News Update

NBR holds an interactive workshop for professionals working in the real estate, construction, and manufacturing sectors

Date: 17 Jul, 2019

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External URL: https://www.nbr.gov.bh/releases/52

The National Bureau for Revenue (NBR) held an interactive VAT workshop for professionals working in the real estate, construction, and manufacturing sectors to recap general and sector-specific VAT concepts, including invoicing and filing.

Following a question-and-answer session, 189 representatives from 113 entities were given the opportunity to visit a unique interactive demo-center that provides an innovative learning experience in order to ensure effective implementation of VAT.

Today’s workshop is a continuation of a series of workshops organised by the NBR to provide an inclusive platform for all stakeholders from the public and private sector to increase awareness of VAT return filing procedures ahead of deadlines.

IMF urges Oman to introduce VAT as soon as possible

Date: 12 Jul, 2019

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External URL: https://www.arabianbusiness.com/politics-economics/423492-imf-urges-oman-to-introduce-vat-as-soon-as-possible

The International Monetary Fund has urged Oman to introduce VAT as soon as possible as the sultanate’s economic recovery from the 2014 oil price shock remains subdued.

The UAE and Saudi Arabia were the first countries in the GCC to introduce a 5 percent VAT on January 1 2018 while Bahrain made the move a year later but Oman, Kuwait and Qatar have not yet implemented the tax.

While welcoming the Oman’s plans to continue with fiscal consolidation, IMF directors called for an expeditious introduction of VAT and measures to adjust government spending.
They also encouraged Omani authorities to implement an ambitious medium-term fiscal adjustment plan, based on reforms to tackle current spending rigidities, streamline public investment, and raise non-hydrocarbon revenue.

The recommendations were made by the executive board of the IMF following the conclusion of a Article IV consultation with Oman.

The IMF said since the 2014 oil price shock, Oman’s policy efforts have aimed at strengthening the fiscal position, enhancing private sector-led growth and employment, and encouraging diversification.

It added that economic activity started to recover last year, and the overall fiscal and current account deficits improved somewhat, reflecting mainly higher oil prices.

Daily cash limit for VAT refunds set at AED7,000

Date: 10 Jul, 2019

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External URL: http://wam.ae/en/details/1395302772660

H.H. Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and Minister of Finance and Chairman of the Federal Tax Authority (FTA), has issued FTA Decision No. (1) of 2019, setting a daily maximum of AED7,000 for cash refunds of Value Added Tax (VAT) for tourists applying through the Tax Refunds for Tourists Scheme.

In a press statement issued today, the FTA asserted that the Tax Refunds for Tourists Scheme, which entered into effect in November 2018, is characterised by its efficiency, seamless procedures, speed, and accuracy in processing applications.

FTA Director-General Khalid Ali Al Bustani said: “The new decision regarding the maximum daily amount a tourist can reclaim in cash is in line with the UAE’s overall strategy to reduce reliance on cash in financial transactions, and benefit from the country’s advanced digital and technological infrastructure. These systems are key components in driving the continuous development of the UAE’s financial and economic sectors; they facilitate the flow of money and financial assets securely, increasing trust in financial transactions – both local and international.”

“The Federal Tax Authority is committed to implementing the highest international standards across all its activities and services, in line with the directives of the UAE’s wise leadership to make the UAE one of the best countries in the world by 2021,” he added. “We are committed to maintaining the UAE’s competitiveness as the only Arab economy that is based on innovation and creativity. The new decision abides by best practices implemented in advanced economies, which prioritise effective and holistic risk management and promote e-payment solutions.”

New shisha tobacco, e-cigarettes tax rule announced in UAE

Date: 10 Jul, 2019

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External URL: https://www.khaleejtimes.com/business/vat-in-uae/new-shisha-tobacco-e-cigarettes-tax-rule-from-november-1

His Highness Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and Minister of Finance, and Chairman of the Federal Tax Authority, FTA, has issued a Decision whereby the “Marking Tobacco and Tobacco Products Scheme” will be implemented on water pipe tobacco and electrically heated cigarettes as of November 1, 2019.

The decision also determines the dates when “Digital Tax Stamps” will be made available, as well as the standards for stockpiling them.

The authority has explained that the scheme facilitates inspections at local markets and customs ports to prevent the sale of contraband products and goods where the tax liability was not paid, and combat commercial fraud. Digital Tax Stamps will be placed on packages of tobacco products and registered in the FTA database.

The stamps store digital information that can be read with a special device to verify that all taxes due on the said products have been paid.

 

Do not fall for this VAT refund scam

Date: 09 Jul, 2019

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External URL: https://gulfnews.com/uae/crime/uae-bank-warning-do-not-fall-for-this-vat-refund-scam-1.65084300

If you have got a purported email from Mashreq Bank asking you to seek value added tax (VAT) refunds by submitting your bank details, banish the thought. It’s a phishing scam!

Of late, several Mashreq Bank customers have got a dodgy email saying they are eligible to receive over Dh10,000 in VAT refunds based on ‘last audit calculations of their fiscal activity”.

Customers are then instructed to enter their credit card details, compete with CVV numbers and expiry dates in an accompanying form and send it back by email.

How do I charge VAT for items that are not sold yet?

Date: 09 Jul, 2019

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External URL: https://www.thenational.ae/business/money/how-do-i-charge-vat-for-items-that-are-not-sold-yet-1.884236

My business supplies sportswear and accessories, with one of our sales channels on a sale or return basis to gyms and yoga studios. We recently registered with the FTA [Federal Tax Authority] and want to know how to account for VAT on items not paid for by my clients until they are ultimately sold to their customer. It seems unfair to raise a tax invoice and demand immediate payment when I send stock to the gym, even though they will not pay for the goods until months later or possibly return the items and not pay at all. LL, Abu Dhabi

The sales model you describe is typically known as consignment, sale on approval, or sale or return. Under this arrangement the supplier will provide products to the buyer but the buyer is not obliged to pay until he has sold them to his customer, or he agrees to take ownership of them from the supplier.

Typically if the items remain unsold, the customer can return them to the supplier without payment. Customers like this arrangement because all the risk stays with the supplier. However, this type of sale creates some confusion from an accounting and VAT perspective.

Because the customer does not take legal ownership of the products until they are sold on, account for them as your stock until the final sale happens, even though they are not physically in your possession.

Shipping and logistics VAT guide released

Date: 07 Jul, 2019

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External URL: https://www.khaleejtimes.com/business/local/shipping-and-logistics-vat-guide-released

WTS Dhruva Consultants has published a comprehensive guide on ‘VAT implications on the shipping and logistics sector’ for companies engaged in the business. This is its second publication, the first being on the UAE healthcare.

The guide covers a wide range of topics across various service lines and will be a relevant tool to a wide cross-section of organisations within the sector, as it highlights the VAT implications on transportation, supply/leasing of vessels, warehouses, and courier agencies’ activities.

Dinesh Kanabar, CEO and founder of WTS Dhruva Consultants, says that “a majority of tax jurisdictions apply for exemptions and/or zero-ratings to the inbound and outbound transportation of goods, whereas the transportation of goods locally attracts taxes. In the UAE, inbound and outbound transportation is zero-rated, while the transport of goods locally is subject to VAT at five per cent.”

The guide has deliberated on whether local transportation can be treated as zero-rated if the same is linked to the international movement. It also addresses the VAT treatment on different reimbursable expenses incurred at the port by the shipping lines, freight forwarders, agents, etc.

Emirates NBD offers VAT-based loan solution to SMEs

Date: 03 Jul, 2019

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External URL: https://www.sme10x.com/finance/emirates-nbd-offers-vat-based-loan-solution-to-smes

It’s just been one year since the introduction of VAT in the UAE and while there have been many learnings, many SMEs have also faced a range of challenges. To cater to the market’s needs, Emirates NBD, Dubai’s largest bank, has launched a new VAT-based loan solution for SME customers.

The new programme makes the lending application process easy for SMEs. They can now get their business turnover and income validated by simply providing copies of the VAT returns filed with the UAE’s Federal Tax Authority. To begin with, home, auto and business loan products will be offered.

This programme also addresses one of the biggest challenges faced by SMEs in the region: getting bank loans. Bank lending remains the lowest in the region at 5%, and understandably so as banks face loss rates as high as 20%, as revealed by Mashreq Bank.

Federal Tax Authority launches new website

Date: 03 Jul, 2019

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External URL: https://www.thenational.ae/business/technology/federal-tax-authority-launches-new-website-1.881848

The UAE Federal Tax Authority (FTA) launched its upgraded website with a bundle of services and amenities for users, also enabling them to submit forms online.

“The Federal Tax Authority has designed its new website in accordance with international best practices,” said FTA director general Khalid Ali Al Bustani

“The site plays a fundamental role as the main platform of the Federal Tax Authority in order to keep pace with the rapid technological development in this area. It has been configured to provide the best services for business, facilitate optimum access to customers and employs the latest technologies to enhance interaction between the authority and the various business sectors around the clock.

“All forms have been automated to ensure the validity of the data submitted to the authority and thus help speed-up the authority’s response to taxpayers’ requests. The site also provides a comprehensive tax library for all guides, e-learning programs, videos and simplified graphics.”

Mr Al Bustani said he hoped the website would contribute to improving the electronic experience of taxpayers and that it would enhance user interaction.

NBR holds an interactive VAT workshop

Date: 03 Jul, 2019

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External URL: https://www.nbr.gov.bh/releases/51

The National Bureau for Revenue (NBR) held an interactive VAT workshop, during which general and sector-specific VAT concepts, including invoicing and filing, were recapped. Following a question-and-answer session, 75 attendees representing 54 entities were given the opportunity to visit a unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.

Today’s workshop is a continuation of the series of workshops organised by the NBR to provide an inclusive platform for all stakeholders from the public and private sector in order to increase businesses’ awareness of VAT return filing procedures ahead of deadlines.

VATP012 - Importation of goods by agents

Date: 02 Jul, 2019

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External URL: http://www.allaboutvat.com/wp-content/uploads/VATP012-Importation-of-goods-by-agents.pdf

New clarification VAT P012 on import of goods by agents or customer of owner of goods.

Agent/customer can reverse in box 7, the pre-populated import in box 6.

Also, the owner of goods has to pass positive adjustment in box 7.

There needs to be an agreement in place between the agent/customer and the owner of goods.

Alternate arrangement still available where the agent gives a statement and recovers the VAT from owner of goods. However, he will not claim RCM credit in box 10.

Bahrain scraps fees on 200 government services

Date: 02 Jul, 2019

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External URL: https://www.arabianbusiness.com/politics-economics/423199-bahrain-scraps-fees-on-200-government-services

Bahrain has decided to scrap fees on up to 200 government services, it was announced in a cabinet meeting on Monday, according to a report by the Gulf Daily News website.

While the list of services which would now be free was not named in the report or by the cabinet, it was also revealed that an additional 220 government services will be exempted from value-added taxes for Bahraini nationals.

The decision means a total of 1,620 services will now be VAT-exempt for Bahraini citizens.

The decision was ordered by Prime Minister Prince Khalifa bin Salman Al Khalifa following King Hamad’s order to review all tax measures.

VAT was introduced in Bahrain in January 2019 in a bid to diversify and increase government revenues.

 

UAE VAT collection exceeds expectations

Date: 01 Jul, 2019

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External URL: https://www.sme10x.com/10x-industry/uae-vat-collection-exceeds-expectations

In its first step to reduce dependency on oil revenues, UAE introduced the 5% Value Added Tax (VAT), implemented since the 1st of January 2018.

According to Moody’s report, UAE’s collection of tax has far exceeded original estimates.

As per government data, VAT collections totalled AED 27 billion ($7.4 billion) in 2018, compared to an anticipated AED 12 billion ($3.3 billion). This amount was also higher than the government’s projection of AED 20 billion ($5.5 billion) in 2019.

Of the total VAT collection, UAE’s federal government will retain 30 percent (AED 8.1 billion) while the remaining AED 18.9 billion will be divided amongst the country’s seven emirates.

According to the report, Dubai was the largest beneficiary of VAT, receiving approximately 60% share of the revenue attributed to the emirates and 42% of total revenue.

Dubai biggest beneficiary of VAT revenue

Date: 01 Jul, 2019

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External URL: https://www.khaleejtimes.com/business/vat-in-uae/dubai-biggest-beneficiary-of-vat-revenue-12

Dubai was the largest beneficiary among the seven emirates in value-added tax (VAT) collection last year, receiving 42 per cent or Dh11.34 billion of the Dh27 billion total, Moody’s Investors Service said.

Data from the global ratings agency showed that the federal government will retain 30 per cent, or Dh8.1 billion, of the collected revenues while the remaining Dh18.9 billion, or 70 per cent, will be divided among the emirates.

After Dubai and the federal government, Abu Dhabi will receive 18 per cent (Dh4.85 billion). Sharjah will get 6 per cent (Dh1.61 billion) and the Northern Emirates will receive 4 per cent (Dh1.1 billion).

The UAE levied 5 per cent VAT on selected goods and services from January 1, 2018, in order to boost revenues and diversify economy away from hydrocarbon dependence. The Federal Tax Authority collected Dh27 billion in VAT revenues in 2018, surpassing its 2018 target of Dh12 billion and even the 2019 target of Dh20 billion.

Thaddeus Best, analyst at Moody’s Investors Service, said the UAE surpassing its 2018 VAT collection target by 125 per cent is credit-positive for the country.

FTA approves 390 requests to refund housing tax worth AED17.52 million: FTA Director-General

Date: 26 Jun, 2019

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External URL: http://wam.ae/en/details/1395302770434

Khalid Ali Al Bustani, Director-General of the Federal Tax Authority, FTA, revealed that the FTA approved 390 requests to refund housing tax worth AED17.52 million, in implementation of the vision of the UAE’s leadership to create a modern housing system for UAE citizens and provide them with the best living standards.

In statements to the Emirates News Agency, WAM, Al Bustani revealed that the number of registrations in the VAT system exceeded 300,000 while the number of registrations in the excise tax system totalled around 724.

The FTA also highlighted the positive outcomes of partnerships agreements signed with relevant authorities and noted their key contributions to the successful adoption of the tax system while stressing that the e-connectivity systems used jointly by the FTA, the Federal Customs Authority and the local customs departments have ensured the easy adoption of the tax system while the e-connectivity system used jointly by the Ministry of Finance and the UAE Central Bank have facilitated the payment of due taxes.

The UAE Central Bank’s “UAEFTS” system is the country’s main tax refund system, includes several payment options, and offers tax payment services in 77 bank branches, exchange offices and financial companies through their “GIBAN” reference. Payments can also be made through the “e-AED” platform.

The FTA also began implementing a VAT refund option for visiting foreign businesses” in April, and launched 60 manuals on VAT and excise tax, as well as e-learning programmes, short awareness films and over 50 flyers.

The Authority noted that it provided 266 workshops for instructions related to taxation in the business sector. It also organised 95 seminars attended by 30,000 specialists from various business sectors.

 

High VAT revenues fortify UAE government finances

Date: 25 Jun, 2019

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External URL: https://gulfnews.com/business/high-vat-revenues-fortify-uae-government-finances--moodys-1.64834236

The UAE’s value added tax (VAT) collections in the first year exceeded the original estimates and is driven by strong tax compliance, according to credit rating agency Moody’s.

“The government’s 2018 and 2019 VAT revenue forecasts had included conservative assumptions regarding the level of compliance in the initial years of implementation. Nonetheless, the robust level of compliance in the first year of the tax framework is a positive reinforcement of the UAE’s high institutional strength,” Thaddeus Best, an analyst at Moody’s wrote in a report.

Moody’s which rates the UAE at Aa2 stable believes that the stronger than expected tax revenues is credit positive for the country.
VAT collection data released by the government showed collections were far higher than expected, reaching Dh27 billion ($7.4 billion) in 2018 compared to the government’s original projection of Dh12 billion ($3.3 billion), and higher even than the government’s 2019 projection of Dh20 billion ($5.5 billion).

According to Moody’s report, the federal government will retain Dh8.1 billion (30 per cent of collected revenues) while the remaining Dh8.9 billion will be divided among the emirates.

44% of UAE SMEs still unaware of automated VAT solutions

Date: 21 Jun, 2019

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External URL: https://www.khaleejtimes.com/44-of-uae-smes-still-unaware-of-automated-vat-solutions

It has been more than 17 months since the UAE introduced the value added tax (VAT) but 44 per cent of small and medium-sized enterprises (SMEs) still perform their daily tasks manually for VAT records and filing returns as they are unaware of automated solutions, revealed a survey conducted by Tally Solution.

Vikas Panchal, business head for the Middle East at Tally Solutions, said that such a low level of awareness is due to a prevailing perception in the market that VAT-compliant business management software is for larger companies only.

“As a result, investment in such a software programme is relegated in the backseat, not knowing that giving it a priority is the key to ensuring correct VAT compliance. This is further compounded by limited understanding of VAT, resistant to change, and budget constraint,” said Panchal.

SMEs should consider it as an investment rather than expenses because committing mistakes while filing VAT returns can result in fines and penalties, he added.

The survey covered over 200 small and medium-sized businesses in the UAE.

VAT Administrative Exceptions User Guide

Date: 20 Jun, 2019

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External URL: http://www.allaboutvat.com/wp-content/uploads/VAT-Administrative-Exceptions-Form-Final.pdf

FTA has introduced the VAT Administrative exception formality where taxable persons can seek concessions /exceptions as per VAT laws for the following categories:

Tax Invoices – Exceptions for raising tax invoice or not mentioning particulars required.

Tax Credit Notes – Exceptions for not raising tax credit notes or not mentioning particulars required.

Length of Tax Period – Tax Period Change to Monthly, Quarterly or Half yearly.

Stagger of Tax Period – Staggering of tax period to end with the month requested by tax payer.

Extension of time for exports – Extension for physical export of goods beyond 90 days.

FTA may take 40 business days on Decision for Tax Invoice, Credit Notes, Tax Period Length or Staggering of Tax Period.

FTA may take upto 20 business days for Decision on export of goods extension.

VAT-Administrative-Exceptions-Form

NBR holds an interactive workshop for representatives working in the service sector

Date: 20 Jun, 2019

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External URL: https://www.nbr.gov.bh/releases/50

The National Bureau for Revenue (NBR) held an interactive VAT workshop for professionals working in the service sector, during which the NBR recapped general and sector-specific VAT concepts, including invoicing and filing.

Following a question-and-answer session, 118 representatives from 74 vendors were given the opportunity to visit the unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.

Today’s workshop is a continuation of the series of workshops organised by the NBR to provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BHD 500,000 to BHD 5,000,000 by June 20th, 2019.

Will VAT rate go up in GCC?

Date: 17 Jun, 2019

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External URL: https://www.khaleejtimes.com/will-vat-rate-go-up-in-gcc

The GCC states will eventually increase value-added tax (VAT) rate, which is one of the lowest in the world, but it could take years before the regional government agree to hike it, tax experts said at a summit on Monday.

Surandar Jesrani, managing partner and chief executive officer (CEO) of MMJS Tax Consultancy, said the UAE and Saudi Arabia cannot unilaterally raise VAT as it is GCC-wide framework agreed among all the six member nations.

“The International Monetary Fund (IMF) is a driving factor as the whole GCC VAT is an IMF initiative. The GCC could increase VAT rate but we don’t know when. But it cannot be unilateral,” he said.

The IMF recently recommended that five per cent VAT levied in Saudi Arabia and the UAE as part of a GCC-wide framework should be raised, saying it is low by global standards. “The region really needs to understand when it is right time for the increase. Considering current economic situation, five per cent is fair now. However, there could be an increase,” Jesrani said.

 

2nd phase of VAT registration deadline

Date: 15 Jun, 2019

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VAT Registration

VAT registration is the process through which a subject to VAT entity requests to be enrolled for VAT. Upon registration, a dedicated VAT account number will be assigned to the entity.

Mandatory Registration

  1. All entities subject to VAT generating or expected to generate more than BHD 5,000,000 in annual supplies of goods and services are legally required to register for VAT by December 20th, 2018.
  2. All entities subject to VAT generating or expected to generate between BHD 500,000 and BHD 5,000,000 in annual supplies are required to register by June 20th, 2019.
  3. All entities subject to VAT generating or expected to generate between BHD 37,500 (mandatory threshold) and BHD 500,000 in annual supplies are required to register by December 20th, 2019.

Process for registration

  1. To register for VAT, VAT payers must first create NBR profile.
  2. The VAT payer is required to populate the NBR form and specify their information including:
    • VAT payer details (Legal name, Legal form, Address, contact details, VAT eligibility date etc.)
    • Commercial registration details (CR Number, CR date, Subsidiary details, Sector etc.)
    • Financial information (annual value of supplies, expenses, imports and exports)
    • Registrant details (Name, identification number, DOB, job title etc.)
    • Documentation (commercial registration certificate, customs registration certificate, audited financial statements, copy of registrant ID, etc.)
  3. The VAT payer submits the profile creation request. This NBR profile can be created online.
  4. If VAT payer’s NBR profile is approved, they will be provided with login details to access the registration form.
  5. The registration form can be completed in a “single click”. This registration form can be accessed online.
  6. Once the submission is reviewed and approved by NBR, The VAT certificate will be available on the VAT payer’s NBR profile.

Abu Dhabi looks at attracting MICE with new VAT waiver

Date: 14 Jun, 2019

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External URL: https://www.traveldailymedia.com/abu-dhabi-looks-at-attracting-mice-with-new-vat-waiver/

Abu Dhabi National Exhibitions Company (ADNEC) announced it has obtained the Free Trade Agreement (FTA) License for waiver from Value Added Tax (VAT) for all international companies and organisations participating in or holding shows and conferences at its venues across the UAE with effect from 1 June.

The VAT waiver covers exhibitions and conferences held over a period not exceeding seven days. The waiver also stipulates that recipients shall not have a permanent base or established business in the UAE and shall not be registered or obliged to register in UAE as per the UAE VAT Law.

Speaking about the development, Humaid Matar Al Dhaheri, group CEO, ADNEC, said, “The VAT waiver for ADNEC-hosted event organisers and participants will further stimulate the business tourism sector in the UAE through enhancing the competitiveness of our venues to host major international exhibitions and conferences. This move supports our strategy to attract new and world-renowned events to our venues and increase our direct and indirect contributions to the Abu Dhabi economy.”

The business tourism sector is a major contributor identified by Plan Abu Dhabi and Abu Dhabi Economic Vision 2030 to accelerate non-oil GDP growth. Through hosting more than 3,390 events and welcoming nearly 17.5 million visitors to date, the venues – Abu Dhabi National Exhibitions Centre and Al Ain Convention Centre – have delivered a direct and indirect economic impact of more than AED32 billion since ADNEC’s inception in 2005, he added.

Tourists to recover VAT through self-service kiosks

Date: 11 Jun, 2019

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External URL: http://wam.ae/en/details/1395302767219

Self-service kiosks have been set up across all the ports included in the Tax Refunds for Tourists Scheme in order to allow tourists to recover Value Added Tax, VAT, when leaving the UAE.

The kiosks are operated by Planet, the company enlisted by the Federal Tax Authority, FTA, to operate the system for the Tax Refunds for Tourists Scheme.

“The kiosks are significant as tourists can recover VAT without the need to interact with employees,” said Khalid Al Bustani, FTA Director-General. “The kiosks are placed at all exit ports included in the Tax Refund Scheme for Tourists, where tourists can submit the tax invoices on their purchases, along with their passport and credit card, to recover VAT. No limit is placed on the maximum amount that can be recovered if the said amount is transferred to the tourist’s credit card. However, in the event that the applicant requests a cash refund, then the maximum amount is set at AED10,000 per day.”

“The new service reflects our commitment to continuously upgrade our services,” he added. “Our periodic follow-ups have revealed a sustained increase in customer happiness with the Tax Refunds for Tourists Scheme, launched in November 2018 in collaboration with system operator Planet. This is part of the government’s plan to establish a legislative, executive, and technological ecosystem that would galvanise the tourism sector – one of the major contributors to national GDP, whereby the UAE has become a major destination for tourists and visitors, offering safety, hospitality, and world-class services.”

The new system consists of integrated mechanisms to connect retail stores registered with the authority and those wishing to register for the Tax Refunds for Tourists Scheme, linking them to the UAE’s ports of entry. This, in turn, allows tourists to apply for tax refunds on their purchases through the system, which operates on the latest technology, if they are eligible to recover VAT as per the terms and criteria specified in Cabinet Decision No. (41) and FTA Decisions No. (1) and (2) of 2018.

The FTA had outlined several conditions for a tourist to be eligible for a tax refund, such as the tourist must be at least 18 years old; must meet the criteria specified in Cabinet Decision No. (52) of 2018 regarding the Executive Regulations of Federal Decree-Law No. (8) of 2017 on VAT, and must exit the UAE along with the purchased items within 90 days.

Top 5 positive changes in GCC, thanks to VAT

Date: 09 Jun, 2019

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External URL: https://www.khaleejtimes.com/business/vat-in-uae/top-5-positive-changes-in-gcc-thanks-to-vat

Following the signing of the Common VAT Agreement by GCC member states, value-added tax (VAT) has become an important step towards ensuring the region’s socio-economic resilience. The new tax regime is a proactive policy meant to diversify the GCC economy, bringing fundamental positive changes to the region. Below are some of these transformative effects felt just more than a year after the system’s implementation.

Increased transparency and accountability

VAT is simpler to implement compared to other indirect taxes. It is also more transparent because the system entails that it be levied at each stage of the supply chain. Indeed, higher transparency and accountability levels are among the benefits of introducing VAT to the regional market.

Companies required to register for VAT purposes contributes to the transparency level by enabling concerned government authorities to track businesses and monitor effectively their compliance. This provision also leads to the creation of a reliable and updated database, thereby aiding the governments in their respective economic performance assessments.

Businesses are critical to collecting VAT from consumers. While before they have limited reporting requirements, companies are now required to maintain all necessary records such as tax invoices and make timely report to the government. To comply with their duties under the VAT tax regime, it is imperative, therefore, that they make sure that their relevant processes and transactions are compliant with the provisions of the law.

UAE's VAT collections exceeds expectations by a wide margin in 2018

Date: 03 Jun, 2019

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External URL: https://www.khaleejtimes.com/business/vat-in-uae/uaes-vat-collection-exceeds-expectations

UAE residents paid Dh27 billion in value-added tax (VAT) last year, surpassing the government’s target of collecting of Dh12 billion, an increase of 125 per cent. It even surpassed the goal of Dh20 billion VAT revenue collections for 2019.

The total VAT collection was also close to the UAE’s nine-month of surplus, which stood at Dh28 billion during the January-September 2018 period.

Analysts expect that VAT revenues will further increase in 2019 as companies analyse their incomes, expenses and IT systems to ensure that correct VAT has been paid. This, in turn, will help the government to increase its spending on the infrastructure and public welfare programmes.

Shoppers can also enjoy VAT-free shopping at one of the malls.

Date: 30 May, 2019

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External URL: https://www.khaleejtimes.com/ramadan-2019/24-hour-mega-sale-for-eid-al-fitr-at-malls-in-uae

24-hour mega sale for Eid Al Fitr at malls in UAE

Shopping malls in Abu Dhabi has announced a 24-hour mega sale during Eid Al Fitr holidays.

For the third year running, Yas Mall is offering visitors big savings and even receive VAT back on purchases of Dh1,000 or above.

Also read: 15-day Ramadan sale in Dubai; free parking, entry

Running straight through from 10am on June 5, 2019, to 10am the following day, shoppers visiting Yas Mall during the 24-hour extravaganza will enjoy incredible exclusive offers and discounts, as well as tax-free shopping.

Also read: Dubai Duty Free announces Eid sale

For all purchases of Dh1,000 or more, shoppers will receive a Yas Mall gift card loaded with their VAT amount. This exclusive offer will only be available during the 24-hour event.

Shoppers can also win instant prizes from mystery boxes and a triple grand prize give away as part of the sale event.

Starting at 10am, Dalma Mall in Abu Dhabi will  be open for 24 hours and offer a Mega Sale from June 5 to June 6, 2019.

The mall will be celebrating four days of mesmerizing Eid festivities starting with the 1st day of Eid Al Fitr.

UAE Cabinet approves VAT revenues distribution between federal and local governments

Date: 30 May, 2019

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External URL: http://wam.ae/en/details/1395302765668

The UAE Cabinet has approved distribution of the value-added tax (VAT) revenues totalled approximately AED27 billion between the federal and local government.

According to the decision 30 percent of the revenue will go to the federal government, and 70 percent to the local governments.

The decision ensures the sustainability and the quality of government services. It also contributes to the development of economic and social projects and public services.

The VAT was introduced in the UAE on 1st January 2018. The rate of VAT is 5 percent. VAT provides the UAE with a new source of income which will be continued to be utilised to provide high-quality public services.

FTA urges tax agents to comply with standards

Date: 28 May, 2019

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External URL: https://www.gulftoday.ae/business/2019/05/28/fta-urges-tax-agents-to-comply-with-standards

The Federal Tax Authority, FTA, has called on tax agents to comply with the five ‘Professional Standards for Tax Agents’, published in a new guide on the subject, in all of their transactions to ensure uninterrupted activity.

The new guide was issued through the FTA’s official website, offering a detailed explanation of the standards and conditions required for practising the profession of tax agent in the UAE.

In the new guide, the FTA offered a detailed explanation of the five professional standards that should be met by tax agents, noting that a system has been put in place to track and ensure compliance with these standards.

The system relies on three methods, first of which is reviewing the timeliness and accuracy of the taxable persons’ returns if they have appointed a tax agent. The second approach is monitoring requests for clarifications and other correspondence with the FTA sent by tax agents, to ensure that their professional and technical knowledge meets the level expected of them under the outlined professional standards. The FTA has accredited 357 tax agents who meet the technical standards, conditions and qualifications required, and who have passed the exams set by the Authority.

Pre-VAT rush to buy gold, second phase to be implemented from July 1

Date: 28 May, 2019

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External URL: http://www.gdnonline.com/Details/541519/Pre-VAT-rush-to-buy-gold,-second-phase-to-be-implemented-from-July-1

GOLD appears to have regained its shine as jewellers in Bahrain are reporting a surge in demand weeks before the rollout of the second phase of a key levy. The second phase of Value Added Tax (VAT) will be implemented from July 1 .

FTA applies penalties for digital tax evasion on cigarettes

Date: 25 May, 2019

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External URL: https://www.thenational.ae/business/economy/fta-applies-penalties-for-digital-tax-evasion-on-cigarettes-1.866135

Penalties for not implementing the new digital tax stamp scheme on tobacco products include fines of Dh20,000 to more than Dh50,000, the Federal Tax Authority said on Saturday.

A ban on the import of any type of cigarettes into the UAE not bearing the digital tax stamps came into effect on May 1. The sale, importation or production of tobacco products not bearing the digital tax marks will be prohibited in the UAE as of August.

The penalties have been set “in an effort to protect consumers, prevent contraband, low-quality products from entering local markets, and halt sales of smuggled goods in the UAE,” the FTA said in a statement.

Bahrain hosts VAT workshop for construction professionals

Date: 25 May, 2019

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External URL: https://www.constructionweekonline.com/business/182955-bahrain-hosts-vat-workshop-for-construction-professionals

National Bureau for Revenue’s workshop aimed at smooth registration of companies earning $1.3-13m

Bahrain’s National Bureau for Revenue, a part of the kingdom’s government, recently held a value-added tax (VAT) workshop for construction professionals to boost clarity in the sector and support their registration for VAT, which Bahrain started levying in January 2019.

The session saw the bureau providing 45 representatives from 29 vendors a rundown on general and sector-specific concepts surrounding VAT, such as invoicing and filing.

The workshop was followed by a Q&A session, and a visit to an interactive demo center that offers a more hands-on understanding of VAT.

State news agency, BNA, reported that the session was part of National Bureau of Revenue’s goal to work as a platform for all public- and private-sector stakeholders to ensure streamlined company registration by June of firms with an annual income of $1.3-13m (BHD500,000-5,000,000).

VAT was made mandatory for companies in the UAE and Saudi Arabia last year, with Bahrain following suit in 2019.

Dubai airport clerk stole Dh70,000 in VAT refunds

Date: 24 May, 2019

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External URL: https://gulfnews.com/uae/crime/dubai-airport-clerk-stole-dh70000-in-vat-refunds-1.64162581

 A tax refund company employee went on trial accused of stealing Dh70,000 this week.

The 34-year-old Filipino forged electronic documents on his company’s system, which refunds value added tax (VAT) to travellers at Dubai International Airport. He then deposited the money onto credit cards for his own benefit.

The accused’s duty was to receive travellers refund documents and use the username and password in the company system to refund money to travellers.

However, the director of the tax refund company noticed two credit card numbers repeatedly appeared in tax refund transactions for different travellers.

“Some travellers who applied for cash refunds were in a hurry to catch their flights,” said the company director. “The defendant changed their refund transactions from cash to credit card payments and put the refund amount for his benefit onto two credit cards.”

Saudi imposes tax on e-cigarettes and sugary drinks

Date: 20 May, 2019

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External URL: https://gulfbusiness.com/saudi-imposes-tax-on-e-cigarettes-and-sugary-drinks/

Saudi Arabia has imposed a special tax on electronic cigarettes and sugary drinks, extending similar taxes introduced in 2017 as it seeks to reduce a budget deficit caused by low oil prices.

The General Authority of Zakat and Tax said a 100 per cent tax would be levied on electronic cigarettes and products used in them, and a 50 per cent tax on sugared drinks.

Saudi Arabia, the Arab world’s largest economy, already had a 100 per cent tax on cigarettes and tobacco products, a 100 per cent tax on energy drinks and a 50 per cent one on fizzy drinks.

The authority took the decision on May 15 and it became effective from Saturday after publication in the official gazette.

The taxes fall under the category of selective taxes on products deemed harmful to public health.

Saudi Arabia, the world’s top oil exporter, introduced a 5 per cent value-added tax (VAT) in January 2018 to improve non-oil revenue generation after a plunge in oil prices from mid-2014 bruised its revenues.

The IMF last week said the VAT introduction had been successful, but that the Saudi government should consider raising the rate, which is low by global standards.

UAE says processing over 8,000 VAT refunds per day

Date: 16 May, 2019

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External URL: https://www.arabianbusiness.com/banking-finance/420095-uae-processing-over-8000-vat-refunds-per-day-tax-authority

The United Arab Emirates Federal Tax Authority (FTA) processes around 8,110 refunds per day on value added-tax (VAT) paid on goods and services bought in the country, it was announced on Wednesday.

The UAE, along with Saudi Arabia, introduced VAT on January 1, 2018, as part of the region’s bid to diversify its revenue streams away from hydrocarbons. Last year, the FTA announced that the Tax Refunds for Tourists schemes, which allows tourists to claim a refund on VAT paid on goods bought during their visit, will be rolled out to all UAE airports and ports and to around more than 4,500 retailers across the country.

In a press statement issued by WAM, the state news agency, Khalid Ali Al Bustani, director-general of the FTA, said that as part of the authority’s efforts to manage and collect federal taxes, various tax refund mechanisms have been launched for legally eligible groups to recover VAT, including the Tax Refunds for Tourists schemes, of which nearly 8,110 transactions were processed on a daily basis.

IMF suggests hiking VAT; commends Saudi reforms

Date: 16 May, 2019

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External URL: https://www.khaleejtimes.com/imf-suggests-hiking-vat-commends-saudi-reforms

The International Monetary Fund has recommended that the 5 per cent value-added tax (VAT) levied in Saudi Arabia and the UAE as part of a GCC-wide framework should be raised, saying it is low by global standards.

The IMF suggested in a country note on the kingdom released late on Wednesday that the decision should be taken following consultations with GCC countries.

“The introduction of VAT has been very successful, and consideration should be given to raising the rate from 5 per cent, which is low by global standards, in consultation with other GCC countries,” it said in the note.

The UAE and Saudi Arabia levied 5 per cent VAT on a host of goods and services from January 1, 2018, in order to bolster the revenues of the Gulf governments as part of diversification initiatives. Other Gulf countries will levy VAT at a later stage. Currently, it is one of the lowest in the world.

UAE marks 500 successful days of VAT

Date: 15 May, 2019

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External URL: http://wam.ae/en/details/1395302762871

As the Federal Tax Authority, FTA, marks 500 days of the Value Added Tax, VAT, in the UAE, Khalid Ali Al Bustani, Director-General of the FTA, revealed that the rates of compliance with tax laws and procedures have increased exponentially among all taxable businesses.

The tax came into effect on 1st January, 2018, at a rate of five percent on the supply of most goods and services.

In a press statement issued by the authority, Al Bustani added, “Compliance was made possible through the seamless, flexible, and clear procedures the FTA has rolled out through electronic, fully paperless systems that are among the most advanced of their kind in the world, underpinned by a sophisticated legislative environment that meets the highest standards in the field.”

“The FTA implemented an easy-to-use system for submitting tax returns and paying taxes via the e-Services portal, available 24/7 on the FTA’s official website,” he added.

Al Bustani said that as part of the authority’s efforts to manage and collect federal taxes, various tax refund mechanisms have been launched for legally eligible groups to recover VAT, including the Tax Refunds for Tourists schemes, of which nearly 8,110 transactions were processed on a daily basis.

IMF urges Saudi Arabia to mull VAT rate increase

Date: 15 May, 2019

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External URL: https://www.arabianbusiness.com/politics-economics/420060-imf-urges-saudi-arabia-to-mull-vat-rate-increase

Economic reforms in Saudi Arabia have started to yield positive results, with non-oil growth picking up and female labour force participation and employment increasing, according to the International Monetary Fund (IMF).

The IMF hailed the successful introduction of value-added tax, saying it has underpinned an increase in non-oil fiscal revenues.

It added that consideration should be given to raising the rate from 5 percent, which is low by global standards, in consultation with other GCC countries.

Consulting VAT Expert before VAT Submissions to Avoid Penalties

Date: 11 May, 2019

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External URL: https://t2conline.com/consulting-vat-expert-before-vat-submissions-to-avoid-penalties/

Ignorance is bliss but not in the case of VAT. The VAT is a very crucial matter in UAE and it should thus be dealt with carefully. Being careless about it may make a lot of hurdles for the companies based in UAE.

Businesses who fail to comply with the rules and regulations of VAT may have to face serious penalties. These penalties may harm the business as well as the reputation of the businessman in the market. that is why it is important for the companies to get help from the VAT consultants in UAE.

The VAT experts are preferred because they have a better understanding of the proceedings of the VAT. They know the right procedure to follow for UAE VAT registration. That is why they are a very good option to consider by the companies for their compliance with the VAT laws in UAE

No matter where you live if tax laws have been implemented on you, you must comply with them, or else you will have to pay heavy penalties.

NBR holds a workshop for professionals working in audit firms

Date: 08 May, 2019

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External URL: https://www.nbr.gov.bh/releases/48

The National Bureau for Revenue (NBR) held a workshop primarily aimed at increasing professional auditors’ VAT awareness to better equip them with the knowledge they need to provide accurate VAT advisory and audit services.

A total of 57 professionals attended the workshop that provided a detailed presentation of the Kingdom’s VAT regulatory and procedural aspects, including registration requirements, filing requirements, and mechanisms for dealing with VAT-payers to better meet their needs.

Today’s workshop ensures the smooth implementation of VAT, particularly in regards to companies with an annual supply of BHD 500,000 to BHD 5,000,000 that are expected to complete their registration by June.

UAE residents confident about state of their finances, impact of VAT falling

Date: 07 May, 2019

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External URL: https://www.arabianbusiness.com/politics-economics/419468-uae-residents-confident-about-state-of-their-finances-impact-of-vat-falling-survey

Residents in the United Arab Emirates continue to be upbeat about the state of their finances, while fewer and fewer report they are seeing any impact from the introduction of value-added tax (VAT) on goods and services since last year, according to a new survey released on Tuesday.

The Consumer Confidence Tracker Q1 2019 from financial website yallacompare surveyed around 1,000 UAE residents on the state of their finances and attitudes towards work.

The results found that 21 percent of respondents feel more confident about their finances than they did 12 months ago, compared to 22 percent in Q4 last year and 14 percent in Q3 2018.

NBR holds an interactive workshop for representatives working in the retail and wholesale sectors

Date: 06 May, 2019

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External URL: https://www.nbr.gov.bh/releases/47

The National Bureau for Revenue (NBR) held an interactive VAT workshop for professionals working in the retail and wholesale sectors, during which the NBR recapped general and sector-specific VAT concepts, including invoicing and filing.

Following a question-and-answer session, 59 representatives from 38 vendors were given the opportunity to visit the unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.

Today’s workshop is a continuation of the series of workshops organized by the NBR to provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BHD 500,000 to BHD 5,000,000 by June.

VAT Financial Guarantee or Cash Deposit Release for Non Registered Importers User Guide VAT 702

Date: 01 May, 2019

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1. About this guide

This guide is prepared to help non-registered importers to submit a request to liquidate partially or completely an eGuarantee or refund partially or completely an eDirham deposit provided while importing goods under tax suspension.

2. About VAT 702

VAT 702 is a form provided by the Federal Tax Authority (“FTA”) pursuant to which a nonregistered importer notifies the FTA to either cancel or liquidate an eGuarantee or to refund or collect an eDirham deposit. In line with the relevant legal provisions, there would be specific scenarios where a non-registered importer would provide an eGuarantee or an eDirham deposit to clear goods at customs, which are subject to tax and duty suspension. Upon export of the goods, the importer is eligible for a refund or a return of the financial guarantee.

Read more..

NBR holds interactive workshop for retail and wholesale sectors representatives

Date: 22 Apr, 2019

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External URL: https://www.nbr.gov.bh/releases/46

The National Bureau for Revenue (NBR) held an interactive VAT workshop for professionals working in the retail and wholesale sectors, during which the NBR recapped general and sector-specific VAT concepts, including invoicing and filing.

Following a question-and-answer session, 48 representatives from 36 vendors were given the opportunity to visit the unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.

Today’s workshop is a continuation of the series of workshops organized by the NBR to provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BHD 500,000 to BHD 5,000,000 by June.

 

Attendees can now register for VAT workshops

Date: 21 Apr, 2019

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External URL: https://www.nbr.gov.bh/releases/45

The National Bureau for Revenue (NBR) today introduced a new electronic service to allow VAT payers to register their interest to attend upcoming VAT workshops by submitting a simple form at https://www.nbr.gov.bh/workshop_registration.

The workshops will introduce attendees to key VAT concepts, including invoicing and filing, as well as providing them with the opportunity to visit the interactive demo-center. The registration feature builds on Bahrain’s intensive efforts to increase all VAT payers’ solid understanding of key VAT concepts in addition to ensuring the smooth registration of companies with annual supplies between BHD 500,000 and BHD 5,000,000 by June.

Can I avoid a Dh22,000 penalty imposed by the FTA?

Date: 16 Apr, 2019

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External URL: https://www.thenational.ae/business/money/vat-q-a-can-i-avoid-a-dh22-000-penalty-imposed-by-the-fta-1.849235

If you fail to file the return the FTA does not recognise any payments that you have made. Therefore you get fined not only a later filing fee but also interest on the amount of the tax due, until the point at which you file the return.

The penalty for missing the filing deadline is Dh1,000 for the first offence and then Dh2,000 for every subsequent missed deadline.

VAT Treatment of Education Services

Date: 15 Apr, 2019

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The supply of educational services and  related goods and services by kindergartens, pre-primary, primary, secondary and higher education institutions is subject to the zero-rate.

In order for the zero-rate to apply:

The school or educational institution must be licensed by the Ministry of Education in Bahrain or be under its supervision, and Supplies must be provided directly to a student who is enrolled in that school or institution.

Certain educational services are not subject to the zero-rate (and will be subject to the 5% rate), including:

Professional education; and Vocational training, unless such  vocational training is provided by a polytechnic educational institution  which is licensed by the Ministry of Education in Bahrain.

 

Read more..

 

VAT Healthcare Guide

Date: 15 Apr, 2019

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An overview of the VAT rules and procedures in relation to the healthcare sector in Bahrain and, if required, how to comply with them the necessary background and guidance to help you to determine how a supply is treated
for VAT purposes.

Read more..

Financial Services VAT Guide

Date: 15 Apr, 2019

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This document sets out some of the general principles of Value Added Tax (VAT) in the Kingdom of Bahrain (Bahrain) specifically relevant to the financial services and the insurance sectors. The main aim of this document is to provide the reader with:

An overview of the VAT rules and procedures applicable to the financial services and the insurance sectors in Bahrain and, if required, how to comply with them the necessary background and guidance to help you to determine how a supply is treated for VAT purposes.

Read more..

NBR holds an interactive workshop for representatives working in the manufacturing sector

Date: 10 Apr, 2019

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External URL: https://www.nbr.gov.bh/releases/44

The National Bureau for Revenue (NBR) held an interactive VAT workshop for professionals working in the manufacturing sector, during which the NBR recapped general and sector-specific VAT concepts, including invoicing and filing.

Following a question-and-answer session, 46 representatives from 24 vendors were given the opportunity to visit the unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.

Today’s workshop is a continuation of the series of workshops organized by the NBR to provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BHD 500,000 to BHD 5,000,000 by June.

VAT implementation in focus

Date: 04 Apr, 2019

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External URL: http://www.gdnonline.com/Details/522760/VAT-implementation-in-focus

The Bahrain Chamber of Commerce and Industry (BCCI) represented by its finance, insurance and tax committee, and its technology committee held a workshop themed “Using technology in VAT implementation” at Beit Al Tijjar. The workshop, delivered by experts from KPMG Bahrain, discussed the legal and administrative framework of the tax, the sector-specific guidelines for VAT as per the National Bureau for Revenues, and the challenges of implementing the tax .

VAT Digital Economy Guide

Date: 04 Apr, 2019

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External URL: https://www.newsofbahrain.com/bahrain/52526.html

The National Bureau for Revenue (NBR) has published a guide that mainly focuses on educating the public on the VAT treatment of e-commerce and the VAT treatment of electronic services. ‘The VAT Digital Economy Guide’ aims to educate the public about the application of VAT on e-commerce and electronic services. The document sets out the general principles of Value Added Tax (VAT) in relation to the digital economy sector in the Kingdom.

The main aim of the document is to provide the reader with an overview of the VAT rules and procedures in the Kingdom in relation to the digital economy sector and how to comply with them if required. It also explains the necessary background and guidance to help determine how supply is treated for VAT purposes.

“This guide is intended to provide general information only and contains the current views of the National Bureau for Revenue (NBR) on its subject matter. “No responsibility is assumed for the VAT laws, rules or regulations in the Kingdom. “This guide is not a legally binding document and does not commit the National Bureau for Revenue or any taxpayer in respect of any transaction.

Read more..

FTA begins process for refunding VAT to business visitors

Date: 02 Apr, 2019

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External URL: http://wam.ae/en/details/1395302752645

The Federal Tax Authority, FTA, has begun implementing the Value Added Tax, VAT, refunds for business visitors while noting that a dedicated application form for the procedure is available on its website.

In a press statement issued today, the FTA explained all the procedures with regard to the refund of VAT to business visitors. The FTA also published a guide through its website which can be accessed through the link: Guide – VAT Refunds for Business Visitors.

Khalid Ali Al Bustani, FTA Director-General, said, “Reciprocity is a key condition for the procedure, whereby the authority will collaborate with countries that refund VAT for UAE businesses visiting their territories.

“The procedure abides by Federal Decree-Law No. (8) of 2017 on VAT and its Executive Regulations, which call for refunding taxes on supplies or imports made by a person not residing in the UAE or any of the Implementing States, provided they meet the necessary conditions.”

The FTA clarified that the period of each refund claim shall be a calendar year, noting that for claims in respect of the 2018 calendar year, it started accepting refund applications as of 1st April, 2019. However, in subsequent calendar years, the opening date for refund applications submission will be 1st March of the following year. That means for the period 1st January to 31st December, 2019, applications will be accepted as of 1st March, 2020.

Early registration key to a smooth Bahrain VAT transition

Date: 02 Apr, 2019

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External URL: https://ameinfo.com/money/banking-finance/early-registration-key-to-a-smooth-bahrain-vat-transition/

Bahrain introduced a 5% value-added tax (VAT) in the Kingdom from January 1st, 2019.

The tax registration in the country is split across phases and requires businesses to enrol across each phase based on their threshold. As such, the larger businesses with annual supplies exceeding BHD 5,000,000 ($13.25 million) are mandated to register in the first phase, whereas businesses with the annual supplies value exceeding BHD 500,000 ($1.32 million) are mandated to register in the second phase.

Similarly, businesses whose annual supplies exceeds BHD 37,500 ($99,375) are mandated to register in the third phase. In addition, voluntary VAT registration is available for businesses even if the annual supplies are less than the mandated registration threshold limit. While it is voluntary, and entrepreneurs can register if their annual supplies exceed BHD 18,750 ($49,687) benefits of registering under VAT are immense and it is recommended that businesses that have not yet enrolled, start immediately to assess the impact of tax on their operations.

Upon registering under VAT, businesses are given a VAT number which can be displayed on invoices, letterheads, websites and other forms of business stationery. While early registrations help businesses add VAT to the sale price of goods and services when they sell to commercial and non-commercial consumers, it can also help in claiming the Input VAT – a mechanism by which a VAT registered business can deduct input tax from the output tax for a period and remit the balance tax payable to the National Bureau for Revenue.

VAT is a simple process, and The National Bureau for Revenue (NBR) has introduced several knowledge and process guides to make registration seamless and accurate. As such, with the help of NBR, early registered businesses can prepare well in advance and ensure that the process is completed easily, eliminating the risk for unnecessary delays, and incorrect information, which may lead to hefty fines or rejection.

UAE considers adding more 'harmful' products to excise tax list

Date: 01 Apr, 2019

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External URL: https://www.arabianbusiness.com/politics-economics/416809-uae-considers-adding-more-harmful-products-to-excise-tax-list

The UAE is mulling the inclusion of new products on its excise tax list, according to a statement by the Ministry of Finance, which implemented the fee on three categories in October 2017.

The ministry is conducting a joint study with officials in Saudi Arabia “on the addition of new goods to the selective tax list, as well as to determine tax rates on certain harmful substances,” its statement said.

While it did not share details of the goods it is considering to add to the tax list, it said in 2017 that it aims to reduce the consumption of harmful substances.

These include tobacco and tobacco products and carbonated and energy drinks, which are currently listed under the excise tax and have doubled in price since the fee’s introduction.

Basic food products NOT subject to VAT

Date: 01 Apr, 2019

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External URL: https://s3-eu-west-1.amazonaws.com/nbrproduserdata/media/59sMaZjgMJHhj7hPqKDFwJdaqEMlhyAODPrYOSe3.pdf

Items Not Subject to VAT

 

 

NBR holds an interactive workshop for representatives working

Date: 01 Apr, 2019

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External URL: https://www.nbr.gov.bh/releases/43

The National Bureau for Revenue (NBR) held an interactive VAT workshop for professionals working in the construction sector, during which the NBR recapped general and sector-specific VAT concepts, including invoicing and filing.

Following a question-and-answer session, 88 representatives from over 50 vendors were given the opportunity to visit the unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.

Today’s workshop is a continuation of the series of workshops organized by the NBR to provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BHD 500,000 to BHD 5,000,000 by June.

NBR holds an interactive workshop for representatives working in the construction sector

Date: 01 Apr, 2019

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External URL: https://www.nbr.gov.bh/releases/43

The National Bureau for Revenue (NBR) held an interactive VAT workshop for professionals working in the construction sector, during which the NBR recapped general and sector-specific VAT concepts, including invoicing and filing.

Following a question-and-answer session, 88 representatives from over 50 vendors were given the opportunity to visit the unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.

Today’s workshop is a continuation of the series of workshops organized by the NBR to provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BHD 500,000 to BHD 5,000,000 by June.

Introducing Digital Tax Stamps Scheme in the UAE

Date: 01 Apr, 2019

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External URL: https://www.tax.gov.ae/pdf/DTS%20Newsletter_2_Plus_3_en.pdf

IMPORTANT DATES 

1st Jan 2019

Importers will be able to order stamps to be sent to the Manufacturers for application to the pack of cigarette products

1st May 2019

No cigarette products without a digital tax stamp will be permitted to be imported into the UAE. Customs departments will undertake checks on
products from this date and penalties for non-compliance may apply.

1st August 2019

No cigarettes will be allowed to be stored, held out for sale, imported or produced anywhere in the UAE unless they carry a Digital Tax Stamp with
end-to-end traceability. Penalties for non-compliance with this rule may apply. It would therefore be advisable for businesses to consider this final deadline date into their supply chain planning to ensure all unmarked products have been sold prior to this time.

Read more..

 

Arab Regional Tax Forum opens in Dubai

Date: 31 Mar, 2019

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External URL: http://wam.ae/en/details/1395302752099

Arab Regional Tax Forum has discussed ways of balancing tax policies, Arab countries’ competitiveness in managing them, as well as the challenges facing these nations in pursuing their tax policies.

The two-day forum which opened today at the Grand Hyatt Hotel in Dubai, is organised by the Ministry of Finance, MoF, and the Arab Monetary Fund, AMF, in cooperation with the Federal Tax Authority, FTA, and the International Tax and Investment Centre, ITIC.

Dr. Abdulrahman Al Hamidy, Director-General of AMF; and Khalid Al Bustani, Director-General of the FTA attended the ceremony. Senior officials from the Ministry of Finance, top tax policy and administration officials from all AMF member states, senior tax and finance executives from multinational enterprises, tax experts from international organisations, and renowned public finance academics also attended the event.

Dr. Abdulrahman Al Hamidy opened the forum with a welcome speech, following which Sir Mark Moody-Stuart, Honorary Co-Chairman of ITIC and the Director General of the FTA gave the keynote addresses.

The FTA Director-General stressed the importance of holding meetings with senior officials and experts, especially in light of the great economic transformation the region is undergoing. He expressed hope that the Arab Regional Tax Forum will benefit all Arab countries through the discussions and knowledge-sharing on key issues.

UAE's FTA sees more businesses registering for taxes in 2019

Date: 31 Mar, 2019

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External URL: https://www.thenational.ae/business/economy/uae-s-fta-sees-more-businesses-registering-for-taxes-in-2019-1.843517

The number of UAE businesses registering for taxation in 2019 is set to grow from levels previously seen in 2018 as more companies become tax compliant, the head of the Federal Tax Authority said.

The limited number of businesses and people that registered for taxation last year was due to a lack in compliance, Khalid Al Bustani said at the sidelines of the Arab Regional Tax Forum in Dubai on Sunday. However, he said the authority had conducted numerous awareness campaigns to limit the number of those penalised for non-compliance.

The rise in the number of new businesses launched in the UAE will also result in an increase in the number of registrations this year, he added.

“Regarding registration, this is a dynamic process because we have companies that are still reaching the compulsory threshold, when they reach that they need to register,” Mr Al Bustani said.

The Emirates introduced a 5 per cent VAT in January last year, and in 2017, it rolled out an excise tax on fizzy and energy drinks and tobacco, to diversify income and create new revenue streams as part of a plan to lower dependence on oil revenues. The International Monetary Fund estimates the introduction of VAT in the Arabian Gulf region could generate between 1.5 to 3 per cent of non-oil GDP in new revenue.

Bahrain publishes VAT guide on financial services

Date: 31 Mar, 2019

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External URL: https://www.zawya.com/mena/en/economy/story/Bahrain_publishes_VAT_guide_on_financial_services-SNG_141422748/

Bahrain’s National Bureau for Revenue stated that a 5% standard tax is applicable where the payment for the services is made by way of fees, commissions or commercial discount.

The Bahrain National Bureau for Revenue (NBR) has released the first edition of its Financial Services VAT guide (FSI VAT Guide) and Islamic finance products generally have the same VAT treatment as their conventional financial product counterpart.

NBR stated that a five per cent standard tax is applicable where the payment for the services is made by way of fees, commissions or commercial discount.

Additionally, tax exemption will be applied where the payment for the services is made by way of an implicit margin or spread, including interest.

MCA is now a FTA approved Tax Agent

Date: 27 Mar, 2019

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MCA Management Consultants has qualified to represent clients to FTA in matters relating to VAT after earning the approval as a FTA accredited Tax Agent.

MCA has met the stringent conditions specified by the Federal Tax Authorities to attain this approval. The conditions safeguard the interest of registered VAT entities and ensure that VAT computation, filing and audit is as per the guidelines contained in the various statutes of the VAT law in UAE.

Businesses in UAE urged to conduct pre-audit checks of VAT returns for expected tax audits this year

Date: 27 Mar, 2019

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External URL: https://menafn.com/1098309617/Businesses-in-UAE-urged-to-conduct-preaudit-checks-of-VAT-returns-for-expected-tax-audits-this-year

Al Dhaheri Jones and Clark (ADJC) reminded companies anew of properly filing their value added tax (VAT) returns in anticipation of a possible tax audits by the Federal Tax Authority (FTA) this year. The Dubai-based consultancy firm, which is a registered tax agent in the UAE as approved by the FTA, warned that hefty penalties await tax violators in pursuant of Cabinet Resolution No. (40) of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE. Since the implementation of VAT in the UAE at the start of 2018, the number of tax returns received from businesses registered for VAT purposes has exceeded 650,000 as per the report of the FTA.

NBR holds interactive workshop for retail/wholesale sectors

Date: 27 Mar, 2019

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External URL: https://www.nbr.gov.bh/releases/42

The National Bureau for Revenue (NBR) held another interactive VAT workshop for professionals in the retail and wholesale sectors, during which the NBR recapped general and sector-specific VAT concepts, including invoicing and filing.

Following a Q-and-A session, 90 representatives from 48 vendors were given the opportunity to visit the unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.

Today’s workshop is a continuation of the series of workshops organised by the NBR to provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BD 500,000 to BD 5,000,000 by June.

Over 300,000 businesses now registered for VAT in the UAE

Date: 26 Mar, 2019

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External URL: https://www.arabianbusiness.com/banking-finance/416295-over-300000-businesses-now-registered-for-vat-in-the-uae

More than 300,000 businesses have now registered for WAT in the UAE, according to the Federal Tax Authority (FTA).

At a meeting chaired Sheikh Hamdan bin Rashid Al Maktoum, also Deputy Ruler of Dubai, it was also revealed that the number of approved tax agents operating in the UAE has increased to 316.

It also confirmed the success of the VAT refund procedures for Emiratis building new homes, with 235 applications approved, enabling citizens to recover a total of AED9.76 million.

Sheikh Hamdan commended the positive results, saying: “The Federal Tax Authority has developed comprehensive plans to encourage tax compliance, raise the registration rate among taxable businesses, and combat tax evasion.”

The FTA also announced that the Tax Refunds for Tourists Scheme, which was introduced in November, was recording nearly 6,000 refund transactions per day.

Business visitors to UAE to get VAT refund

Date: 26 Mar, 2019

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External URL: https://www.zawya.com/mena/en/economy/story/Business_visitors_to_UAE_to_get_VAT_refund-SNG_141039144/

The Federal Tax Authority has completed preparations to launch the “VAT refunds for business visitors scheme” from April 2.

The scheme aims to reciprocate the efforts made in countries that offer VAT refunds to visiting UAE businesses,” the FTA said in a statement.

To be eligible for the VAT refund, the first condition is that foreign businesses must not have a place of establishment or fixed establishment in the UAE or in any of the VAT-implementing GCC states.

 

FTA board reviews developments of ongoing projects

Date: 26 Mar, 2019

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External URL: http://wam.ae/en/details/1395302750976

The Board of Directors of the Federal Tax Authority, FTA, has issued a number of executive decisions concerning the Authority’s operations and administrative policies during its 8th meeting, chaired by H.H. Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, Minister of Finance, and FTA Chairman.

During the meeting, held on Tuesday at the Ministry of Finance’s Dubai headquarters, the Board reviewed a report on the developments of ongoing projects and the FTA’s recent achievements. The report also covered results pertaining to its registration processes for VAT and excise tax and transactions related to filing tax returns, payment of outstanding taxes and collection of recoverable taxes.

The report pointed out that the level of tax compliance in the country has increased, with the number of registrants for VAT exceeding 300,000 registered businesses – tax groups and individuals. Meanwhile, the number of registrants for excise tax reached 719, and the number of approved tax agents increased to 316.

The report confirmed the success of the VAT Refund Procedures for UAE Nationals Building New Residences, with many citizens benefiting from the simple and straightforward electronic procedure that enables them to claim refunds on the taxes incurred on the construction of their new villas and apartments. The study noted that 235 applications were approved, enabling citizens to recover a total of AED9.76 million.

Sheikh Hamdan bin Rashid commended the positive results and major strides the Authority has made since its inception. The FTA saw to the implementation of simple and clear cutting-edge electronic systems, leading to encouraging compliance levels from business sectors. This success was the result of streamlined procedures, an advanced legislative environment, and adherence to high international standards and best practices.

VAT refunds for pavilions at Expo 2020 Dubai

Date: 24 Mar, 2019

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External URL: https://www.khaleejtimes.com/business/local/vat-refunds-for-pavilions-at-expo-2020-dubai

Maximum 20% of pavilion space allowed for commercial activity to claim tax return.
Countries and inter-government agencies will be able to claim value-added tax (VAT) refunds for the costs incurred for the developments of pavilions at Expo 2020 Dubai.
 According to a Cabinet decision posted on the Federal Tax Authority’s (FTA) website, the commercial space should be less than 20 per cent of the space to be entitled for the refund. The Expo 2020 Bureau will largely administer this process.

VAT Refund for Expo 2020

Date: 21 Mar, 2019

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In accordance with the Cabinet Decision No. 1 of 2019 on the ‘Refund of Value Added
Tax Paid on Goods and Services Connected with Expo 2020 Dubai’, Official Participants
of the Expo 2020 are able to claim a refund of VAT incurred by them on the import or
supply of certain Goods and Services.
This document provides guidance for Official Participants of Expo 2020 in respect to the following:

  • The conditions which have to be met to be entitled to claim the VAT refund;
  • The process to be followed to claim VAT; and
  • Information required to complete the relevant forms.

Additional details on the registration requirements along with the importing and customs
details are covered in this user guide.

Click here  to know more

Cabinet Decision is primarily for Expo 2020 Official Participants

Date: 20 Mar, 2019

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This Cabinet Decision is primarily for Expo 2020 Official Participants which includes Countries and Inter Govt agencies. They can claim VAT refund in case they are not VAT registered. Condition is that commercial exhibition space is less than 20% and VAT refund value is more than Aed 200 per transaction. Expo 2020 Bureau will largely administer this process.

Click here   to know more

Is Bahrain facing VAT implementation hurdles

Date: 20 Mar, 2019

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External URL: https://ameinfo.com/money/banking-finance/is-bahrain-facing-vat-implementation-hurdles/

Saudi Arabia and the UAE led the way in January 2018 with the introduction of a 5 percent value-added tax (VAT) as part of the unified GCC VAT Agreement – and Bahrain followed suit in January 2019. This measure in Bahrain, however, could be facing some hiccups.

Value-added tax (VAT) is a type of consumption tax that is placed on the supply of goods and services. It takes into account the “value added” at every step of the supply chain. The GCC framework on VAT, which has been spurred by efforts toward tax transparency and the GCC’s diversification goals, gives sufficient leeway for member states to be flexible on VAT implementation in industries based on local contexts and specifications. Bahrain, for instance, has decided to exclude oil products from VAT, as part of its essential goods exclusion.

Could blockchain transform the GCC's VAT system?

Date: 20 Mar, 2019

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External URL: https://gulfbusiness.com/blockchain-transform-gccs-vat-system/

With the introduction of VAT in the Middle East (UAE, Saudi in 2018 and Bahrain in 2019), the governments had a clean sheet to work with.

From e-registration to manual e-filing, they’ve introduced a lot of technology in a very short amount of time. Companies also had to adapt very quickly and both parties are just beginning their journey of tax and revenue automation.

While the GCC VAT system has just been born, other parts of the world have already traveled a long way in this automation path and there is no doubt these developments will come sooner rather than later in the region.

Read more…

Tourists to Bahrain will be offered VAT refunds through a VAT refund desk at the Bahrain International Airport.

Date: 19 Mar, 2019

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External URL: https://www.newsofbahrain.com/bahrain/52179.html

Tourists to Bahrain will be offered VAT refunds through a VAT refund desk at the Bahrain International Airport. This comes as the Kingdom’s National Bureau for Revenue (NBR) announced the launch of a VAT refund desk at the Bahrain International Airport yesterday. The set up is in collaboration between the Bahrain Airport Company and international payment specialist Planet Payment. The NBR stated that the new desk will offer VAT refund solutions for tourists and non-residents visiting the Kingdom as well as citizens residing abroad. “The VAT refund desk uses an integrated system that allows VAT refund claims on local purchases from over 300 retail outlets across the Kingdom,” the NBR stated.

“The VAT refund desk represents one of many measures the Kingdom is implementing to expand regional and international tourist base, while increasing market competitiveness and expanding growth across Bahrain’s established tourism sector,” it added. Chief Commercial Officer of the Bahrain Airport Company, Ayman Zainal said, “The BAC is pleased to support the Ministry of Finance and National Economy and the National Bureau for Revenue in Bahrain with this important function. Two dedicated stands will be set up at the airport, where tourists can avail hassle-free VAT refunds on their shopping.” The Country Manager of Planet Payment, Eyad Al Kourdi, commented, saying, “Planet is proud to be working closely with the National Bureau for Revenue and the Bahrain Airport Company to deliver a fast, efficient and state-ofthe-art digital VAT refund scheme as the Kingdom’s tourism and retail sectors continue to grow and attract shoppers from across the world.” The NBR explained the VAT refund process stating, “Claimers are required to present their passports, entry visa permits, GCC National IDs, or residency permits for Bahraini nationals living abroad, when shopping VAT free”.

Read more..

KPMG Organizes a Seminar on Tax Compliance and Reporting for Businesses in Bahrain

Date: 17 Mar, 2019

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External URL: https://www.albawaba.com/business/pr/kpmg-organizes-seminar-tax-compliance-and-reporting-businesses-bahrain-1266694

Approximately 200 key members from the business community in the Kingdom of Bahrain attended an exclusive seminar organized by KPMG in Bahrain for VAT registered and to-be registered businesses to discuss tax compliance and reporting obligations.  This in preparation for the first VAT return cycle coming up in April this year. VAT has now been live in the Kingdom of Bahrain for nearly three months and by latest 30 April 2019, VAT registered businesses will be required to submit their first VAT return to the National Bureau for Revenue (NBR).

 Philippe Norré, Partner and Head of Taxes and Corporate Services at KPMG in Bahrain was the keynote speaker and shared insights from his long experience in rolling out and leading KPMG’s Global Indirect Tax Compliance approach.  He explained and discussed the detailed requirements outlined by the Bahraini VAT legislative framework.  “Not only are VAT registered businesses required to submit correctly completed VAT returns and do by deadline together with any payment due, but the compliance and reporting obligations for VAT do require keeping a set of quality documents to support the numbers reported and allowing for an end-to-end reconciliation including with the General Ledger (purchase orders, contracts, invoices, import and export documentation, debt and credit notes and others). As further official guidance notes are issued by NBR a proper knowledge management process is required to keep fully abreast of all developments around VAT in Bahrain. ” He commented during the event.

Real Estate guide for Bahrain

Date: 17 Mar, 2019

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External URL: http://www.allaboutvat.com/wp-content/uploads/Real-Estate-update-17032019.pdf

Summary of VAT on Real Estate sale/Lease

Exempt Standard rated
  •  Sale/lease of  property
  •  Sale/lease land
  •  Labour accommodation
  •  Car parking for > a month
  •  Serviced accommodation  more than a year
  •   Hotel accommodation  and related   services
  •   Paid car parking for period < 1 month
  •   Non Exclusive serviced office space
  •   Function hall
  •   Management services, utilities,     telecommunications etc
  •   Signage and permissions
  •   Services charged separately
  •   Furnished apartments   with  tourism  licence
  •   Storage services
  •   Short term retail and promotional stands
  • No VAT on furniture, unless charged separately from accommodation.
  • VAT to be charged on services provided in addition to serviced space
  • VAT to be charged on provision of space for retails and promotional stands for < 1 month
  • Normal place of rules applicable for insurance of real estate property

 

Click here to know more

NBR announces the opening of a new VAT refund desk for visitors at Bahrain International Airport

Date: 17 Mar, 2019

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External URL: https://www.nbr.gov.bh/releases/39

Bahrain’s National Bureau for Revenue (NBR) today announced the launch of a VAT refund desk at the Bahrain International Airport. Launched in collaboration between the Bahrain Airport Company and Planet, the new desk offers VAT refund solutions for tourists and non-residents visiting the Kingdom of Bahrain as well as citizens residing abroad.

The VAT refund desk uses an integrated system that allows VAT refund claims on local purchases from over 300 retail outlets across the Kingdom.

The VAT refund desk represents one of many measures the Kingdom is implementing to expand regional and international tourist base, while increasing market competitiveness and expanding growth across Bahrain’s established tourism sector.

Commenting on the announcement, the Chief Commercial Officer of the Bahrain Airport Company, Ayman Zainal said:

“BAC is pleased to support the Ministry of Finance and National Economy and the National Bureau for Revenue in Bahrain with this important function. Two dedicated stands will be set up at the airport where tourists can avail hassle-free VAT refunds on their shopping.”

The Country Manager of Planet, Eyad Al Kourdi, also welcomed the launch of the new desk saying:

“Planet is proud to be working closely with the National Bureau for Revenue and the Bahrain Airport Company to deliver a fast, efficient and state-of-the-art digital VAT refund scheme as the Kingdom of Bahrain’s tourism and retail sectors continue to grow and attract shoppers from across the world.”

The NBR also outlined the following steps for completing VAT refund submissions at the Bahrain International Airport:

Claimers are required to present their passports, entry visa permits, GCC National IDs, or residency permits for Bahraini nationals living abroad, when shopping VAT Free.

Claimers need to request VAT free tags, available at retail stores, upon completing their purchase. The tags can be attached to receipts, which will be validated along with purchased goods at the VAT refund desk during check out.

Refunds will be paid in cash or via a credit/ debit card account provided by the claimer.

We must ensure smooth VAT implementation

Date: 15 Mar, 2019

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External URL: http://www.gdnonline.com/Details/509638/We-must-ensure-smooth-VAT-implementation

Bahrain being part of GCC, is obliged to comply and apply the VAT treaty which came to face and absorb some difficulties. First, it is better to mention that the new VAT is of certain features including, among other things, a small rate of five per cent compared with 17 to 20pc in developed countries including Germany, France and the UK. Also, the exemption of many essential products and services “zero rated” from the VAT. I believe, such strategy is intended due to the absence of taxation culture in the region.

This year, the implementation of VAT in Bahrain, is in progress but not free from obstacles. Including, some companies are yet to complete IT systems, train staff, comprehend the process, registration issues, VAT return process and confusion over tax invoices. Moreover, other related issues have started as consequence to VAT, namely prices increase to face VAT. Such points need time to settle and firm actions are required. By all means, costs rationalisation is needed and there should be regulations to supervise and control the market to escape adverse consequences due to VAT.

How to claim VAT refund for Tourist?

Date: 14 Mar, 2019

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External URL: https://www.planetpayment.com/en/countries/uae/#

Tourist leaving the country can claim the VAT refund within 90 days from the date of purchase.

You will receive 85% of the tax paid, minus a fee of 5 AED per Tax Free tag validated. Tax Free tags are stuck to every invoice that you obtain.

There are two counters for claiming the refund. One in the checkin area and the other past immigration. The check-in area counter can process refunds of bills upto 8000 AED and can refund to your credit card directly. If you need cash, you can process the claim at this counter, but to obtain the refund in cash you must go past immigration and collect in US Dollars from Travelex counter.

To claim for bills of value over 8000 AED you are expected to carry and show the item at the counter after immigration in the terminal. They will follow the similar method of directly crediting your card or collect cash from Travelex.

You will not get the full VAT refunded as you are supposed to get only 85% refund, plus pay 5 AED for the tag placed on your bill and the exchange fee to convert to US dollars.

Planet is the official agent for processing refunds and has counters in the check in area, and inside the airport.

Read More

UAE expects to reach deal with EU soon on tax-haven blacklist

Date: 13 Mar, 2019

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External URL: https://www.khaleejtimes.com/business/banking-finance/uae-expects-to-reach-deal-with-eu-soon-on-tax-haven-blacklist

The UAE expects to reach an amicable solution with the European Union soon on the issue of including the emirate in the list of non-cooperative jurisdictions for tax purposes, said a senior UAE banking official.

“I am sure this issue will be solved in the near future. I think it was due to lack of communication and lack of understanding. The EU will be approached and discussed; I’m sure there will be a way out,” said Abdul Aziz Al Ghurair, chairman of the UAE Banking Federation and CEO of Mashreq Group.

“Because we have chosen to be international financial centre, so we have to comply with world regulations. We had issues like this in the past and were solved,” Al Ghurair told media on the sidelines of a banking conference in Dubai on Wednesday.

The UAE on Wednesday regretted the European Union’s decision to include it on a list of non-cooperative jurisdictions for tax purposes. This inclusion was made despite the UAE’s close cooperation with the EU on this issue and ongoing efforts to fulfill all the EU’s requirements, Wam said in a statement.

The UAE said it had shared with the EU a detailed timeline of actions that it is currently implementing in accordance with its sovereign legal process and constitutional requirements.

Dubai Refreshment Co's 2018 profits drop 54% after VAT, excise tax

Date: 12 Mar, 2019

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External URL: https://www.arabianbusiness.com/retail/415206-dubai-refreshment-cos-2018-profits-drop-54-after-vat-excise-tax

The implementation of value-added tax (VAT) and excise tax amounted to 60 percent of the Dubai Refreshment Company’s net local revenue and led to higher consumer prices, according to a statement to shareholders posted to the Dubai Financial Market.

In the statement, Dubai Refreshment Company, which is the sole bottler and distributor for PepsiCo in the UAE, said that the company “was forced to pass these taxes to the consumer”.

“This happened at a time when other sugary non-carbonated drinks were not subject to the excise tax and as such did not need to increase their prices,” the statement added.

 “The price increase on company products combined with favourable tax advantages for non-carbonated sugary drinks put DRC products at a significant competitive disadvantage which resulted in significant reduction in sales and profit.”

In 2018, Dubai Refreshment Company’s net profit fell 54 percent to AED 42.3 million ($11.52 million). Revenues totalled AED 646 million ($175.87 million), a 26 percent decline when compared to the year before.

“The situation was especially difficult in the first few months after the excise tax implementation, however, through a combination of sales improvement and cost reduction initiatives, the company has been able to stabilise the situation and return to reasonable profitability,” the statement said.

Dubai Refreshments distributes carbonated, non-carbonated and bottled water products. Some of brands under Dubai Refreshments’ portfolio include Pepsi, Diet Pepsi, 7-Up, Diet 7-Up, Mountain Dew, Miranda, and Shani, Mountain Dew and Aquafina.

What inflation? Cost of living set to decrease in UAE in 2019

Date: 10 Mar, 2019

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External URL: https://www.khaleejtimes.com/business/economy/what-inflation-uae-cost-of-living-set-to-decrease-in-2019-1

Following a big jump in inflation in 2018 after the implementation of a 5 percent value-added tax, some economists believe that the UAE economy will slip into deflation this year following a persistent decline in housing and fuel prices and an oversupply in the retail and hospitality sectors.

Monica Malik, chief economist at Abu Dhabi Commercial Bank, said the UAE consumer price index contracted by 2.4 percent on a year-on-year basis in January from a 0.4 percent rise in December.

“We had expected to see deflation from January as the impact of the introduction of VAT in 2018 dropped out of the annual data and with the fall in housing and fuel prices,” she said.

The UAE levied 5 percent VAT on a host of goods and services from January 1, 2018 as part of a GCC framework agreed among the Gulf nations, resulting in a spike in inflation in the first few months of the implementation.

Contractors want faster processing on VAT refunds

Date: 09 Mar, 2019

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External URL: https://gulfnews.com/business/contractors-want-faster-processing-on-vat-refunds-1.62552671

Dubai for UAE’s contractors, when they get VAT refunds is getting to be as important as the amounts involved.

“As a main contractor, I will have to pay all the VAT-related costs to the subcontractor or supplier,” said K.A. Siddiqui, Partner at Dubai Walls Construction. “It automatically becomes part of the LPO (local purchase order). There can’t be any delay on our part because any delay will invite penalties and becomes a criminal offense.

“The second I invoice something, I have to pay up … whether the client had paid me or not.”

Which is why contractors are now insisting on clients and project promoters to, in turn, shorten the payment cycles in releasing funds due to them.

IMF says VAT launch in Bahrain a 'significant step'

Date: 07 Mar, 2019

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External URL: https://www.arabianbusiness.com/politics-economics/414919-imf-says-vat-launch-in-bahrain-significant-step

Economic activity in Bahrain was subdued in 2018 and is expected to remain at about 1.8% this year, says the International Monetary Fund.

Economic activity in Bahrain was subdued in 2018 and is expected to remain at about 1.8 percent this year, according to the International Monetary Fund (IMF).

The IMF described the introduction of value added tax (VAT) in January as “a particularly significant step”, as are plans for cost recovery in utilities and further means-tested subsidy reforms.

It added that the Fiscal Balance Program (FBP), accompanied by $10 billion in regional support, marks a major step in Bahrain’s reform agenda and has alleviated near-term financing constraints.

NBR holds interactive workshops

Date: 06 Mar, 2019

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External URL: https://www.nbr.gov.bh/releases/34

The National Bureau for Revenue (NBR) held two consecutive VAT workshops for professionals working in the education, healthcare, service and utility industries, during which the NBR recapped general and sector-specific VAT concepts, including invoicing and filing.

Following a question-and-answer session, around 190 representatives from 100 companies and institutions were given the opportunity to visit the unique interactive demo-center that provides innovative learning experiences to maximize participants’ assimilation and implementation of the materials presented.

Today’s workshop is a continuation of the series of workshops organised by the NBR to provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BHD 500,000 to BHD 5,000,000 by June.

VAT challenges in spotlight at forum

Date: 04 Mar, 2019

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External URL: http://www.gdnonline.com/Details/507804

Around 25 key officials from financial institutions in Bahrain attended an exclusive closed roundtable discussion organised by KPMG in Bahrain to discuss the challenges faced by the financial services sector following the formal introduction of Value Added Tax (VAT) in Bahrain. Philippe Norré, partner and head of indirect taxes at KPMG in Bahrain, was the moderator during the event and said “With their first VAT returns due latest by 30 April 2019, banks and other financial institutions still face lack of VAT treatment clarity around several typical financial offerings .

NBR holds interactive workshops for the food, hospitality, communications and entertainment industries

Date: 04 Mar, 2019

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External URL: https://www.nbr.gov.bh/releases/35

The National Bureau for Revenue (NBR) held two consecutive workshops primarily aimed at increasing the VAT awareness of professionals working in the food & hospitality and communications & entertainment industries.

The workshops attracted 150 representatives from 85 vendors, and recapped general and sector specific technical VAT concepts, invoicing and filing requirements, as well as a question and answer session.

Following the workshop, attendees visited the unique interactive demo-center that provides innovative learning experiences to assist vendors in implementing VAT.

The NBR will continue to organize workshops that provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BHD 500,000 to BHD 5,000,000 by June.

Bahrain cutting budget deficit

Date: 03 Mar, 2019

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External URL: https://thearabweekly.com/bahrain-cutting-budget-deficit

Bahrain recently quickened the pace of economic reforms by passing a package of laws, notably the introduction of a VAT and pension reforms.

The 5% VAT is one of the key commitments under the Gulf Finance programme. The agreement provides for the imposition of a VAT in all Gulf Cooperation Council countries during the current year.

The tax is to promote and diversify non-oil financial revenues. It comes after the introduction in December of a tax, ranging 50-100%, on tobacco and its derivatives, soft drinks and energy drinks.

Bahrain gov't revenues 'out of sync' with non-oil growth - Minister

Date: 27 Feb, 2019

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External URL: https://www.arabianbusiness.com/politics-economics/414186-bahrain-government-revenues-out-of-sync-with-non-oil-economy-growth-says-finance-minister

Minister of Finance and National Economy says growth of Bahrain’s non-oil economy has averaged about 7.5% per year Bahrain gov’t revenues ‘out of sync’ with non-oil growth – minister Bahraini government revenues have not kept pace with the growth of the kingdom’s non-oil economy, according to Sheikh Salman bin Khalifa Al Khalifa, Minister of Finance and National Economy.

Speaking at the GCC Financial Forum in Manama on Wednesday, Sheikh Salman said that non-oil economic growth in Bahrain has averaged approximately 7.5 percent per year.

“There’s a very positive story in the non-oil economic growth space,” he said. “What has been the issue is that non-oil revenues generated by the government have not kept up with that growth.”

Bahrain is currently in embarking on a plan to balance its budget by 2022, a key requirement of a $10 billion aid package funded by neighbouring states including the UAE and Saudi Arabia.

Last year, the country managed to trim its deficit by 35 percent to $3.5 billion. On Monday, Bahrain’s government approved a draft budget for the coming two years that projects a reduction of the deficit to $1.63 billion by 2020.

“As we continue on our deficit reduction measures, it will be of extreme importance that we look at the reduction of operating expenditure and an increase in revenues, non-oil revenues in particular, and that all our spending on subsidies is directed towards citizens,” Sheikh Salman said at the event.

Since VAT was introduced in Bahrain on January 1, Sheikh Salman said that more than 2,000 companies have registered already, more than two-thirds of which are below the legal threshold and have registered because of the positive incentives of refunds.

“It’s working well,” he said, noting that laws passed in Bahrain have zero-rated and exempted certain industries to ensure that citizens are protected from inflationary pressure and that economic growth continues.

Looking to the future, Sheikh Salman said he predicts that Bahrain’s logistics, tourism, financial and oil and gas sectors will continue to be the biggest drivers of economic growth.

Earlier in the week, the governor of Bahrain’s Central Bank said he expects the economy to grow at between 2.0 and 2.5 percent in 2019, similarly to last year.

NBR holds workshops along with its first demo center to educate vendors

Date: 25 Feb, 2019

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External URL: https://www.nbr.gov.bh/releases/32

The National Bureau for Revenue (NBR) held two workshops today for retail and wholesale vendors followed by an interactive demo center providing on-spot assistance and information regarding VAT, at the Ministry of Finance and National Economy.

The VAT demo center is designed to provide vendors with a live step-by-step guide on VAT readiness, and is part of the NBR’s efforts in ensuring the correct implementation of VAT within the Kingdom of Bahrain.

140 representatives from various retail and wholesale vendors attended two workshops that provided a general overview on VAT, sector specific content, invoicing and filing requirements, as well as a question and answer session, to ensure they are well informed on relevant VAT concepts.

The workshops were followed by access to the live demo center that provided an interactive experience on technicalities of VAT to ensure vendor readiness on VAT application.

The workshops and demo center are part of the NBR’s commitment to increase public and private stakeholders’ awareness and transparency regarding the treatment of the VAT across all sectors.

The NBR highlighted the importance of spreading awareness on VAT technicalities at this initial phase, given that companies with an annual revenue of BHD 500,000 to BHD 5,000,000 are set to register for VAT by June of this year.

Planet Payment to build Bahrain's tourist VAT refund scheme

Date: 21 Feb, 2019

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External URL: http://tradearabia.com/news/TTN_351366.html

Rana Faqihi, the assistant undersecretary for Public Revenues Development, has signed a contract with international payment specialists Planet Payment to begin work on the VAT refund scheme for tourists, said a report.

Planet Payment has been chosen to oversee Bahrain’s VAT tourist refund scheme based on their knowledge and expertise in the field of international payment solutions

Planet has been operating for 30 years in 58 different countries regionally and worldwide, and currently operate the UAE’s VAT tourist refund scheme, it said.

The new refund system will be established and ready during this year, Faqihi noted.

Upon completion of the payment infrastructure, tourists visiting Bahrain will be able to claim refunds on a percentage of VAT paid on purchases during their visit to the kingdom. Reimbursements will be made through a fully integrated digital system that connects registered companies in the scheme to the points of exit at Bahrain International Airport, the report said.

MOFNE signs contract with Planet Payment to build VAT tourist refund scheme

Date: 20 Feb, 2019

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External URL: https://www.nbr.gov.bh/releases/31

The Assistant Undersecretary of Development and Policy of Public Revenues, Rana Faqihi, today signed a contract with the international payment specialists Planet Payment, at the Ministry of Finance and National Economy. The contract has been signed to begin work on the tourist refund scheme for VAT paid by tourists during their stay in the Kingdom.

Planet Payment has been chosen to oversee Bahrain’s VAT tourist refund scheme based on their knowledge and expertise in the field of international payment solutions. Planet has been operating for 30 years in 58 different countries regionally and worldwide, and currently operate the UAE’s VAT tourist refund scheme.

Faqihi noted that the collaboration with Planet Payment is in line with the National Bureau for Revenue’s efforts in ensuring the correct implementation of VAT, and that the new refund system will be established and ready during this year.

Upon completion of the payment infrastructure, tourists visiting Bahrain will be able to claim refunds on a percentage of VAT paid on purchases during their visit to the Kingdom. Reimbursements will be made through a fully integrated digital system that connects registered companies in the scheme to the points of exit at Bahrain International Airport.

VAT reimbursements are a common practice introduced to increase visitor expenditure and boost the inflow of tourists as a stimulant for businesses’ competitiveness and overall economic growth.

Has VAT been a taxing experience?

Date: 20 Feb, 2019

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External URL: https://www.meed.com/vat-regime-uae-pinsent-masons/

The introduction of VAT is just one of the many fiscal strategies that will enable the UAE to achieve its medium to long-term objectives to become an economic powerhouse and world-class business hub.

A VAT system by its nature is a flexible tool for governments to regulate their annual budgets, contributing to higher revenue intake and a healthier ability to influence economic growth. This is evidenced in numerous OECD, IMF and domestic Central Bank financial and economic reports. These indicate significant increases in tax-to-GDP ratios as a result of the introduction of a new VAT regime and/or the fluctuation of rates within mature regimes.

The UAE and indeed the GCC’s rationale for the introduction of VAT, together with the related revenues it hopes to generate, give some context to our consideration of whether it has impacted activity in the region, and in particular the construction industry.

VAT has the essential characteristic of an economically neutral tax—ie, it flows through businesses and tax supplies to final consumers. Once a new VAT system has been introduced and businesses have adjusted, VAT should not be a direct cost for businesses and careful management of associated compliance, cash flow and administration costs should limit the indirect impact. Associated inflation is also generally short lived.

For a VAT regime to be successful in its aim of neutrality for businesses, and therefore limit the impact on trade, there are a number of key contributing factors: the VAT rates and structure; VAT thresholds and phased introduction; administration of the system; and exemptions.

Transitional challenges
If we look at these in the context of the construction industry, they give us a clearer picture of some of the challenges that businesses may have faced during the first year of implementation in the UAE and Saudi Arabia, and the resulting impact on the industry across the region.

For such an important, high-value sector, the application of a considerably low rate of 5 per cent was crucial in aiding the industry to adjust to this new demand on working capital. Also, the implementation of a simple VAT system was tactical in supporting comprehension and early adoption, especially in the UAE where businesses did not historically have experience with federal tax regimes.

Over 2,000 local and international vendors registered for the VAT

Date: 18 Feb, 2019

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External URL: https://www.nbr.gov.bh/releases/30

The National Bureau for Revenue (NBR) today announced that over 2,000 local and international vendors have registered for the VAT. The NBR recognized the private sector’s efforts exerted towards ensuring the proper implementation of the VAT, which includes registering for the VAT prior to levying the standard 5% tax.

Consumers are reminded that all registered vendors are legally required to display their VAT registration certificate that includes vendors’ Commercial Registration number and their VAT registration date, prior to levying the 5% VAT.

Should I pay tax on the sale of company assets?

Date: 18 Feb, 2019

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External URL: https://www.thenational.ae/business/money/vat-q-a-should-i-pay-tax-on-the-sale-of-company-assets-1.827120

Legislation states that VAT is charged on taxable supplies made in the normal course of your business. Some argue that selling fixed assets, such as furniture, is outside the normal course of business and is not vatable.

I don’t agree with this argument and advise charging the tax on the sale of all company assets. The purchase of assets used to generate taxable sales are part of most businesses’ normal activities. When you purchase the new office furniture you will be charged VAT on the purchase, which you can recover in full against your output VAT on taxable sales. It makes sense therefore that if you can recover VAT on a purchase of assets, you should then charge VAT on a subsequent sale of the same item.

Food delivery? VAT compliance should be on the menu

Date: 18 Feb, 2019

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External URL: https://www.khaleejtimes.com/20190218/no-title

Getting food at your doorstep using technology could have never been imagined until the tech giants like Uber, Zomato and more recently Talabat and Careem have made it possible. Simply using fingers on customer friendly apps, one can now conveniently anytime during the day order food that will be delivered to your office or home.

Online food delivery apps typically work on the aggregator model where various restaurants are aggregated on the digital platform that allows customers to choose the restaurant and place the order. The order is passed to the restaurant that cooks the food and the app staff gets it delivered at the customer’s doorstep.

The food delivery apps earn income from various sources – delivery fee charged from customers, a commission from restaurants, premium listing fee from restaurants to list them on the app and third-party ad revenue through Google ads. Each source of revenue needs a close look to ensure its appropriate taxability.

The areas of attention for apps are more on identifying who’s the supplier of food & delivery and whether they are two separate supplies or one composite supply. Typically, the apps only act as pure delivery service providers obliged to account for VAT on the delivery fee. The VAT treatment may differ where food is simply picked up from the restaurant and delivered to the customer vis-à-vis where the app buys and store food packets to ensure faster delivery to the hungry customers during peak hours.

In the first situation, delivery fee from customers and commission from restaurants are taxable supplies. In the second situation, the app will have to account for VAT on the supply of food and its delivery to customers but simultaneously also be eligible to reclaim the VAT paid to the restaurant on the purchase of the food packets.

The VAT may still apply under the deemed supply provisions where the food bought by the app could not be sold but consumed internally by its staff. If VAT paid to the restaurant was recovered, there would be an obligation to account for VAT on the value of food unsold.

To entice customers hook on to the app, various promotional schemes are launched. A customer may be given a Dh50 voucher redeemable against the order to reduce his cash payout. The app will pass on the discount from its own income. Correct accounting for discounts, VAT and its appropriate reflection on the invoice is important. The VAT position will be different where the customer is given a voucher not sponsored by the app, rather by a third party. It is important to structure the transactions properly to avoid any VAT dispute later.

Separately, the customers may also be given freebies when the order value exceeds a threshold. This can be a free dessert etc. The app would typically ask the restaurant to pack the freebie along with the order and later pay the restaurant for the value of the freebie. Similarly, some apps also make the orders free of cost should the food is not delivered within a specified time. Whether supply of a freebie or making the food free qualify as a deemed supply and subject to VAT should be analysed.

The apps also earn revenue from placing adverts. The UAE VAT law considers online advertisements as a supply of electronic services subject to VAT based on their use and enjoyment in the UAE. It is critical to analyze the contract with the clients, their location and the location of the target audience. The app’s client may be located outside the UAE, but the adverts are targeted for the UAE audience to increase revenue for the client’s UAE based restaurants. Will this be considered a zero-rated supply (since the client does not have a presence in the UAE) or should it be subject to the standard rate of VAT since the use and enjoyment of the advert happens in the UAE. It is important the app is able to demonstrate legally the actual place of use and enjoyment of the adverts for appropriate VAT treatment.

Issuance and delivery of the tax invoice is mandatory in the VAT law. The app should issue a tax invoice to the customers and ensure it is delivered. It has been observed generally, the app emails a payment summary to the customer that captures the value of food plus the delivery fee and VAT on it. The food invoice is issued by the restaurant and delivered by the app staff to the customer. The app should also issue and deliver a separate simplified tax invoice to the customer for the delivery fee. Non-delivery of this invoice will be considered a non-compliance of the VAT law. Where the delivery fee is fixed, the amount of VAT on it should be considered inclusive. The VAT amount, however, needs to be shown clearly on the invoice.

The online delivery concepts are fairly new and the tax authorities across the globe are increasingly finding it challenging to tax them. Because of different business models prevalent, identifying and putting a tax treatment on every transaction becomes a task. It is critical for businesses to be vigilant on how the contracts are structured and ensure no transaction goes unnoticed by their tax team.

The impact VAT has had on UAE hiring levels

Date: 16 Feb, 2019

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External URL: https://www.arabianbusiness.com/jobs/413123-revealed-how-has-vat-affected-uae-hiring-levels

The majority (84 percent) of recruiters and human resource (HR) professionals in the UAE remain confident about their ability to recruit the right candidates for businesses, according to a new survey.

However, more than half (56 percent) have experienced candidates demanding above average salaries since the roll out of VAT, according to the Recruiter Sentiment Survey by LinkedIn, the world’s largest professional network.

The survey said the implementation of VAT in the UAE at the start of 2018 does not seem to have affected hiring rates, with most respondents (57 percent) seeing an increase in hiring from April to December 2018, when compared to the same period in 2017.

The top reasons for the increase in hiring from April to December 2018 were attributed to business growth (63 percent), availability of more suitable candidates (52 percent) and access to relevant talent insights (51 percent).

However, over half (55 percent) of respondents stated that there was a greater supply of candidates than available roles.

“It is interesting to see that despite the introduction of VAT, the UAE job market and workforce appears to remain confident. However, the new tax does appear to be putting added pressure on businesses as candidates demand higher salaries to compensate for the increase,” said Ghassan Talhouk, head of LinkedIn – UAE LinkedIn Talent Solutions.

The survey revealed that the most in-demand roles since the implementation of the VAT regime were tax and finance executives and IT specialists, as companies geared up for VAT -compliance.

According to the survey findings, transport, public administration and design sectors are among the hardest to find candidates for, while the hiring rates in IT, food and beverage and hospitality industries have peaked since the start of 2018.

IMF Managing Director commends UAE for strengthening its fiscal framework

Date: 09 Feb, 2019

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External URL: http://wam.ae/en/details/1395302738139

The UAE is launching a fiscal risk management project with the IMF’s help and will produce its first fiscal stress test this year, according to Christine Lagarde, Managing Director and Chairwoman of the International Monetary Fund (IMF).

Speaking at the main session of the Fourth Annual Arab Fiscal Forum organized by the IMF, Arab Monetary Fund, AMF, and the UAE Ministry of Finance, today at the World Government Summit 2019, Lagarde commended the UAE and other countries in the region for strengthening their fiscal frameworks.

She said that the UAE as well as Saudi Arabia, Kuwait, Sudan and Lebanon have set up macro-fiscal units, a useful first step in strengthening the fiscal framework while Algeria has recently adopted a new budget law with a strong medium-term orientation. Bahrain has introduced a fiscal program designed to achieve balance over the medium term while Mauritania, Morocco, Jordan, and Lebanon are making great progress with medium-term public investment planning and execution. Egypt now publishes a fiscal risk statement with its budget and produces an internal in-year budget risk assessment.

Speaking on the importance of fiscal policy, the head of the IMF said it plays a vital role in creating and nurturing the vision of sustainable and inclusive growth, especially as encapsulated in the Sustainable Development Goals. “This is because we need fiscal space for spending on health, education, social protection, and public investment all key priorities in this region.” She noted that without a stable foundation, even the best policies can flounder.

Earlier in her speech, Lagarde expressed her happiness at being in Dubai which she called the “city of tomorrow” where “its economic leaders are dedicated to realizing the vision of a better tomorrow.”

“This vision is predicated on prosperity that is shared by all, benefiting the poor and the middle class, citizens and immigrants alike; and opportunities that are open to all, including women. It is a vision of fairness over cronyism and partiality, and of trust that government policy is oriented toward the common good.”

“This is a big vision. But as His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai,once said “The bigger your vision, the bigger your achievement will be we cannot let fear keep us small. We have to be brave to be big.”

Speaking about the economic environment in the Arab region, Lagarde said it has not yet fully recovered from the global financial crisis and other big economic dislocations over the past decade. “Among oil importers, growth has picked up, but it is still below pre-crisis levels. Fiscal deficits remain high, and public debt has risen rapidly from 64 percent of GDP in 2008 to 85 percent of GDP a decade later. Public debt now exceeds 90 percent of GDP in nearly half of these countries.”

She said that oil exporters have not fully recovered from the dramatic oil price shock of 2014. “Modest growth continues, but the outlook is highly uncertain reflecting in part the need for countries to shift rapidly toward renewable energy over the new few decades, in line with the Paris Agreement. With revenues down, fiscal deficits are only slowly declining despite significant reforms on both the spending and revenue sides, including the introduction of VAT and excise taxes. This has led to a sharp increase in public debt from 13 percent of GDP in 2013 to 33 percent in 2018,” she added Lagarde also drew attention to the broader economic context bearing on fiscal policy in the region. “We now think that the global economy will grow by 3.5 percent this year, 0.2 percentage points below what we expected in October. And risks are up, given escalating trade tensions and tightening financial conditions. Unsurprisingly, a weaker global environment has knock-on effects on the region through a variety of channels trade, remittances, capital flows, commodity prices, and financing conditions.”

She said the bottom line of all this is that “the economic path ahead for the region is challenging. This makes the task of fiscal policy that much harder, which in turn makes it even more important to build strong foundations to anchor fiscal policy.”

Speaking further on the importance of strong fiscal policy, Lagarde said the two key pillars of good fiscal management are robust fiscal frameworks, and good governance and transparency. “There is scope to improve fiscal frameworks in this region. Some of the weaknesses are short-termism and insufficient credibility,” she said.

“Corruption is the great disruptor of fiscal policy. Without trust in the fairness of the tax system, it becomes harder to raise the revenue needed for critical spending on health, education, and social protection. Governments might be tempted to favor white elephant projects instead of investments in people and productive potential. Add this up, and we have a recipe for unsustainable fiscal policy combined with social discord,” she said.

Lagarde concluded by saying that good fiscal policy requires good institutional foundations. “Solid foundations in areas such as fiscal frameworks and governance give citizens confidence that fiscal policy serves the good of all, not just the wealthy or the well-connected,” she said

Revealed: Impact of VAT in Saudi Arabia, UAE, one year on

Date: 07 Feb, 2019

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External URL: https://www.arabianbusiness.com/politics-economics/412762-revealed-impact-of-vat-in-saudi-arabia-uae-one-year-on

2019 economic outlook: Weaker oil would put pressure on expenditure in countries with higher break-even prices

Early data suggests that the inflationary impact of the value-added tax (VAT) in both Saudi Arabia and the UAE has largely been contained, according to the most recent PwC Middle East Economy Watch.

Richard Boxshall, senior economist at PwC Middle East, writing in the report, said the impact of VAT in Saudi Arabia was “limited”, mainly because it raised more revenue than was initially expected.

“Overall, the new tax policy has been relatively successful in diversifying government revenue without producing excessive inflation,” he said. “A fuller picture will emerge over the next six months or so, including from studying Bahrain, which joined the VAT club this year.”

Saudi Arabia’s preliminary fiscal outturn data, released alongside the budget in December, estimates that VAT raised $12.2bn in 2018 – nearly a third more than it had expected.

In a January 2018 projection made by the General Authority of Zakat & Tax, the amount raised is equivalent to about 1.6% of GDP.

“This suggests a relatively high efficiency of collection in relation to private consumption by international standards,” said Boxshall.

“The VAT brought in more funds than the expat levy and excise taxes combined, and triple the amount from taxes on income and capital gains.”

While no data is available on the UAE as yet, Boxshall said it is likely to be higher in relative terms than in Saudi Arabia “because private consumption makes up a larger share of the economy”. Seventy percent of the revenues will be distributed to each of the seven emirates, potentially providing a substantial boost for some.

Best year for exporters
Boxshall said 2018 was the best in five years for Middle Eastern oil exporters, driven by two main factors – rising oil prices and increased government spending.

“This combination of stronger prices, as well as fiscal and structural reforms put these economies on a solid footing for 2019, despite a weaker final quarter marked by increased geopolitical risks and oil prices falling into correction by year’s end,” he said.

Oil market developments are likely to be the dominant economic driver for the region once again in 2019, following the sharp decline in prices in the final months of 2018, and OPEC and its allies agreeing to cut output by 1.2m barrels a day in November.

Boxshall said weaker oil would put pressure on expenditure in countries with higher break-even prices.

“This includes Saudi Arabia, whose 2019 budget envisages a 20% increase in capex and a 7% overall increase compared with the 2018 outturn,” he said. “However, Saudi Arabia’s low debt level (about 19% of GDP) means it can finance a larger deficit if needed, although it is still aiming to balance its budget by 2023.”

Active year for M&As and IPOs
Whatever happens at a macroeconomic level, 2019 is likely to be an active year for corporate transactions, which includes major M&A and IPO activity.

Banking sector mergers are under discussion in several countries. The region is widely recognised as being overbanked and has begun to consolidate over the past few years. As banks scale up through mergers, this should boost the sector’s capacity to finance projects and businesses, supporting growth.

Meanwhile, efforts to attract investment will continue, including the announcement of which sectors are eligible for 100% onshore foreign ownership under a new UAE law. There should also be progress in privatisation efforts in Saudi Arabia, Oman and Kuwait.

Applying VAT on EWA bills ‘unconstitutional’

Date: 06 Feb, 2019

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External URL: http://www.newsofbahrain.com/bahrain/50956.html

A Bahraini lawyer has insisted that the recent decision by the Electricity and Water Authority (EWA) to apply Value Added Tax (VAT) on subscribers’ bills are unconstitutional, demanding immediate cancellation of the decision. This came as lawyer Mohammed Al Thawadi appeared before the High Administrative Court, which is examining a complaint lodged by him against the authority. The court said yesterday that it would issue its final verdict in the case on February 24.

In his statements, the lawyer asserted that the decision is unconstitutional, claiming that Articles 15 and 17 of the Constitution of the Kingdom stipulate that taxes should only be imposed through legislation. Mr. Al Thawadi also accused EWA of not adhering to the Unified GCCVAT Agreement.

“Article 29 did not stipulate the imposition of taxes on electricity supply services, but on the contrary, it gave each state the right to exempt some sectors in accordance with local law. “Additionally, Article 30 stipulates the exemption of government bodies from paying taxes, and therefore it is not permissible for the authority to collect taxes.” The lawyer’s last statement came after the authority denied the accusations during the previous hearing.

“The authority does not exercise its functions as sovereign and there is no monopoly of providing electricity and water supply services in the Kingdom,” the authority’s counsel had told the court. Further supporting his accusations against the authority, Mr. Al Thawadi said: “The authority’s claim that it does not operate in a sovereign manner and that there is nothing preventing competition with it from any other party in providing its services is incorrect.

The National Bureau for Revenue held 22 workshops on the treatment of VAT thus far

Date: 04 Feb, 2019

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External URL: https://www.nbr.gov.bh/releases/28

The National Bureau for Revenue (NBR) held a total of 22 workshop on the treatment of VAT across various sectors within the Kingdom. The workshops, which have begun since December 2018, address all of the various sectors’ VAT inquiries to ensure effective implementation of VAT.

The workshops targeted government and private sector entities, including entities in the banking and finance, real estate and construction, sale and retail, auditing, and education sectors. The NBR affirms its commitment to increase public and private stakeholders’ awareness and transparency regarding the treatment of the VAT across all sectors in addition to advancing public-private cooperation.

To ensure the success of the initial phase of the VAT implementation, the NBR will organize a further series of workshops to raise awareness on the technical and procedural aspects of VAT.

VAT Public Clarification - Bank Interest and Dividends

Date: 29 Jan, 2019

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External URL: https://www.tax.gov.ae/pdf/VATP010%20Interest%20and%20Dividends.pdf

Passively earned interest income from bank deposits and dividend income are, therefore, outside the scope of VAT, and there is no requirement to report them in the VAT return.

The clarification VAT P010 primarily states that bank interest and dividends are out of scope and need not be shown as exempt income in the VAT returns. Other interest income are considered as exempt income where there Is supply Management fee is subject to VAT. Please refer to clarification for full details.

VAT Public Clarification Donations, Grants and Sponsorships

Date: 28 Jan, 2019

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External URL: https://www.tax.gov.ae/pdf/VATP011%20-%20Donation%20Grants%20and%20Sponsorships.pdf

The VAT treatment of donations, grants and sponsorships depends on whether the donor, grantor or sponsor, as the case may be, has received any benefit in return for such payments. Where any benefit is received in return for the payments, VAT implications will arise. However, where no benefit is received, the payments will be treated as outside the scope of VAT as they will not be seen as consideration for a supply.

The VATP011 clarification states where donation and grants do not have any supply, they are considered as out of scope. Generally, sponsorship will be subject to VAT as there is usually associated supply to such sponsorship. Click here to read more.

UAE clarifies when companies must de-register from VAT

Date: 26 Jan, 2019

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External URL: https://www.thenational.ae/business/economy/uae-clarifies-when-companies-must-de-register-from-vat-1.818251

Companies registered to pay value added tax in the UAE must apply to remove themselves from the system if they stop operating or anticipate a drop in the value of their taxable sales to below Dh187,500 per annum, the government said on Saturday.

Failure to de-register could elicit a fine from the UAE Federal Tax Authority, the official body that administers the tax said in a statement.

“Registrants will not be de-registered unless they have paid all due taxes and administrative penalties and filed required tax returns for the period in which they were registered, as stipulated under tax legislation,” the FTA’s statement added.

The UAE, together with Saudi Arabia, introduced a 5 per cent VAT on goods and services in January 2018, as part of plans to increase non-oil revenues and create a more transparent business environment.

Any company generating taxable sales of above the threshold of Dh375,000 per annum must register themselves on the government’s VAT system and pay all of the tax for which they are liable each year, while companies with taxable sales above Dh187,500 per annum can voluntarily register themselves to pay VAT.

However, if a company anticipates it will experience a drop in total annual sales to below that minimum threshold over a 30-day period ahead, it must de-register from VAT liability, the FTA said. The application must be submitted within 20 working days of the occurrence of that drop in sales, otherwise the company could be subject to a fine.

“Failing to submit the de-registration application within the period…will lead to the imposition of administrative penalties as stipulated in the VAT tax legislation,” the statement said.

The National Bureau for Taxation holds a workshop for audit firms

Date: 21 Jan, 2019

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External URL: https://www.nbr.gov.bh/releases/23

The National Bureau for Taxation (NBT) today held a workshop primarily aimed at increasing professional auditors’ awareness in regards to the VAT procedures and legal framework in addition to equipping them with the knowledge they need to provide accurate VAT advisory and audit services.

The workshop attracted a number of representatives from various audit firms and addressed VAT-related inquires to ensure the use of best practice in auditing.

Today’s workshop is part of a series of workshops held by the NBT aimed at increasing public and private stakeholders’ awareness regarding VAT procedures and legal framework to achieve the highest level of compliance.

The NBT reminds taxable entities to refer to the list of audit firms that can aid in the implementation of VAT, which is available on the NBT’s website at the following link: https://www.nbt.gov.bh/licenced_acc.

No VAT for international companies holding shows at ADNEC

Date: 13 Jun, 2019

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External URL: http://wam.ae/en/details/1395302767635

Abu Dhabi National Exhibitions Company, ADNEC, today announced that it has obtained the Federal Tax Authority, FTA, License for waiver from Value Added Tax, VAT, for all international companies and organisations participating in or holding shows and conferences at its venues across the UAE with effect from 1st June, 2019.

The VAT waiver covers exhibitions and conferences held over a period not exceeding seven days. The waiver also stipulates that recipients shall not have a permanent base or established business in UAE and shall not be registered or obliged to register in UAE as per the UAE VAT Law.

Speaking on the announcement, Humaid Matar Al Dhaheri, Group CEO of ADNEC, said, “The VAT waiver for ADNEC-hosted event organisers and participants will further stimulate the business tourism sector in the UAE through enhancing the competitiveness of our venues to host major international exhibitions and conferences. This move supports our strategy to attract new and world-renowned events to our venues and increase our direct and indirect contributions to the Abu Dhabi economy.”

“The business tourism sector is a major contributor identified by Plan Abu Dhabi and Abu Dhabi Economic Vision 2030 to accelerate non-oil GDP growth. Through hosting more than 3,390 events and welcoming nearly 17.5 million visitors to date, our venues – Abu Dhabi National Exhibitions Centre and Al Ain Convention Centre – have delivered a direct and indirect economic impact of more than AED32 billion since ADNEC’s inception in 2005,” he concluded.

Sugar Sweetened Beverage – Excise update

Date: 01 Jun, 2019

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Saudi’s General Authority for Zakat and Tax (Gazt) said it approved amendments to existing regulations on May 15, 2019. According to the guidance published in the official gazette, a 100 per cent tax will be enforced on e-cigarettes and its accompanying tools, and a 50 per cent tax on soft and sugary drinks.

The UAE imposed excise duty on certain items at the end of 2017 and is now considering the inclusion of more products on its excise tax list, according to a statement by the Ministry of Finance in April 2019.

Considering the probability of implementation of Excise on Sugar Sweetened Beverages, entities involved in the manufacturing, distribution and selling of these products should evaluate the impact of potential excise levy on their business model and operations.