FZCO audit

[5K1PP3R]

What happens if I just withdraw all the money as dividends and forget about my company? Do they have some kind of auto liquidation procedure?

 

[sergeylim88]

@Barbara Roessle
does this mean if we are using small business relief(no need for audit), we do not have to have accounting for year 2023 and previous?

 

[JackAlabama]

Barbara Roessle said:
For accounting of 2024 and financial audit, the opening point is the balances as of 31 December 2023. For the audit report, accountant needs to provide comparative figures from the previous year. If you get the report audited, the report will contain both years as final numbers. In worst case scenario, the accountant has to highlight on the audit report that the 2023 figures are unaudited and that he has no opinion on them.

Reason behind this could be to control sudden salary raises, divident payouts, new allowances, etc. to avoid paying tax on this.
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Yeah, got it, thanks. Makes sense.
There are checks in place to avoid a sudden vaporizing of taxable profits from one year to the next.

 

[Barbara Roessle]

JimBeam said:
How does dividend payouts affect avoid paying taxes?
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as far as we know dividend payouts can be done as long as they are reasonable! You can also pay yourself allowances like housing, travel, car, etc.....

 

[JimBeam]

Barbara Roessle said:
as far as we know dividend payouts can be done as long as they are reasonable! You can also pay yourself allowances like housing, travel, car, etc.....
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Yes, but dividends are paid from profits (after tax) so they do not lower the taxable income/tax (like expenses, salary or allowances do).

 

[Barbara Roessle]

JackAlabama said:
Yeah, got it, thanks. Makes sense.
There are checks in place to avoid a sudden vaporizing of taxable profits from one year to the next.
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exactly

JimBeam said:
Yes, but dividends are paid from profits (after tax) so they do not lower the taxable income/tax (like expenses, salary or allowances do).
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yes, correct, my bad, I should have checked with my collegue who is the expert, I am doing company setups and trying to answer as correctly as possible.

Dividends distribution to the shareholders of a company are usually from the profits after tax. So if some business is planning to lower the taxable income, then Salary, bonus, commission etc are more suitable expense heads.

So far as the dividends and other profit distributions are concerned, that income is corporate tax exempt. Suppose if a company is receiving profit from their investment in some other entity, that part will be not taxable.

5K1PP3R said:
What happens if I just withdraw all the money as dividends and forget about my company? Do they have some kind of auto liquidation procedure?
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we dont know yet what the exact punishments will be if you do not comply with regulations. But there is no such thing as auto liquidation, no. There will be penalty fees.

Last edited: Oct 11, 2023