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on a stand-alone basis, while implementing it
in their respective Companies and structuring
a transaction which optimizes the impact of a
specific type of tax or do they have to take a holistic
view on all the applicable laws, regulations and
standards and ensure consistency of treatment of
any business transaction, with all the applicable
laws, regulations and standards, which at times
could create challenges in the most optimal tax
structuring of that transaction. This is what is
commonly described as ‘The Consistency Dilemma’
that all the Businesses commonly face.
The question which needs to be answered under TAX
‘The Consistency Dilemma’ is as to which is the
correct approach before taking the position on
the treatment or structuring of any given business
transaction.
My view on this ‘Dilemma’ is that whilst it
is important that a holistic view of analysis
and evaluation of all the applicable laws,
regulations and standards should be
done by the Businesses before taking the
position on the treatment or structuring
of any given business transaction.
Though at the same time, it has to be
understood that the same terms used in
various laws, regulations and standards
can have a different meaning, scope and
implications. Therefore, given that this ‘Dilemma’ can at
Thus, the meaning, scope and implications of a times be very complex for businesses to address
given term in each law, regulation and standard appropriately, so I would like to conclude with the
has to be analyzed in that specific context, for the guidance issued by Ministry of Finance of UAE with
purpose of arriving at a holistic conclusion as to a little bit of twist: “When in Dilemma, please seek
the correct treatment or structure for any given Professional Advise.”
business transaction. Some of the examples of the
same terms having different meaning, scope and
implications under different laws and regulations
are the term ‘Imports’ could have a different
meaning, scope, implications and context in the
various indirect tax laws in UAE i.e. Customs Law,
VAT Decree Law and Excise Tax Law, than what it
has got under the ‘Economic Substance Regulations
(ESR)’. Similarly, the meaning, scope, implications
and context of the term ‘Lease Finance Business’
under the ‘Economic Substance Regulations (ESR)’
could be potentially different than the same term CA Mayank Sawhney
defined under the ‘Federal Financial Leasing Law of
UAE.’
Disclaimer:
This article and/or write ups and/or any of its content shall not be treated as opinion and/or advice in any circumstances of the author(s) and/ or the Chapter. Reader’s to apply their best
judgement in the best interest of their requirement and should seek a formal opinion on any issue.
The Institute of Chartered Accountants of India (Dubai) Chapter NPIO TAX JOURNAL 2020 53