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Financial Reporting Advisory Services
Grant Thornton’s Financial Reporting Advisory Services (FRAS) team supports organisations through a diverse range of accounting and reporting services including transaction accounting, analysis and adoption of new International Financial Reporting Standards, training on new and complex standards, and other related services that enable organizations to achieve greater transparency and navigate through the ever-changing regulatory landscape.
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CFO Advisory Services
Chief Financial Officers (CFOs) and finance teams periodically face difficulties in financial reporting and accounting. To address these issues and challenges GT’s team looks to reduce the periodic uncertainty faced by our clients around difficult reporting and accounting standards and can help overcome these difficulties with our CFO advisory services.
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International Financial Reporting Standards
Capability in International Financial Reporting Standards (IFRS) is one of our core skills. We have access to a full-time team responsible for high quality, consistent application of IFRS throughout the global organisation.
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International Public Sector Accounting Standards
We are equally experienced in the adoption and implementation of International Public Sector Accounting Standards (IPSAS).
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In-Country Value
Grant Thornton is honored to be one of the Certifying Bodies to implement the National In-Country Value (ICV) Program for the Ministry of Industry and Advanced Technology (MoIAT)
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Staff Secondment Services
Finding qualified, skilled professionals for a specific purpose and time period can be a significant challenge for many organisations. We alleviate that challenge with a talent pool of highly motivated and technically trained individuals who have excellent soft skills and the agility to adapt quickly to varied client environments.
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Transformation Advisory
We can help you identify, understand and manage potential risks to safeguard your business and comply with regulatory requirements.
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M&A and Transactions Advisory
We can support you throughout the transaction process – helping achieve the best possible outcome at the point of the transaction and in the longer term.
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Forensics
At Grant Thornton, we have a wealth of knowledge in forensic services and can support you with issues such as dispute resolution, fraud and insurance claims.
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Restructuring
We have an established standard of excellence for Restructuring within the United Arab Emirates with a focus on client success throughout a complex period of the business life cycle.
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Incorporation and Compliance
Grant Thornton assists businesses in setting up and complying with these regulations and acts as adviser for companies to ensure their activities, policies and procedures follow the guidelines specified by respective regulations.
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ICFR
Grant Thornton is a market leader in providing Internal Controls over Financial Reporting (ICFR) services to many well-known entities in UAE.
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Islamic Finance
Grant Thornton's Islamic Financial Services team comprises a global network of professionals with in-depth knowledge of Islamic finance and providing practical, value added assistance to their clients across a range of specialisms and issues.
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Regulatory Compliance
Grant Thornton holds a proven track-record in Regulatory Compliance advisory, our range of services will facilitate robust guidance to help you manage your regulatory risks and affairs, our teams of specialists assist our clients in the following areas:
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Corporate Tax
Our diversified team of corporate tax subject matter experts combines a perfect blend of international experience across several industry sectors, technical expertise, and commercial nuances with a commitment to deliver exceptional value to your business.
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VAT
The VAT team at Grant Thornton is well versed with the VAT Laws applicable across the region and holds valuable experience and professional accreditation in assisting clients across diverse industries to comply with the VAT obligations.
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Transfer Pricing
Grant Thornton UAE assists its clients in providing transfer pricing solutions that are implementable and operational, considering the facts and concerns of its clients.
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International Tax and Tax Due Diligence
Grant Thornton UAE supports multinational groups to optimise their tax structures. We can also assist businesses in analysing existing group transactions and inter-group supplies, as well as advising on potential implications of various taxes to facilitate an efficient Group tax structure.
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Economic Substance Requirements
Economic Substance rules were introduced in the UAE in 2019, requiring UAE businesses that undertake certain ‘Relevant Activities’ to maintain and demonstrate adequate substance.
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Customs and International Trade
The team at Grant Thornton is positioned centrally to assist the businesses with global cross-border tax structuring, planning and compliance needs.
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Excise Tax
We provide Excise Tax related advisory and compliance services to the producer, importer, and the storekeeper of excisable goods
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Business Process Outsourcing Services
Our team at Grant Thornton offers comprehensive and cost effective outsourced solutions, enabling stakeholders and business owners to focus on their core business goals.
VAT Alert: Compensation-Type Payments
21 Jun 2018The Federal Tax Authority (FTA) recently issued a public clarification on the treatment of Value Added Tax (VAT) on compensation payments. The issue discussed in the clarification relates to whether VAT is due on payments made by one business to compensate another business for any loss, omission or wrongdoings.
The UAE VAT laws provide that in cases wherein payment is not made as consideration for a supply of goods or services, the obligation to pay VAT on such supply does not arise.
With the help of this clarification, the FTA has laid down the following principles that should be used to determine if VAT should be due on compensation payments:
- A contractual payment to compensate for loss
- A payment to settle a dispute
- A fine or penalty
- Payment for damaged goods
A Contractual Payment to Compensate for Loss
The best example for such a case is liquidated damages. Liquidated damages are the amounts agreed between the parties at the time of signing the contract in case any party breaches the contract. The rationale to pay the amount is not in relation to any supply of goods or services but to make good the loss suffered by one party due to commission/ omission of an act by other party. Thus, such payments are outside the scope of VAT.
Examples are – Early termination of contract or late performance of service.
It is pertinent to note that such payments do not include the cancellation charges charged by the hotel for cancellation of a booking irrespective of the room being available to the guest or not since the charges are taken for cessation of a right, which is a supply of service by the hotel and thus, chargeable to VAT.
A Payment to Settle a Dispute
The clarification provides that in cases wherein a dispute is settled and payment is awarded to a party, it is imperative to consider the reason behind the payment to determine treatment of VAT. Following are some of the cases wherein VAT treatment has been identified:
| S.no | Cases Discussed | Treatment of VAT |
| A | Payment made to enforce a contractual term | Since payment is a consideration for the contractual supply, VAT is applicable |
| B | Payment in the nature of compensation for any loss suffered | Payment is not a consideration for the supply and thus, outside the scope of VAT |
| C | Payment in return for granting a right | Payment is treated as consideration for the supply and hence, chargeable to VAT |
A Fine or Penalty
Fines and penalties are outside the scope of VAT as the charges are imposed for contravening the terms of an agreement or performing an unlawful act or breach of statutory obligations.
Examples: Speeding fine or fine for incorrect parking
Payment for Damaged Goods
If payment is made to compensate the damage or loss done by one party to the another or for breach of pre-existing terms of contract, VAT is not applicable as such payments are outside the scope of VAT.
However, as an exception to above if the customer has broken a product and is obliged to take title of the broken product, payment made by the customer represents consideration for the supply of goods and thus, VAT is applicable.
Conclusion
The clarification provides that to determine whether a payment should be treated as consideration for a supply or not, nomenclature or the labels related to the payments should be ignored. The parties should consider the contractual or legal arrangements and charge VAT accordingly.
Download the VAT Clarification on Compensation Payments
