The Ministry of Economy (MoE) has listed the businesses that need to register in the anti-money laundering systems before March 31.

These include real estate agents, gold dealers, auditors, and service providers for companies.

Referred to as designated non-financial businesses and professions (DNFBPs), they have been asked to register in the Financial Intelligence Unit (goAML) and the Committee for Commodities Subject to Import and Export Control system (Automatic Reporting System for Sanctions Lists).

Such businesses were given an extended grace period till March 31 to register, in order to avoid penalties, which include licence cancellation and closure.

It is among the several measures adopted by the government to combat money laundering and financing of terrorism in the UAE.

The MoE also underlined the importance of adopting measures to counter money laundering. Failure to do so result in fines ranging from Dh50,000 to Dh1 million – which can be doubled to as much as Dh5 million.

Full list

The ministry explained that a wide range of non-financial business and activities are “most exposed to money laundering risks”. These have been divided into four main categories.

>> Brokers and real estate agents: When entering into operations in the interest of their clients for purchase and sale of real estate.

>> Dealers of precious metals and gemstones: When they perform any single-cash transaction or several seemingly related transactions with a value of Dh55,000 or more.

>> Independent auditors and accountants: When they prepare, conduct or implement financial operations for the benefit of their clients, related to the following activities:

– Buying and selling real estate.

– Managing money that the client owns.

– Managing financial, savings or stock accounts.

– Contributing to establishing, operating or managing companies.

– Establishing, operating or managing companies, or legal arrangements.

– Buying and selling commercial entities.

>> Corporate service providers and trust funds: When they undertake or execute an operation for the benefit of their clients or on their behalf in relation to the following activities:

– Work as an agent in establishing companies.

– Working or preparing someone else to work as a director or company secretary, or as a partner in the company.

– Providing a registered office, business address, place of residence, address for correspondence, administrative address of a legal person, or legal arrangement.

– Act as trustee for a direct trust fund or to perform a similar function for another form of legal arrangement.

– Working or preparing another person to act as a shareholder for another person.

Source:https://www.khaleejtimes.com/business/local/uae-businesses-that-must-register-in-anti-money-laundering-systems

Companies across the UAE need to be up to date and comply with the UAE’s economic substance regulations (ESR) unless they want to incur heavy fines for their failure to comply, experts have said.

In a recent webinar organised by the Dubai Chamber, in collaboration with Al Tamimi & Company, experts highlighted the latest developments and provided guidance with respect to the economic substance regime and compliance requirements. The webinar, titled ‘Key Aspects of Economic Substance Regulations’, noted that the UAE has issued the Economic Substance Regulations in April 2019 and followed them with an updated guidance on relevant activities by the Ministry of Finance to help businesses to demonstrate economic presence in the UAE.

The UAE adopted new economic substance regulations in Cabinet Resolution No. 31 of 2019. These regulations provide that a company engaged in one of a number of specified sectors must have sufficient economic substance in the territory to access the territory’s tax regime. The changes were in response to pressure from the EU on a number of territories, following recommendations from its EU Code of Conduct Group, and apply for financial years starting on or after January 1, 2019. The key activities identified by the European Commission Code of Conduct Group are: banking, insurance, fund management, financing and leasing, shipping, intellectual property, collective investment vehicles, and holding companies that generate income from any of these key activities.

Shiraz Khan, head of Taxation at Al Tamimi & Company, said that tax is a key revenue generation for many countries that don’t have an abundance of natural resources. “These countries generally rely on taxes to fund their public expenditure.”

One of the biggest concerns during the 2008 downturn, he said, revolved around tax evasion. “Many international companies around the world, with the advent of globalisation, were essentially operating in multiple countries and moving money from high tax jurisdictions into low tax jurisdictions and therefore paying less tax as a result.”

The UAE Ministry of Finance (MoF) in August 2020 announced the details of the Cabinet Resolution No. (57) of 2020 concerning Economic Substance Regulations. The Resolution was issued in consultation with the Organisation for Economic Cooperation and Development (OECD) and the European Union Code of Conduct Group, in order to direct companies that engage in one or more relevant activities. The resolution amended and repealed the Cabinet of Ministers Resolution No. (31) of 2019 concerning Economic Substance. Under the resolution, the UAE Federal Tax Authority (FTA) was appointed as the National Assessing Authority for the purposes of the UAE Economic Substance Regulations.

According to the resolution, the definition of a Licensee was amended to be limited to juridical persons and unincorporated partnerships that are registered (whether by way of commercial/trade license or other form of permit) to carry out a Relevant Activity. Natural persons, sole proprietorships and other business forms that are not juridical entities are no longer within the scope of the UAE economic substance regulations.

Noff Al-Khafaji, senior associate, Corporate Structuring at Al Tamimi & Company, noted that the UAE Ministry of Finance, in May 2020, issued a Covid-19 advisory extending the notification filing deadline and consideration of the impact of the pandemic on businesses. In January 2021, the MoF announced that the December 31, 2020 filing deadline for ESR notification and report (if applicable) was extended to January 31, 2020. Failure to provide notification and any relevant information or documentation will result in a Dh20,000 fine, she said. Also, providing inaccurate information will result in a Dh50,000 fine. Failure to submit an ES report can result in a fine of Dh50,000 in the first year, and a fine of Dh400,000 in the second consecutive year of failure.

Source:https://www.khaleejtimes.com/business/local/strict-adherence-to-esr-requirements-necessary-experts-say

The UAE’s Federal Tax Authority (FTA) clarified on Monday that an individual (natural person) owning multiple sole companies is required to obtain only one tax registration for all of them, and not for each one separately.

The FTA said in a statement that a sole establishment (sole proprietorship) is a legal form of business which is 100 per cent owned by a natural person, and it does not have a legal personality independent of its owner, as the sole business and its owner are considered to be the same person.

This announcement was issued in a new public clarification regarding the VAT registration of sole establishments, which recorded a 1.3 per cent surge to 304,948 at the end of January month-on-month, reflecting the robust activity of the sector, which recently attracted many investors from both inside the country and abroad.

The National Economic Register’s recent figures show that relevant authorities issued over 4,000 new licences for sole establishment around the country in January 2021.

According to statistics, sole proprietorship account for nearly 41 per cent of total commercial licences of 740,717 at the end of January.

Abu Dhabi, Dubai and Sharjah account for 78.6 per cent of the total sole establishments operating in the country.

The FTA clarification on tax registration seeks to educate people with the aspects of the tax rule which need simplified explanations, “enabling them to apply the tax principles accurately and efficiently,” the tax authority said.

The FTA clarified that the sole proprietorship rule does not apply to a One-Person Company LLC or other similar legal entities, which are seen as “distinct and separate legal persons” from their owners (unless the applicable legislation treats such entity and the natural person as the same person). For the avoidance of doubt, it should be noted that a legal person (e.g. a company) cannot own a sole establishment.

In certain cases, tax registrations by taxpayers are reviewed with regards to sole establishments and such persons will be informed of the corrective measures to be taken, if needed, the FTA explained.

The tax authority noted that the taxable supplies made by a natural person, in addition to his sole establishment(s), must be considered collectively in order to determine whether the person exceeded the mandatory VAT registration threshold of Dh375,000.

The FTA said the registrant must inform the FTA of any undeclared output tax by submitting a voluntary disclosure in accordance with Federal Law No. 7 of 2017 on Tax Procedures, for example where the registrant disregarded any of his sole establishments or taxable supplies made in his personal capacity for VAT purposes. “This includes instances where a person failed to register for VAT on the basis that the mandatory VAT registration threshold was not exceeded on a stand-alone basis by that natural person or his sole establishment(s).”

A natural person is also required to notify the FTA if it failed to register for VAT and take the necessary corrective action to account for any outstanding dues.

Source:https://www.khaleejtimes.com/business/local/owner-of-multiple-sole-firms-needs-just-one-tax-registration