How a company can claim a refund on excess VAT
When a company files its tax returns, it is required to list the details of sales, purchases output VAT, and input VAT paid over the past three months.
The output VAT is the amount of tax collected on the company’s sales, and the input VAT is the amount paid to the supplier towards purchases and expenses.
If the output VAT is less than the input VAT, the excess balance will be deemed VAT refundable.
Will tourists also pay VAT?
Yes, tourists are a significant source of revenue for the UAE and will pay VAT at the point of sale for items that are consumed while in the country. However, duty free items at airport have been exempted, and tourist will have the facility for a tax refund if they self-carry the items with them while leaving the country. The exact process for tax refund is yet to be announced.
Why is VAT in UAE being implemented?
The UAE Federal and Emirate governments provide citizens and residents with many different public services – including hospitals, roads, public schools, parks, waste control, and police services. These services are paid for from the government budgets. VAT will provide our country with a new source of income which will contribute to the continued provision of high quality public services into the future. It will also help government move towards its vision of reducing dependence on oil and other hydrocarbons as a source of revenue.
Why does the VAT in UAE need to coordinate with other GCC countries like KSA?
The UAE is part of a group of countries which are closely connected through “The Economic Agreement Between the GCC States” and “The GCC Customs Union”. The GCC group of nations have historically worked together in designing and implementing new public policies as we recognize that such a collaborative approach is best for the region.
When will the UAE VAT go into effect and what will be the rates?
VAT is likely to be introduced across the UAE on January 1 2018. The rate will be low and is likely to be 5%.
How can someone access UAE Tax Law?
Tax Laws and the related Executive Regulations will be published as soon as issued
What other taxes is the UAE considering?
As per global best practice, the UAE is exploring other tax options as well. However, these are still being analysed and it is unlikely that they will be introduced in the near future. The UAE is not currently considering personal income taxes, however.
Will this impact economic growth of the UAE?
Our analysis suggests that it will help the country strengthen its economy by diversifying revenues away from oil and will allow us to fund many public services. This is a sign of a maturing economy.
What measures will the government take to ensure that businesses don’t use the VAT implementation as an excuse to increase prices?
VAT is intended to help improve the economic base of the country. Therefore, we will include rules that require businesses to be clear about how much VAT you are paying for each transaction. You will have the required information to decide whether to buy something or not.
How can one object to the decisions of the Authority?
Any person will be able to object a decision of the Federal Tax Authority.
As a first step, the person shall request the FTA to reconsider its decision. Such request for reconsideration has to be made within 20 business days from the date the person was notified of the original decision of the FTA, and the FTA will have 20 business days from receipt of such application to provide its revised decision.
If the person is not satisfied with the revised decision of the FTA, it will be able to object to the Tax Disputes Resolution Committee which will be set up for these purposes. Objections to the Committee will need to be submitted within 20 business days from the date the person was notified of the FTA’s revised decision, and the person must pay all taxes and penalties subject of objection before objecting to the Committee. The Committee will typically be required to give its decision regarding the objection within 20 business days from its receipt.
As a final step, if the person is not satisfied with the decision of the Committee, the person may challenge its decision before the competent court. The appeal must be made within 20 business days from the date of the appellant being notified of the Committee’s decision