You cannot get into business without accepting that you have entered a competitive space. Therefore, it is reasonable to expect that all players operate within the law.
Legally mandated periodic regulatory reporting and the knowledge that an external audit by an empowered body can occur at any time should be enough to ensure that no one cheats. Unfortunately, cheating happens. Even the clearly communicated punishments for doing so never seem to be sufficient to deter bad behaviour.
Legally, you must fail two tests. They are, and to reinforce how dim a view is taken of this, I am using the legal Latin terms, mens rea and actus reus (meaning: guilty mind and guilty act). You need to think about committing an offence and then act on that thought.
So far, we are talking about malfeasance being uncovered by a non-trading external body. Today, in the light of a recently issued Federal Tax Authority (FTA) guide, I wish to address the mechanism in place for all other actors that might likewise reveal potential illegal activity. I say potential because tax law is very complex in parts, and it is not impossible that someone might misunderstand a situation or treatment they have witnessed, and then innocently report it.
Issued in December 2024, a whistleblower programme for tax violations and evasion represents the first detailed approach to the issue.
I addressed this topic in a more general way in an article published by The National on April 29, 2017, as VAT was being launched. There was no formal programme then to protect whistleblowers but their impact could be imagined.
Particularly worrying was the potential for aggrieved personnel who were returning to their home countries unleashing a litany of allegations to the relevant authorities. Trying to sift through that reported in anger would be a challenge.
Also, now abroad, a person might assume that there would be no consequences to their actions. Understand that this new regime does not just relate to people, but to any juridical entity.
I might have used a different word than informant, which represents the reporting party. While the word is absolutely accurate, language changes over time based on its usage and television has not been kind to the general perception of what an informant is and what often happens to them.
The guidance lists two categories of information they are interested in.
Firstly, there is suspected tax evasion, which includes anything from registering with false information to submitting returns that are manipulated to reduce or mitigate any payable tax.
Secondly, there is non-compliance – from falsifying invoices, be it with incorrect amounts or use of a different currency, to trading under the counter for cash and keeping such transactions off the business’s financial accounts.
This is clearly identifiable fraudulent activity. An approach may be rebuffed if it is considered insufficient to prosecute. However, this does not prevent further approaches if additional and more substantial evidence is collected and presented.
In presenting their evidence, the informant must clearly identify themselves. This will naturally remain confidential. Importantly, should any legal proceedings commence, the informant will remain unnamed.
Two interesting things follow. One is whether the prosecuted party is made aware that their actions were uncovered and reported by a person or a juridical entity. Clarity on this element would be useful.
Second is the matter of a monetary reward. A non-disclosure agreement is signed as part of this process.
Any reward would be paid subsequent to a successful prosecution and collection of monies due. There are specifics worth reviewing, although it might be hoped that any reports made would be from a desire to see fairness than the prospect of a monetary windfall.
The informant’s involvement ends as action is being taken. No updates are provided on the nature of the continuing case, which would seem to be a sensible protocol.
For someone to step forward and provide information about the actions of another creates on them a burden, which must be co-shouldered. Hence, the receiving party provides for protections where it’s accurate and in good faith.
The submission is made using the FTA portal and the process is well documented.
I finish by highlighting this because the FTA document is, and I quote, “not a legally binding document and is not intended to provide comprehensive details associated with taxes and is not intended for legal reference”.
Either protection exists or it does not. I am not a solicitor, but for someone to agree to fall backwards, they must be certain that they are falling into the arms of safety.
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Financial considerations before buying a property
Buyers should try to pay as much in cash as possible for a property, limiting the mortgage value to as little as they can afford. This means they not only pay less in interest but their monthly costs are also reduced. Ideally, the monthly mortgage payment should not exceed 20 per cent of the purchaser’s total household income, says Carol Glynn, founder of Conscious Finance Coaching.
“If it’s a rental property, plan for the property to have periods when it does not have a tenant. Ensure you have enough cash set aside to pay the mortgage and other costs during these periods, ideally at least six months,” she says.
Also, shop around for the best mortgage interest rate. Understand the terms and conditions, especially what happens after any introductory periods, Ms Glynn adds.
Using a good mortgage broker is worth the investment to obtain the best rate available for a buyer’s needs and circumstances. A good mortgage broker will help the buyer understand the terms and conditions of the mortgage and make the purchasing process efficient and easier.
Paatal Lok season two
Directors: Avinash Arun, Prosit Roy
Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong
Rating: 4.5/5
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Business Insights
- As per the document, there are six filing options, including choosing to report on a realisation basis and transitional rules for pre-tax period gains or losses.
- SMEs with revenue below Dh3 million per annum can opt for transitional relief until 2026, treating them as having no taxable income.
- Larger entities have specific provisions for asset and liability movements, business restructuring, and handling foreign permanent establishments.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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'Worse than a prison sentence'
Marie Byrne, a counsellor who volunteers at the UAE government's mental health crisis helpline, said the ordeal the crew had been through would take time to overcome.
“It was worse than a prison sentence, where at least someone can deal with a set amount of time incarcerated," she said.
“They were living in perpetual mystery as to how their futures would pan out, and what that would be.
“Because of coronavirus, the world is very different now to the one they left, that will also have an impact.
“It will not fully register until they are on dry land. Some have not seen their young children grow up while others will have to rebuild relationships.
“It will be a challenge mentally, and to find other work to support their families as they have been out of circulation for so long. Hopefully they will get the care they need when they get home.”
