Voluntary disclosures by UAE businesses on VAT or excise tax will face heavy penalties
Date: 20 Oct, 2020
Dubai- October 20, 2020:
There is a major development in the UAE tax litigation landscape.
In a very significant twist, the voluntary disclosures made by UAE based businesses on their actual VAT obligations will now be charged with late payment penalties (up to 300% of the tax due). Late payment penalties would apply from the due date of the tax return and not from the date of the voluntary disclosure.
This is according to a ruling by the UAE Federal Supreme Court judgment on an appeal filed by the UAE Federal Tax Authority.
Tax payment through the new version of the eDirham card
Date: 19 Oct, 2020
Abu Dhabi- October 19, 2020:
The new generation of the eDirham cards have been included as one of the official payment channels provided by the authority. Tax payments can be processed via the new eDirham cards as of Sunday 1st November, 2020, as payments will not be accepted through the existing eDirham cards with effect from the same date.
In order to ensure a smooth transition to the new generation of the eDirham, the authority calls on VAT registrants to prepare to make the switch to the new version. This comes to replace the old version of the eDirham, which will be suspended and will not be available to use for the Authority’s transactions as from the beginning of November 2020.
The FTA stresses that the new version of the eDirham will provide users with a more diverse set of options that are both easier to use and adhere to the highest standards of safety and excellence.
Higher educational institutions can claim VAT refund
Date: 14 Sep, 2020
Abu Dhabi- September 13, 2020: The Federal Tax Authority (FTA), has confirmed that higher educational institutions making only zero-rated and/or standard-rated supplies may recover input tax in full, except where recovery is specifically blocked.
Blocked input tax includes value-added tax (VAT) incurred on certain entertainment services, and motor vehicles that have been purchased, leased, or rented and made available for personal use, the FTA said on Sunday.
The Authority noted that higher education institutions providing exempt supplies are eligible to recover only a portion of the input tax incurred.
The FTA’s Basic Tax Information Bulletin focuses on the tax treatment for the higher education sector in respect of universities and higher education institutions recognised by the competent federal or local government entity regulating the higher education sector where the course is delivered.
Zero VAT for face masks and sanitisers
Date: 02 Sep, 2020
Dubai- September 2, 2020: Medical equipment like disposable suits, hand sanitisers, face masks, respirators for air purification and gloves will be subject to zero-rated value-added tax (VAT) in the UAE. A resolution stipulating this was adopted by the UAE Cabinet to mitigate the repercussions of Covid-19 and support the healthcare sector in the country.
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, chaired the meeting at Qasr Al Watan in Abu Dhabi. He hosted virtually a number of teaching staff and students from different schools in the UAE.
He stressed that education has always been a top priority. “The country exerts unwavering efforts to develop the educational system despite all circumstances,” he said.
UAE Federal Tax Authority launches smart app to detect uncertified tobacco products
Date: 25 Aug, 2020
Abu Dhabi-August 25, 2020: Tax evasion and trade in inferior products and counterfeit goods are among the main challenges facing tax authorities around the world. As part of its on-going efforts to protect consumers from commercial fraud and combat tax evasion with various mechanisms and utilizing the latest technologies, the Federal Tax Authority (FTA) has launched a smart application that can be applied to check on the legality of trademarked tobacco products.
The app enables consumers to scan the stamps placed on the tobacco packages to verify that it is an Authority accredited digital tax stamp, ensure that these products meet the standard specifications, are not smuggled, and have been subjected to tax. Should the consumer discover that the stamps are not accredited, they can file a report to the FTA directly from the smart application. The Authority will then cooperate with the relevant authorities to take legal actions against violators.
The Authority said in a press release issued today that the application has been instigated under the banner, “Monitor yourself, fight fraud”, adding that users can install the app, known as ‘FTA DTS’, on their smart phones via the Apple Store and Google Play.
Commenting on the initiative, His Excellency Khalid Ali Al Bustani, Director-General of the Federal Tax Authority, said: “The ‘FTA DTS’ smart application is one of the effective tools that support the ‘Marking Tobacco and Tobacco Products Scheme’, which came into effect at the beginning of 2019 to combat tax evasion, protect public health and reduce the risks to consumers from the inferior products entering local markets.”
VAT applicable for e-commerce sales, says FTA.
Date: 12 Aug, 2020
Abu Dhabi, UAE, 12 Aug, 2020: The Federal Tax Authority (FTA) has clarified that Value Added Tax (VAT) is applied on e-commerce services (also known as “electronic commerce”, sometimes referred to as the “digital economy”) upon their actual use or enjoyment in the UAE. Note that although many of the general rules of VAT apply to e-commerce, there are a number of special rules that apply specifically to e-commerce transactions.
This guide issued by the FTA clarifies how the VAT Law applies to the supply of goods and services provided through electronic means, such as the internet or similar electronic networks. The guide incudes guidance on the application of VAT on goods and services supplied within the scope of e-commerce, and the imposition and accounting for VAT on those supplies.
The guide outlines the tax treatment of the supply of electronic services, such as services that are provided directly over the internet, an electronic network, or an electronic market, including the supply of domain names, web-hosting and remote maintenance of programs and equipment, software (including the updating thereof), images, text and information provided electronically such as pictures, screen savers, electronic books, documents and other digitized files, music, movies and games on demand, and online magazines.
Other services identified under the banner of ‘electronic services supplies’ include the supply of advertising space on a website and the rights associated with that advertisement, and Political, cultural, artistic, sports, scientific, educational or entertainment broadcasts, including broadcasts of events, live streaming via the internet, the supply of distance learning services, and services of any equivalent type that have a similar purpose and mission.
The FTA Director-General, His Excellency Khalid Ali Al Bustani, noted: “Tax legislation in the UAE is characterized by transparency and accuracy, and takes into account the strengthening of the nation’s leadership position as a central economic and commercial center, not only regionally but also at a global level. In light of the increasing importance of the e-commerce sector, clear mechanisms for procedures have been identified. Value Added Tax, as it relates to the supply of goods and services through electronic means, contributes to supporting the activities of this vital sector, which depends on a locally developed digital and technological infrastructure.”
His Excellency added: “The Federal Tax Authority is keen to apply the best international standards in all its activities and the services it provides to its customers, and to contribute to preserving the advanced competitive position of the country across all sectors, with the means to encourage creativity and innovation.”
His Excellency Khalid Al-Bustani asserted that the FTA is making continuous efforts to contribute to supporting the national economy in general, and the digital economy. His Excellency mentioned, in particular, that the e-commerce sector is witnessing rapid growth, as the UAE is one of the fastest growing e-commerce markets in the region, enhanced by the availability of an advanced digital infrastructure, and a growth-friendly legislative environment.
The FTA indicated that all goods and services purchased through online shopping sites are subject to 5% VAT if the place of supply is in the UAE, like any other purchases made by traditional means, as per the special provisions governing the tax treatment of supplies.
The guide, which has been published on the FTA’s website, www.tax.gov.ae, makes the point that in traditional trade transactions, goods and services are usually supplied from a physical location such as a store or representative office, with the supplier or recipient present at the same site. For e-commerce, however, it generally refers to the supply of goods and services that take place on the internet or similar electronic networks, where goods and services are obtained or supplied through electronic means such as computers or mobile phones via websites or electronic applications (apps).
The guide also provides guidance on the VAT treatment of goods purchased through electronic platforms and services supplied through electronic means, indicating that taxable persons should charge VAT to customers when supplying taxable goods or services (generally, at the standards rate of 5%, or where the VAT Law permits, at a rate of 0%). If the supplies are exempt from tax, these supplies are not treated as a taxable supplies and therefore no VAT needs to be charged on these supplies.
The FTA clarifies in its guide that different conditions and requirements may apply to mandatory or voluntary registration, depending on whether a person has a place of residence in the UAE. A person has a place of residence within in the UAE for the purposes of VAT registration if he has a place of establishment in the UAE.
The guide also deals with the legal requirements for compulsory and voluntary registration, noting that a non-resident may not register voluntarily for VAT on the basis of his ‘taxable expenses. Furthermore, the guide sets out the criteria for determining the place of supply (whether it is inside or outside the UAE), the VAT treatment for supplies of goods through online platforms where the suppliers are UAE residents who are subject to tax, and for suppliers who are not resident in the UAE.
The guide also provides more information on the procedures for recovering input tax on e-commerce transactions and the application of the ‘reverse-charge mechanism’ which could apply on e-commerce transactions. The revers-charge mechanism aims to reduce the burden of compliance and the administrative burden related to collecting VAT from non-resident suppliers. It levels the playing field between the supply of services or goods from a supplier outside the UAE and by a local supplier. This ensures that local UAE suppliers in the country are not prejudices as a result of consumers purchasing online from foreign suppliers.
All other aspects related to the tax treatment of supplies made through agents and the requirements for tax invoices in e-commerce transactions are detailed in the guide, which is available on the FTA’s website, www.tax.gov.ae.
FTA continues to accomplish achievements, says Hamdan bin Rashid
Date: 21 Jul, 2020
Abu Dhabi – July 2, 2020:
H.H. Sheikh Hamdan bin Rashid Al Maktoum chairs first FTA Board of Directors meeting since Cabinet reconstitution
The FTA Board of Directors, chaired by His Highness Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, UAE Minister of Finance and Chairman of the FTA Board of Directors, has held its first meeting since the UAE Cabinet of Ministers approved the decision to reconstitute the FTA’s Board of Directors.
During the virtual meeting held on Monday morning, His Excellency Obaid Humaid Al Tayer, Minister of State for Financial Affairs, was elected as Vice Chairman of the FTA’s Board of Directors.
- The FTA continues to accomplish positive results and achievements, reflecting the strength of the national economy despite challenges faced by the global economy due to the effects of combating the spread of COVID-19.
- The FTA supports taxpayers in fulfilling their obligations by efficiently providing services remotely.
- AED 206 million in tax refunds for 3,124 for UAE Citizens building new residences -a growth of 136.7% over a period of 6 months.
- An increase of VAT registrants to 335,530 and Excise Tax registrations to 1,159.