Dubai Chamber workshop familiarises companies with VAT refund scheme for tourists
Date: 20 Sep, 2018
External URL: http://wam.ae/en/details/1395302709143
The Dubai Chamber of Commerce and Industry recently hosted a workshop aimed to familiarise retailers and members of the business community with the UAE’s new Value-Added Tax, VAT, refund scheme for tourists.
The workshop, hosted at Dubai Chamber’s premises, was organised by the Federal Tax Authority, FTA, in cooperation with Planet, the Tourist Refund operator for the tourist refund scheme which will be rolled out in the last quarter of 2018.
More than 250 members of the business community attended the workshop where participants were briefed on the steps, processes and procedures associated with registering under the UAE’s new VAT refund scheme for tourists.
Registration for ‘Tax Refunds for Tourists scheme’ is now open
Date: 19 Sep, 2018
Committed to ensuring the proper implementation of the UAE’s tax laws, maintaining the country’s Reputation as a pioneer and strengthening its international competitiveness, the Federal Tax Authority (FTA) has announced that registration for the Tax Refunds for Tourist Scheme is now open for retailers, As per Cabinet Decision No.(41) of 2018 on introducing the Tax Refunds for Tourists Scheme. Those wishing to register for the Scheme, operated by Planet on behalf of the FTA, must meet a set of Specific terms and conditions.
Terms and conditions for Retailers to Register:
- Be registered with the Federal tax Authority and hold a valid Tax Registration Number for VAT Purposes.
- Be a seller of goods that are not excluded from refund as determined by the Federal Tax Authority.
- Submit an application to join the scheme as determined by the Federal Tax Authority and be Subject to a credit check by the operator.
- Regularly submit VAT returns and settle payable tax to the FTA.
Retailers who meet the necessary requirements can register through the retailers’ Registration link: https://www.planetpayment.ae
They can also register through the FTA website www.tax.gov.ae by clicking on: Paying Tax >> VAT >>Tourist Refund Scheme
UAE VAT boosts revenue base and could raise 1.7% of GDP
Date: 19 Sep, 2018
The introduction of VAT in the UAE may raise up to 1.7 per cent of the country’s gross domestic product, the rating agency Moody’s said.
“The implementation of VAT in the UAE marks a positive step towards revenue diversification,” said Thaddeus Best, a Moody’s analyst and co-author of the report.
The UAE’s 5 per cent VAT on goods and services introduced on January 1, may raise up to Dh24 billion per year in additional revenues for the country although take-up is likely to be lower in the first few years, Mr Best said.
Under VAT rules, the federal government will retain 30 per cent of the revenues, with the rest distributed across the emirates, according to an yet to be announced sharing formula.
“Depending on the structure of the formula, it could potentially have redistributive effects for the less wealthy emirates such as Sharjah,” the report said. However, this would be an indirect outcome, it added.
VAT implementation has had only a “modest” impact on inflation, the agency said and any inflationary impact on household purchasing power has been mitigated by zero-rated and exempt items (such as certain educational, healthcare and transport services in the country as well as the first sale or rent of residential buildings), and by deflationary trends in the real estate market.
5% VAT 'a starting point' for GCC, says banking chief
Date: 18 Sep, 2018
The 10th MENA CFO conference heard that VAT violators are being censured, with 3,000 offences recorded in Saudi Arabia in the first two months of 2018.
Gulf Cooperation Council (GCC) states could see higher rates of value-added tax (VAT) in the future, with the current five percent rate applied in the United Arab Emirates (UAE) and Saudi Arabia seen as a ‘starting point’, according to one UAE banking executive.
Pointing out that he was speaking in a personal capacity rather than for his employer, Emirates NBD, the bank’s group financial controller, Asim Rashid, said: “My personal view is that five percent is a starting point. The governance and administration of VAT is not cheap.
After gold, this sector may get VAT exemption
Date: 11 Sep, 2018
Following UAE’s decision to exempt gold and precious metals from the value-added tax, the maritime industry could also get a relief as the Federal Transport Authority is negotiating VAT exemption with the Federal Tax Authority, confirmed a senior official on Monday.
Hessa Al Malek, executive director of maritime transport at UAE’s Federal Transport Authority, said the meeting with the Federal Tax Authority will be held soon to discuss the issue.
Firms in UAE's designated zones: Are all your supplies VAT-free?
Date: 09 Sep, 2018
The basic tenet of identifying and listing some of the free zones in the UAE as ‘designated zones’ under the country’s’s value-added tax legislation was to make them VAT free and consequently, be consistent with the tradition of keeping free zones typically free from taxes.
Though in intent and spirit it appears the legislation has achieved the objective, in practice, there are still instances and activities that result in the application of VAT on transactions within the designated zones. Consequently, the companies can blindly not apply VAT on any transaction it enters within the designated zones.
VAT refund for UAE tourists to start in November
Date: 05 Sep, 2018
The UAE’s Federal Tax Authority has appointed Planet as its exclusive tax refund operator for the Tourist Refund Scheme which will be rolled out in November 2018.
“The FTA has announced that from November 2018, eligible tourists will be able to receive a proportion of the VAT as a refund when they shop at registered stores,” said an invitation sent to retailers and tax consultancies across the UAE by the FTA and the Dubai Chamber of Commerce and Industry to brief them about how to register for the tourist refund scheme.
“We wish to invite you to an event organised by the FTA and their exclusive tax refund operator, Planet, who will be operating the Tourist Refund Scheme,” said the invite.
VAT will attract more global investors to UAE realty
Date: 21 Aug, 2018
When value-added tax (VAT) was introduced in the UAE and Saudi Arabia on January 1, 2018, initially stakeholders were wary on the potential impact of the new tax policy on the economy.
A study conducted by Alliance Business Centers Network said that the UAE would be least affected by the imposition of VAT because it is one of the lowest globally compared to countries such as the UK, Switzerland, Germany, Mexico, South Africa and Australia. The study revealed that the VAT in UK and France was 20 percent, which is substantially higher than the five percent implemented in the UAE and Saudi Arabia.
With the adoption of VAT in the real estate sector, investors and stakeholders are weighing the impact on market valuations. According to Deloitte, in the UAE, commercial property is clustered in the taxable bracket and therefore the costs of buying or leasing such property are likely to increase.
Moreover, stakeholders in the UAE real estate sector see the pricing of ancillary services such as brokerage, maintenance services, car parking, facility management and property management increase as such services will be subject to VAT and do not fall within the exemption for rental of residential real estate, even where provided in connection with a residential contract.
Federal Tax Authority launches first phase of ‘Tax Clinic’ in Ras al-Khaimah
Date: 13 Aug, 2018
External URL: http://wam.ae/en/details/1395302703494
The Federal Tax Authority (FTA) has officially launched phase one of its “Tax Clinic” initiative, which seeks to maintain direct and constant communication with taxable businesses.
For three months, the campaign will cover all seven emirates to raise tax awareness across the country, urging taxable businesses to register with the Authority and promoting compliance with Tax Return requirements and the timely payment of due taxes. Phase one will take place in Ras al-Khaimah over the course of three days – from 7:30 am to 2:30 pm – until August 14, 2018, at the headquarters of Ras al-Khaimah’s Department of Economic Development (RAK-DED) and Ras al-Khaimah Economic Zone (RAKEZ).
A press statement issued today explained that the “Tax Clinic” campaign will be organised as a collaboration between the Federal Tax Authority and the departments of economic development and municipalities in all emirates. Two teams of analysts and specialists from the FTA’s Registration, Tax Returns and Taxpayers Services will go on an extensive tour, which includes several meetings and an interactive seminar in each individual emirate, with taxable businesses that have not yet registered in the tax system or that have fallen behind on submitting their Tax Returns and settling their due taxes – particularly, small and medium enterprises (SMEs).
Gold jewellery demand down by 24% in the UAE
Date: 12 Aug, 2018
Demand for gold jewellery fell by 24 percent in the United Arab Emirates year-on-year in the second quarter of the year, according to a report by the World Gold Council (WGC), mainly due to the introduction of a new 5 percent value-added tax (VAT) in January that was applied to a variety of goods and services, including gold jewellery.
“VAT in both UAE and Saudi Arabia has played an important part in the softness this year,” Alistair Hewitt, United Kingdom-based director of market intelligence in the WGC told Zawya in an email interview last Monday. The World Gold Council (WGC) said in its Q2 2018 report that gold demand fell by 10 percent year-on-year in Saudi Arabia, where VAT was also introduced in January.
UAE gold jewelry demand fell by 23 percent in the first quarter year-one year, while demand rose 16 percent in the fourth quarter of last year ahead of the introduction of VAT, according to previous reports published by the WGC.
FTA launches ‘Tax Clinic’ to promote compliance with tax return submissions
Date: 08 Aug, 2018
External URL: http://wam.ae/en/details/1395302702832
The Federal Tax Authority, FTA, has announced a new campaign as part of its efforts to communicate directly and consistently with businesses.
The “Tax Clinic” seeks to increase the number of registered taxable businesses and promote compliance with the timely submission of tax returns and payment of due taxes.
The campaign kicks off on 12th August, 2018, in Ras al-Khaimah, before moving on to Fujairah and then the rest of the emirates for a duration of three months, where representatives from the authority will be present at the clinic to answer taxpayer queries regarding registration with the FTA and other tax obligations. They will encourage those who are yet to register for Value Added Tax, VAT, to promptly do so in order to avoid administrative penalties. The experts will also introduce attendees to the procedures required for submitting accurate tax returns and settling due taxes.
Vat gets vote of confidence
Date: 06 Aug, 2018
External URL: https://www.khaleejtimes.com/vat-gets-vote-of-confidence
Companies in the UAE and Saudi Arabia have given a vote of confidence to the implementation of VAT with 65 per cent of them having successfully filed their first VAT returns by April 2018.
According to the Association of Chartered Certified Accountants (Acca) and Thomson Reuters’ VAT Return Filing and Compliance survey conducted in April, only 18 per cent of companies had found filing their first VAT returns “challenging” and eight per cent “very challenging”.
Pierre Arman, market development leader for tax and accounting at Thomson Reuters, said that at the time of the survey in April, a lot of companies’ first VAT return deadline had been pushed by the Federal Tax Authority by one or two months, hence, about a third of firms did not file a VAT return at the time.
Half-year review: VAT in real estate
Date: 06 Aug, 2018
Six months into its implementation in the UAE, the 5 per cent value-added tax (VAT) has generally had a limited impact on real estate values, if average market prices in the second quarter are anything to go by. Villa and apartment sales prices retreated by an average 4 per cent over the quarter, while apartment and villa rents were down 3 per cent and 2 per cent respectively, according to Asteco’s second-quarter market report.
Various factors contribute to VAT’s muted impact on real estate, but analysts agree prevailing market rates have in a way helped belie fears of a tax backlash.
FTA latest clarification on Entertainment and Employee related expenses
Date: 29 Jul, 2018
Article 53 of Cabinet Decision No. (52) of 2017 on the Executive Regulation of the Federal Decree-Law No. (8) of 2017 on Value Added Tax (“VAT Executive Regulations”) stipulates input tax which is nonrecoverable by businesses (which, in most cases, will mean Taxable Persons).
There are a number of circumstances in which businesses have sought clarity over the definition of ‘entertainment’ for the purposes of the input tax restriction, and in particular what should constitute entertainment of staff or business contacts as opposed to incidental business-related expenses which would be recoverable under normal VAT
This Public Clarification explains the application of Article 53 of the VAT Executive Regulations with regards to VAT which is non-recoverable in respect of entertainment or hospitality of any kind.
VAT incurred on any costs which are used for a genuine business purpose, or which are incidental to a business purpose e.g. food and drink provided during a business meeting, shall be recoverable (subject to normal VAT recovery rules). However, where the hospitality provided becomes an end in itself and could be construed as the purpose for attending an event, such costs will be considered to be entertainment in nature and the VAT incurred shall not be recoverable. More information on how to define whether costs are incidental to a business purpose, or considered to be an end in themselves, is provided below.
FTA classifies ‘eligible goods’ for calculating VAT
Date: 25 Jul, 2018
External URL: http://wam.ae/en/details/1395302700713
The Federal Tax Authority, FTA, has determined three main categories of “eligible goods” for calculating Value Added Tax, VAT, on the basis of the profit margin scheme.
These are second-hand goods, meaning tangible movable property that is suitable for further use as it is or after repair; antiques, i.e. goods that are over 50 years old; and collectors’ items, such as stamps, coins, currency and other pieces of scientific, historical or archaeological interest.
The authority asserted that only those goods, which had been subject to VAT before the supply in question, may be subject to the profit margin scheme. The profit margin is defined as the difference between the buying and selling price of an item and is inclusive of taxes.
The announcement was made in a “Public Clarification” about eligible goods under the profit margin scheme, as per Federal Decree-Law No. (8) on VAT. The FTA offers the clarifications service through its website.
The Director-General of FTA, Khalid Ali Al Bustani, asserted that the new service was launched as part of the authority’s efforts to empower businesses and the general public, and educate them about their rights, obligations and the UAE tax system.
“As part of its comprehensive awareness campaign targeting all segments of society, the FTA published a series of guides that cover all legislative and executive aspects of the UAE tax system, as well as e-learning programmes and infographics,” he said, noting that these efforts reflect the FTA’s commitment to transparency and accuracy in implementing tax procedures.
He called on businesses and experts to take advantage of the Public Clarifications service on the authority’s website, which complements the other guides and publications, and help further raise awareness of the UAE tax system and related procedures and laws.
In a press statement issued on Wednesday, the FTA called on registered businesses to carefully verify eligible goods for the profit margin scheme, reiterating that only those goods which have previously been subject to VAT before the supply in question, may be subject to the scheme.
As a result, stock on hand of used goods that were acquired prior to the effective date of Federal Decree-Law No. (8) on VAT, or goods that have not previously been subject to VAT for other reasons, are not eligible to be sold under the profit margin scheme. VAT is, therefore, due on the full selling price of these goods.
VAT in Saudi
Date: 25 Jul, 2018
When Value Added Tax (VAT) was introduced in the UAE and Saudi Arabia on January 1, 2018, initially stakeholders were wary on the potential impact of the new tax policy on the economy. While a study by Alliance Business Centres Network revealed that the UAE will be least affected by the imposition of VAT, the introduction of VAT in Saudi Arabia is changing the market dynamics and bringing more transparency to the sector.
A report published by JLL clarifies that VAT is applied to any real estate transaction in the country. The 5 per cent rate is implemented on the sale of a residential, commercial, transfer of ownership of undeveloped land, and the sale of partly completed construction works.
However, rental agreements are exempted from VAT charges, which may impact the sale of new property combined with the 5 per cent VAT on brokerage as buyers may divert from buying new property and instead opt for leasing as an alternative. Cost for leasing, though, may also increase as ancillary services are subject to VAT.
Similar to the UAE, VAT will contribute to the government’s initiatives for economic diversification and continued improvement of public services to the general public.
In conclusion, the above-mentioned views on the potential impact of VAT are only assumptions, since real estate is a long-term product, the real effect of VAT in both countries will be defined further in the coming years.
VAT regulations maintain real estate investment competitiveness
Date: 18 Jul, 2018
External URL: http://wam.ae/en/details/1395302699470
The Federal Tax Authority, FTA, has called on persons dealing with commercial real estate to apply the basic Value Added Tax, VAT, rate of five percent on all sales and rent of such properties, urging buyers to pay the due VAT before proceeding with the transfer of ownership.
In a press statement issued today, the FTA stressed that tax laws had specifically aimed to provide a suitable environment for the continued growth and prosperity of the real estate sector – one of the most important economic sectors in the government’s plans to diversify sources of income, and one of the most attractive sectors for investors.
“With the exception of selling unrented commercial property and rental contracts for commercial units, all other property is either not subject to or exempt from the five percent VAT rate on businesses,” Al Bustani noted, adding that rented commercial property is not considered a supply when sold to Taxable Persons.
The Authority went on to explain that the sale of unrented commercial properties, or off-plan selling of commercial properties, is subject to five percent VAT, as is the rental of commercial property. However, taxes paid on the property’s expenses during a given rent period can be recovered through the Tax Return of the tenant if he/she is registered and entitled to a refund. It is also possible to recover the entirety of taxes incurred on construction that is purchased according to the capital assets system if the cost of the property is more than five million dirhams.
FTA: Electronic System to Return VAT to Tourists Entering Final Preparation Stages
Date: 14 Jul, 2018
External URL: http://wam.ae/en/details/1395302698859
The Cabinet Decision to implement a system that returns Value Added Tax (VAT) to tourists will cement the UAE’s status as a premier global tourist destination, asserted the Federal Tax Authority (FTA).
In a press statement issued today, the Authority explained that the Cabinet Decision has set clear standards branded with transparency and accuracy in returning VAT refunds to tourists visiting the UAE.
The Authority revealed that the project is nearing its final preparation stages, where an advanced system will be put in place to corresponds with international best practices. The system relies on an advanced integrated digital system to set up a direct connection with points of sale, as well as with all UAE ports of entry, allowing the global operator to coordinate among retailers registered with the FTA, and enable tourists to submit refund requests for their purchases.
FTA Director General Khalid Ali Al Bustani asserted that the Cabinet Decision to implement a system that returns VAT to tourists is in line with the forward-thinking vision of the UAE’s wise leadership to diversify the national economy and promote all economic sectors to increase their contribution to the Gross Domestic Product (GDP), including the country’s vibrant and promising tourism sector.
UAE banks now able to charge VAT on fees
Date: 14 Jul, 2018
Banks have started charging VAT on various services offered, following a June circular from the Central Bank of UAE, which rescinded a previous notice to the contrary.
In December, the Central Bank issued a notice informing banks that they should absorb VAT charges until they received further instructions.
In June last month, an amendment was issued, detailing 43 new caps on fees and commission charged on consumer-related banking services. The circular specified that “all fees set out in this amendment are exclusive of VAT charges.”
Tina Hsieh, senior manager for indirect tax at global consultancy PricewaterhouseCoopers, said banks will now revise their fees and commissions, publishing any revisions in their schedule of charges.
“To that end, retail customers, for example, will be paying VAT in addition to the fees or commissions charged by banks,” she added.
The December notice seemed to oppose the understanding of many banks at the time, according to PwC, “where the interpretation is that charging VAT on their (maximum) fees and commissions is not an increase in fee but rather is a levy of tax on behalf of the Federal Tax Authority”.
However, the Central Bank clarified the issue in the circular issued last month, giving banks the go-ahead to charge VAT on fees to individuals and companies.
“The new amendment which is effective as of July 1 includes both individuals and entities. Both will be charged a 5 per cent VAT on all fees and bank services with no exception,” said Abdul Aziz Al Ghurair, chairman of UAE Banks Federation in an interview with Al Bayan Economic.
UAE Cabinet approves VAT refund for tourists starting Q4 2018
Date: 11 Jul, 2018
External URL: http://wam.ae/en/details/1395302698458
The UAE Cabinet has adopted a decision to implement the value added tax refund system for tourists, which will integrate between retail outlets with tax refund points in line with the government’s efforts to achieve the efficient implementation of the tax system in the UAE.
According to a press statement, the new tax refund system supports the growth of the tourism sector in the UAE and maintain its position as a global destination for tourists. “The system will be implemented beginning the fourth quarter of 2018 in cooperation with an international specialised company in tax recovery services,” it added.
Non-resident tourists may refund VAT on purchases made at participating retailers, provided that such goods are not exempt from the tax system, through designated refund outlets.
The tourism sector contributes directly to the local economy. The number of passengers through the UAE’s airports reached 123 million passengers in 207, and the total contribution of the tourism sector to the country’s GDP reached 11.3 percent in 2017, equivalent to AED154.1 billion.
VAT refund decision strengthens Abu Dhabi as ‘destination of distinction,’ says Ghobash
Date: 11 Jul, 2018
External URL: http://wam.ae/en/details/1395302698542
Following the UAE Cabinet decision to implement the value added tax refund system for tourists, Saif Saeed Ghobash, Under-Secretary of DCT Abu Dhabi, said that the decision will provide “further impetus” to Abu Dhabi’s strategy to position the emirate as “a visitor-friendly destination of distinction.”
In a statement, Ghobash added, “The UAE in general, and Abu Dhabi specifically, will now have this added significant attraction to all types of tourists and business travellers, reinforcing the emirate’s position as a ‘go-to’ destination and further boosting potential visitor numbers.
“This new directive in is line with the UAE’s efforts to implement an efficient tax system in the emirates. It will directly support the growth of our tourism sector.”
“It will also work in concert with the recently announced reduction in tourism and municipality fees, which means that accommodation costs will be reduced across the emirate. Together, these directives strengthen Abu Dhabi’s position as a destination that affords the warmest of Arabian welcomes to the world,” he continued.
Commenting on the announcement, Sultan Al Mutawa Al Dhaheri, Executive Director of the Tourism Sector at the Department, said, “The announcement of this VAT refund directive is great news for visitors planning a trip to explore our extraordinary emirate. Already firmly established as an attractive and unique distinction, this will positively impact our global appeal. Future visitors will now feel the direct impact of this decision in their travel budgets, meaning they can potentially stay longer, explore further and experience more while they are here. Our extensive touristic and cultural offerings are now even more affordable and accessible than before.
“The tourism sector in Abu Dhabi has witnessed a significant growth in terms of visitors and offerings, in line with the development of leisure and cultural attractions in the capital,” Al Dhaheri said, adding that this new directive will guarantee “steady growth rates, especially with this year’s promising results thus far.”
“Tourists and visitors will be encouraged to stay in Abu Dhabi for longer periods, enjoy more tourist experiences and benefit from attractive offers with wide choices and competitive prices,” he concluded.
More relief as three UAE free zones are out of VAT scope
Date: 05 Jul, 2018
The UAE’s Federal Tax Authority (FTA) has added three new free zones to the list of designated zones that will be out of the five percent VAT scope imposed earlier this year.
The new addition sees the total designated zones increasing to 23 across the UAE.
Federal Decree Law No. (8) of 2017 on VAT specifies that any area meeting certain conditions and mentioned in the Cabinet decision is termed as designated zone for VAT purposes and should be treated as being outside the state for VAT purposes.
According to the FTA, the newly-added free zones are Al Ain International Airport Free Zone, Al Bateen Executive Airport Free Zone in Abu Dhabi, and International Humanitarian City – Jebel Ali in Dubai. The treatment of these areas as designated zones was effective from June 18, 2018.
Thomas Vanhee, partner at Aurifer Middle East Tax, said businesses that have transactions in the new designated zones will be relieved that no VAT applies on the supplies of goods inside the designated zones with some exceptions.
“Some businesses in these designated zones may potentially now deregister for VAT purposes. It will be important for them to assess again their transactions in the zone and determine which ones are actually subject to VAT and which ones are not. Although this constitutes an important relief, the transactions with designated zones can be complex,” said Vanhee.
Currently, eight designated zones are located in Dubai, five in Abu Dhabi, three in Ras Al Khaimah, two each in Fujairah, Sharjah and Umm Al Quwain, and one in Ajman.
FTA issues more clarification on labour accommodation
Date: 05 Jul, 2018
FTA issued clarification about the issue of the applicability of five percent VAT on labour accommodations.
“In the initial period, there was confusion whether labour accommodation is chargeable or not. Subsequently, it was clarified by the FTA that labour accommodation is treated as residential property and hence exempt from VAT. In essence, where additional services such as cleaning, Internet etc. are provided as part of the composite labour accommodation service, there is a single pricing and it is provided by the same supplier, it will be treated as residential property and will be exempt from VAT,” said Girish Chand, director at MCA Management Consultants.
He also pointed out that where the labour accommodation is a mixed supply consisting of various elements and it is charged separately, the tax treatment of each component will have to be determined separately.
FTA updates its e-Services to facilitate work of customs clearance companies
Date: 02 Jul, 2018
External URL: http://wam.ae/en/details/1395302697123
The Federal Tax Authority, FTA, has revealed details of updates to its electronic services, e-Services, which have been designed to provide a greater number of facilities for customs clearance companies that operate under its approval.
The authority says that the new developments have been introduced to simplify registration procedures and enable easy submission of tax returns.
The FTA’s e-Services updates were announced during the third seminar, organised by the authority in Dubai, for freight forwarders and customs clearance companies. The event was held to highlight the role of the authority’s e-Services in facilitating the work of shipping and clearance companies and ensuring the UAE’s smooth import and export trade.
Attended by about 100 stakeholders from various shipping, customs clearance and logistics organisations, the seminar saw a team of specialists from the FTA’s Taxpayers’ Services Department review the electronic processes carried out by the authority to facilitate the work of this important sector and brief the participants on the steps it has taken to overcome any obstacles that might be encountered.
Khalid Ali Al Bustani, Director-General of the FTA, said that the seminar formed part of the authority’s plans to raise the level of tax awareness among business sectors and ensure continuous communication with employees across all economic activities. He highlighted that the session was important to inform stakeholders about the latest tax procedures.
Businesses encouraged to file VAT returns and make payments on time
Date: 27 Jun, 2018
As businesses across the UAE gear up to file Value Added Tax (VAT) returns on June 28th 2018, Al Dhaheri Jones & Clark (ADJC) provides clarity on process and the importance of filing returns.
A VAT return is the formal statement of a registered entity’s VAT statement together with its supporting documentation and VAT payment for a specified tax period. These VAT returns are important as they contain the records of the tax paid by the users in a given period. It is a formal document that provides proof that the registered party has paid their VAT obligation.
“Filing returns on time is crucial for your business. A delay can not only cause a huge amount of stress, but your entire business could be under threat should you fail to comply. While non-compliance can lead to penalties, it also results in backdated payments, investigation by the authority and black-listing. As such, knowing the procedure and deadlines for filing and payment of VAT returns is significantly important to lower the chances of incurring VAT fines and penalties in the UAE,” said Mohammed Fathy, General Manager of Al Dhaheri Jones & Clark.
In the UAE, the administrative penalty for late registration is Dhs20,000 ($5,445). Other fines include Dhs15,000 ($4,084) for failing to display prices inclusive of VAT, Dhs3,000 ($817) for a first incorrect tax filing and Dhs5,000 ($1,361) for incorrect filings thereafter. Failure to submit a deregistration application will result in a fine of Dhs10,000 ($2,723). A first time tax offence will result in a Dhs1,000 ($272) fine and repeat offences within two years Dhs2,000 ($545).
“The Federal Tax Authority (FTA) in the UAE has given businesses enough time to comprehend and follow the legislative rules to file returns. While most businesses are now ready to file returns on time, we suggest that it is best to file returns and make payments before the deadline to ensure that the payments processed through banks reaches FTA on time,” added Mohammed Fathy.
Lessons learned from the UAE and Saudi Arabia’s roll-out of VAT
Date: 27 Jun, 2018
With the entire supply chain affected by VAT, firms cannot start its implementation soon enough
Two of the six GCC states, the UAE and Saudi Arabia, introduced VAT on 1 January 2018. With Bahrain, Qatar, Kuwait and Oman in the process of organising their VAT implementation, the experiences in the UAE and Saudi Arabia provide an indication of issues that businesses in the GCC may face when VAT is rolled out across the rest of the region.
One overriding challenge observed in both the UAE and Saudi Arabia was that businesses typically underestimated the scope and level of effort required to implement VAT. The combination of dealing with a new tax, coupled with the significant business and systems changes that were required, put a lot of pressure on companies to adapt.
To their credit, most organisations got there in the end, but as our survey shows, 77 percent felt that they could have started the process at least three months earlier.
Our survey also revealed that 90 percent of those in the consumer business sector found it took longer than three months to implement, and more concerning, all in the technology sector said it took them longer than six months.
Creating, drafting and implementing tax law is a challenging task. Even though the intention to implement VAT was announced more than a year before the go-live date, detailed legislation was understandably and for a variety of reasons released relatively late in the process in both countries. Both the UAE and Saudi Arabia took a considered view that good tax law cannot be rushed.
Unfortunately, a number of companies were hesitant to commence implementation projects until after the release of the VAT legislation and the timeline for registration for VAT purposes was announced, leading to truncated implementation and delays in the commencement of projects.
7 Ways to Avoid VAT Penalties in UAE
Date: 21 Jun, 2018
The United Arab Emirates and the Kingdom of Saudi Arabia began the implementation of Value Added Tax (VAT) on January 1, 2018 at the rate of five percent, while other GCC countries are expected to follow in the near future.
As VAT is new to the region, it is imperative for business owners to be aware and comply with the new regulations in order to avoid stiff penalties which could be as high as AED 50,000.
Seven tips for UAE businesses to avoid financial penalties that may be imposed due to violations, errors or incorrect record-keeping include:
Register for VAT
Every company offering taxable goods or services with an annual revenue of AED 367,000 and above is required to register for VAT. However, those with an annual revenue between AED 200,000 and AED 367,000 will have the option to register.
Record all transactions
The law requires businesses that meet the minimum annual turnover (as evidenced through financial records) to register and keep a record of all their business income, costs and other associated VAT charges, whilst ensuring all records are up to date.
Every business essentially plays the role of a tax agent, collecting on behalf of the government VAT on goods and services purchased by their consumers.
File VAT return
VAT returns must be filed monthly if your company has an annual turnover above AED 150 million. Businesses with revenue below that level must file quarterly.
Understand zero rates and exempt suppliers
The FTA has exempted some businesses in priority sectors from tax. Being a zero-rated supplier means that the goods being supplied are still VAT taxable, but at the rate of zero percent.
Reverse charges are the amount of VAT one would have paid on goods or services if they were purchased in the UAE. These charges apply when goods and services are imported from outside the GCC.
Get the basics right
A tax invoice must be issued within 14 days of the date of supply. It is mandatory for a tax invoice to include the name, address and tax registration (TRN) of the registrant making the supply.
Cut in hotel tax to help UAE's tourism industry compete with Europe
Date: 19 Jun, 2018
Restaurants in Abu Dhabi and Dubai will be bolstered by the recent drop in municipality fees.
That is according to Jennifer Pettinger-Haines, one of the founding members of the Global Restaurant Investment Forum, an international conference that brings together some of the leading investors from the international world of restaurants.
The reduction in municipality fees comes as both Dubai and Abu Dhabi try to market themselves as year-round holiday destinations, instead of their more traditional standing as winter sun destinations.
Ms. Pettinger-Haines, who is also a member of the Dubai Restaurant Industry Think Tank, was speaking in the wake of the municipality tax cuts announced last week in Abu Dhabi and Dubai.
“The recent announcement that municipality fees on sales at hotel facilities are going to be cut from 10 per cent to 7 per cent is great news for the industry, it was made all the better when we heard that Abu Dhabi was also taking measures to reduce tourism fees from 6 per cent to 3-and-a-half per cent and municipality fees to 2 per cent,” she said.
“These are very positive and significant steps in support of the UAE’s hospitality industry and come at a challenging time for many operators, especially as we head into the summer period. Only time will tell what the true impact will be, but it is a very positive gesture which will offer enhanced value to guests.”
Federal Tax Authority receives businesses’ VAT returns for tax period ending May
Date: 18 Jun, 2018
External URL: http://wam.ae/en/details/1395302695111
The Federal Tax Authority, FTA, announced that it has started receiving tax returns for the tax period ending 31st May, 2018, from businesses registered for Value Added Tax, VAT.
These returns were submitted via the e-Services portal on the authority’s official website, which enables easy and accurate tax submissions.
In a press statement issued on Monday, the FTA reaffirmed that 28th June is the deadline for the submission of tax returns for the tax period ending on 31st May, 2018, calling on all registered businesses to comply with the requirement and settle their payable taxes within the specified period to ensure payment with the FTA before 28th June to avoid financial penalties.
Khalid Ali Al Bustani, Director-General of the FTA, said that the authority has simplified the procedures of submitting the returns and paying due taxes through the electronic services available on the FTA’s official website, which was designed according to the best international standards. The site provides various flexible payment options and is the ideal tool to help businesses comply with tax deadlines, he added.
Al Bustani stressed the need to check the accuracy of all data entered during the submission process and to ensure that the amount owed is transferred to the correct GIBAN number. He added that the responsibility of ensuring that the transfer is made to the correct number is that of the taxable person. He reiterated that the authority is not responsible for following up on the transfer.
Website now allows taxable persons to connect directly with accredited tax agents
Date: 17 Jun, 2018
External URL: http://wam.ae/en/details/1395302694988
The Federal Tax Authority (FTA) has developed its e-Services to include new features allowing Taxable Persons to link their accounts with an accredited Tax Agency, authorising it to carry out registration procedures, submit tax returns, and complete tax transactions on behalf of the Taxable Person, who is kept posted with real-time updates.
In a press statement issued today, the FTA explained that this update was introduced to answer requests submitted by Taxable Persons and businesses registered with the Authority; they reflect FTA’s commitment to flexibility and constructive interaction with the business community as a means to establish an environment that encourages voluntary auto-compliance with tax procedures.
The new features allow Taxable Persons to nominate one or more persons as their Tax Agents, who would then represent them in all their transactions with the Authority, and help them comply with their tax obligations and exercise their rights. A Taxable Person can link their account on eservices.tax.gov.ae with that of an accredited Tax Agency with a simple procedure outlined on the FTA website.
“The Federal Tax Authority is committed to continuously developing its services to ensure flexibility and enable businesses to seamlessly implement the tax system and avoid any disruptions to their activities,” said FTA Director General Khalid Ali Al Bustani, explaining that: “An FTA-accredited Tax Agent can be appointed by any natural or legal person to represent them with the Authority, and help them comply with their tax obligations and exercise their rights.”
Saudi prices rise by 2.8% so far in 2018 as VAT makes impact
Date: 15 Jun, 2018
Prices in Saudi Arabia have risen by 2.8 percent year-on-year so far in 2018 due to the introduction of VAT and utility and fuel price reform, according to new research.
Jadwa Investment, citing the latest General Authority for Statistics (GaStat) inflation release for April, also showed that prices rose by 2.6 percent year-on-year in the month, declining by 0.2 percent month-on-month.
Jadwa said food and beverages prices rose by 5.7 percent year-on-year in April but declined by 0.9 percent month-on-month for the second time in a row.
Housing and utility prices rose slightly by 0.5 percent in April year-on-year, despite a spike in fuel prices in January, Jadwa noted, adding that housing rents, which have been showing negative growth rates since July 2017, weighed on this segment.
The research also said that after a decline in January, annual growth in point of sale retail sales have rebounded, with the average year-to-date rise of 13 percent, compared to 7 percent in the same period last year.
Despite the fact that this year saw the implementation of VAT, Jadwa said it still expects to see higher inflation rates in Ramadan.
FTA urges businesses to pay up VAT dues urgently - Non-compliance will result in penalties
Date: 13 Jun, 2018
Federal Tax Authority (FTA) on Wednesday urged all UAE businesses registered for Value Added Tax (VAT) who missed the deadline for filing their tax returns to pay their tax dues immediately.
“Respecting the deadline to file tax returns and pay due taxes is a legal responsibility borne by the registered tax person,” FTA said in an advertisement.
In case of non-compliance with tax payments on deadlines, businesses will be required to pay the estimated taxes along with administrative penalties.
Violations include the failure of tax registrants to submit the tax return within the timeframe specified in tax law and failure of tax person to settle the payable tax stated in the submitted tax return or tax assessment that was notified.
UAE's reform measures are truly bold undertakings
Date: 13 Jun, 2018
The recent spate of investor-friendly reform initiatives by the UAE government, including 10-year visas for investors and professionals as well as a move to allow 100 per cent foreign business ownership, along with some proactive stimulus packages unveiled by Abu Dhabi and Dubai separately will stir up investor confidence and accelerate the growth of the second largest Arab economy, experts and corporate leaders said.
Combined, the three-pronged stimulus programmes, undertaken by the federal government and two emirates, will give a major fillip to real estate, construction, information technology, small and medium enterprises sectors. In addition, these bold measures along with the easing of liquidity through the Dh50 billion package announced by Abu Dhabi will help banking and manufacturing sectors while considerably easing pressure on the business community, analysts said.
They said other critical measures, taken by Dubai, including a one-year freeze on school-fee hikes, waiver of some fees on aviation and real estate transactions, and cutting charges levied on businesses, will help arrest cost of living and doing business.
Most analysts and corporate leaders believe such bold strategies would help offset the impact of VAT-induced slowdown while reinforcing investor confidence leading to a pick up in foreign direct investments.
Abu Dhabi to introduce 30 per cent alcohol sales tax
Date: 12 Jun, 2018
Abu Dhabi will introduce a 30 per cent tax on alcohol sold in off-licence outlets.
Retailers have received a circular informing them about the introduction of the new tax.
The levy will come into force on June 15 after Ramadan, bringing it in line with Dubai, which already imposes a 30 per cent municipality tax on alcohol sold in off-licence outlets.
A Dh230 fee will also be introduced for special licenses, which enable non-Muslims to purchase alcohol. The licenses were previously free.
Retailers were informed about the changes, which are being brought in by the Abu Dhabi Department of Culture and Tourism, several weeks ago.
Many have displayed notices in stores to inform their customers of the changes, and some, such as Spinneys, are offering discounts in the run up to the introduction. The chain is offering a 15 per cent discount on the price of non-promotional items from tomorrow until the end of the month, according to staff at one of its stores.
News of the 30 per cent hike has been the subject of much discussion on social-media among expatriates – many of whom have said they will be stocking up before June 15.
No VAT impact on construction sector in UAE
Date: 12 Jun, 2018
The UAE’s construction industry has not been impacted by the recent introduction of 5 per cent value-added tax (VAT) and it will witness over 10 per cent expansion in 2018, the second-fastest growth rate in the world, according to industry executives and research reports.
The industry executives believe that Expo 2020 is not the end for the construction sector. Rather they are pinning hopes on multi-year plans such as Vision 2021 which would drive the industry in the post-Expo 2020 era.
“I see good potential for the construction sector. I would say VAT has not impacted us that much; however, there is a pressure on cash flow but people are getting used to it,” said Ravi Murthy, chief financial officer, Arabtec Construction.
Murthy attributed the strong growth potential for the industry to the hosting of Expo 2020 as well as growth in the hospitality and healthcare industries, with a massive inflow of visitors and medical tourists.
“Dubai has won the bid to host the World Chamber Congress which is coinciding with Expo 2020. More than 14,000 chambers from 100 countries will attend the event. If 10 per cent of those chambers do business, the requirement for hotels, infrastructure, road, entertainment, leisure and shopping is going to grow substantially. The UAE target is half a million medical tourists. As compared to the West, they are in the stage of implementation; there are about 43 hospitals with more than 100 beds, which is not enough to cater to the needs. There is a big potential for healthcare. Today, we have Dh740 billion worth of construction projects under way,” he said.
VAT workshop for businesses held in Dubai
Date: 11 Jun, 2018
External URL: http://wam.ae/en/details/1395302693992
Dubai Media City, Dubai Studio City and Dubai Production City have organised a series of workshops for their business partners, aimed at raising awareness about the impact of VAT on the diverse creative community based across the three business parks.
Held in collaboration with Morison Menon Auditors & Business Advisors, the complimentary Tuesday VAT Clinics are taking place over four weeks, with each exclusive, segment-specific workshop focusing on issues related to the introduction of VAT in January 2018. The series seeks to educate companies in the media sector about current tax rules and regulations, correct VAT implementation, and the maintenance of related records.
Highlighting important points for businesses to keep in mind when filing VAT returns, the workshops include a VAT impact analysis for each sector. The sessions feature an interactive component that encourages in-depth discussions between speaker and participants, and facilitates a comprehensive understanding of the subject.
Majed Al Suwaidi, Managing Director of Dubai Media City, Dubai Studio City and Dubai Production City, said, “Our media communities are committed to supporting the next phase of economic diversification in UAE. It is our endeavour at Dubai Media City, Dubai Production City and Dubai Studio City to provide our business partners across the media value chain with access to an enabling industry ecosystem – one that helps them evolve, flourish and build synergies with like-minded community members. The new Tuesday VAT Clinics initiative is a prime example of this approach.”
Samaco, Bentley roll out VAT-free sales initiative
Date: 09 Jun, 2018
SAMACO, the new dealer for Bentley brand in Saudi Arabia, whereby Samaco incurs value added tax (VAT) dues on behalf of clients who are interested to own Bentley car model Bentayga W12; to be the first car dealer to offer such outstanding initiative, coinciding with the holy month Ramadan for this year.
Commenting on this remarkable offer, Mohammed Rafah, CEO of Samaco, said that the VAT free initiative specifically launched for the holy month of Ramadan to spur our clients who wish to own a highly sophisticated car such as Bentley Bentayga W12. This is, in addition, to provide, for the first time, a 5-year open warranty plus free periodical maintenance service for 3 years.
In response to this remarkable initiative, we start to receive orders on Bentley Bentayga W12 from the first day of Ramadan, we, as well, granted our clients the opportunity to test-drive the car to be familiarized with its strong performance and advanced technical capabilities.
Noting that Bentley Bentayga is one of the strongest and luxurious SUV models, equipped with twin-turbo charged 6-liter W12 engine generates 600 HP and maximum torque of 900 n/m partied with automatic 8-speed gearbox (ZF) all four wheel drives. The car achieves 0 to 100 km/h in 4.1 seconds and accelerates to a top speed of 301 km/H, making it the world’s fastest SUV.
Timely stimulus heralds a new dawn for Abu Dhabi economy
Date: 07 Jun, 2018
External URL: http://wam.ae/en/details/1395302693407
A UAE newspaper has said that in a raft of sweeping initiatives which will transform the way we work and live in the capital, two words stand out: together and tomorrow.
“The AED50 billion stimulus package announced by His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, is as far-reaching as it is wide-ranging and will alter the landscape of Abu Dhabi, whether via help for small businesses, creating jobs or boosting tourism,” said The National in an editorial on Thursday.
“The four strata of society upon which Abu Dhabi’s economy depends – residents, citizens, tourists and investors – will all benefit from a string of sagacious economic and social measures. This is the boost the emirate’s non-oil sector has been waiting for.
“The need to re-evaluate the ever-evolving economic landscape made these 10 changes – the latest in a series introduced in recent months across the UAE – necessary, but few could have predicted the scale and speed at which they will be implemented,” it added.
The paper noted, “This year began with the introduction of VAT; just five months later, the government announced the introduction of 10-year visas and 100 percent foreign ownership of UAE companies. They were followed by a series of social reforms in Abu Dhabi, including AED3bn for neighbourhood facilities, double the number of housing loans and increased civic engagement with a volunteering and social innovation platform. All the changes aim to help residents and citizens feel invested in the future growth of their communities – not simply a diversification from an oil-dependent economy but equally, a diversification from feeling life in the capital is a transient pit-stop.”
After slow first quarter, new car sales start picking up in UAE
Date: 05 Jun, 2018
Sales of new cars slowed down in the UAE during the first quarter of 2018 following the introduction of five percent value-added tax (VAT) in January. However, industry executives are hopeful of reversing the trend and said sales will pick up in the second half of the year.
According to automobile distributors in the UAE, new vehicles sales dropped by 10 to 30 percent (depending on the brand) in the first quarter of 2018 due to strong buying in the last quarter of 2017 by nationals and residents prior to implementation of the consumption tax.
Industry executives are expected to post single-digit growth in new car sales this year due to strong appetite from buyers and introduction of new models in the market. They were of the view that VAT had a one-off initial impact in the first quarter and now both buyers and sellers treat it as an essential part of the deal.
Axel Dreyer, general manager, Galadari Automobiles Co, distributor of Mazda vehicles in the UAE, agreed that the anticipated drop in volume in the first quarter has become a reality as the fourth quarter of 2017 sales was above expectations due to pre-VAT buying. Hence, the volume in the following month was less.
“I’m confident that the great offers in the holy month of Ramadan from all brands will stimulate the market again and attract a lot of new car buyers,” Dreyer told Khaleej Times.
To a question, he said sales of new and pre-owned vehicles were impacted by VAT as buyers have preponed the purchases. For price sensitive pre-owned car customers, it is difficult to digest that they have to pay 5 percent extra on the selling price, although the car is 2-3 years old.
“I believe after more than 4 months, the customers are familiar with VAT impact on their purchases. At a certain stage, the customer has to decide what is more economical to use the old car with added repair costs or a new car with service package and less running costs,” Dreyer said.
Negative impact of VAT on UAE, Saudi only short-term – PwC
Date: 04 Jun, 2018
The introduction of value added tax (VAT) in the UAE and Saudi Arabia this year has had a negative impact on their economies in the short term with inflation rising, a new report by consultancy PwC has found.
Inflation rose to 3 percent year-on-year in Saudi in January, after a year in which consumer prices were largely suffering deflation, with a smaller step up in the UAE to 4.8 percent.
This compares to very low rates of inflation in the rest of the GCC where VAT is yet to be introduced (below 1 percent in Kuwait, Qatar and Oman).
The purchasing manager indices (PMIs) for Saudi and the UAE also showed a slump. Saudi had been close to a two-year high in December but dropped in January to a record low of 53 (albeit still above the 50-mark that signals economic expansion).
UAE, which had been at a record level in December, slipped more gradually, down to 54.8 in March, its second lowest reading in a year.
However, the implementation of the tax will prove beneficial for regional economies in the longer term, the report added.
“Although adjustments such as subsidies cuts and the introduction of VAT this year have had short-term negative impacts, they should make the economy more efficient,” the report said, referring to the UAE.
According to the latest IMF forecasts, the country’s real GDP growth is expected to reach 2 percent in 2018 ( up from an estimated 0.5 percent in 2017) and average 3.1 percent in 2019-23. The deficit is narrowing and is expected to return to a surplus by 2022.
UAE Exchange now authorised to accept VAT payments
Date: 03 Jun, 2018
Companies can now make their VAT payments in any of the 150 UAE Exchange branches in the country
Money transfer company UAE Exchange has announced that it has now been authorised to start accepting value added tax (VAT) payments on behalf of the Federal Tax Authority (FTA) in the country.
All entities registered with the FTA who have a valid tax registration number (TRN) and a GIBAN account number can now make their VAT payments in any of the 150 UAE Exchange branches in the country, including 18 in Dubai metro stations.
The UAE introduced VAT alongside Saudi Arabia from January 1 this year at a rate of 5 percent.
It applies to most goods and services including groceries, fuel and utility bills.
In May, the UAE Cabinet decided to refund VAT for institutions working in the exhibitions and conferences sector. The change is intended to support the country’s status as a hub for the meetings, incentives, conferences and exhibitions (MICE) industry and to attract leading event organisers.
The UAE also reversed the application of the tax on the wholesale gold, diamonds and precious metals market.
VAT impact on gold, diamonds to be reduced between registered dealers, says FTA
Date: 30 May, 2018
External URL: http://wam.ae/en/details/1395302691936
The Federal Tax Authority, FTA, has asserted that the new Cabinet Decision issued to regulate Value Added Tax, VAT, incurred by gold and diamond dealers registered with the FTA seeks to establish the adequate legislative environment and infrastructure for the gold and diamonds sector to thrive.
The Decision also improves cash flow among registered suppliers of gold and diamonds, reduces their tax burden, helps them maintain smooth commercial operations, and cements the UAE’s status as a leading global hub for the gold, diamond and jewellery trade sector.
In a press statement issued today, the Authority noted that the decision only pertains to commercial transactions between registered dealers. As per the reverse charge mechanism, registered dealers shall not charge VAT when supplying another tax registered merchant with gold, diamonds or products where the principal component is of gold or diamonds, as long as the latter intends to resell such products, or use them to manufacture gold, diamonds or products where the principal component is of gold or diamonds. The registered recipient must include such supplies in his tax returns.
The Cabinet Decision maintains that Taxable Persons are generally entitled to deduct the tax they incur on their inputs in their tax returns; hence registered gold and diamonds recipients can recover the tax they incurred on their purchases in the same tax return in which they calculate their due taxes, thus maintaining liquidity and cash flow.
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FTA outlines licensing procedure for exhibition, conference services
Date: 30 May, 2018
External URL: http://wam.ae/en/details/1395302691934
The Federal Tax Authority, FTA, has asserted that the Cabinet Decision to refund Value Added Tax, VAT, on services provided at exhibitions and conferences seeks to cement the UAE’s status as a leading destination for local, regional and international forums.
The Decision supports the UAE leadership’s directives to ease the tax burden on business sectors, and empower them to play an effective role in the country’s sustainable development, the Authority explained.
In a press statement issued today, the Authority called on businesses providing exhibition and conference services as defined by the Authority to register in the VAT system and acquire a Tax Registration Number, TRN, as well as a licence from the FTA to provide these services according to a set of conditions that allow them to recover taxes on their services.
Refunds can be claimed for two types of services, the Authority indicated; the first is the grant of the right to access, attend or participate in a conference, while the second is the grant of the right to occupy space for the purpose of conducting a conference or an exhibition.
The new Decision reflects the widespread awareness around the importance of the dynamic exhibitions and conferences sector, which attracts investors from financial markets around the world. The UAE has become a magnet for investors across all sectors with its robust infrastructure and diversified economy.
Khalid Ali Al Bustani, FTA Director-General, said, “The Federal Tax Authority is committed to supporting UAE-based businesses to voluntarily and seamlessly comply with tax procedures, making use of the Authority’s advanced electronic systems and avoiding any disruption to their business activities.”
“Tax legislation in the UAE has helped build a strong collaborative relationship between the FTA and all tax stakeholders, including taxpayers and all relevant government bodies, in an effort to realise the objectives of the tax system in firmly maintaining the UAE’s lead on global competitiveness indexes,” he added.
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Saudi companies urged to file VAT returns by month-end
Date: 28 May, 2018
Saudi’s General Authority of Zakat and Tax has urged companies and entities registered for value-added tax (VAT) to file their tax declaration for the month of April by Thursday, May 31.
Companies whose annual value of taxable goods and services exceeds SAR40m have to declare their returns every month, according to local media reports.
Meanwhile, entities whose annual values of taxable goods and services are less than SAR40m are required to file their tax declarations every three months.
The tax authority emphasised that companies that failed to submit their declaration in time would face fines of between 5 per cent to 25 per cent of the value of tax that was due to be paid.
In addition, the penalty for not paying tax in any given month is equivalent to 5 per cent of the unpaid tax.
Saudi Arabia implemented the first phase of VAT from January 1 this year.
All companies with annual revenue exceeding SAR1m are required to register for the tax. After the first phase, companies with annual revenues of between SAR375,000 ($100,000) and SAR1m have until December 20, 2018 to register.
UAE, Saudi Arabia mobile phone shipments hit by vat
Date: 28 May, 2018
The introduction of value-added tax (VAT) and poor job security have taken a toll on first quarter mobile phone shipments into the UAE and Saudi Arabia.
According to the latest numbers from research firm International Data Corporation (IDC), total mobile phone shipments into the UAE declined by 14.7 per cent quarter-on-quarter, and 5.4 per cent in Saudi Arabia quarter-on-quarter, while smartphone shipments into the UAE were down 4.6 per cent.
Nabila PopalNabila Popal, a senior research manager at IDC, said the UAE market was experiencing a significant shift in consumer spending as evidenced by the first-ever cancellation of the spring edition of Gitex Shopper.
She added that the true impact of this shift could be seen in the independent retail stores of Deira, the traditional trading and commerce centre of Dubai, where shops that were previously impossible to lease are now sitting vacant.
“Organised mall-based retail chains that focus exclusively on consumer electronics are also struggling. Businesses in Qatar, meanwhile, will continue to suffer from the prevailing political challenges and import embargoes that have already impacted the country’s mobile phone market,” she said.
“The size of the overall market in Saudi Arabia is expected to decline over the coming years as a direct result of the new expat dependent tax,” said Kafil Merchant, a research analyst at IDC.
“A significant portion of the local population is expected to leave the country due to the introduction of this levy, with the exodus expected to run into the millions. The full impact remains to be felt, however, as many expatriates are waiting for the school year to end before leaving,” he said.
The report states that Nokia continues to dominate the vendor landscape for feature phones, garnering 87 per cent share of the overall GCC market in first quarter.
Monday, May 28, 2018, is the final deadline for submitting Tax Returns
Date: 23 May, 2018
External URL: http://wam.ae/en/details/1395302690821
The Federal Tax Authority (FTA) has announced the release of eight educational awareness videos targeting businesses, introducing them to the simple four-step procedure for submitting tax returns through its website: www.tax.gov.ae.
In a press release issued on Wednesday, May 23, 2018, the FTA explained that the videos can be viewed on its official website and social media channels, as well as through all news websites. The new videos constitute a comprehensive guide outlining the steps and procedures required to complete and submit Tax Returns and pay taxes, and making them easier to understand and follow for businesses.
The Authority went on to caution that this coming Monday (May 28, 2018) is the final deadline for submitting Tax Returns and paying due taxes for the Tax Period that ended on April 30. The FTA urged the businesses included in this Tax Period to comply with the deadline in order to avoid administrative penalties.
FTA Director General Khalid Ali Al Bustani said: “Launching the videos is part of the Federal Tax Authority’s plan to raise tax awareness among businesses and members of the community from all backgrounds. These educational and awareness efforts are part of our strategy to improve our services and encourage self-compliance with tax procedures using our advanced electronic systems.”
“The Authority is multiplying its efforts to ensure businesses and individuals all over the UAE know their rights, their obligations, and how to correctly implement the tax system,” he added. “The FTA has released more than 60 guides covering all legislative and implementing aspects of the UAE tax system, in addition to e-learning modules, infographics, and animations in Arabic and English about Excise Tax, Value Added Tax, and the objectives behind them.”
DED receives 8,166 consumer complaints in Q1, 2018
Date: 23 May, 2018
External URL: http://wam.ae/en/details/1395302690687
The Commercial Compliance and Consumer Protection (CCCP) sector in the Department of Economic Development saw a 30 percent increase in consumer complaint during the first quarter (Q1) of 2018 compared to the same period last year as more and more consumers continued to come forward and raise their concerns with the authorities as well as merchants.
CCCP, while continuing its efforts to enhance the role of DED in consumer protection and reinforcing Dubai’s reputation as a safe shopping destination for residents as well as tourists, received 270 complaints a day on average in a total of 8,166 complaints in first three months of the current year as compared to 6,275 complaints during Q1, 2017.
The Consumer Protection section in CCCP dealt with 1,007 issues out of which consumer complaints accounted for 81 percent. The rest included 1,062 notes and 779 enquiries received from consumers. Complaints received from inside the UAE accounted for 37 percent and the nationality-wise breakdown of complainants is as follows: India (13 percent), Egypt (10 percent), Saudi Arabia (7 percent) and Jordan (5 percent).
The services sector had a 33.9 percent share in the total complaints received while 16.7 percent were from the electronics sector, 10.7 percent relating to e-commerce, 7.9 percent regarding automobiles, and 6 percent about car rentals. Textiles and personal items (3.5 percent ), furniture (3.1 percent ), shipping (2.7 percent ), clothing and accessories (2.6 percent ) also featured among the complaints while 10 percent were from various sectors.
UAE's robust hospitality and travel sector remains unfazed by VAT impact
Date: 21 May, 2018
The UAE’s robust hospitality and travel sector has remained unfazed by the impact of the value-added tax (VAT) during the first few months of its implementation. The number of visitors rose 2 per cent to 4.7 million in the first quarter, while occupancy rate up 0.7 per cent to 87 per cent witnessing a sustainable growth.
Experts in the hospitality and travel sectors have described the impact of the tax as being modest or negligible.
“The value-added tax, like any other tax regimes, is part of a government’s fiscal reforms and is expected to accelerate economic growth and development of societies in the long run,” said Sameer Bagul, EVP and MD at Cleartrip Middle East. “While it is true that initial adjustments following the introduction of tax in the UAE had sent shockwaves across various industries and businesses, which have long been accustomed to minimal taxation, the travel sector has seen a modest impact as airlines remain subject to zero tax rates, thus leaving no impact on airfares.”
However, Bagul noted that travel agents and travel management companies who earn commissions and service fees have to bear five percent of revenue as cost. He further described this as an investment in the economy.
“On the other hand, hotels in the country are subjected to five percent VAT, in addition to the existing 20 percent municipality fee and service charges combined, making the average room rates costlier. Additionally, various leisure activities have seen pricing adjustments to include the five percent VAT from January 2018. Nonetheless, we have not witnessed any impact on our business despite these changes as we continue to grow very strongly in selling both hotels and hyper-local leisure experiences in the UAE,” he added.
The implementation of the VAT is likely to generate Dh12 billion in income in its first year of introduction, and may collect up to Dh20 billion in 2019. Experts have predicted that hospitality revenue in the UAE is set to increase by 10.8 percent annually to hit $9.8 billion by 2020. The government’s spending on the sector’s development is expected to grow by 4.3 percent over the next decade. Furthermore, with the opening of new attractions such as theme parks and the development of specialty entertainment areas, the UAE will continue to be a preferred destination for tourists from around the world; leaving experts optimistic about the hospitality industry’s growth in the coming years.
Laurent A. Voivenel, senior vice president of Operations & Development for the Middle East, Africa & India at Swiss-Belhotel International, noted that many global hospitality brands are familiar with the tax, and haven’t faced any major challenges in terms of execution. “Typically in a hotel be it the room revenue, food & beverage revenue, telecommunications such as telephone, TV/movies and Internet revenue, conference or banquet revenue, or any other rentals, each needs to be itemised separately for accounting purposes and must be consolidated to determine the operation’s VAT liability.”
Federal Tax Authority sets requirements and procedures to refund VAT on new residences for UAE nationals
Date: 19 May, 2018
External URL: http://wam.ae/en/details/1395302690015
The Federal Tax Authority (FTA) has set three requirements and procedures for UAE nationals to refund Value Added Tax (VAT) incurred on the new residences.
The conditions state that in order to refund VAT, applicants must be UAE national; the monetary cost in question must have gone towards financing the construction of a new residence, set to be used exclusively as a residential unit for the applicant and/or their family; and finally, the VAT refund only includes the money spent on establishing the unit, such as the amounts paid as building materials.
The FTA issued a comprehensive guide that clarifies the VAT refund process, publishing it on its official website. The guide can be viewed on the following link: https://www.tax.gov.ae/ar/pdf/VAT-Refund-Building-New-Residences-by-UAE-Nationals-User-Guide-full.pdf In a press release issued today, the Authority explained that UAE citizens have the right to recover VAT when constructing their own residences. They ought to submit a request to recover the tax incurred on construction costs from the FTA. The request must be submitted within six months from the completion date of the construction project, which precedes the date of occupancy of the building, or the date of issuance of a certificate of completion for the building by the competent authorities, or another date determined by the Federal Tax Authority whatever comes first.
FTA Director General Khalid Ali Al Bustani said: “The Authority has been providing transparent standards, procedures and mechanisms to ensure seamless procedures for citizens looking to recover Value Added Tax incurred on the construction of new residences. This, in turn, leads to achieving the vision of our wise leadership to develop a modern, stable housing system in the UAE.”
VAT Refund to Boost MICE Industry in the UAE
Date: 16 May, 2018
The UAE Cabinet’s decision to refund value-added tax (VAT) to the meetings, incentives, conferences and exhibitions (Mice) industry will make the country – especially Dubai – retain its competitive edge regionally and help position it as a bigger player on the global level as the refund money will be pumped back into the industry for marketing, generating more economic activity, say industry executives and tax experts.
In addition, the refund will continue to attract more foreign companies and business tourists to Mice events which take place in the UAE all round the year.
Humaid Matar Al Dhaheri, the group CEO of the Abu Dhabi National Exhibition Centre (Adnec), said the decision to refund VAT will significantly enhance the competitiveness of the industry and increase the capacity to attract niche global events, exhibitions and conferences.
It will trim costs incurred by organisers and international associations while also enabling local associations to submit more bids to host major international conferences and congresses.
“I am pleased to invite all public and private sector firms, partners, event organisers and specialised associations to make optimum use of such initiatives that will consolidate their presence in the UAE by strengthening the existing exhibitions and conferences portfolio and attracting and conducting new events,” Al Dhaheri said.
Satish Khanna, general manager, Al Fajer Information and Services, hailed it as a landmark decision for the industry, which will help the emirates to grow in terms of market size and come closer to other global Mice destinations such as Las Vegas.
He pointed out that exhibition companies will have more money at their disposal as a result of this government initiative and it will be distributed towards marketing the events and generate more activity in the country.
“Whatever we save will go into marketing and this will enhance the size of exhibitions and be beneficial for the Mice industry. Dubai is on the right track to be a global Mice destination. The UAE’s will attract more Mice players to the country,” Khanna said.
Ahmed Pauwels, CEO of Messe Frankfurt Middle East, said that VAT hasn’t noticeably affected their business. “Both in terms of exhibitors and our suppliers, we have not faced any undue hindrance in our business functions. So, with the recent announcement of the refund facility, I am sure the outcome will prove to be extremely positive and welcomed by the market.”
ADNEC Group CEO praises VAT refund decision
Date: 14 May, 2018
External URL: http://wam.ae/en/details/1395302689011
Humaid Matar Al Dhaheri, Group CEO of ADNEC, has praised UAE Cabinet decision pertaining to VAT on exhibitions and conferences, inviting all public and private sector firms, partners, event organisers and specialised associations, to make optimum use of such initiative.
He further said that it will consolidate their presence in the UAE by strengthening the existing exhibitions and conferences portfolio and attracting and conducting new events.
“Our wise leadership has always been keen to support several national institutions and constantly aiming to drive the development of various economic and social sectors for the benefit of the country and its citizens, which is reflected in enhancing the emirate’s position globally and making it an ideal destination for hosting international conferences, exhibitions and events,” he said in a statement.
“The decision to refund Value Added Tax, VAT, by institutions working in the exhibitions and conferences sector will significantly enhance the competitiveness of the industry and increase the capacity to attract niche global events, exhibitions and conferences. It will trim costs incurred by organisers and international associations while also enabling local associations to submit more bids for hosting major international conferences and congresses and enhancing the support of partnerships with the public and private sectors,” he added.
Al Dhaheri went on to say, “The UAE, with its open, vibrant economy, world-class infrastructure and technological prowess, is at the forefront of shaping the business tourism sector at the regional and international levels. This would not have been possible without the generous support received from our wise and noble leadership and our corporate sister companies operating in this vital sector.”
Saudi tax authority exposes more than 5,000 VAT violations this year
Date: 14 May, 2018
External URL: http://www.arabnews.com/node/1302036/saudi-arabia
The General Authority of Zakat and Tax (GAZT) has stepped up its value-added tax (VAT) inspections in the build-up to Ramadan with its accompanying rise in trade.
The GAZT confirmed that it has issued orders for 5,212 VAT violations against non-compliant businesses since VAT was implemented in the Kingdom.
Violations ranged from issuing VAT invoices without all the required information to collecting taxes that exceed 5 percent, not including a tax number on the invoices and eligible businesses not registering for VAT.
The GAZT said in a statement that its field inspections across the Kingdom targeted several sectors, including shopping malls, car maintenance centers, electrical appliance stores, and food markets.
The authority aims through its field inspections to raise the awareness of businesses about the importance of applying VAT to follow up on whether they were complying with the tax, and to ensure proper application of all VAT procedures.
The GAZT urged all consumers to use the VAT smartphone app as it allows them to know if the businesses they deal with are registered in the VAT system and to report violating businesses.
MCA releases guide on How to File VAT Returns
Date: 13 May, 2018
MCA, the premier VAT advisory firm has shared a guide to help companies file returns due on the 28th day after their Tax period. This guide walks you through the steps of filing the returns including the payment steps.
The guide is available on our site. Click on this link to read the guide.
Cabinet approves resolution on VAT refunds for exhibitions, conferences
Date: 13 May, 2018
External URL: http://wam.ae/en/details/1395302688751
The Cabinet has approved a resolution pertaining to the Value Added Tax (VAT) for Conferences and Exhibitions, in line with the government’s ongoing efforts to support this sector and to enhance the country’s status as a hub for Meetings, Incentives, Conferences & Exhibitions (MICE).
The resolution provides for granting the facilities involved in organising exhibitions and conferences the right to refund the amounts levied on providing such services, to guarantee ease of doing business and competitiveness in this sector. It supports, at the same time, the efficient implementation of the tax system, as per the best integrational practices.
The resolution aims to support the UAE’s MICE sector and to maintain the country’s global lead in this field, in the light of the facilities offered to develop the sector and the keenness to provide the conducive environment, infrastructure and legislative framework for doing business and to attract the world’s leading event oragnising companies.
According to recent statistics, MICE’s annual contribution to UAE economy stood at AED 2.39 billion and is anticipated to grow to AED 5.1 billion by 2020.
UAE's maritime industry seeking VAT exemption
Date: 07 May, 2018
The UAE maritime industry is seeking exemption from the value-added tax levied earlier this year in line with global practices as many countries have relieved the industry from VAT, industry executives said.
They believe that the UAE needs to look at the fees and other charges in order to become more competitive and also needs to update its maritime law.
“It is important to think about the regulations especially the VAT because many countries around the world have exempted the shipping industry from VAT and it is important. There is discussion with the government and we hope this will be taken positively. I guess we have to apply what applies anywhere else; and the principal is that the shipping industry is usually kept free from VAT,” said Khamis Juma Buamim, managing director and group CEO, Gulf Navigation Holding.
The UAE Cabinet last week announced exemption for the gold and precious metals trade from VAT to revive the industry.
“In general, there are too many fees and charges and too many time-wasting [requirements to obtain services]. Time means money and people seriously think about how much time they spend [on obtaining these services],” he added.
UAE jewellers eye VAT relief on retail sales
Date: 03 May, 2018
Gold and jewellery industry executives in the UAE hope that the government will extend VAT exemption to the retail segment, similar to what was given to wholesalers and investors for the benefit of end-users.
“We welcome the move of VAT [value-added tax] exemption by the UAE Cabinet on the gold and diamond trade in the B2B market. One of the major tourist attractions of the UAE is the jewellery sector that generates billions of dollars in revenue every year and by exempting it from the tax, the benefit will be immense for the businesses and the overall economy,” said Firoz Merchant, chairman of Pure Gold Group.
“I hope that the government extends a similar exemption to the retail sector, which will not only benefit the jewellery retailers but also tourists and consumers,” he added.
“We are not expecting total VAT exemption on purchases as we have requested to charge only on making charges as raw gold [pure gold] is VAT-free and jewellery is made from raw gold,” said Anil Dhanak, managing director of Kanz Jewellery.
“Retail will greatly benefit once we go back to the old pricing structure and VAT is levied only on making charge which comes to around Dh1 per gram; it will be easy to absorb by retailers and even customers will not feel the pain.”
Trading in Gold and Diamond exempted from VAT
Date: 01 May, 2018
External URL: http://wam.ae/en/details/1395302686143
In line with the UAE Government’s efforts to ensure an efficient implementation of the Value Added Tax, VAT, while employing best international standards and maintaining the competitiveness of the local precious metals sector, the UAE Cabinet adopted a law to introduce the VAT Reversed Charge mechanism for investors in gold, diamond and precious metals.
This step aims to maintain UAE’s high ranking in the ease of doing business indicators, and allows investors in gold, diamond and precious metals to conduct business with ease. The VAT Reversed mechanism will contribute to stabilising the gold and diamond sector in the UAE as well as stimulating investment in this sector.
The law includes investments in precious metals such as gold, silver and platinum, used in trade in accordance with internationally accepted standards with a purity of 99 percent or more.
This comes in the light of the many initiatives offered by the UAE to investors. It also provides the optimal environment, infrastructure and legislations necessary for growth and supports UAE’s position as a global hub for trade.
The volume of gold trade in the UAE rose to AED244.3 billion in 2016, with a growth rate of 13 percent. The value of UAE’s imports of gold amounted to AED142.4 billion in the same year, while exports amounted to AED75.9 billion, and re-export amounted to AED26 billion.
The gold, diamond and precious metals sector is one of the vital national economic sectors and one of the most important for the economic diversification that is expected to witness significant growth in the coming period as part of the UAE’s diversification objectives.
FTA cautions against granting exceptions when charging taxes unless specified in tax laws
Date: 29 Apr, 2018
External URL: http://wam.ae/en/details/1395302685476
The Federal Tax Authority, FTA, has reiterated its call for all registered businesses to collect Value Added Tax, VAT, and Excise Tax on all taxable transactions and from all customers, cautioning against excepting any individual or organisation that does not fall under one of the excepted categories specified in the UAE tax laws.
In an official statement issued today, the FTA urged taxable businesses to remain vigilant and precise in their business transactions. Businesses must avoid granting exceptions from VAT, the Authority warned, clarifying that no transaction may be considered as outside the scope of tax, exempt, or zero-rated unless it was stated in the legislation or announced by the Ministry of Finance or the Federal Tax Authority, where any such exception was made, this is considered illegal and the supplier shall be liable for any tax not collected on the supply.
The Federal Tax Authority reassured businesses that it periodically issues updated official notices that clearly specify the categories that are not subject to tax, exempt, or zero-rated, as stipulated in UAE tax laws and formal cabinet decisions.
FTA Board approves Tourists Refund Scheme
Date: 25 Apr, 2018
External URL: http://wam.ae/en/details/1395302684624
The Federal Tax Authority’s, FTA, Board of Directors has formally approved implementation of Tourists Refund Scheme at its fifth meeting, held on Wednesday at the Dubai Ruler’s Court.
The meeting was headed by H.H. Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance.
The scheme seeks to ensure high preparedness and adherence to international standards among UAE businesses. It is set to include comprehensive procedures to connect outlets and points of sale across the UAE with the refund system.
The Board also adopted the proposed design and security specifications of the brand to be used as a marker for tobacco products, allowing them to be tracked electronically in order to ensure that the Excise Tax on these products is paid. This advanced system seeks to prevent excise tax evasion and will be implemented in the near future in coordination with Customs Departments, as well as Departments of Economic development departments, and manufacturers and importers of tobacco products.
During the meeting, the FTA Board of Directors approved a set of executive decisions concerning the internal regulatory and administrative policies of the Authority and its operational activities. The Board reviewed a comprehensive report covering the achievements made by the Federal Tax Authority, as well as the successful implementation of the UAE tax system. The reports revealed a remarkable increase in the number of businesses registered for VAT before the end of penalty waiver period issued by the Authority to exempt businesses from late registration penalties, where 281,000 of them are now registered for value-added tax, VAT, while 637 are registered for excise tax.
Saudi Inflation Starts to Decline as VAT Impact Lessens
Date: 25 Apr, 2018
Saudi Arabia’s inflation rate has started to slowly decline as the impact of value-added tax (VAT) and subsidy cuts introduced at the start of the year begin to lessen.
Consumer prices rose by 2.8 percent year on year in March, according to official statistics released on April 24, compared to a rate of 2.9 percent in February.
Inflation leapt to 3 percent year-on-year in the immediate aftermath of the introduction of a 5 percent VAT charge in January.
The new tax was introduced by the Kingdom in an effort to boost its non-oil revenues as well as narrow its fiscal deficit caused by lower oil revenues. The UAE also introduced VAT in January.
While Saudi households initially struggled with the higher rate of inflation and started cutting back on spending, analysts say public sector bonuses, pledged by the government, will help boost consumer purchasing power.
In January, a royal order outlined a range of bonuses and benefits to be paid out to public sector workers, pension holders, students and members of the military.
90,000 registered businesses to submit tax returns, pay due taxes by end of April
Date: 22 Apr, 2018
External URL: http://wam.ae/en/details/1395302683794
The Federal Tax Authority, FTA, has revealed that approximately 90,000 businesses registered for Value Added Tax, VAT, are required to submit their tax returns and pay their taxes no later than 29th April 2018.
Over 85,000 of these companies had their first quarterly tax period end in March, while the remaining businesses saw their monthly periods end on the same date. In a statement issued today, the Authority renewed its call to all businesses registered for VAT to expedite the submission of their tax returns and pay their due taxes on time in order to avoid administrative penalties.
FTA Director-General, Khalid Ali Al Bustani, called on registrants to check their tax periods and the deadline for submitting tax returns and paying due taxes through the eServices portal on the FTA website. “Businesses whose tax periods ended on 31st March should submit their tax returns, and then pay their due taxes before the deadline specified by the Authority,” he explained, “The majority of registered businesses included in quarterly tax periods are small and medium enterprises,” Al Bustani said.
“The Authority sought to streamline the procedures of filing tax returns and paying taxes to encourage taxable persons to comply and carry out their transactions by themselves electronically to meet their tax obligations in mere minutes and with four simple steps. Taxable persons may, at any time, enlist assistance from the FTA-accredited tax agents listed on the website,” he added.
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.”
Drop in House Rents Soften VAT Impact in UAE
Date: 23 May, 2018
Although the levy of a 5 percent value-added tax (VAT) was expected to affect UAE residents in the form of increased living costs, the reduction in house rents has offset this impact to a great extent.
While global benchmarks suggest that households should allocate no more than 35 percent of their total monthly income on housing (in the form of either rents or mortgage payments), many families in Dubai currently spend over 40 percent of their combined income on rents.
“Tenants are definitely experiencing increasing higher living costs. It is, therefore, good news that rents continue to fall [by around 10 percent over the past 12 months]. This should help address the problem where accommodation costs in Dubai are generally too high,” says Craig Plumb, head of research, JLL Mena.
“Although the introduction of 5 percent VAT at the beginning of the year had an impact on overall costs for residents, this was more or less offset by reduced rents. This is mainly caused by an increased supply, employment challenges and the movement of tenants from one emirate to another seeking the best value for money,” observes John Stevens, managing director, Asteco.
Most of the UAE residential market has absorbed VAT’s limited inflationary impact in 2018. However, there has been an impact on residents’ disposable incomes.
“Dubai’s real estate market is heavily sentiment-driven and the introduction of VAT across Dubai has undoubtedly had a negative effect on this. It is more likely that it is the change in sentiment that may cause tenants to behave more cautiously. However, it is still too early to know with any degree of certainty,” suggests Thomas Bolton, Cluttons’ director – strategic projects.
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)||18.104.22.168||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|