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Reverse Charge Mechanism
Categories VAT 0 Comments

Reverse Charge Mechanism: How Does It Work Under UAE VAT Law

Reverse Charge Mechanism: How Does It Work Under UAE VAT Law

Under UAE VAT Law, the responsibility to levy, collect, and pay tax to the Government is on the supplier. But there is also a reverse charge mechanism applied on certain notified supplies when the recipient or the buyer of goods or services is responsible for paying the tax to the Government.

The reverse charge mechanism under VAT is used for transactions from across the border. This provision frees the business from physically paying VAT at the point of import. Understanding this mechanism is crucial for businesses that import goods into the UAE because the provision differs from other clauses in the UAE VAT Law.

What Is Reverse Charge Mechanism?

Normally, the supplier of goods or services charges VAT on sales and then pays the tax so collected to the Government. This process of a registered supplier collecting tax from his customers is called a forward charge mechanism.

So what is the reverse charge mechanism in the UAE?  

In the reverse charge mechanism (RCM) under UAE VAT Law, the supplier does not charge VAT to the customer. Instead, the buyer or end customer is responsible to pay the tax directly to the government authority.

In effect, the obligation of reporting a VAT transaction is shifted from the seller to the buyer. The buyer will need to record the VAT transaction on purchases (Input VAT) and sales (Output VAT) in their VAT return in the respective VAT return period.

Why Was VAT Reverse Charge Mechanism Introduced?

If the supplier does not have a business in the UAE, tracking their business transactions and ensuring VAT compliance becomes difficult for the Federal Tax Authority (FTA). That is why buyers who are residents of the UAE have to pay VAT on a reverse charge basis. That levels the playing field for domestic and foreign supplies and helps to avoid tax evasion on any taxable supplies. Another reason is that the VAT reverse charge mechanism eliminates the responsibility for the businesses outside the UAE to register for VAT in UAE.

Reverse Charge Mechanism VAT UAE: When Does It Apply?

The recipients that have a business in the UAE and buy goods from the suppliers from outside the UAE must pay VAT on a reverse charge basis. According to the UAE VAT Law, if the taxable person imports concerned goods or concerned services for business purposes, they are treated as making a taxable supply to themselves. So they are responsible for all applicable taxes.

The Executive Regulations specify conditions when UAE VAT reverse charge mechanism applies and additional obligations related to record keeping for tax calculated according to the RCM.

The UAE VAT Law lists the following supplies that are liable for reverse charge mechanism of VAT in UAE if the applicable conditions are met as it is prescribed in UAE Executive Regulations:

  • Import of a concerned product or service for business purposes;
  • Supply of a product or service by a supplier that does not have a residence in UAE to a taxable entity with the place of residence within the UAE’s jurisdiction;
  • Taxable supply of refined or crude oil, processed or unprocessed natural gas, and hydrocarbons for resale or production and distribution of any form of energy by a registered supplier to a registered buyer in the State of UAE.

You should keep in mind that reverse charge is generally applicable when purchases are made from outside the UAE. If all purchases are made locally, the reverse charge mechanism is not applicable.

Reverse Charge Mechanism UAE: What Are the Requirements?

So if your business is a recipient involved in a reverse charge transaction, what should you do? First, you should calculate the amount of tax to be paid to the Federal Tax Authority (FTA) and self-account the VAT amount as input tax during the purchase. Then you need to declare it in your VAT return. Besides, you may claim input credit if possible. It is also essential to maintain the necessary documents like invoices and payment records for future reference as proof of tax payment.

Here are the requirements for the reverse charge mechanism in the UAE:

  • Businesses that receive goods or services must be registered for VAT.
  • Every registered business owner must keep proper records of their supplies that incur a reverse charge.
  • Invoices, receipt vouchers, and refund vouchers should specify whether the tax payable for that particular transaction is through reverse charge.

Got questions about the reverse charge mechanism ?

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Reverse Charge VAT in the UAE: How Beaufort Associates Can Help You

If your company is registered for VAT and you have recently imported goods from outside the UAE, you need to analyze whether the reverse charge mechanism should be applied to that transaction. That requires a clear understanding of the latest tax regulations in the UAE.

But as you see, reverse charge VAT regulations can be very confusing for business owners because of their complicated nature. So you may need a professional and experienced opinion to understand how and when to use the reverse charge mechanism under VAT.

Beaufort Associates offers a wide range of VAT consultancy services in the UAE. Our experienced VAT consultants can provide you with professional support and advice tailored to your business needs.

We can assist you in managing every VAT aspect of your business, including handling reverse charge mechanism transactions. You can always count on us when you need guidance on VAT registration, VAT return filing, and Vat implementation in the UAE. Contact us today for a free consultation!

The information provided herein is for the general information of the user and is provided in good faith. We make no representation or provide warranty of any kind, express or implied, regarding the adequacy, suitability, validity, or completeness of the information. Our advice in regard to UAE corporate tax and value added tax is based on our understanding of the relevant laws and the regulations issued. We cannot be held responsible for new regulations and/or interpretation of existing regulations by the FTA that is not consistent with our advice. Under no circumstance shall we have any liability to any user of this information or to third parties for any loss or damage of any kind incurred as a result of the use or reliance of this information.

financial advisor
Categories Accounting 0 Comments

Financial Advisors: What Value Can They Bring to Your Business?

Financial Advisors in Dubai: What Value Can They Bring to Your Business?

Many business owners avoid hiring a financial advisor thinking it will add unnecessary costs, but they are wrong. Business owners often need a financial advisor to get expert advice. An objective and experienced advisor is your essential partner that can help you create comprehensive and practical financial plans that address the present and the future and then assist in their implementation.

They can also help you to avoid costly mistakes and maximize your business returns. Working with a professional business advisor can save you time and money and give you the freedom and confidence to focus on other aspects of your business.  

What Does a Financial Advisor Do?

A financial advisor is usually seen as someone who provides financial advice or guidance for clients around money matters, personal finances, and investments.  They can help people manage their money and reach their financial goals by providing their clients with strategies and ways to create more wealth by offering such services as investment management, financial planning, or wealth management to high net worth individuals.

In a corporate setting, financial advisors can assist companies in realising their objectives and goals. In this capacity, the financial advisor supports a company in a variety of roles. Such roles include working as trusted business advisors, helping identify issues and possible control weaknesses, providing advice on specific issues, and general advice.  

Business Financial Advisors

A business financial advisor can help you make the most of your initial capital investment into your business. For example, they can help you assess your business model’s viability, identify blind spots, and outline effective strategies and realistic timelines for your path to profitability.

Financial advisors also prepare businesses for future developments and different stages of business growth. They can look at the situation from a third-party perspective and tell you realistically whether you can achieve your business goals on schedule.

They can also help you to succeed in a crowded marketplace by discovering untapped niches and future developments. Financial advisors can help you to face challenges and suggest opportunities for business growth that you may not be aware of.

Financial Consultant Vs. Financial Advisor: What Is the Difference?

The terms financial advisor and financial consultants are often used interchangeably. But in fact, advising and consulting are separate types of outsourced financial services.

You can hire a consultant to address a specific problem at a particular time. They will review the situation and identify underlying problems after assessing all relevant factors. Then they will provide advice to address the issues and assist in making a decision that can help to improve the situation.

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In this capacity, the Financial Advisor provides general management support and may be called upon to advise the company on an ongoing basis in various areas, from accounting and controls to marketing and sales to procurement, HR, etc.

Where the advisor feels that the problem requires a specialist in a particular discipline, they may suggest that a company hire a consultant to solve those specific issues.

What Are Types of Financial Advisors?

Different types of financial advisors offer a diverse range of services. All of them are uniquely qualified to help you reach different financial goals and manage your money differently.

  • Investment advisors provide investment advice to their clients. You can also hire them to manage your assets directly.
  • A financial coach (also known as a financial counsellor) will act similarly to a financial consultant, but they are mostly considered beginner-friendly financial advisors. They motivate clients towards their goals and help them to build their wealth.
  • Financial planners can help you reach specific goals in their studied areas of expertise. They are best suited for long-term projects.
  • Business financial advisors provide business owners with information and ideas about how they can run their businesses more effectively. Business advisors help businesses to grow and succeed through careful planning and strategy and provide guidance for significant business decisions.

Who Should Hire a Business Financial Advisor?

A business financial advisor can be useful for any business owner. Everyone needs the best advice when making decisions about their finances. Hiring a business financial advisor can be especially helpful for small business owners who are young and lack experience.

You should also consult a professional when considering some significant changes, such as acquiring a new business or passing ownership to someone else in your company.

How to Find the Right Business Financial Advisor in Dubai – UAE.

You should not hire the first advisor you come across. This decision is vital for your business, so you should research to find a service specializing in business finances.

An important aspect to consider is the relationship. You should find someone you are comfortable with to discuss your finances openly. Other aspects to consider are:

  • Expertise in a specific industry;
  • Cost of services;
  • Convenient location;
  • Specific product offering.

Every business is unique and has different priorities, so make sure your advisor can help where you need it. It’s important to find an advisor who is a good fit for you. Then you will have peace of mind knowing you are working with someone who has your best interest at heart.

Why Outsource Financial Advisory Services to Beaufort Associates

Beaufort Associates has many years of experience and specializes in providing management consulting and business advisory services for different businesses in Dubai and the GCC region.

We are dedicated to providing our clients with the most reliable services to help them achieve their goals and take their business to the next level. When working with business owners, we use a comprehensive approach and look at their entire financial picture.

When you’re looking for advice or guidance, no matter what size your business is, we have a team of professionals ready to work with you to realize your business’s full potential. You can count on our financial advisors to help you to make the right decisions at the right time.

We take the time to get to know your business and understand your limitations and aspirations. As a result, we can provide you with bespoke options when looking for accounting services, assisting with creating a business plan, VAT registration, or financial outsourcing options.

Our experienced financial advisors have extensive knowledge about business regulations pertaining to investment and finance. They can provide you with premium advisory services on all kinds of financial and corporate matters. Contact us today for a no-obligation meeting.

Let’s talk!

The information provided herein is for the general information of the user and is provided in good faith. We make no representation or provide warranty of any kind, express or implied, regarding the adequacy, suitability, validity, or completeness of the information. Our advice in regard to UAE corporate tax and value added tax is based on our understanding of the relevant laws and the regulations issued. We cannot be held responsible for new regulations and/or interpretation of existing regulations by the FTA that is not consistent with our advice. Under no circumstance shall we have any liability to any user of this information or to third parties for any loss or damage of any kind incurred as a result of the use or reliance of this information.

Financial Controller
Categories Accounting 0 Comments

Financial Controller: Benefits of Outsourcing Controller Services

Financial Controller: Benefits of Outsourcing Controller Services

Wondering what a financial controller is and whether you need one for your business? Financial control is fundamental for any company. You may have developed a good strategy and optimal planning, but without financial control, it would be impossible to understand whether you are going in the right direction. Financial control allows you to verify whether the current situation of your company adheres to your original objectives.

Whether you are a startup or an established business, you need appropriate financial leadership. A financial controller can help get all of your finances in order and avoid lots of problems. And outsourcing controller services can be even a smarter move for your business.

What Does a Financial Controller Do?

In simple words, your financial controller is the financial leader of your business. Their first mission is to make sure that your business’ finances and accounts are doing well. This person will be in charge of creating financial reports and analyzing all data that helps guide your business through critical changes.

Their key responsibilities typically include:

  • High-level management and control over accounting;
  • Managing internal controls;
  • Predictive economic analysis and advice;
  • Coordinating and directing the preparation of the budget;
  • Compliance audits, as required;
  • Coordinating tax compliance;
  • Duties relating to payroll;
  • Managing financial department staff.

As you see, the main roles of a controller are maintaining efficient finance operations and managing risks. But you should keep in mind that a controller’s functions may vary based on the size and complexity of the business and the industry. In smaller teams, a financial controller can also act as a Chief Financial Officer (CFO) and perform more strategic functions.

As your business grows and becomes more complex, you may also consider hiring other professionals that will help you properly manage your finances and make better business decisions.

Cost Controller

Cost control involves identifying business expenses and reducing them to increase profit. A cost controller oversees cost management for a company to identify critical areas that may need change to maintain and grow profitability.

Cost controllers are responsible for providing a clear and insightful analysis of financial aspects across a company. It all starts with a critical assessment of all budgets and cost projections. Cost controllers also assess all the incoming resources and products to ensure the best price and develop effective solutions and cost-cutting measures.

Credit Controller

Whether your business will succeed or fail primarily depends on the demand for your products or services. That’s why many companies extend credit to customers to make it easier for them to purchase their products.

Effective credit control policies allow companies to increase sales, which leads to increased profits. The most important aspect of this strategy is to determine who to extend credit to. That’s actually what a credit controller does.

Credit controllers evaluate new credit requests, set up terms and conditions of the credit, monitor client accounts, and remind them to pay outstanding invoices. They ensure timely collection of all receivables.

Why Should You Outsource Controller Services?

Running a growing business is both exciting and overwhelming. If you see that you are outgrowing your current accounting and bookkeeping services and require better information for decision making, it’s time to hire a controller.

Financial controllers can be in-house or outsourced. Outsourcing is a more cost-effective and practical option, so many companies are choosing this model or switching to it. Today, outsourced financial controllers have become a popular alternative with small and medium businesses. This way, they can have a better control over their cost and also choose what functions they want to outsource or keep in-house.

Hiring an outsourced financial controller makes sense for a number of reasons. Here are some of them.

  • It can be the best solution when your business does not have enough work to justify a full-time employee.
  • You can hire an outsourced controller on a project-basis to augment an existing financial team.
  • It is less expensive than hiring a full-time employee because you pay only for the completed work. There are no added expenses for benefits packages, bonuses, or raises, and office space.
  • Outsourced controller services provide you with a variety of expertise options, and you can always expect to get unbiased and objective business advice.
  • Experienced professionals can provide you with strategic guidance in special circumstances, for example, dramatic industry changes or pending legislation.
  • Your financial records will not be accessible to your staff members, so you will minimise the risk of fraud and security breaches.

Looking for Financial Controller for your business?

Contact us to schedule an initial free consultation and learn how we can help you get valuable insight into your company’s performance and position!

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How to Hire an Outsourced Financial Controller for Your Business

When choosing an outsourced controller, you are looking to pick one that will work best with your company. You may have concerns about whether the outsourced company will understand your business and whether they will be as dedicated as in-house employees.

You should also make sure that the provider will adjust to the level of controller service that is appropriate for your particular company. Besides, they should be up-to-date with technology.

Beaufort Associates was established in 2000 and offers a range of outsourced financial consulting services to suit your business needs. We are ready to help you with your financial data management and reporting. Our company is well equipped to serve as your outsourced controller service department. 

Our team of outsourced financial controllers has the necessary expertise and experience with the financial processes. They are aware of the best practices used by industry-leading operations and will apply these principles to your business. They will help you run your business and stay in control of your expenses and growth.

We offer a comprehensive, strategic, and customized approach to outsourced controller services. With us, you will have everything you need to make informed financial decisions for your business. We will provide insights, timely reporting, and strategy management to guide you towards stable and scalable financial success. Contact us now to discuss your business needs.

The information provided herein is for the general information of the user and is provided in good faith. We make no representation or provide warranty of any kind, express or implied, regarding the adequacy, suitability, validity, or completeness of the information. Our advice in regard to UAE corporate tax and value added tax is based on our understanding of the relevant laws and the regulations issued. We cannot be held responsible for new regulations and/or interpretation of existing regulations by the FTA that is not consistent with our advice. Under no circumstance shall we have any liability to any user of this information or to third parties for any loss or damage of any kind incurred as a result of the use or reliance of this information.

External Audit
Categories Auditing 0 Comments

Internal and External Audit: Why Do You Need It?

Internal and External Audit: Why Do You Need It?

Wondering how your company can benefit from an external audit? In this article, we discuss how external audit differs from internal audit and explain its purpose and essential steps. You will also learn how your business can benefit from using external audit services.

Internal Audit Vs. External Audit

An audit is the examination and verification of a company’s financial records to ensure that transactions are represented fairly and accurately.

Performing an audit is an essential part of the life of any business, no matter its size or the type of industry because it helps determine the exact financial picture of the company and pinpoint any weaknesses and improvement suggestions.

There are two different types of audits – internal and external.

Internal Audit

The purpose of an internal audit is to assess the major risks facing the business and the effectiveness of the business in managing those risks, as well as the effectiveness of the control processes implemented by management.

They may also issue recommendations on improving the company’s systems and controls if they identify deficiencies in specific business areas.

Internal audits are performed by the company’s employees, and the final audit report is given directly to the company’s management and the board of directors. If a company does not have the in-house resources to examine and assess certain parts of its operations, it may outsource its internal audit services. The consultant auditors will use the specific standards of the company they are auditing in their work.

If we compare internal audit vs. external audit, we notice that they differ in the purpose, focus, and scope of work, but the main difference between them is in the concept of independence.

External Auditors

The external auditors are appointed by the company’s shareholders and act independently to ensure an objective approach to the audit process.

External auditors express an opinion about the company’s financial condition and financial reporting risks. When performing an audit, they examine the company’s business accounts to find out whether they accurately and fairly represent its financial performance.

The scope of their work is limited to financial statements, such as balance sheet, income statement, cash flow statement, a statement of changes in equity, and supplementary notes including a summary of significant accounting policies.

Purpose of External Audit

The external auditors are appointed by the company’s shareholders and act independently to ensure an objective approach to the audit process.

External auditors express an opinion about the company’s financial condition and financial reporting risks. When performing an audit, they examine the company’s business accounts to find out whether they accurately and fairly represent its financial performance.

The scope of their work is limited to financial statements, such as balance sheet, income statement, cash flow statement, a statement of changes in equity, and supplementary notes including a summary of significant accounting policies.

Purpose of External Audit

The purpose of an external audit is to form an independent opinion on the financial statements of an organization.

External auditors examine financial reports to determine whether the financial statements taken as a whole show an accurate and fair view of the organization’s financial position at a given date. Besides, auditors’ objective is to verify that the financial statements have been prepared correctly according to national and international generally accepted accounting standards.

External auditors address their opinion about the financial statements/records that were examined to the shareholders of the company (referred to as the “audit report”).

The external auditors may also report their findings in regards to the accounting system and internal controls to the senior management (directors, audit committee) of the audited entity in the form of a detailed report that includes their concerns regarding the accounting system and internal controls and recommendations on how to improve the company’s accounting procedures.

External Audit Process

The external audit process relies on evidence, analysis, conventions, and informed professional judgment. The process typically consists of 3 basic steps: planning, gathering evidence, and issuing a report.

  • During the planning phase, the auditor creates an audit program where they identify and schedule audit procedures that will be carried out to gather the evidence.
  • During the execution phase, evidence-gathering procedures are performed. They include observation, calculations, confirmation, inquiry, analysis, inspection, and comparison.
  • After a thorough investigation, the external auditors submit their audit report comprising the financial statements and their objective opinion as to whether those financial statements present a true and fair view of the financial position of the company and its performance and comply with the relevant accounting standards and legal requirements.

External Audit for Your Business

The external audit is compulsory for all the companies registered in the UAE. Often the company registration and renewal authorities require financial statements including external audit report for the renewal of the company’s trade licence.

The financial statements prepared in the UAE are required to comply with International Financial Reporting Standards (IFRS) and the applicable provisions of the UAE Federal Law. The external audit report is a significant document for the small, medium, and large-scale businesses that provides independent confirmation of such compliance.

It also enhances your financial credibility in the business marketplace.  An externally audited set of financial statements is essential when you apply for loans and financial assistance from banks.

Besides, an audit is critical to the decision-making of any organization. It offers you a greater insight into the way your business functions and highlights areas for improvement to help your business continually grow. External auditors can identify deficiencies in the accounting systems or controls and provide you with recommendations on making your business more efficient and less prone to fraud or error.

Planning an Internal and External Audit for your Business?

Contact us to schedule an initial free consultation and learn how we can help you get valuable insight into your company’s performance and position!

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Internal and External Audit Services: Learn What We Offer

Are you looking for external audit services?  Have you already prepared financial statements or you require accounting to be carried out and financial statements to be prepared for your company? Beaufort Associates provides management consulting and advisory services in Dubai and the GCC region.

We provide audit support services and help clients by arranging and assisting in the audit. We understand the rules and requirements and have contacts with external auditors – from international audit firms to the second and third tier audit firms that enable us to provide a one stop shop for your external audit requirements. Our goal is always to provide a smooth audit process for every client.

We communicate with the external auditors on behalf of the client company, obtain quotations and shortlist suitable audit firms, and arrange the preparation of financial information and the schedules the auditors require. We also generally assist auditors in having the audit completed and the audit report issued quickly within agreed time frames.

You can order audit support as a standalone service or together with accounting services. Our firm is also a trusted VAT registration consultant and offers assistance with accounting outsourcing. With many years of experience in management consulting and accounting, we would like to become your trusted business partners with whom you can discuss, with confidence, your business issues and strategies.

The information provided herein is for the general information of the user and is provided in good faith. We make no representation or provide warranty of any kind, express or implied, regarding the adequacy, suitability, validity, or completeness of the information. Our advice in regard to UAE corporate tax and value added tax is based on our understanding of the relevant laws and the regulations issued. We cannot be held responsible for new regulations and/or interpretation of existing regulations by the FTA that is not consistent with our advice. Under no circumstance shall we have any liability to any user of this information or to third parties for any loss or damage of any kind incurred as a result of the use or reliance of this information.

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