TAX & AML - Ayaan Finance

TAX & AML Compliance

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Office - M10, WAFI Residence Offices, Al Razi Street, Healthcare City, Dubai

Email:

info@ayaanfin.com

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+971-56-4130023

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WORKING CAPITAL & TRADE FINANCE

AML Compliance

In the UAE, Designated Non-Financial Businesses and Professions (DNFBPs) are entities that are not banks or financial institutions but are still susceptible to money laundering and terrorism financing risks. DNFBPs include real estate agents, dealers in precious metals and stones, lawyers, notaries, and other independent legal professionals, as well as accountants and auditors. These entities are required to comply with Anti-Money Laundering (AML) regulations to prevent and detect money laundering and terrorism financing activities. Here are the key steps for DNFB companies to ensure AML compliance in the UAE:

THE PROCESS

1 Understanding Regulations

DNFB companies should familiarize themselves with the UAE Federal Law No. 20 of 2018 on anti-money laundering and combating the financing of terrorism (AML Law) and its implementing regulations. It is essential to understand the legal requirements applicable to your specific business activities.

Appointment of Compliance Officer

Appoint a Compliance Officer responsible for ensuring AML compliance within the company. This person should be knowledgeable about AML laws and regulations and be responsible for implementing and overseeing the AML program.

3 Customer Due Diligence (CDD)

Conduct thorough customer due diligence before establishing a business relationship with a client. This includes identifying and verifying the identity of customers, beneficial owners, and politically exposed persons (PEPs). Enhanced due diligence is required for high-risk customers.

4 Record Keeping

Maintain comprehensive records of customer transactions, identification documents, and all relevant correspondence. Retain these records for at least five years after the termination of a business relationship.

Reporting Suspicious Activities

Establish procedures for employees to report suspicious transactions or activities. Report any suspicious transactions to the UAE Financial Intelligence Unit (FIU) through the goAML system promptly.

6 Training and Awareness

Provide regular training to employees to raise awareness about money laundering and terrorist financing risks. Ensure that employees understand their roles and responsibilities in AML compliance.

7 Risk Assessment

Conduct a risk assessment to identify and assess the money laundering and terrorism financing risks specific to your business. Develop policies and procedures tailored to mitigate these risks effectively.

Internal Controls and Policies

Implement internal controls and policies to prevent money laundering and terrorism financing. These controls may include transaction monitoring, customer profiling, and employee screening procedures.

9 Sanctions Screening

Screen customers against national and international sanctions lists to ensure you are not conducting business with individuals or entities associated with terrorism or other illicit activities.

10 Periodic Reviews

Regularly review and update your AML policies and procedures to ensure they remain effective and compliant with the latest regulations.

External Audit and Assessment

Consider engaging external auditors or consultants to assess your AML program's effectiveness and compliance with regulations.

Cooperate with Authorities

Cooperate fully with regulatory authorities during inspections and investigations. Provide all requested information and support to regulatory authorities.

It’s crucial for DNFB companies in the UAE to stay informed about the evolving AML regulations and adjust their internal processes and controls accordingly to remain compliant and mitigate the risks associated with money laundering and terrorism financing. Consulting with legal and compliance experts familiar with UAE AML laws can provide valuable guidance tailored to your specific business context.

Corporate Tax

Managing corporate tax in the United Arab Emirates (UAE) involves understanding the tax regulations and complying with the requirements set by the government. Here are the steps to manage corporate tax in the UAE:

1 Understand the Tax System

Familiarize yourself with the UAE tax system, which is governed by the Federal Tax Authority (FTA). As of my last update in January 2022, the UAE implemented a Value Added Tax (VAT) system. There is no federal corporate income tax in the UAE, but individual emirates may have their own rules.

Determine Tax Liability

Understand the tax liabilities applicable to your business activities. Different sectors might have specific regulations. For instance, financial services and oil companies might be subject to different rules.

3 Register for VAT (if applicable)

If your business turnover exceeds the mandatory threshold for VAT registration, you must register your business with the FTA. Ensure proper VAT accounting and compliance with VAT regulations.

4 Maintain Accurate Records

Keep thorough and accurate financial records. Proper bookkeeping is essential for tax compliance and can also help you in case of tax audits.

File Tax Returns

File your VAT returns on time, adhering to the regulations set by the FTA. Late or incorrect filings can result in penalties.

6 Compliance with Transfer Pricing Regulations

If your company has related entities, ensure compliance with transfer pricing regulations. The UAE has specific guidelines concerning transfer pricing to prevent profit shifting.

7 Stay Updated

Tax laws and regulations can change. Regularly check for updates from the FTA or consult with a tax professional to ensure your business remains compliant with the latest rules.

Consult with a Tax Advisor

Consider consulting with a tax advisor or an accounting firm experienced in UAE tax laws. They can provide tailored advice based on your specific business activities and help you navigate the complexities of taxation.

9 Employee Taxes

If you have employees, ensure their income taxes are deducted at source and remitted to the appropriate authorities. Compliance with labor and tax laws regarding employees is crucial.

10 Engage in Tax Planning

Plan your business activities with an eye on taxation. Proper structuring of business operations can sometimes result in tax savings. However, ensure that any planning is legal and ethical.

Be Prepared for Audits

Be prepared for possible tax audits. Maintain all necessary documentation and be ready to cooperate with tax authorities if your business undergoes an audit.

Consider Double Taxation Treaties

If your business deals with international transactions, explore the double taxation treaties between the UAE and other countries. These treaties can sometimes provide relief from paying taxes in both jurisdictions.

13 Emirate-Specific Regulations

Be aware that some emirates in the UAE might have specific regulations or exemptions. Depending on where your business is located, you might need to comply with additional local rules.

Always ensure that you’re in compliance with the most recent laws and regulations, as tax policies can change, and new regulations can be introduced. For the most accurate and updated information, consult with a local tax professional or legal advisor.

Freezone Corporate Tax

United Arab Emirates (UAE) does not impose federal corporate income tax on businesses operating within most of its free zones. However, the tax policies can vary depending on the specific free zone in which a company is established.<br>

Many of the UAE free zones offer tax incentives, including:

1 Tax Exemptions

Most free zones provide full corporate tax exemptions for a certain number of years, often ranging from 15 to 50 years. This means that companies established in these zones are not required to pay corporate income tax on their profits.

Import and Export Duties

Free zones usually offer exemptions from import and export duties, making it easier and more cost-effective for businesses to trade goods.

3 100% Foreign Ownership

In most free zones, foreign businesses can have 100% ownership without the need for a local partner or sponsor. This is a significant advantage for foreign investors.

4 Repatriation of Profits and Capital

Free zones typically allow businesses to repatriate 100% of their profits and capital without restrictions.

No Currency Restrictions

There are usually no restrictions on the use of foreign currencies or the repatriation of funds.

6 No Personal Income Taxes

Employees working within the free zones are often exempt from personal income taxes.

7 Stability of Regulations

Free zones in the UAE provide a stable regulatory environment, ensuring that businesses can operate with confidence.

However, it’s crucial for businesses to understand that these policies can vary between different free zones. Additionally, while there is no federal corporate income tax, businesses operating outside free zones and those engaged in certain sectors might be subject to corporate taxation.

As tax laws and regulations can change, it’s advisable to consult with a local business advisor or legal expert in the UAE to get the most current and specific information regarding corporate tax in a particular free zone.