Latest news with #taxlaw
The National
8 hours ago
- Business
- The National
Beyond the Bottom Line: How UAE Companies Can Turn Tax Compliance into Competitive Advantage
This column focuses on different treatments of tax law. If you are in a certain industry, what is the correct timing when invoicing? What information is mandatory on supplier invoices? You can continue to ask questions of this nature up to and including internal document management and compulsory filing with external parties. By way of consequences, inevitably it is the stick, not the carrot, that delivers the greatest response. It is important to understand what penalties can be applied and the sum value of interest on those. This is because it is typically at a later time that problems are discovered. Focusing on the carrot, let us reframe this as a positive business proposition. It is a useful exercise to revisit, line by line, component by component, your profit-and-loss statement to see if contributing elements are optimised. One part often overlooked is tax. Not just corporate tax, but VAT – and depending on your business activities – excise and customs duties. You can tell a lot about a chief executive's leadership by what draws their attention first. 'Sales is vanity, profit is sanity and cash flow is reality.' In uncertain times this adage is never more true. Let's start with sales. From an organisational viewpoint, the location of sales should cause you to consider having a separate entity for non-Gulf business. Depending on what and where you do it, this business might be exempt from corporate tax. At the very least, you can elect to sit outside the UAE's VAT system having satisfied the relevant authorities that you comply with their conditions. What would be lost in reclaimable VAT would be counterbalanced by not having to comply with rules of treatment for client and supplier invoices. Add to that reporting and the potential for disruptive external audits to normal internal operations. Let us add another layer. As more rules are introduced to a tax regime, it requires more effort to manage the increased difficulty. Several regimes that are adding new or amending existing rules, often tugging operational practices in different directions, require an alternative management approach. The worst outcome is when the rules of one tax regime are permitted to dictate the actions of another and do so incorrectly. For example, I've worked with people who, for years, thought that VAT did not apply to their revenue. These businesses will discover that the people to whom they are filing their annual corporate tax return, detailing their revenue, are the same as those they are not reporting their VAT related revenue to. If this is the position you find yourself in, admit the error. The relevant authorities will work with you to correct matters. Yes, with penalties, but having dealt with and settled your dues, the issue is considered resolved and everyone moves on. The above are examples of what you might find when you review your sales processes. It's not a comprehensive list. Let us move on to cost of goods and services. Does your business track the profitability of each piece of work it does at a consolidated level? For a corporate tax perspective, you are interested in whether any of your suppliers are related or connected parties. This means understanding the different parties that make up your supply chain. While you are looking at that, take a look at your margins. While we are talking about transfer pricing, what happens when a related party is not a direct supplier, but instead supplies one who is. Do the same rules of proving that transactions are being carried out at arm's length apply? I do not know. It's possible that a business might be unaware that it's happening. Given ignorance is no defence in law, that might not be sufficient, should it be discovered. Would the value of such business matter? A one-off transaction of value verses multiple micro transactions. Given the breadth of what constitutes a related party in the UAE, it might be easier than you think to find your organisation in this position.
The National
a day ago
- Business
- The National
Why UAE companies must understand the nuances of tax laws
This column focuses on different treatments of tax law. If you are in a certain industry, what is the correct timing when invoicing? What information is mandatory on supplier invoices? You can continue to ask questions of this nature up to and including internal document management and compulsory filing with external parties. By way of consequences, inevitably it is the stick, not the carrot, that delivers the greatest response. It is important to understand what penalties can be applied and the sum value of interest on those. This is because it is typically at a later time that problems are discovered. Focusing on the carrot, let us reframe this as a positive business proposition. It is a useful exercise to revisit, line by line, component by component, your profit-and-loss statement to see if contributing elements are optimised. One part often overlooked is tax. Not just corporate tax, but VAT – and depending on your business activities – excise and customs duties. You can tell a lot about a chief executive's leadership by what draws their attention first. 'Sales is vanity, profit is sanity and cash flow is reality.' In uncertain times this adage is never more true. Let's start with sales. From an organisational viewpoint, the location of sales should cause you to consider having a separate entity for non-Gulf business. Depending on what and where you do it, this business might be exempt from corporate tax. At the very least, you can elect to sit outside the UAE's VAT system having satisfied the relevant authorities that you comply with their conditions. What would be lost in reclaimable VAT would be counterbalanced by not having to comply with rules of treatment for client and supplier invoices. Add to that reporting and the potential for disruptive external audits to normal internal operations. Let us add another layer. As more rules are introduced to a tax regime, it requires more effort to manage the increased difficulty. Several regimes that are adding new or amending existing rules, often tugging operational practices in different directions, require an alternative management approach. The worst outcome is when the rules of one tax regime are permitted to dictate the actions of another and do so incorrectly. For example, I've worked with people who, for years, thought that VAT did not apply to their revenue. These businesses will discover that the people to whom they are filing their annual corporate tax return, detailing their revenue, are the same as those they are not reporting their VAT related revenue to. If this is the position you find yourself in, admit the error. The relevant authorities will work with you to correct matters. Yes, with penalties, but having dealt with and settled your dues, the issue is considered resolved and everyone moves on. The above are examples of what you might find when you review your sales processes. It's not a comprehensive list. Let us move on to cost of goods and services. Does your business track the profitability of each piece of work it does at a consolidated level? For a corporate tax perspective, you are interested in whether any of your suppliers are related or connected parties. This means understanding the different parties that make up your supply chain. While you are looking at that, take a look at your margins. While we are talking about transfer pricing, what happens when a related party is not a direct supplier, but instead supplies one who is. Do the same rules of proving that transactions are being carried out at arm's length apply? I do not know. It's possible that a business might be unaware that it's happening. Given ignorance is no defence in law, that might not be sufficient, should it be discovered. Would the value of such business matter? A one-off transaction of value verses multiple micro transactions. Given the breadth of what constitutes a related party in the UAE, it might be easier than you think to find your organisation in this position.
BBC News
4 days ago
- Business
- BBC News
Jersey tax law does comply with human rights, court rules
A Jersey tax law does comply with human rights, a senior UK court has attorney general, the Jersey Competent Authority and the treasury minister lodged an appeal over a ruling made by the island's Court of Appeal about how authorities might share private tax information with other court had ruled the International Co-operation (Protection from Liability) (Jersey) Law 2018 is incompatible with human rights after Imperium Trustees (Jersey) Limited argued the information should be kept Tuesday, the London-based Judicial Committee of the Privy Council overturned the ruling made in 2024. Provisions within the law place limits on the costs and damages that can be awarded against public authorities in Jersey when they have made decisions in good faith to fulfil a request from the authority of another country, the government its ruling, Jersey's Court of Appeal said provisions within the law infringed Article 6(1) of the European Convention on Human Rights (ECHR).The government said the ruling was the first declaration of incompatibility made by a Jersey the Judicial Committee said that, as the proceedings were a "tax matter", the main issue was the lawfulness of a notice to produce tax information rather than the confidentiality issues raised by its ruling, the Judicial Committee - which is the final court of appeal for the UK overseas territories and Crown dependencies - said it did not consider article 6(1) of the ECHR had been engaged.
Yahoo
19-06-2025
- Business
- Yahoo
Tax law might be coming for your free office snacks
A change in tax law may make companies rethink a popular workplace perk: food and drink. Starting in 2026, companies will no longer be able to deduct the cost of on-site cafeterias or takeout for workers who stay late. And accountants say the change probably applies to office snacks and coffee, too. Subscribe to The Post Most newsletter for the most important and interesting stories from The Washington Post. Though the cost of such staff freebies is relatively small in the grand scheme of employee benefits, the potential change in tax law comes as many businesses are trimming expenses in the face of tariffs and economic uncertainty. 'Companies are in cost-cutting mode, and if they don't have some incentives, they will continue to cut back,' said Ellen Kossek, an emerita professor of management at Purdue University. 'We've seen this in Silicon Valley,' she added, referencing the onetime center of such upmarket perks as unlimited vacation time, on-site hair stylists, deluxe cafeterias and coffee bars. Because food can be a powerful motivator - especially at a time when many companies are abandoning remote and hybrid work - Kossek said companies' ratcheting down of staff offerings could affect the broader corporate culture and return-to-office initiatives. 'If you have to pay for your food, it's one less reason to come to the office.' U.S. tax law allow companies to deduct certain business costs, such as insurance, rent and office supplies, from their income before they pay taxes. But meals are treated differently, depending on the category. For instance, a company can deduct 50 percent of the restaurant bill for taking a client or a job candidate to lunch under current law. But a provision that allows companies to deduct cafeteria costs or any meals they provide in the workplace 'for the convenience of the employer' is poised to sunset in 2026. If it does, U.S. businesses would be looking at an additional $300 million a year in taxes, based on estimates by the Joint Committee on Taxation. With congressional Republicans racing to advance President Donald Trump's tax and immigration bill and extend his 2017 tax cuts, some accountants had expected lawmakers to retain the workplace meal deduction. But the House version made an exception only for the restaurant industry, according to Christa Bierma, vice chair of the American Institute of Certified Public Accountants' committee on employee benefits. Unless the Senate makes further changes to the legislation, which tax experts say is unlikely, restaurants will continue to get the write-off. 'For some industries, it is culturally demanded,' Bierma noted of the exception. 'Nobody would want to be the first one to say we're not going to do this anymore.' Ending the tax advantage makes philosophical sense for conservatives, said Tax Foundation analyst Alex Muresianu. Under current rules, a company-paid lunch is essentially a form of tax-free income. And if the employee isn't paying tax, the company should, Muresianu said. 'We want to tax all employee compensation the same,' he said. 'And instead of wages, having employer-provided meals in various contexts is a form of nonwage compensation.' That thinking, though, doesn't align with other provisions in the Republican bill, which treats overtime wages and tips as tax-free. Trump is pushing senators to pass his tax bill by July 4 despite warnings from many economists and some lawmakers about the projected price tag; the nonpartisan Congressional Budget Office expects it to expand the deficit by $2.4 trillion over a decade. In 2017, when lawmakers opted to sunset the in-house meal deduction in eight years, the coronavirus pandemic had not yet driven millions of workers home from their desks. Today, some management experts question the wisdom of removing a business incentive at a time when many workers are chafing at RTO mandates. 'I think the corporate culture will change in several ways,' said University of Manchester professor Cary Cooper, who has researched hybrid work arrangements. Free food can be a powerful motivator, he said. 'If they're taking that away … or minimizing the quality of the food being provided - and there will be companies that will do that - you're not going to motivate people to return to the office.' Cooper suggested that senators consider extending the deduction as they reshape the tax bill. Without a delay, he foresees repercussions for businesses that need employees on-site, such as hospitals. 'In our day and age, I think it's just silly. I don't know why you would want to change the law in that direction at all.' Last summer, Bierma's committee of CPAs submitted a long list of questions and suggestions to the IRS seeking guidance on how companies should plan for the change. It hasn't received an answer. The law clearly removes tax advantages for company cafeterias - businesses can no longer deduct the cost of food, beverages or operations, which are now fully or partly deductible. Also out are meals that employers might provide in the workplace, such as dinner for staffers who stay beyond their shifts. But that leaves questions about more modest niceties. Accountant Richard Pon, who counts law firms and retailers among his clients, is convinced that the deduction will also go away for break-room staples such as coffee, fruit, chips and granola bars. 'Just having a small kitchen … some people will take the position that's not an eating facility. That's not a cafeteria,' he said. 'I think the position of the IRS might say that's an eating facility, no matter how small it is.' Related Content Trump is as unpredictable as ever, even when faced with war Field notes from the end of life: My thoughts on living while dying He's dying. She's pregnant. His one last wish is to fight his cancer long enough to see his baby. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
18-06-2025
- Business
- Bloomberg
Lawyers Are Mad About SALT
Programming note: Money Stuff will be off tomorrow. The way US tax law works is that businesses mostly can deduct their business expenses from their taxable income, but people mostly can't deduct their personal expenses. So a company that has $100 of revenue and spends $80 on inputs will have $20 of taxable income, but a person who has a $100 paycheck and spends $80 on food and rent will have $100 of taxable income. There are various exceptions. A person who has a $100 paycheck and spends $80 on food and a mortgage will have less than $100 of taxable income, because the interest on the mortgage is at least partially tax deductible.
