Today, I want to address two issues – property and dubious suppliers.
One of the modern miracles of the UAE is the speed at which it has developed, in particular regarding property – personal and commercial. Many of you may have purchased one or more.
Now that corporate tax is live, the question of what is personal and what is business has become a pressing one.
There are many who have been using juridical entities, placing one or more of their assets within. Each location may have its own entity.
There can be good structuring reasons for this. Simply, with no tax on earnings, it's a useful tool for day-to-day management and nicely produces a profit and loss statement.
Misreading corporate tax law has led some to liquidate these entities, returning ownership to a natural person. The reasoning is that individuals do not pay income tax, unlike entities.
This argument might hold weight if there were just one property, one that wasn’t multistorey and mixed-use. However, it might still be difficult to defend moving ownership from a legal entity to a personal one.
Corporate tax has anti-avoidance provisions. Their purpose is to allow the relevant regulatory authority sufficient scope to prevent both the letter and the spirit of the law from being undermined.
The above example would appear to be driven by a desire to avoid the payment of tax.
Any decision that an infraction has occurred that isn't specifically outlined in legislation may be challengeable in court.
In jurisprudence, there is something called equity, where the spirit of the law can be considered. However, there is caution: such matters are rarely black and white.
There’s one additional element to consider. Ministerial Decision No. 120 of 2023 on Transitional Rules for Corporate Tax creates a time stamp after which such a change has tax implications.
The critical piece is the fiscal year of the juridical entity. I’m still finding that people make unsubstantiated claims as to what this is. With so many entities still not registered for corporate tax, it’s a reckless act to make assumptions without validating this key date with the Federal Tax Authority.
Next, there is another query asked of me that raises more questions than I could provide answers to.
It’s not unusual to have that one supplier who seems unable to provide formal paperwork relating to his business.
By this I mean a trade licence or a VAT certificate. In the case of the latter, as long as VAT is not being charged, the issues are minimal. Or so you might think.
It’s not enough to quote a VAT number on an invoice. The official certificate should also be provided by your supplier the first time you trade. This you should file away carefully alongside each original paper invoice.
Reclaiming VAT charged to you demands that you are confident that all is in order with those bills. You will face penalties for invalid claims.
This brings us to corporate tax. Like VAT, you are required to have correct supporting documentation for any deduction against taxable income.
Starting with the principle that ignorance of the law is no defence in law, what happens when it’s discovered that a supplier’s invoices are invalid, for example by virtue of the entity not legally existing or trading within its licensing under UAE laws?
How would this be discovered, I hear you ask? During an audit by an intrepid, proactive and curious inspector.
Fine, you may reply, but we have thousands of transactions and this kind of issue is only likely to arise among smaller values of goods or services. Surely an inspection will focus on the larger numbers?
While this is generally true, do you really want to be the one who gets caught?
OK, what would happen if we were found out? The deduction would be disallowed; there will probably be a penalty. What follows are the kickers.
This inspection will likely occur a few years after the submission of that corporate tax return. Firstly, you will owe interest on the amount of tax you should have paid. You are open to potential per-incident penalties – yes, one for each mistaken claim.
Finally, and of greatest impact, confidence that your supporting documentation is in order will have just dissipated. This could get expensive financially, particularly if you are sensible and monetarily value you and your team’s time.
The questions and actions I’m seeing and hearing tell me the UAE is not very prepared for what is already happening.
David Daly is a partner at the Gulf Tax Accounting Group in the UAE
ESSENTIALS
The flights
Emirates flies from Dubai to Phnom Penh via Yangon from Dh2,700 return including taxes. Cambodia Bayon Airlines and Cambodia Angkor Air offer return flights from Phnom Penh to Siem Reap from Dh250 return including taxes. The flight takes about 45 minutes.
The hotels
Rooms at the Raffles Le Royal in Phnom Penh cost from $225 (Dh826) per night including taxes. Rooms at the Grand Hotel d'Angkor cost from $261 (Dh960) per night including taxes.
The tours
A cyclo architecture tour of Phnom Penh costs from $20 (Dh75) per person for about three hours, with Khmer Architecture Tours. Tailor-made tours of all of Cambodia, or sites like Angkor alone, can be arranged by About Asia Travel. Emirates Holidays also offers packages.
Stamp duty timeline
December 2014: Former UK finance minister George Osbourne reforms stamp duty, replacing the slab system with a blended rate scheme, with the top rate increasing to 12 per cent from 10 per cent:
Up to £125,000 - 0%; £125,000 to £250,000 – 2%; £250,000 to £925,000 – 5%; £925,000 to £1.5m: 10%; Over £1.5m – 12%
April 2016: New 3% surcharge applied to any buy-to-let properties or additional homes purchased.
July 2020: Rishi Sunak unveils SDLT holiday, with no tax to pay on the first £500,000, with buyers saving up to £15,000.
March 2021: Mr Sunak decides the fate of SDLT holiday at his March 3 budget, with expectations he will extend the perk unti June.
April 2021: 2% SDLT surcharge added to property transactions made by overseas buyers.
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
3%20Body%20Problem
%3Cp%3E%3Cstrong%3ECreators%3A%3C%2Fstrong%3E%20David%20Benioff%2C%20D%20B%20Weiss%2C%20Alexander%20Woo%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%20%3C%2Fstrong%3EBenedict%20Wong%2C%20Jess%20Hong%2C%20Jovan%20Adepo%2C%20Eiza%20Gonzalez%2C%20John%20Bradley%2C%20Alex%20Sharp%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%203%2F5%3C%2Fp%3E%0A
More from Janine di Giovanni
The specs: 2018 Volkswagen Teramont
Price, base / as tested Dh137,000 / Dh189,950
Engine 3.6-litre V6
Gearbox Eight-speed automatic
Power 280hp @ 6,200rpm
Torque 360Nm @ 2,750rpm
Fuel economy, combined 11.7L / 100km
6 UNDERGROUND
Director: Michael Bay
Stars: Ryan Reynolds, Adria Arjona, Dave Franco
2.5 / 5 stars
Company profile
Name: Back to Games and Boardgame Space
Started: Back to Games (2015); Boardgame Space (Mark Azzam became co-founder in 2017)
Founder: Back to Games (Mr Azzam); Boardgame Space (Mr Azzam and Feras Al Bastaki)
Based: Dubai and Abu Dhabi
Industry: Back to Games (retail); Boardgame Space (wholesale and distribution)
Funding: Back to Games: self-funded by Mr Azzam with Dh1.3 million; Mr Azzam invested Dh250,000 in Boardgame Space
Growth: Back to Games: from 300 products in 2015 to 7,000 in 2019; Boardgame Space: from 34 games in 2017 to 3,500 in 2019
The details
Heard It in a Past Life
Maggie Rogers
(Capital Records)
3/5
Essentials
The flights
Etihad and Emirates fly direct from the UAE to Delhi from about Dh950 return including taxes.
The hotels
Double rooms at Tijara Fort-Palace cost from 6,670 rupees (Dh377), including breakfast.
Doubles at Fort Bishangarh cost from 29,030 rupees (Dh1,641), including breakfast. Doubles at Narendra Bhawan cost from 15,360 rupees (Dh869). Doubles at Chanoud Garh cost from 19,840 rupees (Dh1,122), full board. Doubles at Fort Begu cost from 10,000 rupees (Dh565), including breakfast.
The tours
Amar Grover travelled with Wild Frontiers. A tailor-made, nine-day itinerary via New Delhi, with one night in Tijara and two nights in each of the remaining properties, including car/driver, costs from £1,445 (Dh6,968) per person.
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
The biog
Name: Greg Heinricks
From: Alberta, western Canada
Record fish: 56kg sailfish
Member of: International Game Fish Association
Company: Arabian Divers and Sportfishing Charters
Global Fungi Facts
• Scientists estimate there could be as many as 3 million fungal species globally
• Only about 160,000 have been officially described leaving around 90% undiscovered
• Fungi account for roughly 90% of Earth's unknown biodiversity
• Forest fungi help tackle climate change, absorbing up to 36% of global fossil fuel emissions annually and storing around 5 billion tonnes of carbon in the planet's topsoil
MATCH INFO
Barcelona 2
Suarez (10'), Messi (52')
Real Madrid 2
Ronaldo (14'), Bale (72')
UAE currency: the story behind the money in your pockets
Disability on screen
Empire — neuromuscular disease myasthenia gravis; bipolar disorder; post-traumatic stress disorder (PTSD)
Rosewood and Transparent — heart issues
24: Legacy — PTSD;
Superstore and NCIS: New Orleans — wheelchair-bound
Taken and This Is Us — cancer
Trial & Error — cognitive disorder prosopagnosia (facial blindness and dyslexia)
Grey’s Anatomy — prosthetic leg
Scorpion — obsessive compulsive disorder and anxiety
Switched at Birth — deafness
One Mississippi, Wentworth and Transparent — double mastectomy
Dragons — double amputee
