What Can Businesses in the UAE Do to Ensure Compliance with UBO and ESR?
In order to stay in the game, businesses in the Emirates need to regularly check their financial health. This helps keep an eye on their financial health and also helps businesses gain their stakeholders’ trust. One way of doing this is to get a book of accounts that have been certified by a Dubai based auditing firm.
Ever since the introduction of, Economic Substance Regulations (ESR), Ultimate Beneficial Owners (UBO), VAT, and Anti-Money Laundering (AML), annual audits have become a necessity for businesses in the Emirates. It goes without saying that this comes with its own challenges, maintaining financial statement credibility while also meeting regulations can be a daunting task.
Auditing firms can help you ensure regulatory compliance and transparency in the following ways:
AML law compliance is being pushed by the government quite actively. This means there’s an increase in compliance monitoring and harsh penalties for non-compliance. In October 2020, around two hundred law firms were awarded license suspensions due to AML non-compliance. In September 2020, around 9 companies were penalized with hefty fines and prison sentences for accounts of money laundering.
In order to steer clear of such punishments, businesses are having to tread carefully and ensure that they are meeting all regulations. Auditing firms in Dubai are helping businesses familiarize themselves with all these regulations and make sure that they are complying.
All companies that fall under ESR compliance requirements have to file ESR reports and notifications annually to the FTA. Companies that are generating revenue from relevant activities must also meet the economic substance test’s requirements.
Any company that is not able to submit these notifications and other relevant information may have to deal with a penalty of AED 20,000. In case companies end up filing inaccurate information, they will have to pay a hefty fine of AED 50,000.
In order to avoid these hefty penalties, companies need to prepare their documents with care and accuracy. Auditing firms provide companies with the guidance and expertise needed to do this.
VAT Requirement Fulfillment
UAE is a tax-free zone, but VAT has been introduced recently. All businesses that are eligible for paying VAT have to register themselves for VAT. Certain businesses that meet the criteria can also voluntarily apply for VAT registration as well. Any VAT registered business in the UAE has to make sure that it meets all VAT related requirements, maintain its records, and stay updated regarding its eligibility for VAT.
Auditing firms are helping businesses understand the VAT registration process and make sure that they comply with all necessary requirements.
Improve Business Workflow
The UAE business market is undergoing plenty of changes at the moment. Despite all these changes, one thing remains certain: in order to survive, businesses have to maintain a solid auditing system and make sure that their stakeholders continue to trust them.
Dubai auditors make sure that businesses maintain transparency in their financial activities. This transparency helps businesses stay on the good side of the law and gain the trust of various authorities that are part of the UAE’s business environment.