financial Crime

Money laundering and terrorist financing are the key enablers of financial crimes, such as fraud, corruption, tax evasion and terror financing. By detecting and preventing it, AML helps to protect against these types of crime.

  • Compliance With Laws And Regulations

AML regulations are put in place to prevent financial crime and protect the integrity of the financial system. Compliance with AML regulations is mandatory for monetary institutions and other regulated entities.

  • Protecting The Reputation And Credibility Of Financial Institutions

Financial institutions and other regulated entities that are involved in money laundering can suffer significant damage to their reputation and credibility, which can result in lost business and customers. By implementing effective AML measures, organizations can protect their reputation and credibility.

  • Maintaining The Trust Of Customers

Financial institutions and other regulated entities rely on the trust of their customers. By implementing effective AML measures, organizations can maintain the trust of their customers by demonstrating that they are committed to preventing financial crime.

  • Risk Management

Money laundering is a major risk for financial institutions and other regulated entities. By implementing effective AML measures, organizations can manage this risk and protect themselves from the potential negative impacts of money laundering

Spicer Pegler

Combating these crimes, you need a team of experts and hiring a team for just AML can be difficult and tricky too. We would recommend you to approach Spicer Pegler. They are the best accounting and auditing firm in Dubai working since a long time. They know exactly what to do and when to execute their plans and how. They also provide the best AML services to all sorts of businesses and brands and help them avoid any illegal activities within the organization and help secure it to the best of possibility.

You can know more about them by going to their website and contact them too with the contact number mentioned on the website.

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28 Nov 2022|Corporate Tax in Real Estate
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Role of Corporate Tax in Real Estate Sector

What Corporate Tax in UAE Could Mean to the Real Estate Industry

The Corporate Tax (CT) law will be starting from June 2023 as per the Ministry of Finance (MoF) of UAE. The law includes all the people including the natives and residents, with commercial or trade licenses to run business projects in the state. It is very important for peoples and businesses to communicate with CT advisors to be informed and updated on the latest information regarding the policy it in UAE.

The Federal Tax Authority (FTA) of UAE, will be looking after the organization, enforcement, and collection of the CT. Moreover, the UAE’s MoF is set to keep on being the competent body for worldwide tax agreements, treaties, and other related matters. It also includes the trading of important information linked to tax.

What is a Corporate Tax (CT)?

A corporate tax, likewise called corporation or company tax, is a tax imposed on the revenue of companies or similar lawful entities. Numerous states impose these types of taxes within the state, and a same taxation policy may be applied at state or local levels. The taxes might likewise be alluded to as income or capital tax. The corporate tax applies the following:

  • Companies and organizations embodied in the country,
  • Companies and organizations running business in the state on benefiting from it,
  • Overseas companies who are based permanently in the country, or
  • Organizations considered as resident for tax purposes in the state.

Organization revenue subject to tax is in many cases decided much like taxable revenue for sole taxpayers. Mostly, the tax is forced on net benefits. In certain regions, rules for taxing organizations might contrast fundamentally from rules for taxing individuals. Certain corporate acts or types of corporations might be excluded from taxation.

Exemptions from CT

The rules regarding exemptions from the corporate tax are mentioned below:

  • Organizations participated in the extraction of natural resources are excluded from CT as these organizations will stay subject to the ongoing Emirate level corporate tax collection.
  • Profits and capital increases procured by a UAE business from its passing shareholdings will be excluded from CT.
  • Qualifying intra-group transactions and rearrangements will not be dependent upon CT, provided the necessary conditions are met.

Corporate Tax Rates

The Corporate Tax rates according to the MoF are:

  • 0% up to AED 375,000 (for taxable income)
  • 9% above AED 375,000 (for taxable income) and
  • An alternate tax rate (not determined as of now) for huge multinationals that meet specific rules set with respect to ‘Pillar two’ of the OECD Base Erosion and Profit Shifting Project.

Impact of CT on Real Estate

The CT in UAE will be imposed on ‘taxable income.’ Taxable income refers to a business’ net profit after deducting some specific amount called as deductibles as per the country’s CT policy. The total revenue is utilized as the premise to calculate how much the individual or association owes to the government for the particular tax period.

Business exercises, which contain all types of business activities that are completed inside the UAE falling under a business/exchange permit or license, as well as pay received under freelancer license (assuming that available income surpasses the limit), are incorporated in the frame of UAE Corporation Tax policy’s applicability.

To better understand these recent changes we will be helping you in understanding the impact of Corporate Tax in UAE on the real estate industry.

– Capital Gains from the Sale of Properties Held by Corporate Organizations

Corporate sectors and people holding trade licenses investing in real estate of UAE and have commercial and/or residential properties looking forward to getting profit from value appreciation of properties when demands and inflation is on the rise. Although, CT in UAE might be implemented on capital gains realized from the trade of properties of UAE mainland businesses. Free zone entities in Dubai and the other emirates are not included in UAE’s corporate tax policy keeping in mind that the properties are not on the mainland and/or they do not lead business out of the free zone(s).

– Revenue from Real Estate

Corporate tax in UAE is pertinent to all transactions of corporate sectors in the business of real estate development, the management, and construction. This incorporates pay from lease, maintenance, buying, and selling of residential and business properties or land. The CT law likewise envelops many exercises and administrations in relation to the property of UAE-enlisted organizations with the exclusion of free zone areas that limit exercises inside UAE free zones.

– Revenue from Operations of Real Estate Agencies

Pay of real estate agencies in UAE from brokerage fees and premium from sales and other income frameworks are taxable under the new CT law. Appropriately authorized and enrolled UAE organizations offering guidance, judgment, and help on the sale, acquisition, use, removal, planning, or potentially protection of properties or enhancements subsequently are to adhere to the CT law provisions.

Conclusion

All of those that come in the frame of UAE’s CT policy are liable to satisfy all necessities according to tax return filing. For further help on the details regarding CT, talk with consultants in UAE. At Spicer Pegler, we with a team of experienced tax specialists offer corporate tax advisory services and company tax services in UAE, including corporate tax advice.

The expertise of our team on corporate tax in Dubai, UAE runs from charge detailing and consistence to risks relating to tax and solutions for help. If you have any question about anything regarding to the corporate tax in UAE you can get in touch with us today so we can help you!

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10 Nov 2022|Audit Checklist
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The Audit Checklist

Audit Checklist for Small Businesses

As a small business owner, there are many things to look after. Usually people think that small business is much easier to handle than a big business or a company, but that is not true. A small business is much more difficult to handle than a big company or firm. A small business owner lies in between spending too much and too less in order to grow and manage the business. One example of this can be accounting and auditing.

They usually have to manage everything by themselves initially, as they do not have any investment for hiring a specialized accountant or outsourcing the accounting and auditing services to firm. This makes it frustrating, as they have to look after and focus on multiple things by themselves which in the end effects their business growth

Beginning and working as a small business owner brings with it an obligation to continuously assess your business through performance, management, and financial audits. Audits are helpful for small business owners with looking through out issues, assess performance, and keep all parts of the business in accordance with objectives, plans, and initiatives.

Here are some things that you should look for your small business and manage it better in the views of accounting and auditing. Below is a special checklist for it.

The Small Business Checklist

Management In Focus

Management is a key pointer in any organization and should be held accountable when conducting an audit. Conducting a small business audit requires a precise evaluation of the organization’s faculty and techniques. A management audit centers around checking essential business tools are set up, like a mission statement and yearly spending plan.

Evaluate and assess every department of the organization and guarantee managers comprehend and show full authority, all of the staff receives appropriate training and precise job description exist for each position. Ensure a policy manual and a technique for assessing staff performance exists. Other things to check incorporate the management of your spending and an assessment of the plans set up to increase sales.

Operational Evaluation

Auditing the tasks of your business will require uncovering details connected with processes, such as production, sales and marketing. Assess provider relationships, including the availability of choices, in the event that the need emerges.

Auditing the tasks of your business will require uncovering details connected with processes, such as production, sales and marketing. Assess provider relationships, including the availability of choices, in the event that the need emerges.

Watch out for stock control procedures and audits. Check production equipment to ensure that the quality of the maintenance and also check if it is up-to-date. Examine your startup to guarantee environmental projects and safety arrangements get the proper measure of consideration and attention.

Focus strictly how well your business addresses issues of the clients, fosters a target market, and stays aware of the latest technological advancements.

Financial Management

The financial prosperity of an organization lays on the owner’s capacity to monitor significant financial records, statements, and happenings in the business. Leading a financial audit will confirm the business utilizes a legitimate bookkeeping framework, prepares accurate and comprehensive budget statements, accommodates bank statements and clears taxes on time.

Furthermore, a financial audit centers around how your business broadens credit, gathers on current and delinquent accounts, and prepares invoices. Financial audit and examination should incorporate checking the business works with a powerful and precise payroll system, pays representatives on time, and follows laws and regulations linked with payroll deductions.

Conclusion

These are the things that can really help you in auditing your small business. We at Spicer Pegler believe that small businesses are strength of the whole business sector. If you further have any question regarding this, you can always get in touch with us.

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31 Oct 2022|General
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Outsourcing Accounting & Management Services in an Uncertain Economy?

Outsourcing Accounting & Management Services in an Uncertain Economy?

Surging World Economic Uncertainty amid War:

As the war in Ukraine continues to expand, World uncertainty has drastically surged, as per the latest study of the ‘World Uncertainty Index’.

This ascent is a terrible sign for development and the expansion in uncertainty in the principal quarter could be sufficient to diminish entire year World growth by up to 0.35 percent. The World uncertainty reached remarkable levels with the initial COVID-19 outbreak it then fell sharply.

Regardless of the recent jump, the ongoing current is still around 50% of the level that was at the beginning of the pandemic. This could come down to three reasons. Initially, Coronavirus was a World pandemic, hitting almost every economy and health systems. Secondly, the outbreak came in the midst of already raised uncertainty because of Brexit and the tensions between US and China. Lastly, the index is on the path of rising to the peak due to the war between Russia and Ukraine.

The current chart shows the quarterly index since 1990. The chart shows a massive drop from 2020 Q1 to 2021 Q1. It was standing at 55,684 in 2020 Q1 when the pandemic was at its peak and every economy in the world and got effected by it. Just after a year of rescission, the world was finally coming back to normalization in 2021 Q1. It dropped to 11,888 at that time, just before the Russia-Ukraine war started in February and it is rising since then. In 2022 Q2, it rose to 29,343 from 11,888 in 2021 Q1.

The Consumer Price Index (CPI) for September 2022 showed that overall inflation crossed 8% for the seventh consecutive month. As the economy shrinks and interest rates climb, organizations are scrambling to decrease spending as policymakers think about solutions. With the proceeded down turn, numerous business owners are grappling with a push for higher wages when the demand of consumer is falling.

In any event, during a economic uncertainty, business can work on functional productivity while reducing expenses through business process outsourcing. Underneath we will go through the top different ways organizations can maintain stability in the midst of market unpredictability by outsourcing routine capabilities, going from accounting and HR to Accounting & Bookkeeping and CFO Support services.

 

The Benefits of Outsourcing Accounting Services:

benefits of outsourcing

benefits of outsourcing

  1. Reduces Cost

Costing is an essential part of any business or organization as the whole institute depends on it. If you are able to properly manage your costing you can achieve unreal efficiency. One way is to outsource your services to third party accounting firm. An uncertain economy urges business owners to target higher efficiency and cut on costs. In the meantime, wages, benefits, rent, and everything else consumes a sizable portion of the overall budget and costing of the company.

Outsourcing offers an amazing chance to bring down your overhead cost. By drawing in with a solitary outsource accounting service provider, costs are decreased to a much higher extent for company that could independently incur invoices from a bookkeeper, a pay role distribute, and a CPA firm, for instance. A more modest in-house headcount likewise decreases the amount of required office space. Additionally, reputable outsourcing providers often offer their own software solution at a much lower cost, dispensing the need to invest in any sort of technology.

In conclusion, outsourcing your non-essential business tasks will allow you to reallocate and utilize their resources to core functions that generate revenue.

  1. Improves Efficiency

In lean times, firm might want to reduce expenses by reducing and laying off internal staff. The initial ones to get a cutback notice are many times lower-level workers who perform routine business tasks. In their nonattendance, those now-incomplete assignments might be reassigned to remaining employees.

Yet, this heavier workload risks with lower result and productivity among more high-level representatives who now should squander valuable time on menial or low-value tasks as opposed to their core capabilities. Outsourcing to a supplier whose groups’ abilities match or even outperform those of entry-level representatives settle this problem without compromising work quality.

 

  1. It Is Flexible

Outsourcing not only empowers companies to grow rapidly, but it also empowers them to pare back activities energetically. Business closures are normal during extreme monetary times, however having a outsourcing partner improves on the whole process much effectively. Because they do not need to lay off in-house workers and can focus on selling sites that are no longer needed. In like manner, in the event that a business purchases extra sites, coordinating those new outlets is streamlined with staff and systems being in place.

 

  1. Better Benefits

Although employees deserve benefits and they may sometime need them too however is specific situations employee benefits may be able to help the company in order to cut business costs during a recession. However, businesses who outsource services including finance, accounting, HR, IT, or even marketing are not required to pay the same benefits. That means they are better able to manage and continue giving the corresponding benefits to their in-house employees.

 

  1. It Offers Intelligence And Insight

If you are able to outsource your internal functions to a reputable firm, it will not only help your company grow but also achieve the peak of performance. Great accounting firms help you in every way possible by offering state-of-the art technologies, deep reports and beneficial advices to fix the internal problems and be the best in the space.

A reputable outsourcing firm will offer you with the best practices, extensive experience, and in-depth insights as professionals who have gone through possibly every setback and have experienced everything in the niche. Consistence concerns might be mitigated by the outsourced firm’s knowledge on government, state, and local laws and requirements. This will further improve and grow your business while reducing mistakes.

When the world is one the path to a recession, many business owners will be seeking for the best market intelligence and insight, and the right outsourcing firm can deliver it.

 

The Conclusion

In an uncertain economy, businesses should do their best to reduce risks, reduce expenses, and be ready to pivot. Choosing the right outsourcing firm will help you achieve whatever you want while you focus on other things leaving everything on them. Choose the firm that rightly suits your company and fulfills your needs, as the right firm is among the best thing that anyone could hope to find to support against a rescission. You just need a right auditing & accounting firm in Dubai, UAE for running for financial flows smoothly and flawless.

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22 Jun 2022|Company Formation Services
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Company Formation Services in the UAE

Company Formation Services in the UAE

We provide a range of outstanding services for setting up your business hassle-free in the UAE. We realize that establishing a company in a foreign country is indeed a challenging task & hence, we regard to assist our clients in taking truthful & profitable decisions. This is inclusive of, but not limited to, company formation, licensing, incorporation, visa renewals, golden visa consultation, business setup consultation or professional advice, & property consultation, we are your one stop solution for all your business requirements.

How can we help?

Our experts offer a complete variety of wide-range services that accelerate the business setup process. Our consultants are dedicated to advice entrepreneurs & investors to acquire their business setup in UAE hassle-free.

Our services include:

Company Registration – We help with the complete process of registering your company. Whether it be mainland or a freezone authority, we do the administering of all required forms & then submit to the concerned authorities.

Trade License Application – Our experts also prospect on applying for a trade license on your behalf. This is considered as the most important & challenging step when setting up your business, which is taken care off by us completely.

Incorporation – We take the responsibility of submitting all the essential papers that relate to the incorporation of your company in the UAE.

Various Trade Zones – We take the accountability for our clients & can help you setup your business in any emirate of our choice, including mainland or freezones. These are Dubai, Sharjah, Abu Dhabi, Fujairah, Ajman, RAK & UAQ.

Assistance in opening Corporate Bank Accounts – A corporate bank account is a the most vital for commencing business & we are readily available to help you set one. Acquiring a corporate bank account is an extremely time-consuming process. It requires certain paperwork from different entities & gathering all this also takes time. We will assist you with all the obligations smoothly.

Clearing documents – Getting clearances from relevant agencies can be demanding, hence, in this concern, we help you by accomplishing the crucial clearances from these agencies in the UAE.

Marketing and Advertising – We also take care of applying the right advertising & marketing channels for brand recognition. This can largely enhance your visibility in the market & get your business up & running.

Our goal is to make sure that you are covered the complete necessities for setting up your company in the UAE. You can most assured that you’re being given the finest services by our experts.

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16 May 2022|Corporate Tax
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Corporate Tax in the UAE

What is Corporate Tax?

It was officially announced by the UAE’s Ministry of Finance, on the 31st of January 2022, that UAE will be introducing a corporate tax (CT) regime, which will be effective from 1st June, 2023.

Corporate tax will be compulsory for business & commercial entities as well as for individuals who derive income as freelancers.

Under this latest policy, all activities performed by corporate/legal entities are considered eligible for corporate tax.

Accordingly, even if an individual who has a registered entity, liable for the purpose of carrying out business, is considered eligible for corporate tax.

The corporate tax system is expected to be extended even for business corporations which are functioned in Free zones. However, the application of the corporate tax policy will be subject to the governing law of each free zone, respectively.

The Ministry of Finance (MoF) has stated that the proposed federal CT law will also be applicable for banking operations in the UAE (although branches of foreign banks are already subject to a CIT regime at an Emirate-level).

The Federal Corporate Tax rate

Three different rates of corporate income tax are proposed to apply, as follows:

  • 0% rate on taxable income up to AED 375,000 (c. USD 102,000)
  • 9% rate on taxable income above AED 375,000; and
  • A different rate (which has not been announced yet) for large multinationals that generate consolidated global revenues above EUR 750m (c. AED 3.15 bn) in line with the Pillar Two of the OECD Base Erosion and Profit Shifting (BEPS) project.

 

Taxability of Free Zone Entities

A 0% tax has been proposed for companies and branches registered in Free zones on the following incomes:

  • Income from businesses outside UAE
  • Income from trading with other Free zone entities
  • Income from regulated financial services directed at foreign markets

 

Free zone entities would be permitted to carry on following activities in mainland without forfeiting their 0% tax rate:

  • Having branch in mainland (profits of the branch taxable at 9%)
  • Earning passive income from mainland entities (e.g., interest, royalties, dividends)
  • Transactions with mainland group companies (however payments to Free zone entities will not be deductible for mainland companies)
  • Sale of goods to mainland businesses by entities in designated Free zones

 

Any other income earned by a Free zone entity from mainland will disqualify Free zone entities from the 0% CT regime.

Free zone entities will also have an irrevocable option to move to the regular tax regime.

Exempted Categories

  • Corporate Tax will not be applicable for the employment income of an individual including the salary.
  • Any investment concerning real estate carried out by an individual will be exempted unless such an individual is required to obtain a commercial or corporate license in relation to activities involved with the investment concerning such real estate activities.
  • Individuals who would gain from their investments in corporations such as dividends gained from their shareholding will be exempted as far as it is gained from the individual’s personal capacity.
  • Any income earned through bank deposits, or any other income earned through such bank deposits by an individual is excepted from the proposed corporate tax.
  • Any business which is engaged with the extraction of natural resources will be exempted from the corporate tax regime and a different scheme of corporate tax will be in application depending on the governing law of such matters in each Emirate.

 

Calculation of CT liability

  • CT Rates

As outlined in the announcement issued in January, the CT rates are as follows:

– 0% for net profit not exceeding AED 375,000;
– 9% for net profit exceeding AED 375,000;

  • Withholding tax

A 0% (zero percent) withholding tax will apply on domestic & cross-border payments made by UAE businesses.
Further, there will be no obligation to file withholding tax returns.

  • Foreign tax credits applicability

Since UAE resident companies will be subject to CT on their worldwide income, in order to avoid double taxation, a foreign tax credit will be permitted in UAE which will be the lower of:

– The amount of tax paid in the foreign jurisdiction
– UAE CT payable on foreign-sourced income

It should be noted that tax credits which are not utilized, cannot be carried forward nor will the FTA refund such credits.

Set-off & carry forward of losses

Businesses will be allowed to utilize prior period losses (from the effective date onward) to offset up to a maximum of 75% of the taxable income.

Tax losses can be carried forward indefinitely. In case of change in ownership of more than 50%, tax losses can be carried forward provided the same business is continued.

CT Group

The UAE CT regulations will permit group of companies to form a tax group & file a single tax return for the entire group, subjective to the below mentioned conditions:

  • Common parent company holding 95% of share capital in the group companies;
  • Parent/subsidiary are not exempt persons or in Free zone consuming benefits of 0% CT rate;
  • All group members must use the same financial year

 

Registration & Deregistration

  • A business subject to CT will need to register with the FTA and obtain a Tax Registration Number within a prescribed period. The FTA can also automatically register a business for CT purposes if the person does not voluntarily do so.
  • Where a business ceases to be subject to the CT (e.g., due to cessation or liquidation of the business), it will be required to apply to the FTA to be de-registered for CT purposes within 3 months from the date of cessation.
  • The FTA will only de register a person where the FTA is satisfied that the person has filed CT returns and settled all CT liabilities and penalties (if any) due for all periods up to and including the date of cessation.
  • Where a person does not apply for de-registration within the time limits or comply with the payment and filing obligations, the FTA may de register the person based on available information.

 

Filing, Payment & Refund

  • To avoid the administrative burden on taxpayers, a business will only be required to prepare & file one tax return & other related supporting schedules with the FTA for each tax period. There will be no obligation for a business to file a provisional CT return & make advance payments of CT.
  • Each tax return & related supporting schedules will need to be submitted to the FTA within 9 months of the end of the relevant Tax Period.
  • Payments to settle a taxpayer’s CT liability for a Tax Period will required within 9 months of the end of the relevant Tax Period. Where a taxpayer can demonstrate that a CT refund may be due, the taxpayer can apply to the FTA to request a refund.

 

How can we help?

Our consultants will glad to assist you with you a free consultation!

We are registered Tax Agents with FTA & can help you with all your taxation requirements.

For more information on Corporate Tax, book an appointment with our experts right away!

*** Please Note: This document contains information on the proposed United Arab Emirates (UAE) Corporate Tax regime and is released for the purposes of obtaining input from interested parties. It does not reflect the final view of the UAE Government and is not intended to comprehensively address all possible aspects of the proposed UAE Corporate Tax regime. For more information Corporate Tax, please Federal Tax Authority (FTA) portal. The Ministry of Finance welcomes comments on a consultation document by 19th May 2022, using the online submission form.
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27 Apr 2022|Financial Growth
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How to Measure the Financial Growth of your company?

How to Measure the Financial Growth of your Company?

Evaluating the total performance of your business involves several criteria. You must ask a lot of questions and they are required to be answered with evidence and facts. Are there disruptions in the operation of the business? Where is it leading to? What is occurring as growth drivers and blockages?

You can achieve answers to these questions when you accurately examine your financial obligations and overall performance. Your business is required to have enough profits, strong sales figures, and regular cash flow for it to strive in the market.

Measuring the financial state of a company

The income statement, balance sheet, and statement of cash flows are necessary financial statements. These statements are enlightening tools that dealers can use to analyze a company’s financial strength and deliver a quick portrait of a company’s financial health and fundamental value.

  • The income statement: The income statement shows the results of a company’s business operations for a particular quarter or year. Through the income statement, you can observe the inflow of new assets into a business and ration the outflows sustained to produce revenue.
  • The Balance Sheet: While the income statement is a history of the finances flowing in and out of a company, the established balance sheet is a description of a company’s financial position at a given point in time. The balance sheet depicts what a company owns (assets) and owes (liabilities) and the difference between the two (stockholders’ equity).

The balance sheet displays:

– The percentage of those assets financed with debt (liability)
– The percentage of equity (retained earnings and stock shares)
– Assets are listed in order from most liquid to least liquid
– Liabilities are listed in order of immediacy

  • The Statement of Cash Flows: As with an income statement, the statement of cash flows indicates a company’s financial activity over a period. It projects where a company’s cash comes from and how it’s used to compensate for operations and/or to finance the future.

 

Key financial indicators to measure a company’s financial health

  • Preparation of Key Financial Statements:

The basic reports that every company requires to generate are the balance sheet and the profit/loss statement. They are not only essential measures of the performance of the business but they are also required statutorily. They give an outline of the financial health of the company and show the owners everything that they need to know about how the company’s growth.

  • Preparation of Aged Debtors Trial Balance:

Every month, an aged debtor’s trial balance should be prepared, so that the company can closely track all the customers who owe them money. They can keep the path of irregular accounts and follow up assiduously with nonpayers to get back their money.

  • Preparation of Inventory Records:

There are many businesses that invest greatly in machinery, equipment, and raw materials. There should be accurate maintenance of inventory records. It displays how much stock was purchased, how much was utilized for making the final products, how much has gone waste, and whether any equipment has gone missing at any point in time.

  • Preparation of Working Capital Statements and Financial Ratios:

Businesses should ask their finance experts to regularly gather working capital statements and periodic calculations of current ratios and quick ratios. This will show the number of assets they possess, as compared to their liabilities, and how many assets they can transform into cash.

  • Preparation of Fund and Cash Flow Statements:

Fund flow statements and cash flow statements are crucial reports for a company that informs them just how much liquid cash is coming into the business.

  • Analysis of Overheads:

Simply preparing financial statements is not adequate. The business requires to go beyond that and look for hidden messages in the numbers that point out weak areas. Check the overhead expenses, like rent, salaries, marketing expenses, etc.

  • Analysis of Marketing Expenses:

What is the expenditure on advertising? Do the returns rationalize the cost, or is this an unwanted burdened cost to the company? It is important to measure how much money is being spent on other marketing avenues, and are these leads being converted into proper sales?

  • Analysis of HR:

Human resources-related actions must be examined. What is the employee turnover rate? If the staff turnover ratio is very high, then the company is probably spending a considerable amount of money on new recruitments, payments to recruitment agencies, and separation processes of departing employees.

  • Creation of Dashboards:

It is also important that the finance team prepares daily, weekly, monthly and yearly dashboards to keep all shareholders informed on the financial progress of the company. Trend analysis must be performed on a regular basis.

  • Competitive Analysis:

Financial statistics of the company should be evaluated with your competitors so that your company is aware of how they are faring. Maybe your competitors can manage costs and increase profits in different ways. And if that is the case, then your company requires to take heed and catch up with the rest of the industry.

In conclusion, measuring financial performance has a vital role in ensuring that calculated decisions are taken in a timely manner and the growth plan of the business is held on to. Accurate financial reporting and financial analysis have a meaningful contribution to this examining activity and hence, should be given necessary consideration by the business.

How can we help?

One of the most important issues preventing your business from growing the way you want is accurate financial management. This means you can’t analyze the numbers in a way that makes you able to know your biggest risks and opportunities, not to mention your inability to properly plan the financial roadmap for your business growth.

We at Spicer-Pegler will give you instant financial reports as soon as you request them, summarizing your financial position with utmost accuracy. Moreover, we will provide you with advanced financial analyses extracted from your financial reports written in a simplified manner that is easy for you and your board of directors to understand and assimilate, providing you with the ability to make more accurate financial decisions.

We are experts at providing financial consultations to help you and your board of directors make your strategic financial decisions about your company’s future to achieve your business goals during various economic challenges.

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31 Mar 2022|Financial Advisors
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How do Financial Advisors add value to your firm?

How do Financial Advisors add value to your firm?

A skilled financial advisor adds value to your company &, as a result, to your portfolio, by tackling complex tax issues, advising you about your investment choices & supporting you through emotional times that may negatively influence your financial decisions or circumstances.

Especially for Small Business Owners or SMEs, a financial advisor will help your business to adapt to local trends, plans ways to boost profits & also help prepare for retirement.

Money will keep your business running. If the cash flow is managed properly, then your business can rapidly scale, achieving maximum heights. If you’re battling to handle your own finances, a small business financial advisor may be the best option. While it may cost to work with a financial advisor, the upfront investment can be worth it to increase your business’s financial health, create a plan for your retirement, & much more.

A financial advisor is a qualified professional who helps you maximize the capital that goes into commencing & running your business.

As an entrepreneur you want your business to make a profit, have a good turnover, scale, & thrive. Keeping your business finances healthy can help you achieve this.

Services that a financial advisor can offer for a small business owner include:

  • Spending & saving schemes.
  • Tax advise & requirements.
  • Recommended accounts for operating your business.
  • Cash flow management.
  • Budget management.
  • Risk management.
  • Profit & loss analysis.

 

Benefits of a Financial Advisor

Outsourcing with a financial advisor can have countless benefits for both you & your corporation:

  • Saves time & energy:

As a small or a new business owner, you are handling many tasks at the same time. Usually in the beginning, you are managing the accounts, the admin tasks, HR sector, government, or tax issues. With all this on your plate, there is little or no time to look at the financial area of your business.
Poor bookkeeping, unsound financial decisions & cash flow obstructions can adversely affect your business. That’s where allocating your business finances to an expert comes is highly recommended. While you’re running your business operations, a financial advisor will keep the capital flowing as well as help you create a plan for what to do with that capital.

  • Save money:

Many small business owners might be unaware that they’re recklessly spending on certain areas of their businesses. A financial advisor will calculate your business finances & observe where you can reduce excessive expenses.
When your finances are well managed, you have more capital to provide to your business & expand it by:

  1. Hiring more employees
  2. Exploring new marketing ideas.
  3. Releasing new products.
  4. Offering employee raises.
  • Execution of your business plan:

When you write your business plan, you will have numerous goals about where you want to take your business. Often, these goals can be financially impractical, & you’ll need an unbiased stance if you want to bring your business idea to execution. A financial advisor will help you achieve your goals keeping your finances under consideration.

  • Evaluate Market Trends:

Some financial advisors will be more engaged in the implementation of the business, including researching market trends. Some markets are more competitive than others & you’ll need an expert opinion on how your company will sustain itself in such a market.
Market forecasts, advancing technology & other demographic factors may affect the growth of your business. You want to ensure your business is financially strong so you can withstand disputes & take advantage of upcoming opportunities.

  • Investment & retirement planning:

For most business owners, their investments are all covered in their business with the reasoning that they can later sell their business to finance their retirement. A healthy investment portfolio is one that is expanded. A financial advisor can suggest personal finance tips & help you choose which investments work best for your unique situation, including when & how you wish to retire.
As your business starts generating more revenue, your financial advisor can also help you decide how to invest this capital to continue growing your business.

Common mistakes a financial advisor can help you prevent:

  • Overpaying yourself
  • Mixing personal & business expenses
  • Not researching your business structures
  • Not having a retirement plan
  • Not having insurance plans
  • Not getting the business valuation performed

 

How can we help?

Outsourcing a financial advisor is highly recommended. Our financial advisors will take care of your company’s complete financial health. Moreover, our experts will help to strengthen the long-term financial health of your business. Capital is the lifeblood of your business & it’s an aspect of your business that you should consider leaving in the hands of a competent financial professional like Spicer-Pegler.

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28 Feb 2022|Company Liquidation
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Company Liquidation

All you need to know about Company Liquidation

The liquidation process in UAE requires the conversion of an organization’s resources into cash, paid to different contributors of the company. For instance, a company might be liquidated to pay the debts to the creditors; the lending agencies, or a bank from where loans may have been taken.

It is usually the last resort that investors opt for, as a company that is in ideal financial health is not obligated to process liquidation. But, if a company doesn’t show any suitable development & the debt cannot be paid off, then creditors choose to opt for liquidation.

In this process, the assets of the company; land, machinery, raw material, products, & other commercial items are auctioned or sold to a prospective buyer. The cash, which is attained from the selling of all the things, is then distributed among the lenders.

Liquidation requires certain actions which must be followed by a business. This will impact will also affect the VAT & Tax status. If the company is registered as a tax group, in that case, the management cautiously remembers to deregister the business from a tax group as it may create problems in the future.

What are the Types of Liquidation?

There are two different types of company liquidation that a business may implement:

  1. Voluntary LiquidationHere the investors of a company will decide to liquidate the company as they have no money to pay the creditors. In this type of liquidation, importance is given to the creditors at the time of distributing the earnings from the assets.

  2. Compulsory LiquidationThis type of company liquidation is put forward by a court order. Here, the assets of the company are distributed to the creditors & contributors based on the priority of claims.

 

What is the Role of a Liquidator?

A liquidator is a leading decision-maker in a liquidation process. A liquidator has several responsibilities to take care. Some of the duties of a liquidator include:

  1. Initiating the liquidation process:
    Once the stakeholders give a resolution for the liquidation, & the appointment of a liquidator, the liquidator can then issue an acceptance letter. This acceptance letter will also compute the procedure to be followed & also the name of the liquidator.
  2. Publish the Liquidation Notice
    Once the liquidation procedure has been initiated, the liquidator distributes the liquidation notice, both in Arabic & English, in two local newspapers so that the news of the liquidation reaches maximum people.
  3. Overview of Collection & Distribution of Company Assets
    If required, the liquidator may outline the collection & distribution of company assets, & the settlement of liabilities. The approach of distributing assets will be stated in the acceptance letter.
  4. Preparing the Statement of Affairs
    As the final step in the liquidation process, the liquidator arranges the statement of affairs & the liquidator’s report. In this, all the details of the liquidation process are provided.

 

Documents primarily required for company liquidation

  • Trade License Copy
  • Memorandum of Association Copy with all the modifications
  • Power of Attorney if any
  • Shareholders Resolution
  • Shareholder’s passport Copy
  • Emirates ID Copy
  • Deregistration Application Form

 

Actions required to be taken during the notice period

  • Authorization from Immigration Department
  • Authorization from Labor Department
  • letter from Electricity and Water Departments
  • Authorization letter from Telecom Authority (DU or Etisalat, etc.)
  • Authorization letter from Landlord
  • Bank account closure letter

 

Benefits of Company Liquidation

  • Debt is paid to the creditors & there are no complications with partners related to money.
  • The management & directors are saved from probable legal actions.

 

Drawbacks of Company Liquidation

  • The drawback of the procedure is that the company seizes to exist. As a result, it causes the present staff to lose their jobs.

 

How can we help?

The liquidation of a company in the UAE is a complex & and exhausting process. At Spicer-Pegler, we assist our clients hassle-free with all the procedures required for company liquidation. We at Spicer-Pegler offer are financial consultants & we offer a wide range of services including, auditing, accounting, VAT consultation, UBO consultation, Anti-Money Laundering services, financial dispute services, ESR services, Corporate Tax consultation, company formation, liquidation & insolvency, etc. We have been providing the best audit services in the UAE for over a decade.

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17 Jan 2022|External Audit
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External Audit Process

External Audit Process

An external audit process certifies that a company’s internal controls, processes, guidelines & policies are sufficient, effective & in compliance with governmental requirements, industry standards & company policies. This type of audit also guarantees that reporting mechanisms avoids errors in financial statements.

Major types of audits performed by external auditors include the financial statements audit, the operational audit, & the compliance audit. A financial statement audit analyzes financial statements, records, & related operations to establish obedience to accepted accounting principles.

External audit is the process of unbiased or individual valuation of the company’s financial statements by a qualified independent third party, the external auditor. In this case, auditors examine the transactions & balances of the company’s accounting records to verify whether they are comprehensive & accurate.

As a result, auditors express their opinion in the audit report, whether the company’s financial statements present fairly, in all material respects, in accordance with the applicable accounting standards and regulations.

External auditors are usually chosen by shareholders at the annual general meeting of the company. Likewise, external auditors are usually appointed based on their skills, experiences, qualifications, & reputations.

Objectives of External Audit

  • To have an independent evaluation of financial statements whether they give a true & fair view, in all material regards.
  • To analyze whether financial statements have been made in accordance with applicable accounting standards, such as IFRS.
  • To improve the overall quality of the company’s financial statements so that the operators, such as shareholders, lenders, suppliers, & other stakeholders, acquire more confidence in having a business relationship with the company.
  • To conform with relevant laws & regulations that required the company to have their accounts audited by an independent third party. This usually occurs to list companies & other public interest entities, such as banks & insurance companies, which are usually obliged by stock market regulations & country’s laws to have their accounts audited by an independent external audit firm.

Process of External Audit

The process of external audit generally abides by three stages that include planning stage, evidence gathering stage & completion stage.

1. Planning Stage:

The external audit procedure generally commences after auditors are appointed for the audit of the company. In general, audit activities start with the planning of an overall audit, include accepting clients by signing an engagement letter after approving on the terms, forming an audit team, determining the time & scope of the external audit.

Another imperative planning of an external audit is the risk assessment that auditors perform in order to measure the risks of material misstatements that could appear in financial statements due to any unfavorable business environment.

The final stage of the audit plan is creating the overall audit strategy to certify that the audit process is implemented in an efficient & effective manner & all the risks of material misstatements have been accurately referred. This stage of external audit involves constructing overall audit programs & procedures, including allocating audit assignments to various team members based on their skills & expertise.

2. Evidence Gathering Stage:

This is the next stage of external audit where auditors require to achieve adequate & suitable audit evidence before they can draft an opinion on the company’s financial statements. Hence, they are obligated to execute audit tests including tests of controls & substantial tests to gather the audit evidence.

In this stage of external audit, before execution of the substantive tests, auditors tend to perform tests of controls to attain evidence to support the efficiency of the controls so that they can rely on control. Hence, diminishing some of the work they require to perform in substantive tests. However, auditors only perform these tests of controls on those controls that can reduce the risk of material misstatements in financial statements.

Auditors then need to perform substantive tests including both substantive analytical procedures & tests of details. Substantive analytical procedures are achieved by observing trends, ratios, & relationships between data, including both financial & non-financial information.

Tests of details are accomplished by studying supporting documents on transactions & balances, physical review on fixed assets, & recalculation on the work processed by the client, etc.

In general, auditors require to test all relevant financial statement declarations, including incidence, reality, totality, accuracy, termination, & categorization, etc. in the external audit to find adequate & proper audit evidence to draft the basis of concluding an opinion.

3. Completion Stage:

Completion stage is the final stage of the external audit process. Here auditors build their conclusion on the client’s financial statements whether they are fair & true with respect to materials provided. In this case, external auditors give an overall conclusion by implementing their professional judgment & based on evidence they acquired during their audit.

As a result, they produce audit report stating an opinion on financial statements. Usually, the report would start with a statement “In our opinion, the financial statements present fairly…” or “In our opinion, the financial statements give a true and fair view…” This is the case of unmodified or unqualified audit opinion which is also referred to as “clean opinion”.

However, sometimes external auditors also give a modified audit opinion which is defined as qualified opinion, adverse opinion or disclaimer of opinion. In this case, it would mean financial statements have an issue, either due to material misstatements or due lack of audit evidence to form the basis of opinion.

What can Spicer-Pegler offer you in the field of external auditing?

Evolving regulations, digital transformation, competition, & the need to boost confidence in capital markets all mean that the external audit landscape is being reshaped faster than ever before, where leading companies address these problems by investing directly in new technologies and business models to face economic challenges of different sizes.

Thus, we at Spicer-Pegler test your company’s documents to determine whether the records & reports issued by your company’s various departments are accurate, as we work to present the information fairly according to the accounting standards approved in your company’s geographical location.

Moreover, Spicer-Pegler skillfully handle the most complex business issues through our global scope & integrated structure that allows us to provide a consistent level of quality external audit services worldwide, which gives you confidence in the information you provide to the board of directors and shareholders, which in turn they rely on in making their decisions.

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Spicer Pegler is a firm of experienced Chartered Accountants, established in Dubai as an Auditing & Accounting firm.

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