FTA calls for timely submission of quarterly and monthly tax returns
Date: 18 Apr, 2018
External URL: http://wam.ae/en/details/1395302682838
The Federal Tax Authority, FTA, has called today on businesses registered for Value Added Tax, VAT, and whose quarterly and monthly tax periods ended by March 31st, 2018, to file their tax returns and pay their due taxes by April 29th.
In a press statement, the authority explained that according to the Federal Decree-Law No. (8) for 2017 on VAT and its Executive Regulations, tax returns must be submitted to the FTA no later than the 28th of each month, or according to the law no. (7) of 2017 on Tax Procedures the following day if the 28th falls on public holiday.
Khalid Ali Al Bustani, FTA Director-General, said that filing tax returns and paying taxes is a legal obligation that must be carried out to ensure businesses compliance with tax legislation.
Al Bustani also called on registered businesses to check their tax periods and the deadline for submitting tax returns, and pay taxes through the eServices portal on the FTA website as soon as possible and not to wait until the deadline.
Businesses whose tax periods ended on March 31st can submit their tax returns, and then pay their dues before the expiry of the payment period, he explained.
He said, “The electronic tax transfer procedure may require some time for banks to process the payment after it has been submitted by the taxable person; this processing time may lead to payments reaching the authority after the deadline if the payment was not submitted early enough, in which case, the taxable person incurs administrative penalties.”
“Tax returns and payments may be submitted 24 hours a day on the website,” Al Bustani added.
VAT facilitates dynamic governance for SMEs
Date: 16 Apr, 2018
External URL: http://wam.ae/en/details/1395302682513
The introduction of Value Added Tax (VAT) in the UAE has served an opportunity for small and medium enterprises (SMEs) to review their processes and identify opportunities to streamline operations.
“VAT in the UAE was introduced to boost the development of the economy. However, SMEs in the country have also been able to introduce governance in their operations with the introduction of the new tax. As VAT requires the businesses to adjust prices, processes and procedures it offered an opportunity for many companies to review and audit their business practices, make use of digital tools and cut costs on unnecessary expenses,” said Mohammed Fathy, General Manager of Dubai-based consultancy, Al Dhaheri Jones & Clark.
Introduction of VAT has helped businesses adapt digital solutions wherever possible. From record-keeping to filing returns, VAT has allowed SMEs to align their processes. Additionally, businesses have had the opportunity to train teams and make them familiar with not just VAT regulations, but also internal operations.
In addition, VAT compliance has served as an opportunity for SMEs to refresh existing investments in business applications and introduce new business efficiencies, better customer engagement, employee empowerment and potential new business models, which has streamlined the governance and operations across companies.
“While VAT compliance mandates SMEs to integrate and report in accordance with the Federal Tax Authority (FTA) rules, it also requires businesses to implement practices that comply with these rules. This gives them an opportunity to automate workflows, provide real-time data insights, and also transition to a digital system which is not just fast and quick, but also safe and secure. Overall, the introduction of VAT has served as a boon for the SME industry, which has helped them integrate and implement governance across functions, departments and operations,” added Mohammed Fathy.
FTA meets 20 accredited tax agents, calls for greater compliance
Date: 16 Apr, 2018
External URL: http://wam.ae/en/details/1395302682420
Khalid Ali Al Bustani, Director-General of the Federal Tax Authority, FTA, held a meeting with 20 accredited tax agents to discuss their duties in terms of spreading awareness among businesses, supporting them in complying with the tax system, and strengthening the relationship between the FTA and taxable persons.
The meeting went on to explore the means of increasing cooperation and coordination among all stakeholders in order to increase compliance and spread awareness around the tax system, its principles, and ways to implement and monitor it. Furthermore, the tax agents were introduced to the support services provided by the Authority to help taxpayers comply with the laws while ensuring minimum impact on their activities.
“The tax agent’s profession requires advanced qualifications, know-how, competencies and practical experience in order to be able to perform his/her role with accuracy, and to meet stringent standards,” asserted Al Bustani, adding that tax agents registered with the FTA can be assigned to any person or entity for the purpose of representing them with the Authority, and assisting them in carrying out their obligations and exercising their tax rights.
Federal Tax Authority starts roadshow on VAT
Date: 15 Apr, 2018
External URL: http://wam.ae/en/details/1395302682220
The Federal Tax Authority (FTA) has launched a roadshow to communicate directly with businesses subject to Value Added Tax (VAT) that haven’t registered yet, urging them to benefit from the exemption given by the Authority until April 30, 2018, which took into consideration the lack of preparedness among businesses in an effort to promote compliance and help them avoid administrative penalties.
In a press statement issued today, the Authority explained that the new initiative, which went into effect as of early last week and will run until April 24, 2018, is organised in collaboration with economic departments and some municipalities across all seven emirates. The roadshow will see a team of FTA tax experts and analysts, as well as representatives from the Tax Registration Department, go on a tour covering the entire country, organising interactive seminars and workshops to introduce taxable businesses to the three-step registration procedure, which can be completed in 15-20 minutes -when all requirements are well prepared- through the Authority’s official website.
Besides spreading awareness of VAT registration procedures, the FTA explained that the new initiative seeks to listen to taxable businesses that have not yet registered for VAT, in order to identify and address the reasons and obstacles that have prevented them from doing so. The Authority indicated that these workshops are organised in coordination with economic development departments and some municipalities, who invite unregistered businesses to attend these seminars at the customer service centres of each emirate’s department of economic development.
The Federal Tax Authority will announce the tour on social media in order to expand the scope of beneficiaries. The first meeting brought the FTA experts together with businesses subject to VAT in Ras al-Khaimah. The tour started in Abu Dhabi Department of Economic Development (DED) on Sunday, April 15, followed by Dubai DED on Monday, April 16, and then two consecutive sessions in Ajman DED on Tuesday and Wednesday, April 17 and 18. On Thursday, April 19, the FTA experts will be in Sharjah DED, before moving on to Umm Al Qaiwain on April 22 and 23, and then wrapping up the tour in Fujairah Municipality on April 24.
The Authority has called on businesses to attend these events in order to have all their queries and concerns answered by a team of experts, in order to overcome any obstacle preventing them from registering for VAT. The FTA reiterated its commitment to coordinating with local and federal authorities to ensure transparency and a smooth implementation of the UAE tax system that does not affect business operations in any sector.
98.8% compliance with Tax Return regulations
Date: 11 Apr, 2018
External URL: http://wam.ae/en/details/1395302681284
Tax compliance in the UAE is one of the highest in the world, as 98.8 percent of all businesses and groups registered for Value Added Tax, VAT, have complied with submitting their Tax Returns on time, where the rate increased after follow-ups from the Federal Tax Authority,FTA, asserted Khalid Ali Al Bustani, Director-General of the FTA.
His remarks came during the media roundtable held in Dubai on Wednesday to look back at the first 100 days of VAT, which went into effect on 1st January 2018.
Al Bustani stated that this high level of commitment is due to the guidance provided by the FTA, as well as the clarity and simplicity of the procedures, which allow taxable persons to submit tax returns and pay their dues online, any time and from anywhere. Users can access the e-Services portal on the Authority’s official website, which was designed in accordance with international best practices to provide diverse and flexible payment solutions, as well as information and guidance to promote tax awareness and help businesses meet deadlines.
This advanced system now has 275,000 registrants, Al Bustani explained, noting that it allows taxable persons or their representatives to complete all procedures without having to be physically present at the authority. Starting from opening up an account on the portal, to registering for VAT, to paying due taxes.
VAT is bringing about a 'change' in payments
Date: 09 Apr, 2018
The 5% VAT levy on goods and services is bringing a change in the way retail merchants have to manage ‘change’. Items with the 5% VAT have changed the price from 5.00 to 5.25, thus expecting either the customer to give the 25 fils coins, or take back 75 fils from the merchant.
The UAE government has clarified that there is no scarcity of small coins, however merchants have to gear up now to handle a larger volume of coins.
However, retail will see a bigger impact when more and more customers switch to a cashless mode using their debit cards. The bank charges on debit/credit card will impact profitability that is already under stress due to the 5% VAT.
Gold Losing Its Luster In Dubai As Market Struggles With 5% VAT
Date: 09 Apr, 2018
While investment demand has picked up in the global gold market, physical demand remains lackluster as seen in Dubai, the world’s epicenter of the bullion market
The struggling physical market was a key topic among participants during the seventh annual Dubai Precious Metals Conference. Chandu Siroya Vice Chairman, Dubai Gold & Jewellery Group noted that physical gold demand has dropped significantly since the start of the year after a 5% value-added tax was added to purchases with the United Arab Emirates.
According to reports, wholesale gold jewelry sales in UAE’s gold district saw a decline of as much as 60% in the first three months of the year as a result of the VAT.
“A lot of companies didn’t sell for the first 20 days after the VAT came in, and only later got back to selling,” Siroya said during a panel discussion at the conference. “We also saw that around 20 offices became available for rent in the gold souk. Unfortunately, the market is down significantly, both at the wholesale and retail levels.”
The dismal description of the UAE’s first-quarter gold demand comes after a dismal 2017. Stats from the World Gold Council showed that jewelry demand fell to a 20-year low last year to 42.8 tonnes.
Jewellery industry, government in talks to levy VAT only on making-charges
Date: 09 Apr, 2018
The gold and jewellry industry in Dubai is talking to the government to levy value-added tax (VAT) only on the making charges of the jewellry rather than the whole single piece as the new tax regime has taken shine off the yellow metal in the first quarter of this year.
Chandu Siroya, vice-chairman, Dubai Gold and Jewellery Group (DGJG), said the group has proposed that VAT to be implemented at the labour component only.
“We are talking to different sources in the government and we are very hopeful about the positive outcome of it. The government will find some solution for us… And we will go back to become a preferred choice.”
Gautam Sashittal, CEO, Dubai MultiCommodities Centre (DMCC), said: “What is important for us is to remain competitive as an industry globally. Even though the underline value of metal is quite significant, the actual margins are very small. So even 5 per cent VAT can make a big difference. So we and DGJG have made representation on how VAT regime could work and these discussions are ongoing at the moment.”
Sales of gold jewellery will spurt if VAT is levied only on the value-addition of the gold jewellery. As witnessed prior to the introduction of VAT on January 1, 2018, demand for gold jewellery had increased substantially in Dubai both from the residents and tourists.
Beware of VAT fraud
Date: 27 Mar, 2018
External URL: https://www.khaleejtimes.com/beware-of-vat-fraud
The introduction of the value added tax (VAT) in the UAE will bring forth a number of benefits to the country’s economy and business environment, but experts warn business owners to beware the threat of fraud.
Speaking at an event at the Dubai Chamber on Tuesday, experts from management consultancy, Metis, said that issues such as increased stress on working capital, the disruption of existing banking arrangements, and an increased vulnerability to fraud in the most extreme of cases, are potential pitfalls that many business owners and industry professionals haven’t considered yet.
“The VAT has become a very important strategy tool for the UAE government,” said corporate advisor, Grant T. Huxham. “Usually, taxation, of any kind is very clear, but there are certain codes and phrases that business owners need to be aware of. One area that has left some business owners with questions are freezones. There are 14 listed freezones that are not taxable, however you also have to be aware that there are certain freezones where the tax does apply. This is where issues of fraud can happen.”
Companies which are particularly vulnerable, include small and medium sized enterprises, which according to the UAE Ministry of Economy, represents more than 94 per cent of the total number of companies operating in the country.
Huxham cautioned business owners to beware of fraudsters, especially if they regularly engage with freezones. “Many companies from overseas will send you an invoice saying that they are going to tax you, because of the VAT law. This is a case of fraud if they are not registered to collect the tax in the UAE. My advice is to set up a meeting with the relevant authorities and to ask for clarity on the topic if you are unsure. The location of the delivery of the service is important because that will determine if the VAT will be applicable to you or not.”
Limited VAT impact on real estate sector
Date: 20 Mar, 2018
External URL: http://wam.ae/en/details/1395302676096
The Federal Tax Authority, FTA, and Dubai Land Department, DLD, have confirmed that the UAE’s recently introduced VAT will have a limited impact on the real estate sector.
FTA and DLD have stated that all real estate transactions, with the exception of the sale of vacant commercial properties and commercial property leases, will be either not subject to or exempt from the five percent VAT, while leased commercial property will not be considered a supply during their sale by the taxable person and will therefore not be taxable.
The components of the tax-exempt real estate sector include bare lands, provided that they are sold or leased when no building or engineering works are on such lands. Upon commencement of any real estate development work, tax will be applied.
Residential buildings are not taxable if sold or rented. These include apartments, buildings, residential villa complexes, housing for workers and students, accommodation for armed forces and police, and homes for the elderly, orphans and nursing homes. The law stipulates that the period of the lease shall be more than six months or to the holders of the identity card issued by the Federal Authority for Identity and Citizenship. However, this does not apply to buildings not fixed on lands, hotels and hotel apartments, or apartments offering services in addition to housing.
85% components of Dubai's property sector not subject to tax
Date: 20 Mar, 2018
No VAT on sale of leased commercial property by taxable person, says FTA
Leased commercial property will not be considered a supply during its sale by the taxable person, therefore, it will not be taxable, the Federal Tax Authority (FTA) and Dubai Land Department (DLD) clarified on Tuesday.
Both the government entities emphasised that there has been a limited impact of value-added tax (VAT) on the UAE’s real estate as majority of the transactions are either not subject to or exempt from the five per cent VAT. Currently, only the sale of vacant commercial properties and commercial property leases are subject to taxation.
Sultan Butti bin Mejren, director-general of DLD, pointed out that 85 per cent of components in Dubai’s total real estate sector are not subject to VAT.
“When reviewing the details of sales, rents and other transactions, we found that the value of bare land sales, residential properties, and occupied commercial and retail properties comprise the largest percentage of total properties traded during 2017. This ratio is expected to remain over the coming years and even stands to increase with commercial offices continuing to improve their leasing operations and minimise empty units,” he added. Sailesh Jatania, CEO of Gemini Property Developers, said it would be a big relief for the buyers to exclude sale of the leased commercial supply by a taxable person from the taxation.
He confirmed that there is a limited impact of VAT on the residential property but there is a direct impact on the commercial property. “As far as commercial property is concerned, the cost for the buyer is high. Buyers are demanding to reduce the price of retail units, because they have to pay VAT as well,” he said.
FTA urges consumers to ask for invoices
Date: 18 Mar, 2018
External URL: http://wam.ae/en/details/1395302675581
The Federal Tax Authority, FTA, has urged all consumers in the UAE to request tax invoices from retailers when purchasing products or services subject to Value Added Tax, VAT, to prevent attempts to manipulate the tax system.
The Authority urged all taxable businesses to issue tax invoices when providing any supply, in order to avoid administrative penalties. In a new awareness message issued today, and as part of the FTA’s consumer awareness campaign “Be Aware of Your Rights”, the Authority stressed that failure to issue a tax invoice or alternative document when providing a product or service will expose the taxable business to an administrative penalty of AED5,000 for each tax invoice or alternative document. Similarly, failure to issue a tax credit note or alternative incurs an administrative penalty of AED5,000 for each notice or alternative document.
The FTA urged consumers to verify the VAT amount on prices displayed in tax invoices. The Authority has launched online instruments and services to enable consumers to easily verify the value of the tax – namely, the VAT Calculator, launched in January – as well as to ensure that the issuer of the invoice is actually registered with the FTA, through the TRN Verification service.
New Guide - Taxable Person - issued by FTA
Date: 15 Mar, 2018
FTA has released a new guide book titled TAXABLE PERSON GUIDE FOR VALUE ADDED TAX dated March 1, 2018.
This guide is the main reference guide to VAT in the UAE. It provides with:
– an overview of the main VAT rules and procedures in the UAE and how to
comply with them;
– assistance with the more likely questions that businesses might have; and
– references to more specialised publications where they have been published.
It replaces the previous guide on the same subject.
You may download the guide at the following URL: https://www.tax.gov.ae/pdf/Taxable-Person-Guide-Issue-1-March-2018.pdf
KPMG sheds light on VAT challenges in Saudi, UAE
Date: 14 Mar, 2018
Around 100 business leaders and senior finance executives gathered yesterday at an event organised by KPMG in Bahrain to review and debate the first 100 days of VAT in the GCC and the lessons to be learnt for Bahraini businesses from the introduction of value-added tax (VAT) in the Kingdom of Saudi Arabia (KSA) and the United Arab Emirates (UAE).
The half-day seminar, ‘VAT compliance for Bahrain businesses in KSA and UAE: the do’s and don’ts in Bahrain and beyond’ examined the current implications on Bahraini businesses with operations in or with Gulf countries that have already implemented VAT, how to tackle these, how to ensure a correct tax treatment from business partners and what to expect in Bahrain including process and technology solutions.
Businesses must display VAT inclusive prices to avoid penalties
Date: 13 Mar, 2018
External URL: http://wam.ae/en/details/1395302674234
The Federal Tax Authority, FTA, has asserted that all businesses subject to Value Added Tax, VAT must display prices of goods and services inclusive of tax in order to avoid administrative penalties.
The authority called on consumers and service recipients in the UAE to be aware of their rights, noting that prices displayed on items – or announced for provided services – should be inclusive of tax.
The displayed price should be the total amount that consumers will pay upon receiving the Tax Invoice, which should include the full price, followed by the total price to be paid and the amount of tax charged therein.
Late registrations penalties waived till end of April
Date: 05 Mar, 2018
The UAE Federal Tax Authority extended the exemption period for administrative penalties for late VAT registrants until the end of April to help businesses get ready for the five per cent levy introduced on January 1.
“The Board [of directors of the Authority] approved a plan to exempt businesses that are late in registering with the Authority from administrative penalties until April 30, 2018,” the authority said in a statement on Wednesday. “This takes into consideration the lack of readiness of some businesses during the first phase of VAT implementation, and reflects FTA’s commitment to assisting businesses and encouraging them to be compliant with the tax procedures and to avoid administrative penalties.”
About 260,000 companies out of an estimated 350,000 have registered for VAT, the authority’s director general Khalid Al Bustani said in January, but the FTA is showing leniency in terms of imposing fines for late registration. To help companies comply correctly with VAT regulations, the authority extended the deadlines for filing tax returns, a move experts say will help struggling businesses.
However, the VAT will be applicable from January 1, 2018 as for all other businesses.
FTA signs MOU with Central Bank for Tax Collection
Date: 26 Feb, 2018
The Federal Tax Authority (FTA) has signed a Memorandum of Understanding (MoU) with The Central Bank of the United Arab Emirates to facilitate tax collection through the UAE Funds Transfer System (UAEFTS) that offers a timely processing of fund transfers between bank accounts.
The UAEFTS will facilitate the payment of tax using the GIBAN (Generated IBAN) issued by the FTA to registered entities. This is closely linked to the TRN of the person paying the tax and the FTA unique entity identifier code 868.
As a remitting institution, the CB103/CB102 shall be used to accept and process tax payments to the credit of FTA in UAEFTS.
Key elements required for in CB102/CB103 that will need to be provided by the taxable entity:
- Purpose of Payment [TAX / GRI]
- Amount to be Paid to FTA
- GIBAN [The IBAN representation of the TRN of the Taxable entity]
Abu Dhabi's DED closes 15 commercial facilities for price hike violations
Date: 21 Feb, 2018
External URL: http://wam.ae/en/details/1395302668566
The Department of Economic Development, DED, in Abu Dhabi shut down 15 commercial facilities in the emirate during the month of January due to price hikes on goods.
Ahmed Tarish Al Qubaisi, Acting Director of the Commercial Protection Administration, said that the DED has conducted 98 campaigns, 50 of which were implemented in Abu Dhabi, 28 in Al Ain and 20 in the Al Dhafra Region. The campaigns focussed on the major points of sale and shops in the markets, which are visited by significant numbers of consumers to ensure that these facilities do not raise prices unjustifiably and that they implement VAT for the facilities that are registered in the tax system of the Federal Tax Authority.
He noted that a total of 3,520 inspections were conducted throughout January, 1,350 of which were in Abu Dhabi, 1,120 in Al Ain and 1,050 in Al Dhafra. As a result of these inspections, 85 tickets were issued, 47 of which were issued in Abu Dhabi, 34 in Al Ain, and 4 in Al Dhafra.
Al Qubaisi said that tickets were issued against those facilities that collected VAT without being registered in the tax system of the Federal Tax Authority and increased prices excessively for the period preceding the implementation of the tax by checking the previous bills. This is as per Item No. 77 of the Tickets Schedule in which it is stated that additional fees or services are imposed on the consumer unjustifiably, and Item No. 72 regarding the failure to adhere to the undertaking and the circulars presented by the DED or the instructions, conditions and controls issued by it.
Al Qubaisi called upon the consumers to contact the DED through the Contact Centre of the Abu Dhabi Government in case they detect any explicit violations in VAT implementation.
Filing returns in 4 Steps - Guide issued by FTA
Date: 19 Feb, 2018
External URL: http://wam.ae/en/details/1395302668161
The Federal Tax Authority, FTA, has issued 50 guides and e-learning modules covering some legislative and implementation aspects of the UAE’s tax regulations as part of the authority’s comprehensive awareness campaign.
Khalid Ali Al Bustani, FTA Director-General, said that this step reflects the FTA’s continued commitment to adopting the highest standards of transparency and accuracy in implementing tax procedures. The guides and e-learning modules cover many tax aspects, including import and export declaration, registration for Excise Tax, Value Added Tax, and Tax Groups, Excise Tax refund, filing tax returns, warehouse keepers and designated zones.
The announcement coincided with the launch of the FTA’s comprehensive awareness campaign, “Filing returns in 4 Steps”, which seeks to familiarise businesses registered for VAT purposes with the FTA’s advanced online system. The FTA’s online tax system was launched earlier this month, and started receiving tax returns for the first tax period, which ended for some businesses on 31st January, 2018, as these are now required to file their returns before 28th February, 2018.
Al Bustani called on businesses and specialists to benefit from these guides and e-learning modules to raise awareness among stakeholders and provide a comprehensive introduction to the UAE tax system with all its legislations and mechanisms. This will enable the FTA to obtain accurate and comprehensive information, which helps promote tax culture among the various business sectors, thus ensuring the successful implementation of the tax system.
For more visit https://www.tax.gov.ae/e-learning.aspx
UAE and KSA will be the only GCC country with VAT this year
Date: 18 Feb, 2018
“Kuwait, Qatar, Bahrain and Oman will need more time than expected for implementing the GCC agreement to introduce Value Added Tax, even though Saudi Arabia and the United Arab Emirates have already implemented the tax”, says the Deputy Director of Financial Affairs Department at International Monetary Fund (IMF) Abdelhak Senhadji.
In December 2017, Saudi Arabia and the UAE introduced excise taxes on energy drinks, fizzy drinks and cigarettes, and they introduced VAT one month later. Bahrain had also introduced excise taxes in December 2017 but the government suspended the introduction of VAT until a joint committee of the Cabinet and the parliament decides on a mechaplot nism to help Bahrainis with limited income to deal with the consequences of implementation of the tax system.
According to a report issued by the ratings agency S&P last month, Qatar was not expected to introduce VAT in this phase as it was faced with the threat of a boycott and the closing of travel, trade and diplomatic ties by the UAE, Saudi Arabia and Bahrain.
UAE VAT to stay at 5%, affirms Minister of State for Financial Affairs.
Date: 13 Feb, 2018
The UAE’s government has no intention of raising the current rate of Value-Added Tax (VAT) or excise tax in the medium term, Obaid Al Tayer, the country’s Minister of State for Financial Affairs confirmed.
“If you’re referring to the next five years, we don’t see anything [relating to] increasing the VAT rate or the excise rate. I also want to confirm that there aren’t any studies or any legislation regarding introducing income tax,” Al Tayer told reporters in Dubai on Saturday.
Apparently the minister was quashing the social media chatter on VAT to be increased to 10% in the near future.
FTA urges businesses to complete and submit tax returns for the first tax period before February 28
Date: 03 Feb, 2018
External URL: https://www.tax.gov.ae/filling-vat-returns.aspx
The Federal Tax Authority (FTA) has set up integrated electronic systems to allow Taxable Persons to register, file tax returns and pay their due taxes seamlessly, asserted FTA Director General His Excellency Khalid Ali Al Bustani.
The system encourages voluntary compliance, H.E. Al Bustani said, calling on all businesses registered with the Authority – whose first Tax Period ends on January 31, 2018 – to file their returns for the first Tax Period no later than February 28, 2018. The FTA Director General reiterated the importance of early preparation for submitting tax returns within the set timeframes, reminding registered businesses to submit their tax returns on a monthly or quarterly basis, as determined by the FTA based on their annual revenue, and within the deadlines set in Federal Decree-Law No. (8) of 2017 on Value Added Tax, as well as its Executive Regulation.
H.E. Al Bustani noted that the Federal Tax Authority had made some exceptional adjustments to the first tax periods for VAT in order to afford more flexibility to businesses following requests from a large number of businesses subject to VAT, which entered into effect in the UAE on January 1, 2018. These exceptional adjustments included extending Tax Periods from one to three months for some businesses at the beginning of implementation in 2018, with Tax Periods returning to a monthly basis later on.
The first quarterly Tax Period – which was meant to expire by the end of January or February 2018 – was extended, H.E. reminded, by merging it with the following period, making the first Tax Period four months for some businesses and five for others. Meanwhile, businesses whose first Tax Period was three months ending in March 2018 were not included in these adjustments.
VAT TRN is sufficient, no need to ask fro VAT Certificate
Date: 27 Jan, 2018
External URL: http://wam.ae/en/details/1395302662854
The FTA has urged businesses to conduct transactions on the basis of TRN (Tax Registration Number) and not to insist on VAT Certificates.
Many businesses that did not meet the deadline for registration have been issued with provisional TRN and as such are not able to download the VAT certificate from the FTA site. In light of these business partners may conduct business on the basis of TRN and not have to insist on VAT Certificates.
The Federal Tax Authority, FTA, has confirmed that businesses are not required to present a tax certificate in order to conduct their commercial activities and can simply use their Tax Registration Number, TRN.
In a statement issued on Saturday, the Authority called on all businesses and stakeholders in the UAE to carry out commercial or other transactions using TRNs provided by businesses, urging them not to require tax certificates in order to ensure smooth operations and minimise disruption of work.
Committee of Consumer Protection reviews VAT impact
Date: 27 Jan, 2018
External URL: http://wam.ae/en/details/1395302662885
The Higher Committee of Consumer Protection is ensuring continued coordination between all state departments concerned with the Value-Added Tax to corroborate consumers’ confidence in the market stability and sound application of the tax and prevent any unjustifiable price hikes, Sultan bin Saeed Al Mansouri, Minister of Economy, has affirmed.
The minister’s remarks came at a meeting of the Higher Committee of Consumer Protection at the Ministry of Economy in Dubai recently.
“The committee received growing calls from the consumers during the first days of the VAT application. People had some concerns, but their worries have ebbed with the passage of time and by the end of the first fortnight of the application, the calls received by the committee declined from 3261 on the first day of the application to 493 on January 15,” said the minister at the meeting.
Khalid Ali Al Bustani, Director General of the Federal Tax Authority (FTA), who attended the meeting, said the complaints received by the committee address three main issues: price hikes, tax registration numbers and erroneous calculation of VAT on some commodities.
“Traders and departments against whom the complaints were filed have been notified and were given a grace period to rectify their strategies as per the tax rules and condition,” Al Bustani added.
“The committee is in constant follow-up of the market to prevent any violations and in case of any non-abidance, all legal measures have been taken against the violators,” Mohammed Ahmed bin Abdul Aziz Al Shehhi, Undersecretary for Economic Affairs in the Ministry of Economy, who attended the meeting, said.
DUBAI, 27th January, 2018 (WAM)
VAT cannot be charged if older contracts are silent on VAT
Date: 26 Jan, 2018
Health clubs cannot charge VAT on membership contracts issued last year – unless they made clear reference to the tax at the time, a senior government official has said.
Ahmad Al Zaabi, acting director of consumer protection at Dubai Economy, said gyms and other clubs could only charge VAT, or any other tax, on contracts signed last year “if the documented agreement terms specified the same”.
His comments came after Fitness First members became embroiled in a dispute with the health club over VAT being applied to memberships signed and paid for last year.
Many members have complained about demands from the company to pay the tax for the 2018 portion of their membership, with some claiming they were denied entry to the club until the tax was paid.
Mr Al Zaabi said: “For example, the agreement should state that the fee applicable does not include VAT or any of the tax concerned, and also specify that the merchant reserves the right to charge VAT or any other tax that may be implemented in the country at any point during the agreement period.”
He said if this does not happen, the contact will be considered “silent” and the merchant “cannot charge VAT from the consumers, or to gain an accepted settlement with their consumers”.
Tourist VAT refund coming soon, says FTA
Date: 24 Jan, 2018
In a recent press conference, the FTA chief Khalid Al Bustani said they are in talks with four international firms to establish refund centres at airports for facilitate refund of VAT to tourists departing UAE.
These firms have experience in managing refund of VAT and will be soon finalized.
In the same meeting the FTA also announced that over 260,000 businesses and 10,000 groups have already registered.
Online Shopping Purchases Subject to VAT
Date: 19 Jan, 2018
External URL: https://www.tax.gov.ae/online-shopping.aspx
The Federal Tax Authority (FTA) has confirmed that all purchases made through online shopping portals are subject to the same 5% Value Added Tax (VAT) as any other purchase made through traditional outlets if the products purchased online are received within the United Arab Emirates.
The Authority explained in an awareness flyer issued today that according to Federal Decree-Law No. (8) of 2017 on Value Added Tax and its Executive Regulations, all online sales are subject to VAT where a seller’s supplies exceed the mandatory registration threshold of AED375,000 over the previous 12 months or the coming 30 days.
FTA makes amendments to the first tax period
Date: 18 Jan, 2018
The Federal Tax Authority, FTA, has made some exceptional amendments to the first tax period for those subject to value-added tax, VAT, to be more flexible with the business sectors included in the tax.
The tax period for some businesses will, therefore, be four months, and five months for other businesses while businesses with a three-month tax period ending in March will not be affected by the amendments, he further added.
You can view the first tax period for your organization by logging into your account on the e-services portal on the FTA’s website.
As per the regulations, the tax declaration must be submitted to the authority no later than on the 28th day after the end of the relevant tax period.
FTA relaxes the timeline for filing the first VAT returns
Date: 16 Jan, 2018
The Federal Tax Authority (FTA) has relaxed the timeline for filing the first value-added tax (VAT) returns, easing reporting and compliance pressure on companies, especially SMEs.
The first tax return filing for companies with more than Dh 150 million turnovers was one month. For others, it was quarterly. Now, firms can file their first tax returns after four or five months in June as per the new timelines appearing on the FTA’s dashboard after log-in by a member company. Such an extension in filing returns shall help firms to better comply.
Government Declares which Free Zones are Exempt from VAT
Date: 09 Jan, 2018
The Cabinet has passed a decision on the Designated Free Zones for the purpose of the implementation of Value Added Tax.
The designated zones are special zones for VAT purposes, which are generally considered outside of the UAE in terms of value-added taxation. While VAT applies throughout the UAE, in the designated zones VAT generally does not apply. Only fenced free zones with special controls on goods and services going in and out could benefit from this status.
|No.||Designated Zone ( Abu Dhabi)|
|1||Free Trade Zone of Khalifa Port|
|2||Abu Dhabi Airport Free Zone|
|3||Khalifa Industrial Zone|
|No.||Designated Zone (Dubai)|
|1||Jebel Ali Free Zone (North-South)|
|2||Dubai Cars and Automotive Zone (DUCAMZ)|
|3||Dubai Textile City|
|4||Free Zone Area in Al Quoz|
|5||Free Zone Area in Al Qusais|
|6||Dubai Aviation City|
|7||Dubai Airport Free Zone|
|No.||Designated Zones (Sharjah)|
|1||Hamriyah Free Zone|
|2||Sharjah Airport International Free Zone|
|No.||Designated Zones (Ajman)|
|1||Ajman Free Zone|
|No.||Designated Zones (Umm Al Quwain)|
|1||Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port|
|2||Umm Al Quwain Free Trade Zone on Sheikh Monhammed Bin Zayed Road|
|No.||Designated Zones (Ras Al Khaimah)|
|1||RAK Free Trade Zone|
|2||RAK Maritime City Free Zone|
|3||RAK Airport Free Zone|
|No.||Designated Zones (Fujairah)|
|1||Fujairah Free Zone|
|2||FOIZ (Fujairah Oil Industry Zone)|
Traders not to charge more than 20 fils in addition to the bill amount
Date: 08 Jan, 2018
The Abu Dhabi Department of Economic Development (ADDED) on Thursday said that a small change of 10 fils and 5 fils can be rounded off to 25 fils and traders should not charge customers more than 20 fils in addition to the bill amount.
The statement comes after complaints from consumers that they are not being handed out the exact change after the purchase of items post introduction of VAT (value added tax) in the UAE from January 1.
Elaborating further, the Department8 said if the bill shows Dh10 and 5 fils, one may pay up to Dh10.25, and if the bill is Dh10.35 fils, it is fine to pay up to Dh10.50 fils.
“This is to stop any confusion about the lack of 10 and 5 fil coins in the market,” ADDED stated.
VAT is levied on most items including food and beverages, electronic goods, jewelry, among others.
Further, the consumer protection department of Ministry of Economy has warned traders to pay the exact change or face penalties. “The ministry emphasizes the right of the consumer to recover any amounts of money and no trader has the right to take any additional amounts on the goods,” Hashem Al Nuaimi, Director of Consumer Protection Department at the Ministry of Economy, told Gulf News on Thursday. He asked members of the public to report any complaint via the call center in the Ministry of Economy on the number 600522225, which works from 7 am to 10:30 pm.
VAT-free Salik recharge only if done online
Date: 02 Jan, 2018
There is a 5 per cent value-added tax (VAT) when you buy a Salik (toll gates) recharge card or tag from a petrol station or supermarket but no extra charge when you recharge your Salik account online or via the RTA website.
There is no VAT on Salik charge – it is still Dh4 deduction from smart tags every time a vehicle passes under these toll gates.
Last month, the Roads and Transport Authority (RTA) has clarified that VAT will not be levied on Salik or public transport facilities, after rumours on social media that VAT will also apply on Salik.
Passengers and commuters of public transport facilities like the buses, metro, tram and maritime transport, as well as cab passengers, will not be subject to VAT.
This is an excerpt from a Khaleej Times article and which you can read here.
Retailers warned against unjustified price hike
Date: 02 Jan, 2018
The Department of Economic Development (DED) in Abu Dhabi has warned it will monitor any price hikes after the UAE implemented value-added tax (VAT) from January 1 and asked consumers to report any violations and complaints.
The Department collected price details of products in 2017 from retailers and it will verify in the first quarter of 2018 to ensure that the price hikes are not beyond the permitted level in line with the implementation of five per cent VAT.
The UAE has levied VAT at five per cent following thorough research studies conducted by competent bodies at ministries and federal entities. Economists have projected that inflation in the UAE will marginally inch up due to VAT as the tax rate is one of the lowest in the world.
This is an excerpt of an article in the Khaleej Times which you can read here.
Provisional Tax Registration Numbers issued, says FTA
Date: 24 Dec, 2017
In a statement on Saturday, as reported in the Gulf News, the Federal Tax Authority has started issuing provisional tax registration numbers to Tax Groups, and will soon be issuing provisional tax numbers to individual businesses to ensure that there is no delay in the January 1, 2018 deadline for VAT roll-out in UAE.
It is presumed that the permanent numbers will be issued once the application has been fully reviewed and amendments made by business to ensure completeness.
Multiple stores 'change prices ahead of VAT'
Date: 23 Dec, 2017
A number of retailers across the UAE have begun raising prices ahead of the January launch of the VAT, according to members of staff at each store who asked to remain anonymous. Importantly, the staff members said the retailers who have raised prices are not yet collecting VAT and are not claiming to be charging VAT.
Retailers have a number of mechanisms they can use to try and pre-empt any negative impact from the introduction of a tax.
Multiple instances of price increases across stores including major pharmacies, fashion retailers, clothiers, and household goods sellers have been found. Speaking on the condition of anonymity because of the sensitivity of the topic, staff members said that they had been asked to reprice multiple products to reflect the introduction of VAT, before the tax is officially implemented on January 1, 2018.
Several retailers declined to comment for this story.
While stating that retailers taking advantage of customers under the guise of VAT was an important issue to address, the FTA’s Al Bustani emphasised, however, that any complaints about retailers increasing prices and not telling customers was “not [the FTA’s] responsibility,” as it was “not a tax issue.”
This is an excerpt from a news story in Gulf News which you can read here.
What UAE Property Buyers and Renters Need to Know Now
Date: 23 Dec, 2017
As the United Arab Emirates (UAE) is gearing up for the rollout of the first-ever tax in the country, here are the implications for the real estate sector
- Real estate brokering is defined as a service under the new UAE tax law, which will take effect 1 January 2018.
- This means that UAE residents renting or buying property in the UAE will pay an additional 5% to the UAE government, collected by their broker, on the total commission of a rent or sale.
For owners of residential properties, either homeowners or investors of residential buildings, there is no need to register for VAT as long as they do not have any other business activities. The first supply of a new residence that is upon the first handover by a developer is zero-rated within the first three years after its construction. Subsequent sale or rental of such property is exempt from VAT whenever such transaction occurs.
Owners of commercial property, however, will have to register with the Federal Tax Authority (FTA) if the value of supply (the lease and/or sale) over the preceding 12 months or the coming 30 days exceeds Dh375,000. The VAT rate for such sale and rent of a commercial property is 5%. However, such owner, by registering with the FTA, will generally also be able to recover VAT with respect to expenses related to the supply of the building.
This is an excerpt from a news article published in the Arabian Gazette and you can read it here.
No VAT on withdrawals from other banks' ATMs in UAE
Date: 22 Dec, 2017
The VAT will be payable only on the fee charged by the banks, which is a nominal amount of Dh2 per transaction. While many residents in the UAE are struggling to understand how the value-added tax (VAT) will impact the way they interact with their banks, experts say that there is no reason to be alarmed.
Customers will not be charged five percent VAT on the amount withdrawn from ATMs other than their own bank, rather only on the Dh2 fee charged by the banks, according to tax experts. The five percent VAT will be levied on the Dh2 fee charged by banks when withdrawing from ATMs of other banks – which translates to around a nominal 10 fils per transaction.
This is an excerpt from a Gulf News article which you can read here.
Government declares: No increase in salaries to reduce VAT impact
Date: 20 Dec, 2017
There will be no increase in salaries to cope with the levying of the value-added tax (VAT), Obaid Humaid Al Tayer, Minister of State for Financial Affairs, told the Federal National Council on Tuesday.
Al Tayer said the tax will have a minimal socioeconomic impact on people and investments.
In the medium term, the impact of the tax will be 0.11 percent and as the economy grows it will go further down, Al Tayer added. The minister told reporters after the House’s session that the government is ready for implementation of VAT, while the “readiness of the businesses is their own responsibility”.
Al Tayer told the House that the impact on current and future investments in the country is expected at 0.68 percent, adding that VAT is aimed at “achieving financial sustainability” for the government. The minister was answering questions about the implementation of VAT from the beginning of next year.
This is an excerpt from an article from Gulf Times and you can read the complete article here.
No plans to delay VAT in UAE for businesses
Date: 18 Dec, 2017
There are no plans to delay VAT for businesses or banks in the UAE and no company will be exempted or will be given an extension for applying, the Minister of State for Financial Affairs announced on Tuesday.
“The date is set for levying VAT from January 1, 2018, and the government is ready for VAT,” minister Obaid Humaid Al Tayer said during a session of the Federal National Council (FNC), held in its headquarters. During the session chaired by FNC Speaker Dr Amal Al Qubaisi, council members raised concerns over the readiness of businesses for VAT, and the impact of VAT on the overall national economy to the minister.
“The imposition of value added tax is a historic step forward,” said the minister, adding that it is a step forward towards achieving “financial stability”.
However, a statement by the Chairman of UAE Banks Federation, Abdul Aziz Abdulla Al Ghurair, revealed the concerns that banks in the UAE had over the VAT, highlighting that banks are not ready and require a six-month extension.
“The government does not like to postpone anything, so it’s impossible to exempt anyone from the tax. There will not be any favours given to anyone,” said the minister.
This is an excerpt from a Khaleej Times article and you can read the complete article here.
MCA on panel of VAT Clinic by Khaleej Times
Date: 15 Dec, 2017
Khaleej Times organized a VAT Clinic on 15th December at the Indian Consulate which drew a large crowd of professionals and businessmen.
Professionals from the Institute of Chartered Accountants of India (ICAI) Dubai Chapter clarified some of the misconceptions regarding the tax at the Indian Consulate in Dubai.
The VAT Clinic is organised by Khaleej Times in collaboration with the ICAI Dubai Chapter and Qadi Accountants.
Girish Chand, director of MCA Management Consultants, along with Manu Nair, CEO of Emirates Chartered Accountants Group; Sangeetha Nahar, senior manager of finance at Dubai Properties Group; and Dilip Jain, VAT lead at the ICAI VAT Faculty participated in this event.
“The reality of the tax has set in and we should do our best to prepare for it from next year,” he said. “The ICAI has looked at VAT in a very broad way,” said Madhukar Hiregange, chairman of the Indirect Tax Committee. “Our target is to have 500 people who are capable of training to be ready to help individuals very soon. Any expert that learns about VAT has the responsibility to raise awareness. One of the biggest challenges of VAT will be how business owners can continue to run their businesses in the region.”
Read more about it on the Khaleej Times Online Edition.
Education and health care largely escape VAT price increase
Date: 10 Dec, 2017
The Federal Tax Authority (FTA) delivered a piece of welcome news to UAE residents on Wednesday morning, when it confirmed that both education and healthcare will be zero-rated when the country introduces VAT next year.
There has been some confusion since August 2017, which the FTA blames on a mistranslation, as to whether or not private education would be subject to a 5 percent rate hike on January 1, 2018.
According to the long-awaited draft of the FTA’s executive regulations on VAT, the supply of educational services shall be zero-rated if the following conditions are met: Firstly, the institution’s curriculum must be in accordance with the Ministry of Education, and secondly, the institution must be recognized by the Ministry of Education.
You can read the complete article here.
UAE’s VAT on gold jewellery will be on the entire piece
Date: 09 Dec, 2017
The VAT (value-added tax) on gold jewellery will likely apply to the entire piece, which effectively means an additional payout of Dh7-Dh8 a gram at today’s prices, according to industry sources. But on gold bars, deemed as investible assets, no such tax will apply. (There will also be no duty on loose diamonds.)
Fine of Dh100,000 on retailers using VAT to raise product prices
Date: 07 Dec, 2017
A fine of Dh100,000 would be imposed on suppliers and retailers who raise prices of products more than the stipulated VAT (Value Added Tax).
According to Al Bayan newspaper, the Ministry of Economy stressed that it will slap a huge penalty on those who try to make an extra buck on the pretext of VAT.
Dr Hashim Al Nuaimi, director of the consumer protection department, said that in cooperation with other financial bodies in the country, the ministry has established a committee to monitor the markets before and after the implementation of VAT on January 1, 2018.
He added that the panel will conduct surprise inspections to ensure the implementation of VAT as well as the selective tax. Immediate action would be taken if the committee detects any violations, Al Nuaimi pointed out.
Read the complete article here.
Administrative Penalties for Violations of Tax Law in the UAE Declared by The UAE Cabinet
Date: 06 Dec, 2017
Cabinet Resolution No. (40) of 2017 on Administrative Penalties for Violations of Tax Law in the UAE
The Cabinet has issued Resolution No. (40) of 2017 on Administrative Penalties for Violations of Tax Law in the UAE. This Resolution outlines the scope of the resolution, general provision of the Administrative Penalty, methods of amending Administrative Penalties, the objections framework and responsibility of issuing Executive Decisions.
The Resolution is effective as of the date of its issuance on 24th September 2017, excluding table two which came into effect as of 1st October 2017, and table three which will come into effect as of 1st January 2018.
This Resolution includes the tables of Violations and Administrative Penalties appendix to the Cabinet Decision No. (40) of 2017, including table one, two and three.
No VAT on Salik, RTA clarifies
Date: 06 Dec, 2017
In a huge relief to UAE residents, the Roads and Transport Authority has clarified that value-added tax (VAT) will not be levied on Salik (toll gates) or public transport facilities.
The statement comes after rumours on social media that VAT, which is set to roll out in the UAE from January 1, will also apply on Salik.
There are seven Salik gates in Dubai, and a toll of Dh4 is automatically deducted from smart tags every time a vehicle passes under these toll gates.
Read the full article here.
No delay to UAE's VAT launch despite plea, says tax chief
Date: 01 Dec, 2017
The UAE is fully committed to introducing VAT on January 1 despite calls for it to be put back by a senior banker, it was announced on Wednesday.
Khaled Al Bustani, director general of the Federal Tax Authority, said in an interview with Arabian Radio Network that there would be no delay to its implementation.
He also said the authority is seeing a surge in registrations as the deadline for companies to register for VAT looms.
He claimed financial institutions in the UAE are not yet ready and needed more time to prepare.
But Al Bustani insisted there “is no discussion” about delaying agreements to bring in the new tax in the new year, adding that the law surrounding VAT clearly states that January 1 2018 is the start date.
Etisalat, du to charge VAT on products and services
Date: 29 Nov, 2017
The UAE’s telecom service providers, etisalat and du, will charge five per cent value added tax on the services and products they offer to the consumers in the country.
“Starting from the 1st of January 2018, most of etisalat’s products and services shall be subject to a five per cent value added tax in compliance with federal laws and regulations levying and regulating the tax in the UAE,” it said in a statement.
Du also said on its website that it would apply the standard VAT rate of five per cent from January 2018 to its products and services.
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, on Monday approved the executive regulations for VAT.
UAE Cabinet approves VAT Executive regulation
Date: 28 Nov, 2017
The UAE cabinet on Monday, 27 September, approved the executive regulation, which is expected to provide final details on how VAT will impact various goods and services.
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai, signed the Executive Regulation for VAT.
The United Arab Emirates cabinet on Monday approved the executive regulation of the value-added tax (VAT) that is expected to include all of the remaining details on the new tax’s impact on goods and services.
The UAE cabinet issued decree Number 52 of the year 2017 concerning the executive regulation of the Federal Law No. 8 of 2017 on value-added tax, which outlines the supply of goods and services in all cases, including supply in special cases.
According to the statement, the VAT executive regulation will also define details on mandatory and optional tax registration, as well as tax groups, exemptions and details on deregistration.
It will also include details on the tax due dates, where charges will be incurred, tax refunds and penalties in case of violations.
Tax Agents, Tax Accounting Software Vendors can now register in UAE
Date: 26 Nov, 2017
The Federal Tax Authority (FTA) has officially opened registration for individuals interested in working as tax agents and for tax accounting software vendors, in addition to providing the necessary technical support to help these vendors as they assist UAE-based businesses comply with tax regulations.
In a statement on Saturday, the FTA has defined standards and specifications that must be met by the tax agent, who is defined by Federal Law No. (7) of 2017 on Tax Procedures as any person registered with the authority in the register, who is appointed on behalf of another person to represent him before the authority and assist him in the fulfilment of his tax obligations and the exercise of his associated tax rights.
Who can be a tax agent?
The tax agent must be of good conduct and behaviour, never having been convicted of a crime or misdemeanour prejudicial to honour or honesty, irrespective of whether or not he may have been rehabilitated. He/she must hold a certified Bachelor or Master degree in tax, accounting or law from a recognised educational institution. If the applicant holds a bachelor degree in any other field, he/she may submit a tax certification from an internationally recognised tax institute.
Applicants must also provide a certification of relevant and recent experience of at least three years in either tax, qualified accounting or law, and a certificate proving their verbal and written communication skills in both Arabic and English. Furthermore, they must pass the Authority’s Tax Agent exam, provide a medical fitness certificate, as well as a copy of the liability insurance contract against professional errors. Candidates are to carry out their activity through a legal person licensed by the competent authorities.
Read the full article here.
VAT will have moderate impact on UAE inflation
Date: 26 Nov, 2017
Inflation in the UAE is set to witness a moderate increase next year with the implementation of five per cent value added tax (VAT) from January 2018, analysts said.
“Inflation in the UAE is expected to be circa 2.5 per cent in the current year. Introduction of VAT in 2018 is likely to see this rise to over three per cent,” said Anita Yadav, head of fixed income research at Emirates NBD Research. She noted that there are multiple factors that affect inflation including interest rate hikes, currency strength and economic growth.
Akber Naqvi, executive director and head of asset management at Al Masah Capital, sees VAT increasing inflation by 1.5 per cent to two per cent in the first year post introduction. However, the impact will start to normalise in the following years as the initial impact will be factored in during the first year of introduction.
According to the International Monetary Fund, UAE inflation is projected to reach 3.6 per cent in 2018, almost 80 basis points higher than the estimated 2.8 per cent in 2017.
UAE Government makes it convenient to file VAT Returns
Date: 22 Nov, 2017
The UAE has retained its top global ranking in terms of ease of payment of taxes, thanks to fewer taxes in the country. Analysts are unsure about the impact of the VAT on the country’s ranking, however , hey see the authorities going in the right direction with digital platform and regulations.
Released by World Bank and PriceWaterhouseCoopers on Tuesday, the Paying Taxes 2018 report noted that it takes just 12 hours to file taxes in the UAE as compared to 29 hours in Bahrain, 47 hours in Saudi Arabia, 55 hours in Luxembourg, 63 hours in Switzerland and 64 hours in Singapore. The report comes at a time when the UAE and Saudi Arabia are set to roll out value-added tax (VAT) at five per cent – which is also one of the lowest in the world – from January 2018.
Girish Chand, director, MCA Management Consultants, said that despite the UAE being the latest entrant in the VAT regime, it has adopted simple and logical implementation of VAT.
“This has been done by maintaining a single rate of taxation at five per cent and keeping very limited activities in the zero rated and exempt category. Also the tax return mechanism is very simple where the information required is at summary level. The tax authorities have facilitated an online return filing mechanism making it convenient to file the return,” Chand added.
Read the complete report here.
VAT-specific deadlines for owners of commercial properties
Date: 20 Nov, 2017
Owners of commercial properties in the UAE will need to keep in mind two deadlines related to the upcoming VAT.
One, they will need to register with the Federal Tax Authority if the sales or rental proceeds exceeded Dh375,000 in the previous 12 months. And, two, if the owners believe they are likely to generate more than Dh375,000 over the next 30 days.
These commercial properties could be used for offices, retail, hotel, F&B (food and beverage), or any such activity, and which will be assigned a 5 per cent VAT. But land sales for the purpose of building a commercial property is exempt from VAT’s ambit.
Read the full article here.
5% VAT on fuel from January 1 in Saudi Arabia
Date: 19 Nov, 2017
The standard Value Added Tax (VAT) of five per cent will be applied to purchasing petrol, Saudi Arabia’s General Authority of Zakat and Tax (GAZT) has said.
The confirmation was stated in a reply to an online question whether there would be a VAT rate of petrol. “The VAT rate of five per cent for petrol will be applied starting January 1, 2018,” GAZT said.
Last week, the authority said the local transport of passengers and goods within Saudi Arabia, and associated services would be subject to the standard 5 per cent VAT rate, with businesses collecting the tax from travelers upon purchasing the travel ticket.
However, it said that the international transport of passengers and goods will be zero-rated according to the Unified VAT Agreement for the Gulf Cooperation Council (GCC) and the VAT Implementing Regulations.
The zero-rated services include excess baggage and seat reservation fees, maintenance, repair and modification of qualified international transport, storage charges, port charges, parking fees, customs duties, customs clearance fees, transport-related fees, air navigation services fees and aircraft crews.
Read the full article here.
VAT Applicable on Food, Water and Electricity
Date: 12 Nov, 2017
The UAE residents will have to pay 5 percent value-added tax (VAT) on food, water and power and higher education from next year.
Girish Chand, director, MCA Management Consultants, said both Saudi and the UAE authorities have brought these categories under the VAT.
Khalid Al Bustani, director general of Federal Tax Authority said, the tourists in the UAE will also get refunds on the returns. He further said that they are working with the parties involved in the project.
Under the VAT regulation, higher education institutes which are more than 50 percent funded by the government, will not be charged VAT but the rest will be.
Khalid Al Bustani, director general of Federal Tax Authority, on Wednesday said the tourists in the UAE will also get refunds on the returns. He said the authority is working with the parties involved in the project and expected to be rolled out ahead of VAT implementation.
This is an excerpt from an article published in the Khaleej Times and you can read it here.
Fines for Tax violations could be upwards of Dh 50,000
Date: 10 Nov, 2017
The UAE government’s message to businesses is clear: Take taxes seriously, because non-compliance costs.
Earlier this month, the UAE Council of Ministers announced the penalties for failing to comply with the country’s new tax laws.
Set fines for failing to adhere to tax laws range from Dh1,000 to Dh50,000, however other violations will incur a penalty of 50 percent of the unpaid tax, which could be significantly more than Dh50,000.
Observers are quick to point out that penalties are an integral part of any legislation for non-compliance with tax laws.
Publishing the penalties has the added incentive of showing to people that the authorities are serious about implementing taxes throughout the UAE.
The excise tax, a duty on energy drinks, tobacco products, and carbonated drinks came into effect on October 1, while value-added tax (VAT) will launch on January 1, 2018.
Following repeated claims of VAT being delayed, Federal Tax Authority (FTA) Director-General Khalid Ali Al Bustani said earlier this month that these claims were false and the tax was fully on track to launch on January 1.
So how do these penalties compare to the rest of the world?
The vast majority of countries around the world have established tax programmes. Globally, the Gulf remains one of the last tax-free regions.
According to others, however, the UAE’s penalties are harsher when compared to Saudi Arabia’s, the only other Gulf country to have announced penalties. This is to enforce compliance among many businesses in the UAE who have never dealt with taxes.
Read the original article on Gulf News here.
Draft of the UAE Executive Regulations for VAT to be Released Soon
Date: 08 Nov, 2017
The UAE’s Ministry of Finance will release the draft of the Executive Regulation of Federal Decree-Law No (8) of 2017 on Value Added Tax in the coming few days which will provide more clarity and details on exactly what items will be taxed.
The Executive Regulations clarify several topics, including keeping accounting records and commercial books related to tax purposes, a period of record-keeping mechanism and saving.
VAT is set for implementation across the UAE from January 1, 2018, at a rate of 5 percent. The implementation comes as GCC governments grapple with lower oil prices, which are pressuring the governments’ revenues and hence, spending.
VAT will follow the rollout of excise tax in the UAE that began from October 1, and that impacted prices of tobacco products, carbonated drinks, and energy drinks.
Guidelines for Smooth VAT Rollout Issued by UAE Tax Authority
Date: 01 Nov, 2017
17 point guidelines for businesses to help companies in the UAE to transition to the new tax system
The UAE Federal Tax Authority (FTA) has issued a guideline to the local businesses for a smooth and effective imposition of the Value Added Tax System.
The newly-introduced VAT system is scheduled to go into effect on 1st January 2018, in accordance with the highest international standards.
The FTA said that the businesses must be aware of the following things before registering for the VAT system.
1. VAT is an indirect tax imposed on the supply of the goods and services. It is already implemented in over 150 countries, including all the 29 European Union states as well as Canada, New Zealand, Australia, Singapore, and Malaysia.
2. VAT is ultimately charged by the end consumers as it is charged at each step of the supply chain. Businesses only collect the tax on behalf of the government.
3. Businesses only pay the government the tax that they collect from their consumers. They may also reclaim from the government the VAT they had paid to suppliers.
4. VAT will provide the government a new source of income which will be used for the provision of various high-quality public services, including hospitals, roads, public schools, parks and civil services. The tax will also help the authorities to reduce its reliance on oil thereby building a stable and sustainable knowledge economy.
5. VAT rate has been fixed at 5 percent in the United Arab Emirates and is levied on the supply of all goods and services, including food, commercial buildings, and hotel services if no explicit provision is made to impose a zero rate or an exemption.
6. VAT’s zero rates is implemented on some goods and services, including health and education, gold for investment, the first supply of residential buildings, and the supply of international transport of passengers, goods, and exports.
7. VAT doesn’t apply to activities such as bare land, local transportation of passengers, the supply of residential buildings and the supply of some financial services.
8. Businesses involved in the supply of goods and services, which are subject to a zero rate, must register for VAT, but they can recover the VAT they incurred on their purchases. The businesses which supply exempt goods or services can’t recover VAT incurred on their purchases.
9. All those businesses must register for VAT whose taxable supplies and imports exceed the mandatory registration threshold of AED 375,000.
10. A business may register voluntarily for VAT if their supplies and imports are below the mandatory registration threshold, but exceed the voluntary registration threshold of AED 187,500.
11. A business with expenses exceeding the voluntary registration threshold may also register voluntarily for the VAT. This offer has specifically designed for the start-up businesses with no turnover yet to register for VAT.
12. All the businesses must apply for registration at the earliest. Failing to register by January 1, 2018, will result in fines as stipulated in Cabinet Decision No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE.
13. Businesses can register for VAT through the Federal Tax Authority’s website, which is available 24 hours a day, seven days a week.
14. Businesses can also form Tax Group which will be a useful tool to simply accounting for VAT. In this regard, the businesses that satisfy certain requirements covered under the Legislation – such as having a place of residence in the UAE and being related or associated parties – can form a Tax group.
15. Businesses are not allowed to impose VAT on any of their goods or services before January 1, 2018.
16. All the businesses must retain business records like Balance Sheet, Profit, and Loss, and records pertaining to fixed assets, payroll, inventory and stock levels as well as accounting records, including payments, receipts, purchases, sales, revenues, and expenses.
17. On their way to register for VAT, many businesses may be required to amend their core operations, financial management practices, the procedures they use to keep accounting books and records, and the technology they use in their accounting practices, in addition to changes in their human resources.
UAE nationals can claim VAT refund on home construction
Date: 01 Apr, 2018
Emirati house owners have the right to a five percent value-added tax (VAT) refund when constructing their homes, the Federal Tax Authority (FTA) has stated.
The Authority has issued a guide with details for homeowners on how to claim the refund. It clarifies that only UAE citizens have the right to ask for the refund. They need no new account on the Authority’s website, and only need to download and fill a form and submit it back so the Authority
Anurag Chaturvedi, senior director at Crowe Horwath, told Khaleej Times that UAE nationals can claim the VAT refund against the construction expenses for a residential building if they construct it for themselves or their family members.
“UAE nationals can claim the refund against a newly constructed building to be used solely as residence, under Article (66) of Cabinet Decision No. (52) of 2017 on the Executive Regulations, of the Federal Decree-Law No (8) of 2017 on Value Added Tax,” he revealed.
Furthermore, the VAT refund is not allowed in relation to a building that will not be used solely as a residence by the person or the person’s family. “For example, it is not to be used as a hotel, guest house, hospital, or if the property is to be used for rental purposes or for any other purpose not consistent with it being used as a residence,” Chaturvedi said.
Nirav Shah, director at Fame Advisory DMCC, also stressed that the refund is only valid if the building is going to be used by the owner and his family. He also noted that the refund can only be claimed by Emirati nationals.
According to the guide issued by the FTA, an Emirati owner has the right to ask for the VAT refund if he bought a piece of land and allowed an authorised person or company to establish a housing unit on it. The guide says that the VAT refund only includes the money spent on establishing the unit, adding that it includes the amounts paid as building materials, except for electricity products of furniture or green areas.
On the other hand, the refund also includes VAT paid for doors, fire alarms systems, floors, kitchens, health units, bathrooms, windows, and electricity cables. A third entity is going to review the housing units to approve the refund and its amount after the Emirati owner submits the form. Moreover, the owner needs documents that prove his ownership for the unit, show the date of issuing the certification of establishment, prove the ownership of the land and show the value of VAT paid during the process.
Accredited Tax Accounting Software Vendors
Date: 31 Mar, 2018
|Solution Provider Name||Software Name||Software Version||Validity|
|Zoho Corporation Private Limited||Zoho Books||MILESTONE_ZFUAE_1||Till March 2019|
|Tally Solutions Private Limited||Tally.ERP 9||Release 6.3||Till March 2019|
|Sage Group PLC||Sage 50 Accounts (UK Edition)||188.8.131.52||Till March 2019|
|Sage Group PLC||Sage Evolution||7.20.5.002||Till March 2019|
|Sage Group PLC||Sage One Accounting||4.1.2||Till March 2019|
|Sage Group PLC||Sage X3||11||Till March 2019|
|Sage Group PLC||Sage 300||2018 (6.5)||Till March 2019|
|Focus Softnet FZ LLC||FocusI||FocusI||Till March 2019|
|Focus Softnet FZ LLC||FocusRT||FocusRT||Till March 2019|
|Focus Softnet FZ LLC||Focus8||Focus8||Till March 2019|