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Abdelhamid_Co_CPA_AuditorA

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  1. VAT on insurance and related services supplied in the UAE should be charged except on two specific types of insurance which are defined by way of exception in the Federal Decree-Law No. (8) of 2017 on Value Added Tax, hereafter ‘the Law’ and Cabinet Decision No. (52) of 2017, hereafter ‘the Executive Regulations’ of Federal Decree-Law No.(8) of 2017 on Value Added Tax, are as follows; · life insurance and associated reinsurance (exempt), Article 42(3)(c), Executive Regulations. · insurance relating to the international transport of goods and passengers (zero rated), Article 33(2)(c), Executive Regulations. A life insurance is a contract which lawfully entered into the extent that it places a sum or sums at risk upon the contingency of the termination or continuance of human life, marriage, similar relationships permitted under applicable law, or the birth of a child. Article 42(1)(c), Executive Regulations. Whereas the contract of insurance which is provided in connection with the international transportation of goods or passengers, including a transfer which begins or ends in the UAE or which passes through the UAE. International transportation is further defined as: · transportation of goods or passengers that begins in the UAE and ends outside the UAE; Article 33(1)(a), Executive Regulations, or · transportation of goods or passengers that begins outside the UAE and ends in the UAE; Article 33(1)(b), Executive Regulations, or · transportation of passengers from a place in the UAE to another place in the UAE by sea or air or land as part of an international transport of those passengers if either the first place of departure, or the final place of destination, is outside the UAE; Article 33(1)(c), Executive Regulations. · transportation of goods from a place in the UAE to another place in the UAE if the services are supplied as part, or for the purpose, of an international transportation of goods either from a place in the UAE to a place outside the UAE, or from a place outside the UAE to a place in the UAE, Article 33(1)(d), Executive Regulations,. Type of Insurance Standard Rated Zero Rated Exempt General Insurance If the recipient is resident in the UAE If the recipient is resident outside the GCC Implementing States, is located outside the UAE and the performance of the insurance services is not received by anyone in the UAE who would not be able to recover VAT incurred Life Insurance If the recipient is resident outside the GCC Implementing States, is located outside the UAE and the performance of the insurance services is not received by anyone in the UAE who would not be able to recover VAT incurred If recipient is resident in UAE International Transport If in respect of international transportation services only, but not for travel insurance Travel If the recipient is resident in the UAE If the recipient is resident outside the GCC Implementing states, is located outside the UAE and the performance of the insurance services is not received by anyone in the UAE who would not be able to recover VAT incurred Other If the recipient is resident in the UAE if the recipient is resident outside the GCC Implementing states, is located outside the UAE and the performance of the insurance services is not received by anyone in the UAE who would not be able to recover VAT incurred VAT incurred on cost of wholly attributable taxable supplies can be recoverable. VAT incurred on costs which is partly attributable to taxable supplies and also to exempt supplies of financial services must be apportioned, only that part which is reasonably attributable to the taxable supply can be recovered. Reference: UAE VAT Guide - Insurance.
  2. Official Participants of the Expo 2020 are able to claim a refund of VAT incurred by them on the import or supply of certain Goods and Services in accordance with the Cabinet Decision No. 1 of 2019. For this purpose, Official Participant must register for VAT if the value of their taxable supplies or imports (for commercial or non-official purposes) in the UAE exceeds, or is anticipated to exceed, the mandatory registration threshold of AED 375,000. Official Participants of Expo 2020 will be incurring VAT on Goods and Services connected to the Expo 2020 as per normal UAE VAT rules are eligible to recover VAT Goods and Services which were imported or acquired on certain conditions. A person may only recover VAT incurred in the UAE on Goods and Services, where the Goods and Services are used or intended to be used for making taxable supplies. Where incurred expenses do not relate to any taxable supplies made by the person, VAT is not recoverable. Notwithstanding the above, Official Participants are able to reclaim VAT incurred on the import and acquisition of the following four categories of Goods and Services without the need to use them for making taxable supplies: A. VAT incurred by the Official Participant on Goods and Services in direct connection with the construction, installation, alteration, decoration and dismantlement of their exhibition space; B. VAT incurred by the Official Participant on Goods and Services in direct connection with the operation of their exhibition space and any presentation within the Expo 2020 site; C. VAT incurred by the Official Participant on Goods and Services relating to the actual operation of the office of the Official Participant, provided that the value of each Good or Service for which a claim is made is not less than AED 200; and D. VAT incurred on import of Goods for personal use of the Official Participant’s Section Commissioner-General, Section Staff and the Beneficiaries. Under categories A and/or B, the Official Participant must be in possession of a Certificate of Refund Entitlement issued by the Bureau to reclaim VAT. An Official Participant can be eligible to apply for the certificate in the following conditions. · The applicant must be an Official Participant of the Expo 2020 in Dubai, holding a valid Expo 2020 trade licence number. · Not more than 20% of the exhibition space or presentation is, has been, or is intended to be used for non-official or commercial purposes. The application to recover VAT incurred can be made by one of the following methods: · Where the Official Participant is not registered for UAE VAT, the refund applications can be made through the Bureau by submitting a special refund application to the Bureau and it can claim refund within 15 days of the end of the calendar month in which the total VAT value to be claimed is AED10,000 or more, or within 15 days of the end of the calendar quarter where the total VAT value to be claimed is less than AED10,000. · Where the Official Participant is registered for VAT, it may reclaim VAT via its regular UAE VAT return.
  3. There are many differences between traditional auditing and Risk-based auditing. Traditional auditing is associated with conducting tests to issue an opinion on the fairness of the financial statements of the company being audited. Those tests include, tests on internal controls that the company uses to produce figures in the financial statements, tests on the balances of the accounts, and tests on the overall posting system of its accounts. Where as in Risk-based auditing the audit plan is based on the assessment of the Risks which impact the overall company’s objectives, the audit plan includes to identify and assess risk responses that management relying upon to manage those risks. Risk-based Auditing provides an in-depth understanding of the business unit operations through risk assessment which provides assurance, that important risks are being managed properly, and more efficient use of resources has been applied by concentrating on risky areas. Generally, risk-based auditing focuses on audit risks, i.e. inherent risk, control risk, and detection risk. Inherent risk is the risk involved in the nature of business or transaction. Control risk refers to the risk that a misstatement could occur but may not be detected and corrected or prevented by entity’s internal control mechanism. Detection risk is the probability that the audit procedures may fail to detect existence of a material error or fraud. Risk-based auditing takes a step further than traditional auditing and not only focuses on audit risks, but also highlights business risk. That is because business risk can affect the profitability and even survival of a firm. By concluding our discussion, we can say that, a poorly controlled environment has considerable risks that must be the focus of attention of the management. In this situation, risk-based auditing identifies the weaknesses and helps the management to take proper measures in reinforcing the internal controls.
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