FTA released a decision on 'The Mechanism for Calculating the Average Retail Selling Price of Excise Goods in the Market'
Date: 10 May, 2021
Dubai- May 10, 2021:
In order to calculate the average retail selling price of the excise goods in the market, the FTA has released a decision approved by the Board of Directors’ at its 15th meeting held on 20 April 2021.
For the purposes of Clause 2 of Article 14 of Cabinet Decision No. 52 of 2019, a Taxable Person shall undertake the procedures outlined in the document for the purpose of identifying the Designated Retail Selling Price as per the sequence mentioned.
Click here to view the Federal Tax Authority Decision No. 1 of 2021 (Unofficial translation) – Issued on 28th April 2021.
UAE reduces penalties on VAT, excise tax to cope with Covid-19 impact
Date: 09 May, 2021
Dubai- May 9, 2021:
The UAE has reduced penalties on value-added tax (VAT) and excise tax in order to help companies and individuals better cope with the impact of the Covid-19 pandemic. According to newly-released Cabinet Decision No. 49 of 2021, tax payers who currently have penalties pending can see those reduced to 30 per cent, provided they settle them before December 31, 2021.
Going forward, late payment penalties will be reduced to four per cent per month, a substantial reduction from one per cent per day while an overall cap stays at 300 per cent.
The new provisions will be applicable 60 days as from April 28, 2021.
For more information click here.
FTA releases New Public Clarification on VAT registration of Sole Establishments
Date: 08 May, 2021
Dubai- May 8, 2021:
The FTA (Federal Tax Authority ) issued guidance on the value added tax (VAT) registration for sole establishments and sole proprietorships.
A natural or legal person may own a number of sole establishments. There has been uncertainty on whether each sole establishment needs to obtain a separate VAT registration or whether all such establishments should be included under one VAT registration. The Public Clarification released clarifies the VAT registration obligations of a person in respect of its sole establishments.
A person owning a number of sole establishments should obtain only one VAT registration for all its sole establishments, and it is not permissible to register each sole establishment separately for VAT.
This does not apply to a one-person company LLC or other similar legal entities that are seen as distinct and separate legal persons from their owners.
The FTA will review in certain cases the VAT registrations by taxable persons in respect of sole establishments and will inform them of the corrective steps to be taken, if any.
UAE ranked among the top 10 in 28 competitive indicators for the financial and tax sector
Date: 03 May, 2021
External URL: https://wam.ae/en/details/1395302931770
Abu Dhabi- May 3, 2021:
Five of the major international institutions specialized in assessing competitiveness have ranked the UAE among the top 10 in the world in 28 indicators of competitiveness in the financial and tax sector.
This was highlighted by a report by the Federal Competitiveness and Statistics Centre (FCSC), which documented the rankings of the IMD World Competitiveness Yearbook, the Legatum Prosperity Index, the World Economic Forum’s Travel and Tourism Competitiveness Report, the Global Talent Competitiveness Index (GTCI) and the Global Competitiveness Index 4.0. The report states that the UAE was ranked first in the Real Personal Taxes Index, the Collected Personal Income Taxes Index, the Low Tax Evasion Rate Index, the Collected Indirect Tax Revenues Index, the Lack of Wastefulness in Government Spending Index and the Best Time to File Tax Returns Index.
The UAE was also ranked second globally in the areas of corporate tax collection, real increase in government expenditures, and collection of capital and real estate taxes, while it was ranked third in the areas of intergovernmental transfers, local central governmental debt and rate of low consumption taxes.
In early January 2018, the UAE implemented VAT at 5% on most goods and services that are supplied at every stage of the supply chain. Prior to that in 2017, an excise tax was applied to restrict the consumption of substances that affect health such as tobacco products and energy drinks.
At a time when many countries of the world tend to increase taxes on personal and corporate profits, the UAE ranked first in the world in the absence of income taxes and low rates of tax evasion which strengthens its eligibility to attract foreign investment.
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FTA releases Real Estate Guide
Date: 02 May, 2021
Dubai- May 2, 2021:
Federal Tax Authority (FTA) releases ‘Real Estate Guide‘ that throws guidance on the VAT treatment of supplies of real estate, as well as various common transactions which occur within the real estate sector. The purpose of the document is to provide guidance on how VAT affects businesses which operate within the real estate sector, as well as for owners or landlords of real estate.
This document is meant for owners of commercial and residential real estate, landlords making supplies of commercial or residential real estate, and businesses operating within the construction industry, or making supplies which relate to real estate. Property managers and owners’ associations may also find this guide useful.
UAE participates in 113th meeting of GCC Financial and Economic Cooperation Committee
Date: 28 Apr, 2021
External URL: http://wam.ae/en/details/1395302928924
Abu Dhabi- April 28, 2021:
Obaid Humaid Al Tayer, Minister of State for Financial Affairs, participated in the 113th meeting of the GCC Financial and Economic Cooperation Committee, held virtually on April 22, 2021 and discussed strengthening financial and economic cooperation among GCC countries.
The Committee discussed the recommendations submitted by the GCC Committee of Monetary Authorities and Central Banks Governors during the 76th meeting; the 25th meeting of GCC Customs Union Authority; and the Gulf Market Committee at its 30th and 31st meetings.
Also discussed were the minutes of the 8th meeting of Committee of Heads and Directors of Tax Administrations in the GCC States; the budget for supporting joint activities and programmes to develop youth work in the GCC countries; and the G20 Finance Track’s initiatives that can be issued to the GCC countries. That, in addition to the decisions of the 41st Session of GCC Supreme Council and the decisions of the 21st meeting of the GCC Ministerial Committee of following up the implementation of the GCC Joint Work Decisions.
The committee reviewed the GCC Supreme Council’s decision on agreeing on a system of linking payments in the GCC countries; discussing the programme on achieving economic unity among the GCC countries by 2025; and discussing the issues proposed to the International Monetary Fund (IMF), which they will study and submit at the joint meeting of the GCC Financial and Economic Cooperation Committee, the GCC Committee of Governors of Monetary Institutions and Central Banks and the Director-General of the IMF.
It also reviewed the latest developments related to the GCC-Takamul system, which is an electronic gateway for complaints and enquiries related to the Gulf Common Market. The committee praised its experimental launch among the GCC countries, and asked member countries to provide the data of those in charge of the system in the ministries of finance to the General Secretariat. The official launch of the system will take place during the next meeting of the GCC Financial and Economic Cooperation Committee in October 2021.
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FTA collects tax liabilities worth AED74 million in Q1-21
Date: 27 Apr, 2021
External URL: http://wam.ae/en/details/1395302930003
Abu Dhabi- April 27, 2021:
The Federal Tax Authority (FTA) has conducted more than 2,707 field inspection visits through 35 inspection campaigns across UAE markets in the first quarter of 2021 (Q1-21). This is as part of its ongoing efforts to protect consumer rights and increase the level of tax compliance.
FTA revealed that 256 VAT violations were detected and 248 violations with a total value of AED74 million during Q1.
FTA Director-General, Khalid Ali Al Bustani, confirmed that the sophisticated, cutting-edge tools adopted by the authority during inspections enable teams to accurately carry out their tasks through the latest field electronic mechanisms which correspond to best practices. This contributes to tightening controls on UAE markets to prevent the sale, circulation, and stockpiling of products that have not fulfilled their Excise or VAT obligations.
One of these tools is the mandatory marking of tobacco and tobacco related products which came into effect on 1st January, 2019. It specified the requirement to place Digital Tax Stamp (DTS) on cigarette packs and tobacco products, including water-pipe tobacco and electrically heated cigarettes, after registering them in the FTA database. Each DTS contains data that can be read with a special device to ensure all taxes due on the products have been paid.
Al Bustani added, “The tax compliance rates that have been observed in the outcomes of the inspection campaigns carried out in the first quarter of 2021 highlight the success of the authority’s oversight efforts carried out in cooperation with the competent entities.”
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FTA holds 3 interactive sessions in Q1-21 as part of “Tax Clinic” initiative for SMEs
Date: 22 Apr, 2021
Abu Dhabi – April 22, 2021:
The Federal Tax Authority (FTA) has held 3 interactive sessions via video conference, as part of the “Tax Clinic” initiative, a policy of direct communication with business sectors to promote tax awareness and avoid the most common errors while implementing tax procedures.
The awareness sessions held in Q1 of 2021focused on the small and medium enterprise (SME) sector. Teams of tax analysts and experts from the FTA’s Registration and Taxpayer Services Departments answered the inquiries of business representatives from across the emirates. The inquires were about tax registration and obligations. They also raised awareness of how to submit returns and pay tax dues without errors.
His Excellency Khalid Ali Al Bustani, Director-General of FTA, emphasized that the FTA is committed to ensure the security and safety of its employees and clients. It maintains constant interaction with those involved in the tax system by organizing webinars and meetings with its partners in the government/private sectors via video conference to adhere to social distancing norms imposed by Covid-19.
Click here to read more.
New edition of the ‘Basic Tax Information Bulletin’ on the Automotive sector
Date: 21 Apr, 2021
Abu Dhabi – April 21, 2021:
The Federal Tax Authority (FTA) has announced in its latest edition of the Basic Tax Information Bulletin that motor vehicle repairs and maintenance services provided within the UAE are subject to VAT at the standard rate of 5%. This applies even if the costs are charged to an entity based outside the UAE. The new edition mainly targets businesses in the automotive sector, including new car dealers, used car dealers, and servicing and parts’ suppliers.
With regard to repair services and parts provided under a warranty, the FTA clarified that VAT is applicable on the sale of vehicles under warranty and warranty packages purchased separately by the customer. Any subsequent supply of repair services and parts to the owner of the vehicle under warranty is not subject to VAT, provided no additional amount is charged in respect of the repair service or parts.
As per the Bulletin, businesses in the automotive sector making taxable supplies are eligible for the full recovery of input VAT, with the exception of blocked items such as certain entertainment services and purchased, leased, or rented motor vehicles that are available for personal use.
Click here to read more.
FTA receives 2 new international accreditations in Information Technology and Information Security Management System
Date: 20 Apr, 2021
Abu Dhabi – April 20, 2021:
The Federal Tax Authority (FTA) has received two certifications “ISO 20000” and “ISO 27001” in the information technology services sector: ISO certification for IT Service Management and ISO certification for IT Security Management.
His Excellency Khalid Ali Al Bustani, FTA Director-General, emphasized that the two new certifications enhance confidence in the FTA’s IT services and electronic systems. They are being continuously improved to ensure data protection and improve its services in all sectors. This is being accomplished through the application of a comprehensive quality methodology to complete operations and document them via an integrated system approach.
The Director-General affirmed that FTA since its establishment has been keen to provide a sophisticated digital tax system according to the best international standards. This is to carry out all operations smoothly and facilitate the processes of registration, filing tax returns, tax payments and tax refunds, thereby allowing quick completion.
Click here to read more.
UAE MoE extends anti-money laundering (AML) compliance date until 30th April for selected businesses
Date: 11 Apr, 2021
Dubai- April 11, 2021:
The UAE Ministry of Economy announced the extension of the deadline granted to companies in the “specific non-financial business and professions” sector to register in government regulations approved for countering money laundering and combating the financing of terrorism until the end of April 2021.
The decision is due to the large numbers of companies in the sector seeking to register in the last days of the previous deadline, which expired on March 31, taking into account the conditions of companies and the business sector in general during the period of the Covid-19 pandemic.
Click here to read more.
FTA released a basic tax information bulletin on Automotive Sector
Date: 09 Apr, 2021
Dubai- April 9, 2021:
FTA released a basic tax information bulletin on Automotive Sector meant for new car dealers, used car dealers, servicing and part’s suppliers.
The bulletin clarifies that supplies made by businesses in the automotive sector are generally subject to VAT, including but not limited to:
- Sales of new and used cars
- Sales of car parts
- Service centers’ services, warranties, and related insurance products
Supplies of qualified means of transport, such as buses that are designed or adapted for public transportation of 10 or more passengers and are actually used for public transportation are, however, zero-rated for VAT purposes.
For further clarification contact our tax experts.
FTA released public clarification VATP025 on 'Temporary Zero-rating of Certain Medical Equipment'
Date: 08 Apr, 2021
Dubai- April 8, 2021:
The Federal Tax Authority has published public clarification VATP025 on “Temporary Zero-rating of Certain Medical Equipment”.
The key highlights are:
- The date is extended till 31st December-2021 for VAT at the rate of 0% on certain supplies and import of medical equipment.
- After 31st December-2021 if there is any supply then normal procedures shall apply.
View the list of guides here.
For further clarification contact our tax experts.
FTA released public clarification VATP024 on bad debt relief adjustment
Date: 06 Apr, 2021
- In the event a supplier does not receive payment from the customer, the supplier may adjust the output vat on the bad debt subject to certain conditions as follows.
– VAT charged and accounted for on the supply (to FTA via tax returns).
– Consideration should have been written off in full or part.
– A duration of six months should have passed from the date of supply.
– Supplier has notified the customer that the amount has been written off.
- Bad debt relief can only be taken to the extent of consideration written off in the accounts.
- During the six months period, FTA considers that supplier should engage with customer to recover the debt.
- The supplier is required to notify the customer and communicate via a letter, email or post to the customer stating the amount of consideration that has been written off. The notification to the customer for the write-off must include:
– Invoice number and date of invoice which has not been paid.
– Amount of consideration which has been written off.
- It may not be necessary to obtain an acknowledgment from the customer. However, it is prudent to retain the evidence of having sent the notification.
- The adjustment on account of bad debt relief should be made in the “Adjustment column” of Box 1 of the VAT Return. The adjustment amount should be the VAT amount only
These key highlights are for your information only and should require further advice, kindly get in touch with our tax experts.
Federal Tax Authority showcases 3 key initiatives in 'UAE Innovation Week'
Date: 09 Mar, 2021
Dubai- March 9, 2021:
The Federal Tax Authority (FTA) is taking part in the UAE’s Innovation Week, under the slogan ‘UAE Innovates 2021’, with the aim of enhancing an innovation culture and encouraging community participation in designing and developing future experiences and initiatives.
Khalid Al Bustani, Director-General of the FTA, said that the authority’s participation in UAE Innovation Week is in line with its strategy to encourage innovation, development, and to contribute to the UAE’s efforts to strengthen the national strategy for innovation and digital transformation, to continuously develop government services.
The FTA’s three initiatives included
- The ‘Tax Innovation Lab’ initiative, which involves holding remote brainstorming meetings on various critical topics that promote innovative ideas;
- The ‘Monitoring Tax Innovations’, which highlighted the most remarkable innovative achievements in the tax field;
- And a series of online comprehensive talks, comprised of virtual dialogue sessions on innovation management, research and development and future trends in the field.
Al Bustani emphasised that this contribution reflects the FTA’s understanding of customer needs and its efforts to meet their expectations and keep them happy.
VAT applicable for services provided by artists, influencers
Date: 08 Mar, 2021
Dubai- March 8, 2021:
The Federal Tax Authority (FTA) has clarified in a bulletin that services provided by artists and social media influencers (SMIs) for consideration are subject to Value Added Tax.
VAT applies to such services and include, but are not limited to, online promotional activities performed on behalf of other businesses for a consideration, such as promoting a product in a blog or a video or promoting a business on a social media post, any physical appearances; marketing and advertising related activities; providing access to any social media influencers’ networks on social media, and any other services that the SMIs may provide for a consideration.
This announcement was shared in the latest Basic Tax Information Bulletin issued by the FTA on the tax treatment of services provided by artists and social media influencers.
The bulletin clarified that if an artist or influencer incurs any costs in providing a service and subsequently recovers that cost from its client, such reimbursement falls within the scope of VAT in the UAE.
Click here to view more.
UAE MoE extends deadline until March 31 for DNFBPs to comply with Anti-money Laundering (AML)
Date: 03 Mar, 2021
Dubai- March 3, 2021:
The UAE has the most attractive trade regimes in the Middle East region, making it a global hub. As a committed member of the International Financial Action Task Force (FATF), the UAE has displayed readiness for anti-money laundering (AML) and counter financing of terrorism (CFT). The UAE taken proactive steps in an effort to monitor the illegal funds and align with international best practices.
Federal Law No 20 of 2018 on Anti Money Laundering (AML) was introduced in the UAE for combating the financing of terrorism and of illegal organizations.
The regulatory authorities under the AML set up are:
- Ministry of Economy
- The Central Bank of the UAE
- Securities and Commodities Authority
- Ministry of Justice
- Insurance Authority
- Dubai Financial Services Authority
- Financial Services Regulator Authority in Abu Dhabi Global Market
The law has enforced great responsibilities on Designated Non- Financial Businesses and Professions (DNFBP) to help tackle money laundering. The UAE’s Ministry of Economy (MoE) is entrusted with the responsibility to supervise the DNFBP and commercial free zones with regards to AML/CFT.
Anyone engaged in the following trade or business activities would be considered a DNFBP:
- Brokers and real estate agents
- Dealers in precious metals and precious stones
- Lawyers, notaries, and other independent legal professionals and independent accountants
- Providers of corporate services and trusts
Click here to know the process of goAML registration.
- The deadline to register in the free goAML system to file STRs (Suspicious transaction reporting) and ARS (Automatic reporting system) for sanctions lists was February 25, 2021 and is applicable for DNFBPs registered in mainland and free zones as well.
- MoE has extended the deadline and grace period for registration until March 31, 2021 for mainland DNFBPs.
- DNFBPs that fail to abide with rules shall be subject to various administrative and financial penalties, that range from warnings to fines between Dh 50,000 to Dh 5 million.
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FTA to deactivate VAT 301 form for VAT payment
Date: 16 Feb, 2021
Dubai- February 16, 2021:
Since the implementation of VAT in UAE, the VAT301 form has been available on e-services portal to manually process the VAT payment on Customs Declarations using the Tax Registration Number (TRN).
Recently, FTA has communicated that form VAT301 will be discontinued on 23 February, 2021 for users who have a valid TRN and were using this form earlier for settlements via their VAT returns. Anyone registered for VAT purposes and having a valid TRN, in order to continue being able to import goods via Customs, ensure that your
Customs Registration Numbers (CRN’s) are linked to your Tax Registration Number (TRN).
If you do not have a CRN, ensure you register with the Customs Department and link your CRN with TRN. Alternatively, you will only be able to import goods via a clearing company registered with the FTA or use form VAT301 to utilize the payment option.
If you are from those whom the condition and rules applies on as it is shown below :-
1– Designated entities exempted by FTA.
2- Free zone Companies that exports through land to GCC Countries from designated zones[AHA1] for the VAT purpose.
3- FTA accredited Shipping and Clearance Agencies to clear shipments of on behalf of registered/non-registered importers with FTA.
NOTE: You can request to open form VAT301 for VAT settlements based on customs declarations through FTA’s online services. To submit application download VAT-301-SETTLEMENT-ACCESS-FORM
This will need to be filled and sent to VAT301application@tax.gov.ae along with applicable documents such as sample GCC transit customs declarations for review and approval.
Send your inquiry and we will arrange a consultation on this subject.
FTA Inspections in UAE: to enhance Excise Tax compliance and reduce violations
Date: 15 Feb, 2021
Dubai- February 15, 2021:
The number of inspection campaigns organized by the Federal Tax Authority (FTA) witnessed notable growth during 2020 across UAE markets. Some were conducted in collaboration with Departments of Economic Development and other relevant entities to protect consumer rights and increase the level of tax compliance.
The Authority said that these campaigns were carried out as part of their extensive efforts to contribute towards strengthening market performance, protect legitimate trade and prevent the sale of contraband within the UAE and tax evasion.
The application of Excise Tax laws achieved remarkable success since their implementation, reflecting positive results primarily in building a safe and healthy society by reducing the consumption of harmful goods.
The FTA noted that the total value of the liabilities caught during the inspection visits amounted to AED 191,830,000 in the category of goods subject to Excise Tax, 9.4 million units of cigarette packs and 14,000 kilograms of shisha tobacco products were uncovered as goods not bearing digital tax stamps and no tax has been declared or paid on them. Other goods caught in violation of Excise Tax laws included a total of more than 803,000 items ranging from carbonated beverages, energy drinks, sweetened drinks and electronic smoking devices.
FTA Director-General, Khalid Ali Al Bustani, confirmed that the Authority prioritizes consumers’ protection from harmful products that do not meet the UAE’s regulations and standards while actively combating tax evasion.
The Authority will continue to conduct its inspection campaigns to enhance tax compliance and reduce transactions that violate legislation and tax procedures.
Owners of multiple 'sole businesses' need just one VAT registration: FTA
Date: 10 Feb, 2021
Dubai- February 10, 2021:
According to the FTA, anyone owning multiple ‘sole businesses’ in the UAE need only one tax registration for all of them, and not for each one separately. It means that all tax claims must be filed collectively by the individual and for the establishments he owns. A sole establishment is 100 per cent owned by an individual, and does not have legal standing independent of its owner.
The FTA clarified that the sole proprietorship rule does not apply to a One-Person Company LLC or similar legal entities, which are seen as “distinct and separate legal persons” from their owners (unless the applicable legislation treats such entity and the natural person as the same person). For the avoidance of doubt, it should be noted that a legal person a company) cannot own a sole establishment. In certain cases, tax registrations by taxpayers are reviewed with regards to sole establishments and such persons will be informed of the corrective measures to be taken.
The tax claims filed by the business owner in addition to his sole establishments must be considered collectively to determine whether the person exceeded the mandatory VAT registration threshold of Dh375,000.
The FTA said the registrant must inform the FTA of any undeclared output tax by submitting a voluntary disclosure in accordance with Federal Law No. 7 of 2017 on Tax Procedures. A natural person is also required to notify the FTA if it failed to register for VAT and take the necessary corrective action to account for any outstanding dues.
MoF extends deadline till January 31, 2021 for submitting ESR notifications
Date: 06 Jan, 2021
Abu Dhabi- January 6, 2020:
The Ministry of Finance (MoF) has announced the extension of the deadline for submitting Economic Substance Regulations (ESR) notifications and reports.
All companies in the UAE that engage in any of the ESR’s relevant activities must submit an annual ESR notification to its Regulatory Authority no later than January 31, 2021 in order not to be subject to administrative penalties.
All companies that fall under this decision are immediately to register an account in the ministry to access the ESR Portal to submit needed reports, notifications and supporting documents electronically before the mentioned deadline as no further extension will be granted to deviating companies.
FTA conducts a second virtual workshop for tax agents on tax treatment of e-commerce
Date: 15 Nov, 2020
Abu Dhabi- November 11, 2020:
The Federal Tax Authority (FTA) confirmed that several general Value Added Tax (VAT) rules apply to e-commerce transactions, in addition to a number of special VAT rules specifically applied to e-commerce transactions. E-commerce refers to the supplies of goods and services on digital platforms, via computers or mobile phones purchased from websites or electronic applications.
The workshop saw the participation of 225 accredited tax agents and a number of FTA officials. The FTA gave a presentation on how to apply VAT on the supplies of goods and services made within the e-commerce framework and how to calculate VAT on these supplies. The FTA also presented an overview of e-commerce, the principles of VAT on the supply of goods via e-commerce and the supply of electronic services, and the effects of VAT on electronic markets using practical examples. The presentation indicated that all goods and services purchased through online shopping sites are generally subject to 5% VAT if the place of supply is in the UAE. The tax is also applied to most of the goods that are sold inside the UAE; subject to some exceptions per the VAT legislation (such as medicines sold on websites). Additionally, the import of goods is subject to VAT.
His Excellency Khaled Ali Al Bustani, Director General of the FTA, stressed that the number of FTA accredited tax agents is increasing steadily, in line with the continuous growth of taxable persons within the tax system. H.E. Al Bustani said: “The number of accredited tax agents increased in the first 10 months of 2020 by more than 10% to 515, compared to 468 in the same period last year. This increase provides more opportunities for taxpayers wishing to deal with the FTA through tax agents by offering them an extensive, constantly-updated list of approved agents on the FTA’s website.”
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