VAT Offences and Penalties in KSA

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The financial world is fraught with uncertainties; there are several internal or external factors that can lead to insolvency in business. In the dynamic financial world, some organizations might not able to stand the test of financial strains even in a prominent trade destination such as Dubai, which offers numerous opportunities for businesses. The organizations resort to liquidations due to different reasons such as irrelevant market predictions, financial shocks, relocation of firms, or any legal obligation. Dubai has a conducive environment for business organizations; however, not all might be able to flourish and might succumb to the uncertainties in the competitive world.

What is Company Liquidation?

Company liquidation refers to the systematical wind up of business by deregistering its license and dissolving the assets among the shareholders and the creditors, thereby avoiding the accumulated fines or penalties.
The high-octane business world carries heavy risk and the organizations need to adapt to the dynamic financial climate. Once a while, traders involved in the business cycle have to face the inevitable stage when the business transactions turn stagnant. There might come a stage when the profit levels are outweighed by the liabilities. The organizations unable to survive in such risky situations may wind up or dissolve their assets and discharge the liabilities to the creditors or the partners. In the global world, increasing the level of competition opens the gate for businesses to operate with their optimum capacity. In the long run, fragile business entities have shown their inability to sustain in the dynamic world. While the robust business entities with a large capital base and multiple ideas sustain and earn goodwill in the market. Sustenance can be determined by the rank of the organization in the competitive world.

Voluntary and Compulsory Company Liquidation

Voluntary company liquidation arises when the fragile business entities exhaust their financial pool or the business profits are outweighed by the stagnancy of the business transactions. In such cases, the company’s economic profits stoop to such a level that it might not be able to cover the variable and the fixed costs. In the involuntary company liquidation, the shareholders and the owners of the organization unanimously agree to dissolve the company assets and the resolution meeting is organized for the owners and the stakeholders.

Forced or mandatory liquidation refers to the legal action when the court orders are issued by the legislation to dissolve the incorporation. Under this, a court appointee reviews the insolvency status of the company assets by audit. After the audit, the liquidated assets are distributed among the lawful parties and the creditors of the company.

Company Liquidation Steps Involved

After deregistration and dissolving the assets, the trade name of the company is struck off and its license is revoked from the Dubai Trade Register for the company’s preventing further trade. The company liquidation process requires completing all the formal insolvency procedures; else the company would be ineligible for dissolution. Below are the steps involved in the process:

    • Preparing Documents And Notice Period:
      The required documents are prepared and submitted to the specific division and the legislative bodies for verification. After some formal initial payments, the documents are required to be submitted to the Department of Economic Development. The liquidation certificate issued to the company will act as the evidence of documents verification.After receiving the liquidation certificate the organization needs to advertise in the newspaper about their insolvency. The notice period for putting the 4 advertisements in the newspaper is 45 days for the limited liability companies. The advertisement should be published in the Arabic language. During the notice period, the deregistered company’s no objection statement is also generated.
    • Submission of Documents And Companies Involved
      The verification of documents is completed after getting clearance letter from the:

      • Ministry of Human Resources and Emiratisation
      • Directorate of Residency and Foreigners Affairs
      • Dubai Electricity and Water Authority
      • clearance letter from Etisalat
      • Liquidator and Partners NOC
      • Bank No liability certificate
      • Department of Immigration
      • Telecom Authority
    • Issuance of Deregistration Certificate
      Once the verification is completed and the required fees are paid, the company name is dyed in the wool by the Department of Economic Development and Dubai Trade Registry for de-licensing.
    • Company Liquidation In Dubai: Required Documents
      Below are the listed documents that are needed for the process of liquidation.

      • Photocopy of the trade license of the company
      • Copy of Memorandum Of Association
      • Power of attorney
      • Shareholder’s Resolution of the company
      • Photocopy of the passport of all the shareholders
      • Photocopy of the Emirates Identity
      • Application form for the liquidation of the company
      • The notice period and advertisement regarding the company’s liquidation
  • Last step of liquidation
    After the submission and verification of all the documents, the legislative authorities will provide a review of the final payment and value of company assets. The concerned company can recruit liquidators for their own convenience. Aviaan Accounting has the best lawyers and the liquidators who help to complete the liquidation process appropriately and efficiently.

Benefits of Company Liquidation in Dubai
Dubai is the prominent country in turning a new leaf for the dissolvent companies and rehabilitate many business setups by providing them various benefits. The liquidation act in Dubai secures the personal wealth of the stakeholders and owners. The presence of the owners or all business partners is not required for the liquidation process. The act protects the company from the creditors to charge any fees or penalties. The legislative authorities in Dubai take proper action against the counterfeiting fraud companies which are involved in malicious and illegal activities. The foreign ventures who fail to meet business expectations have the roll-back opportunity.

How Aviaan Accounting Can Help
The team at Aviaan Accounting has the excellence to do common tasks in an uncommon way. In-house Trade License Cancellation services are provided by Aviaan Accounting. We believe that speed is an indispensable ingredient to meet excellence. Our excellence is proved by providing gradual services to numerous organizations through our wide network and finalizing their exit strategy. Aviaan Accounting helps insolvent companies in legitimate closure of their operations and rejuvenates their strength to turn a new leaf for their businesses.

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