FAQ

A business must register for VAT if its taxable supplies and imports exceed the mandatory registration threshold of AED 375,000.

Furthermore, a business may choose to register for VAT voluntarily if its supplies and imports are exceed the voluntary registration threshold of AED 187,500.

Similarly, a business may register voluntarily if its expenses exceed the voluntary registration threshold.

The ICV Certificate can be issued within 2-3 weeks once all requested documents are submitted.

All companies from various sectors are eligible for the ICV certificate such as Free Zone entities, Service Providers and Manufacturers. Companies that have been operating for 10 months are eligible too for this certificate.

The National In-Country (ICV) program is governed by the Ministry of Industry and Advanced Technology, so all the companies dealing with them directly or indirectly, prefer to deal with those suppliers who are ICV certified. So if you are ICV certified then you will get more businesses.

Yes. As per Article No. 27 of Chapter 2 of New Commercial Companies Law, Federal Law No. 2 of 2015:

• Every Joint Stock Company or Limited Liability Company shall have one or more auditors to audit the accounts of the Company every year. The remaining forms of companies may appoint an auditor following the provisions of this Decree-Law.
• The Company shall prepare annual financial accounts including the balance sheet and the profit and loss account.

• Free Zone Companies: Few Free Zone Authorities like Jebel Ali Free Zone Authority (JAFZA), Dubai Multi Commodities Centre (DMCC), Dubai Air Port Free Zone Authority (DAFZA), Dubai International Financial Centre (DIFC), etc has made it mandatory to submit the audited financial statements to the authority for the renewing the trade license of the companies registered under them.

• Liquidation of the Company: Audited Financial Statements are required to be submitted to regulatory authorities at the time of liquidating/cancelling the license of the company.

• Third Party Requirement: Lenders such as banks and other financial institution or investors or the major customers customer insist the companies to get their books of accounts audited by a registered auditor in U.A.E to ensure the credit worthiness of companies to deal with them.

• IFRS Accounting Standards bring “Transparency” by enhancing the international comparability and quality of financial information. It has become very easy for investors to make economic decision based on Financial Statements.

• IFRS Accounting Standards strengthen “accountability”. The information gap has been reduced between shareholders of organization and people who are responsible to maintain accounting. IFRS provide information that is needed to hold management to account.

UAE laws that promote IFRS adoption.

• Article No. 27 of Chapter 2 of New Commercial Companies Law, Federal Law No. 2 of 2015 states that “The Company shall apply the International Accounting Standards and Practices upon preparing its periodical and annual accounts, to give a clear and accurate idea of the profits and losses thereof”.

We will discuss below whether all the companies which are operating either on large scale or small are required to prepare their financial statements based on full IFRS.

Those entities, whose shares not publicly traded/unlisted companies/they do not have public accountability can prepare their financial statements under IFRS for SMEs.

The four main public securities markets in the UAE and their accounting requirements are as follows:

• NASDAQ Dubai. The listing rules of NASDAQ Dubai require listed companies to prepare IFRS Standards financial statements.

• Dubai Financial Market PJSC. The listing rules of the Dubai Financial Market PJSC do not specify a specific accounting framework to be used in the financial statements of listed companies. IFRS are permitted and are used by most listed companies.

• Dubai Financial Services Authority (DFSA). The listing rules of the Dubai Financial Services Authority (DFSA) require all listed companies to prepare financial statements in accordance with IFRS Standards or other standards acceptable to the DFSA. The

• Abu Dhabi Securities Exchange. The listing rules of the Abu Dhabi Securities Exchange require IFRS Standards.

Local legislative authorities in individual jurisdictions (and not the IASB) decide which entities are required or permitted to use the IFRS for SMEs. International Accounting Standard Board (IASB) has determined that any entity that does not have public accountability may use IFRS for SMEs.

IFRS for SMEs retains many of the accounting principles of full IFRS but simplifies a number of accounting principles that are generally less relevant for small and medium-sized entities. In addition, IFRS for SMEs significantly streamlines the volume and depth of disclosures required by full IFRS, yielding a complement of disclosures that are more user-friendly for SME stakeholders.

Certain more complex areas of full IFRS deemed less relevant to SMEs, including earnings per share, segment reporting, insurance, and interim financial reporting, are omitted from the IFRS for SMEs. In other instances, certain full IFRS principles are simplified to take into account the special needs of SMEs. Some examples of the differences between full IFRS and IFRS for SMEs include:

• Capitalization of interest—Under full IFRS, interest directly attributable to the acquisition, construction, or production of qualifying assets should be capitalized. Under IFRS for SMEs, all interest must be expensed.

• Investments in associates—Under full IFRS, investments in associates are accounted for using the equity method. Under IFRS for SMEs, investments in associates may be accounted for using the cost model, equity method, or at fair value through profit and loss.

• Goodwill and indefinite-lived intangibles—Under full IFRS, goodwill and indefinite-lived intangible assets must be tested at least annually for impairment, or more often when an indicator of impairment exists. Under IFRS for SMEs, there is no concept of indefinite-lived intangible assets. IFRS for SMEs requires that goodwill and intangible assets be amortized over the useful life of the asset (or a term not to exceed 10 years if the useful life cannot be determined). Goodwill and intangible assets are also tested for impairment only when an indicator of impairment exists.

• Research and development costs—Under full IFRS, research costs are expensed but development costs meeting certain criteria are capitalized. Under IFRS for SMEs, all research and development costs are expensed.

• A substantial reduction in disclosure requirements under IFRS for SME.