UAE VAT to stay at 5%, affirms Minister of State for Financial Affairs.
Date: 13 Feb, 2018
The UAE’s government has no intention of raising the current rate of Value-Added Tax (VAT) or excise tax in the medium term, Obaid Al Tayer, the country’s Minister of State for Financial Affairs confirmed.
“If you’re referring to the next five years, we don’t see anything [relating to] increasing the VAT rate or the excise rate. I also want to confirm that there aren’t any studies or any legislation regarding introducing income tax,” Al Tayer told reporters in Dubai on Saturday.
Apparently the minister was quashing the social media chatter on VAT to be increased to 10% in the near future.
FTA urges businesses to complete and submit tax returns for the first tax period before February 28
Date: 03 Feb, 2018
External URL: https://www.tax.gov.ae/filling-vat-returns.aspx
The Federal Tax Authority (FTA) has set up integrated electronic systems to allow Taxable Persons to register, file tax returns and pay their due taxes seamlessly, asserted FTA Director General His Excellency Khalid Ali Al Bustani.
The system encourages voluntary compliance, H.E. Al Bustani said, calling on all businesses registered with the Authority – whose first Tax Period ends on January 31, 2018 – to file their returns for the first Tax Period no later than February 28, 2018. The FTA Director General reiterated the importance of early preparation for submitting tax returns within the set timeframes, reminding registered businesses to submit their tax returns on a monthly or quarterly basis, as determined by the FTA based on their annual revenue, and within the deadlines set in Federal Decree-Law No. (8) of 2017 on Value Added Tax, as well as its Executive Regulation.
H.E. Al Bustani noted that the Federal Tax Authority had made some exceptional adjustments to the first tax periods for VAT in order to afford more flexibility to businesses following requests from a large number of businesses subject to VAT, which entered into effect in the UAE on January 1, 2018. These exceptional adjustments included extending Tax Periods from one to three months for some businesses at the beginning of implementation in 2018, with Tax Periods returning to a monthly basis later on.
The first quarterly Tax Period – which was meant to expire by the end of January or February 2018 – was extended, H.E. reminded, by merging it with the following period, making the first Tax Period four months for some businesses and five for others. Meanwhile, businesses whose first Tax Period was three months ending in March 2018 were not included in these adjustments.
VAT TRN is sufficient, no need to ask fro VAT Certificate
Date: 27 Jan, 2018
External URL: http://wam.ae/en/details/1395302662854
The FTA has urged businesses to conduct transactions on the basis of TRN (Tax Registration Number) and not to insist on VAT Certificates.
Many businesses that did not meet the deadline for registration have been issued with provisional TRN and as such are not able to download the VAT certificate from the FTA site. In light of these business partners may conduct business on the basis of TRN and not have to insist on VAT Certificates.
The Federal Tax Authority, FTA, has confirmed that businesses are not required to present a tax certificate in order to conduct their commercial activities and can simply use their Tax Registration Number, TRN.
In a statement issued on Saturday, the Authority called on all businesses and stakeholders in the UAE to carry out commercial or other transactions using TRNs provided by businesses, urging them not to require tax certificates in order to ensure smooth operations and minimise disruption of work.
Committee of Consumer Protection reviews VAT impact
Date: 27 Jan, 2018
External URL: http://wam.ae/en/details/1395302662885
The Higher Committee of Consumer Protection is ensuring continued coordination between all state departments concerned with the Value-Added Tax to corroborate consumers’ confidence in the market stability and sound application of the tax and prevent any unjustifiable price hikes, Sultan bin Saeed Al Mansouri, Minister of Economy, has affirmed.
The minister’s remarks came at a meeting of the Higher Committee of Consumer Protection at the Ministry of Economy in Dubai recently.
“The committee received growing calls from the consumers during the first days of the VAT application. People had some concerns, but their worries have ebbed with the passage of time and by the end of the first fortnight of the application, the calls received by the committee declined from 3261 on the first day of the application to 493 on January 15,” said the minister at the meeting.
Khalid Ali Al Bustani, Director General of the Federal Tax Authority (FTA), who attended the meeting, said the complaints received by the committee address three main issues: price hikes, tax registration numbers and erroneous calculation of VAT on some commodities.
“Traders and departments against whom the complaints were filed have been notified and were given a grace period to rectify their strategies as per the tax rules and condition,” Al Bustani added.
“The committee is in constant follow-up of the market to prevent any violations and in case of any non-abidance, all legal measures have been taken against the violators,” Mohammed Ahmed bin Abdul Aziz Al Shehhi, Undersecretary for Economic Affairs in the Ministry of Economy, who attended the meeting, said.
DUBAI, 27th January, 2018 (WAM)
VAT cannot be charged if older contracts are silent on VAT
Date: 26 Jan, 2018
Health clubs cannot charge VAT on membership contracts issued last year – unless they made clear reference to the tax at the time, a senior government official has said.
Ahmad Al Zaabi, acting director of consumer protection at Dubai Economy, said gyms and other clubs could only charge VAT, or any other tax, on contracts signed last year “if the documented agreement terms specified the same”.
His comments came after Fitness First members became embroiled in a dispute with the health club over VAT being applied to memberships signed and paid for last year.
Many members have complained about demands from the company to pay the tax for the 2018 portion of their membership, with some claiming they were denied entry to the club until the tax was paid.
Mr Al Zaabi said: “For example, the agreement should state that the fee applicable does not include VAT or any of the tax concerned, and also specify that the merchant reserves the right to charge VAT or any other tax that may be implemented in the country at any point during the agreement period.”
He said if this does not happen, the contact will be considered “silent” and the merchant “cannot charge VAT from the consumers, or to gain an accepted settlement with their consumers”.
Tourist VAT refund coming soon, says FTA
Date: 24 Jan, 2018
In a recent press conference, the FTA chief Khalid Al Bustani said they are in talks with four international firms to establish refund centres at airports for facilitate refund of VAT to tourists departing UAE.
These firms have experience in managing refund of VAT and will be soon finalized.
In the same meeting the FTA also announced that over 260,000 businesses and 10,000 groups have already registered.
Online Shopping Purchases Subject to VAT
Date: 19 Jan, 2018
External URL: https://www.tax.gov.ae/online-shopping.aspx
The Federal Tax Authority (FTA) has confirmed that all purchases made through online shopping portals are subject to the same 5% Value Added Tax (VAT) as any other purchase made through traditional outlets if the products purchased online are received within the United Arab Emirates.
The Authority explained in an awareness flyer issued today that according to Federal Decree-Law No. (8) of 2017 on Value Added Tax and its Executive Regulations, all online sales are subject to VAT where a seller’s supplies exceed the mandatory registration threshold of AED375,000 over the previous 12 months or the coming 30 days.
FTA makes amendments to the first tax period
Date: 18 Jan, 2018
The Federal Tax Authority, FTA, has made some exceptional amendments to the first tax period for those subject to value-added tax, VAT, to be more flexible with the business sectors included in the tax.
The tax period for some businesses will, therefore, be four months, and five months for other businesses while businesses with a three-month tax period ending in March will not be affected by the amendments, he further added.
You can view the first tax period for your organization by logging into your account on the e-services portal on the FTA’s website.
As per the regulations, the tax declaration must be submitted to the authority no later than on the 28th day after the end of the relevant tax period.
FTA relaxes the timeline for filing the first VAT returns
Date: 16 Jan, 2018
The Federal Tax Authority (FTA) has relaxed the timeline for filing the first value-added tax (VAT) returns, easing reporting and compliance pressure on companies, especially SMEs.
The first tax return filing for companies with more than Dh 150 million turnovers was one month. For others, it was quarterly. Now, firms can file their first tax returns after four or five months in June as per the new timelines appearing on the FTA’s dashboard after log-in by a member company. Such an extension in filing returns shall help firms to better comply.
Government Declares which Free Zones are Exempt from VAT
Date: 09 Jan, 2018
The Cabinet has passed a decision on the Designated Free Zones for the purpose of the implementation of Value Added Tax.
The designated zones are special zones for VAT purposes, which are generally considered outside of the UAE in terms of value-added taxation. While VAT applies throughout the UAE, in the designated zones VAT generally does not apply. Only fenced free zones with special controls on goods and services going in and out could benefit from this status.
|No.||Designated Zone ( Abu Dhabi)|
|1||Free Trade Zone of Khalifa Port|
|2||Abu Dhabi Airport Free Zone|
|3||Khalifa Industrial Zone|
|No.||Designated Zone (Dubai)|
|1||Jebel Ali Free Zone (North-South)|
|2||Dubai Cars and Automotive Zone (DUCAMZ)|
|3||Dubai Textile City|
|4||Free Zone Area in Al Quoz|
|5||Free Zone Area in Al Qusais|
|6||Dubai Aviation City|
|7||Dubai Airport Free Zone|
|No.||Designated Zones (Sharjah)|
|1||Hamriyah Free Zone|
|2||Sharjah Airport International Free Zone|
|No.||Designated Zones (Ajman)|
|1||Ajman Free Zone|
|No.||Designated Zones (Umm Al Quwain)|
|1||Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port|
|2||Umm Al Quwain Free Trade Zone on Sheikh Monhammed Bin Zayed Road|
|No.||Designated Zones (Ras Al Khaimah)|
|1||RAK Free Trade Zone|
|2||RAK Maritime City Free Zone|
|3||RAK Airport Free Zone|
|No.||Designated Zones (Fujairah)|
|1||Fujairah Free Zone|
|2||FOIZ (Fujairah Oil Industry Zone)|
Traders not to charge more than 20 fils in addition to the bill amount
Date: 08 Jan, 2018
The Abu Dhabi Department of Economic Development (ADDED) on Thursday said that a small change of 10 fils and 5 fils can be rounded off to 25 fils and traders should not charge customers more than 20 fils in addition to the bill amount.
The statement comes after complaints from consumers that they are not being handed out the exact change after the purchase of items post introduction of VAT (value added tax) in the UAE from January 1.
Elaborating further, the Department8 said if the bill shows Dh10 and 5 fils, one may pay up to Dh10.25, and if the bill is Dh10.35 fils, it is fine to pay up to Dh10.50 fils.
“This is to stop any confusion about the lack of 10 and 5 fil coins in the market,” ADDED stated.
VAT is levied on most items including food and beverages, electronic goods, jewelry, among others.
Further, the consumer protection department of Ministry of Economy has warned traders to pay the exact change or face penalties. “The ministry emphasizes the right of the consumer to recover any amounts of money and no trader has the right to take any additional amounts on the goods,” Hashem Al Nuaimi, Director of Consumer Protection Department at the Ministry of Economy, told Gulf News on Thursday. He asked members of the public to report any complaint via the call center in the Ministry of Economy on the number 600522225, which works from 7 am to 10:30 pm.
VAT-free Salik recharge only if done online
Date: 02 Jan, 2018
There is a 5 per cent value-added tax (VAT) when you buy a Salik (toll gates) recharge card or tag from a petrol station or supermarket but no extra charge when you recharge your Salik account online or via the RTA website.
There is no VAT on Salik charge – it is still Dh4 deduction from smart tags every time a vehicle passes under these toll gates.
Last month, the Roads and Transport Authority (RTA) has clarified that VAT will not be levied on Salik or public transport facilities, after rumours on social media that VAT will also apply on Salik.
Passengers and commuters of public transport facilities like the buses, metro, tram and maritime transport, as well as cab passengers, will not be subject to VAT.
This is an excerpt from a Khaleej Times article and which you can read here.
Retailers warned against unjustified price hike
Date: 02 Jan, 2018
The Department of Economic Development (DED) in Abu Dhabi has warned it will monitor any price hikes after the UAE implemented value-added tax (VAT) from January 1 and asked consumers to report any violations and complaints.
The Department collected price details of products in 2017 from retailers and it will verify in the first quarter of 2018 to ensure that the price hikes are not beyond the permitted level in line with the implementation of five per cent VAT.
The UAE has levied VAT at five per cent following thorough research studies conducted by competent bodies at ministries and federal entities. Economists have projected that inflation in the UAE will marginally inch up due to VAT as the tax rate is one of the lowest in the world.
This is an excerpt of an article in the Khaleej Times which you can read here.
Provisional Tax Registration Numbers issued, says FTA
Date: 24 Dec, 2017
In a statement on Saturday, as reported in the Gulf News, the Federal Tax Authority has started issuing provisional tax registration numbers to Tax Groups, and will soon be issuing provisional tax numbers to individual businesses to ensure that there is no delay in the January 1, 2018 deadline for VAT roll-out in UAE.
It is presumed that the permanent numbers will be issued once the application has been fully reviewed and amendments made by business to ensure completeness.
Multiple stores 'change prices ahead of VAT'
Date: 23 Dec, 2017
A number of retailers across the UAE have begun raising prices ahead of the January launch of the VAT, according to members of staff at each store who asked to remain anonymous. Importantly, the staff members said the retailers who have raised prices are not yet collecting VAT and are not claiming to be charging VAT.
Retailers have a number of mechanisms they can use to try and pre-empt any negative impact from the introduction of a tax.
Multiple instances of price increases across stores including major pharmacies, fashion retailers, clothiers, and household goods sellers have been found. Speaking on the condition of anonymity because of the sensitivity of the topic, staff members said that they had been asked to reprice multiple products to reflect the introduction of VAT, before the tax is officially implemented on January 1, 2018.
Several retailers declined to comment for this story.
While stating that retailers taking advantage of customers under the guise of VAT was an important issue to address, the FTA’s Al Bustani emphasised, however, that any complaints about retailers increasing prices and not telling customers was “not [the FTA’s] responsibility,” as it was “not a tax issue.”
This is an excerpt from a news story in Gulf News which you can read here.
What UAE Property Buyers and Renters Need to Know Now
Date: 23 Dec, 2017
As the United Arab Emirates (UAE) is gearing up for the rollout of the first-ever tax in the country, here are the implications for the real estate sector
- Real estate brokering is defined as a service under the new UAE tax law, which will take effect 1 January 2018.
- This means that UAE residents renting or buying property in the UAE will pay an additional 5% to the UAE government, collected by their broker, on the total commission of a rent or sale.
For owners of residential properties, either homeowners or investors of residential buildings, there is no need to register for VAT as long as they do not have any other business activities. The first supply of a new residence that is upon the first handover by a developer is zero-rated within the first three years after its construction. Subsequent sale or rental of such property is exempt from VAT whenever such transaction occurs.
Owners of commercial property, however, will have to register with the Federal Tax Authority (FTA) if the value of supply (the lease and/or sale) over the preceding 12 months or the coming 30 days exceeds Dh375,000. The VAT rate for such sale and rent of a commercial property is 5%. However, such owner, by registering with the FTA, will generally also be able to recover VAT with respect to expenses related to the supply of the building.
This is an excerpt from a news article published in the Arabian Gazette and you can read it here.
No VAT on withdrawals from other banks' ATMs in UAE
Date: 22 Dec, 2017
The VAT will be payable only on the fee charged by the banks, which is a nominal amount of Dh2 per transaction. While many residents in the UAE are struggling to understand how the value-added tax (VAT) will impact the way they interact with their banks, experts say that there is no reason to be alarmed.
Customers will not be charged five percent VAT on the amount withdrawn from ATMs other than their own bank, rather only on the Dh2 fee charged by the banks, according to tax experts. The five percent VAT will be levied on the Dh2 fee charged by banks when withdrawing from ATMs of other banks – which translates to around a nominal 10 fils per transaction.
This is an excerpt from a Gulf News article which you can read here.
Government declares: No increase in salaries to reduce VAT impact
Date: 20 Dec, 2017
There will be no increase in salaries to cope with the levying of the value-added tax (VAT), Obaid Humaid Al Tayer, Minister of State for Financial Affairs, told the Federal National Council on Tuesday.
Al Tayer said the tax will have a minimal socioeconomic impact on people and investments.
In the medium term, the impact of the tax will be 0.11 percent and as the economy grows it will go further down, Al Tayer added. The minister told reporters after the House’s session that the government is ready for implementation of VAT, while the “readiness of the businesses is their own responsibility”.
Al Tayer told the House that the impact on current and future investments in the country is expected at 0.68 percent, adding that VAT is aimed at “achieving financial sustainability” for the government. The minister was answering questions about the implementation of VAT from the beginning of next year.
This is an excerpt from an article from Gulf Times and you can read the complete article here.
No plans to delay VAT in UAE for businesses
Date: 18 Dec, 2017
There are no plans to delay VAT for businesses or banks in the UAE and no company will be exempted or will be given an extension for applying, the Minister of State for Financial Affairs announced on Tuesday.
“The date is set for levying VAT from January 1, 2018, and the government is ready for VAT,” minister Obaid Humaid Al Tayer said during a session of the Federal National Council (FNC), held in its headquarters. During the session chaired by FNC Speaker Dr Amal Al Qubaisi, council members raised concerns over the readiness of businesses for VAT, and the impact of VAT on the overall national economy to the minister.
“The imposition of value added tax is a historic step forward,” said the minister, adding that it is a step forward towards achieving “financial stability”.
However, a statement by the Chairman of UAE Banks Federation, Abdul Aziz Abdulla Al Ghurair, revealed the concerns that banks in the UAE had over the VAT, highlighting that banks are not ready and require a six-month extension.
“The government does not like to postpone anything, so it’s impossible to exempt anyone from the tax. There will not be any favours given to anyone,” said the minister.
This is an excerpt from a Khaleej Times article and you can read the complete article here.
MCA on panel of VAT Clinic by Khaleej Times
Date: 15 Dec, 2017
Khaleej Times organized a VAT Clinic on 15th December at the Indian Consulate which drew a large crowd of professionals and businessmen.
Professionals from the Institute of Chartered Accountants of India (ICAI) Dubai Chapter clarified some of the misconceptions regarding the tax at the Indian Consulate in Dubai.
The VAT Clinic is organised by Khaleej Times in collaboration with the ICAI Dubai Chapter and Qadi Accountants.
Girish Chand, director of MCA Management Consultants, along with Manu Nair, CEO of Emirates Chartered Accountants Group; Sangeetha Nahar, senior manager of finance at Dubai Properties Group; and Dilip Jain, VAT lead at the ICAI VAT Faculty participated in this event.
“The reality of the tax has set in and we should do our best to prepare for it from next year,” he said. “The ICAI has looked at VAT in a very broad way,” said Madhukar Hiregange, chairman of the Indirect Tax Committee. “Our target is to have 500 people who are capable of training to be ready to help individuals very soon. Any expert that learns about VAT has the responsibility to raise awareness. One of the biggest challenges of VAT will be how business owners can continue to run their businesses in the region.”
Read more about it on the Khaleej Times Online Edition.
Education and health care largely escape VAT price increase
Date: 10 Dec, 2017
The Federal Tax Authority (FTA) delivered a piece of welcome news to UAE residents on Wednesday morning, when it confirmed that both education and healthcare will be zero-rated when the country introduces VAT next year.
There has been some confusion since August 2017, which the FTA blames on a mistranslation, as to whether or not private education would be subject to a 5 percent rate hike on January 1, 2018.
According to the long-awaited draft of the FTA’s executive regulations on VAT, the supply of educational services shall be zero-rated if the following conditions are met: Firstly, the institution’s curriculum must be in accordance with the Ministry of Education, and secondly, the institution must be recognized by the Ministry of Education.
You can read the complete article here.
UAE’s VAT on gold jewellery will be on the entire piece
Date: 09 Dec, 2017
The VAT (value-added tax) on gold jewellery will likely apply to the entire piece, which effectively means an additional payout of Dh7-Dh8 a gram at today’s prices, according to industry sources. But on gold bars, deemed as investible assets, no such tax will apply. (There will also be no duty on loose diamonds.)
Fine of Dh100,000 on retailers using VAT to raise product prices
Date: 07 Dec, 2017
A fine of Dh100,000 would be imposed on suppliers and retailers who raise prices of products more than the stipulated VAT (Value Added Tax).
According to Al Bayan newspaper, the Ministry of Economy stressed that it will slap a huge penalty on those who try to make an extra buck on the pretext of VAT.
Dr Hashim Al Nuaimi, director of the consumer protection department, said that in cooperation with other financial bodies in the country, the ministry has established a committee to monitor the markets before and after the implementation of VAT on January 1, 2018.
He added that the panel will conduct surprise inspections to ensure the implementation of VAT as well as the selective tax. Immediate action would be taken if the committee detects any violations, Al Nuaimi pointed out.
Read the complete article here.
Administrative Penalties for Violations of Tax Law in the UAE Declared by The UAE Cabinet
Date: 06 Dec, 2017
Cabinet Resolution No. (40) of 2017 on Administrative Penalties for Violations of Tax Law in the UAE
The Cabinet has issued Resolution No. (40) of 2017 on Administrative Penalties for Violations of Tax Law in the UAE. This Resolution outlines the scope of the resolution, general provision of the Administrative Penalty, methods of amending Administrative Penalties, the objections framework and responsibility of issuing Executive Decisions.
The Resolution is effective as of the date of its issuance on 24th September 2017, excluding table two which came into effect as of 1st October 2017, and table three which will come into effect as of 1st January 2018.
This Resolution includes the tables of Violations and Administrative Penalties appendix to the Cabinet Decision No. (40) of 2017, including table one, two and three.
No VAT on Salik, RTA clarifies
Date: 06 Dec, 2017
In a huge relief to UAE residents, the Roads and Transport Authority has clarified that value-added tax (VAT) will not be levied on Salik (toll gates) or public transport facilities.
The statement comes after rumours on social media that VAT, which is set to roll out in the UAE from January 1, will also apply on Salik.
There are seven Salik gates in Dubai, and a toll of Dh4 is automatically deducted from smart tags every time a vehicle passes under these toll gates.
Read the full article here.
No delay to UAE's VAT launch despite plea, says tax chief
Date: 01 Dec, 2017
The UAE is fully committed to introducing VAT on January 1 despite calls for it to be put back by a senior banker, it was announced on Wednesday.
Khaled Al Bustani, director general of the Federal Tax Authority, said in an interview with Arabian Radio Network that there would be no delay to its implementation.
He also said the authority is seeing a surge in registrations as the deadline for companies to register for VAT looms.
He claimed financial institutions in the UAE are not yet ready and needed more time to prepare.
But Al Bustani insisted there “is no discussion” about delaying agreements to bring in the new tax in the new year, adding that the law surrounding VAT clearly states that January 1 2018 is the start date.
Etisalat, du to charge VAT on products and services
Date: 29 Nov, 2017
The UAE’s telecom service providers, etisalat and du, will charge five per cent value added tax on the services and products they offer to the consumers in the country.
“Starting from the 1st of January 2018, most of etisalat’s products and services shall be subject to a five per cent value added tax in compliance with federal laws and regulations levying and regulating the tax in the UAE,” it said in a statement.
Du also said on its website that it would apply the standard VAT rate of five per cent from January 2018 to its products and services.
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, on Monday approved the executive regulations for VAT.
UAE Cabinet approves VAT Executive regulation
Date: 28 Nov, 2017
The UAE cabinet on Monday, 27 September, approved the executive regulation, which is expected to provide final details on how VAT will impact various goods and services.
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai, signed the Executive Regulation for VAT.
The United Arab Emirates cabinet on Monday approved the executive regulation of the value-added tax (VAT) that is expected to include all of the remaining details on the new tax’s impact on goods and services.
The UAE cabinet issued decree Number 52 of the year 2017 concerning the executive regulation of the Federal Law No. 8 of 2017 on value-added tax, which outlines the supply of goods and services in all cases, including supply in special cases.
According to the statement, the VAT executive regulation will also define details on mandatory and optional tax registration, as well as tax groups, exemptions and details on deregistration.
It will also include details on the tax due dates, where charges will be incurred, tax refunds and penalties in case of violations.
Tax Agents, Tax Accounting Software Vendors can now register in UAE
Date: 26 Nov, 2017
The Federal Tax Authority (FTA) has officially opened registration for individuals interested in working as tax agents and for tax accounting software vendors, in addition to providing the necessary technical support to help these vendors as they assist UAE-based businesses comply with tax regulations.
In a statement on Saturday, the FTA has defined standards and specifications that must be met by the tax agent, who is defined by Federal Law No. (7) of 2017 on Tax Procedures as any person registered with the authority in the register, who is appointed on behalf of another person to represent him before the authority and assist him in the fulfilment of his tax obligations and the exercise of his associated tax rights.
Who can be a tax agent?
The tax agent must be of good conduct and behaviour, never having been convicted of a crime or misdemeanour prejudicial to honour or honesty, irrespective of whether or not he may have been rehabilitated. He/she must hold a certified Bachelor or Master degree in tax, accounting or law from a recognised educational institution. If the applicant holds a bachelor degree in any other field, he/she may submit a tax certification from an internationally recognised tax institute.
Applicants must also provide a certification of relevant and recent experience of at least three years in either tax, qualified accounting or law, and a certificate proving their verbal and written communication skills in both Arabic and English. Furthermore, they must pass the Authority’s Tax Agent exam, provide a medical fitness certificate, as well as a copy of the liability insurance contract against professional errors. Candidates are to carry out their activity through a legal person licensed by the competent authorities.
Read the full article here.
VAT will have moderate impact on UAE inflation
Date: 26 Nov, 2017
Inflation in the UAE is set to witness a moderate increase next year with the implementation of five per cent value added tax (VAT) from January 2018, analysts said.
“Inflation in the UAE is expected to be circa 2.5 per cent in the current year. Introduction of VAT in 2018 is likely to see this rise to over three per cent,” said Anita Yadav, head of fixed income research at Emirates NBD Research. She noted that there are multiple factors that affect inflation including interest rate hikes, currency strength and economic growth.
Akber Naqvi, executive director and head of asset management at Al Masah Capital, sees VAT increasing inflation by 1.5 per cent to two per cent in the first year post introduction. However, the impact will start to normalise in the following years as the initial impact will be factored in during the first year of introduction.
According to the International Monetary Fund, UAE inflation is projected to reach 3.6 per cent in 2018, almost 80 basis points higher than the estimated 2.8 per cent in 2017.
UAE Government makes it convenient to file VAT Returns
Date: 22 Nov, 2017
The UAE has retained its top global ranking in terms of ease of payment of taxes, thanks to fewer taxes in the country. Analysts are unsure about the impact of the VAT on the country’s ranking, however , hey see the authorities going in the right direction with digital platform and regulations.
Released by World Bank and PriceWaterhouseCoopers on Tuesday, the Paying Taxes 2018 report noted that it takes just 12 hours to file taxes in the UAE as compared to 29 hours in Bahrain, 47 hours in Saudi Arabia, 55 hours in Luxembourg, 63 hours in Switzerland and 64 hours in Singapore. The report comes at a time when the UAE and Saudi Arabia are set to roll out value-added tax (VAT) at five per cent – which is also one of the lowest in the world – from January 2018.
Girish Chand, director, MCA Management Consultants, said that despite the UAE being the latest entrant in the VAT regime, it has adopted simple and logical implementation of VAT.
“This has been done by maintaining a single rate of taxation at five per cent and keeping very limited activities in the zero rated and exempt category. Also the tax return mechanism is very simple where the information required is at summary level. The tax authorities have facilitated an online return filing mechanism making it convenient to file the return,” Chand added.
Read the complete report here.
VAT-specific deadlines for owners of commercial properties
Date: 20 Nov, 2017
Owners of commercial properties in the UAE will need to keep in mind two deadlines related to the upcoming VAT.
One, they will need to register with the Federal Tax Authority if the sales or rental proceeds exceeded Dh375,000 in the previous 12 months. And, two, if the owners believe they are likely to generate more than Dh375,000 over the next 30 days.
These commercial properties could be used for offices, retail, hotel, F&B (food and beverage), or any such activity, and which will be assigned a 5 per cent VAT. But land sales for the purpose of building a commercial property is exempt from VAT’s ambit.
Read the full article here.
5% VAT on fuel from January 1 in Saudi Arabia
Date: 19 Nov, 2017
The standard Value Added Tax (VAT) of five per cent will be applied to purchasing petrol, Saudi Arabia’s General Authority of Zakat and Tax (GAZT) has said.
The confirmation was stated in a reply to an online question whether there would be a VAT rate of petrol. “The VAT rate of five per cent for petrol will be applied starting January 1, 2018,” GAZT said.
Last week, the authority said the local transport of passengers and goods within Saudi Arabia, and associated services would be subject to the standard 5 per cent VAT rate, with businesses collecting the tax from travelers upon purchasing the travel ticket.
However, it said that the international transport of passengers and goods will be zero-rated according to the Unified VAT Agreement for the Gulf Cooperation Council (GCC) and the VAT Implementing Regulations.
The zero-rated services include excess baggage and seat reservation fees, maintenance, repair and modification of qualified international transport, storage charges, port charges, parking fees, customs duties, customs clearance fees, transport-related fees, air navigation services fees and aircraft crews.
Read the full article here.
VAT Applicable on Food, Water and Electricity
Date: 12 Nov, 2017
The UAE residents will have to pay 5 percent value-added tax (VAT) on food, water and power and higher education from next year.
Girish Chand, director, MCA Management Consultants, said both Saudi and the UAE authorities have brought these categories under the VAT.
Khalid Al Bustani, director general of Federal Tax Authority said, the tourists in the UAE will also get refunds on the returns. He further said that they are working with the parties involved in the project.
Under the VAT regulation, higher education institutes which are more than 50 percent funded by the government, will not be charged VAT but the rest will be.
Khalid Al Bustani, director general of Federal Tax Authority, on Wednesday said the tourists in the UAE will also get refunds on the returns. He said the authority is working with the parties involved in the project and expected to be rolled out ahead of VAT implementation.
This is an excerpt from an article published in the Khaleej Times and you can read it here.
Fines for Tax violations could be upwards of Dh 50,000
Date: 10 Nov, 2017
The UAE government’s message to businesses is clear: Take taxes seriously, because non-compliance costs.
Earlier this month, the UAE Council of Ministers announced the penalties for failing to comply with the country’s new tax laws.
Set fines for failing to adhere to tax laws range from Dh1,000 to Dh50,000, however other violations will incur a penalty of 50 percent of the unpaid tax, which could be significantly more than Dh50,000.
Observers are quick to point out that penalties are an integral part of any legislation for non-compliance with tax laws.
Publishing the penalties has the added incentive of showing to people that the authorities are serious about implementing taxes throughout the UAE.
The excise tax, a duty on energy drinks, tobacco products, and carbonated drinks came into effect on October 1, while value-added tax (VAT) will launch on January 1, 2018.
Following repeated claims of VAT being delayed, Federal Tax Authority (FTA) Director-General Khalid Ali Al Bustani said earlier this month that these claims were false and the tax was fully on track to launch on January 1.
So how do these penalties compare to the rest of the world?
The vast majority of countries around the world have established tax programmes. Globally, the Gulf remains one of the last tax-free regions.
According to others, however, the UAE’s penalties are harsher when compared to Saudi Arabia’s, the only other Gulf country to have announced penalties. This is to enforce compliance among many businesses in the UAE who have never dealt with taxes.
Read the original article on Gulf News here.
Draft of the UAE Executive Regulations for VAT to be Released Soon
Date: 08 Nov, 2017
The UAE’s Ministry of Finance will release the draft of the Executive Regulation of Federal Decree-Law No (8) of 2017 on Value Added Tax in the coming few days which will provide more clarity and details on exactly what items will be taxed.
The Executive Regulations clarify several topics, including keeping accounting records and commercial books related to tax purposes, a period of record-keeping mechanism and saving.
VAT is set for implementation across the UAE from January 1, 2018, at a rate of 5 percent. The implementation comes as GCC governments grapple with lower oil prices, which are pressuring the governments’ revenues and hence, spending.
VAT will follow the rollout of excise tax in the UAE that began from October 1, and that impacted prices of tobacco products, carbonated drinks, and energy drinks.
Guidelines for Smooth VAT Rollout Issued by UAE Tax Authority
Date: 01 Nov, 2017
17 point guidelines for businesses to help companies in the UAE to transition to the new tax system
The UAE Federal Tax Authority (FTA) has issued a guideline to the local businesses for a smooth and effective imposition of the Value Added Tax System.
The newly-introduced VAT system is scheduled to go into effect on 1st January 2018, in accordance with the highest international standards.
The FTA said that the businesses must be aware of the following things before registering for the VAT system.
1. VAT is an indirect tax imposed on the supply of the goods and services. It is already implemented in over 150 countries, including all the 29 European Union states as well as Canada, New Zealand, Australia, Singapore, and Malaysia.
2. VAT is ultimately charged by the end consumers as it is charged at each step of the supply chain. Businesses only collect the tax on behalf of the government.
3. Businesses only pay the government the tax that they collect from their consumers. They may also reclaim from the government the VAT they had paid to suppliers.
4. VAT will provide the government a new source of income which will be used for the provision of various high-quality public services, including hospitals, roads, public schools, parks and civil services. The tax will also help the authorities to reduce its reliance on oil thereby building a stable and sustainable knowledge economy.
5. VAT rate has been fixed at 5 percent in the United Arab Emirates and is levied on the supply of all goods and services, including food, commercial buildings, and hotel services if no explicit provision is made to impose a zero rate or an exemption.
6. VAT’s zero rates is implemented on some goods and services, including health and education, gold for investment, the first supply of residential buildings, and the supply of international transport of passengers, goods, and exports.
7. VAT doesn’t apply to activities such as bare land, local transportation of passengers, the supply of residential buildings and the supply of some financial services.
8. Businesses involved in the supply of goods and services, which are subject to a zero rate, must register for VAT, but they can recover the VAT they incurred on their purchases. The businesses which supply exempt goods or services can’t recover VAT incurred on their purchases.
9. All those businesses must register for VAT whose taxable supplies and imports exceed the mandatory registration threshold of AED 375,000.
10. A business may register voluntarily for VAT if their supplies and imports are below the mandatory registration threshold, but exceed the voluntary registration threshold of AED 187,500.
11. A business with expenses exceeding the voluntary registration threshold may also register voluntarily for the VAT. This offer has specifically designed for the start-up businesses with no turnover yet to register for VAT.
12. All the businesses must apply for registration at the earliest. Failing to register by January 1, 2018, will result in fines as stipulated in Cabinet Decision No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE.
13. Businesses can register for VAT through the Federal Tax Authority’s website, which is available 24 hours a day, seven days a week.
14. Businesses can also form Tax Group which will be a useful tool to simply accounting for VAT. In this regard, the businesses that satisfy certain requirements covered under the Legislation – such as having a place of residence in the UAE and being related or associated parties – can form a Tax group.
15. Businesses are not allowed to impose VAT on any of their goods or services before January 1, 2018.
16. All the businesses must retain business records like Balance Sheet, Profit, and Loss, and records pertaining to fixed assets, payroll, inventory and stock levels as well as accounting records, including payments, receipts, purchases, sales, revenues, and expenses.
17. On their way to register for VAT, many businesses may be required to amend their core operations, financial management practices, the procedures they use to keep accounting books and records, and the technology they use in their accounting practices, in addition to changes in their human resources.
VAT to create 5,000 Jobs in UAE and KSA
Date: 12 Oct, 2017
External URL: http://www.arabnews.com/node/1176006/business-economy
DUBAI: Around 5,000 finance and accounting jobs would be generated with the introduction of the Value Added Tax (VAT) in the Gulf region, a tax law expert said on Wednesday.
The Unified Agreement for VAT of the Cooperation Council for the Arab States of the Gulf, which was signed by the six member states of the Gulf Cooperation Council, required signatories to enact domestic legislation that would introduce a 5 percent VAT on certain transactions.
Gulf states have been looking at other ways to reduce dependency on oil revenues, as well as create new income streams to fund government services including public health services, public owned or funded schools, parks and transport infrastructure.
It is estimated that the VAT’s imposition will raise between $7 billion and $21 billion annually — or between 0.5 percent and 1.5 percent of regional GDP. The IMF has said the returns could reach around 2 percent of region’s output.
Saudi Arabia and the UAE are expected to be the first Arabian Gulf countries to introduce the GCC-wide VAT on January 1, 2018, while other member states Kuwait, Qatar, Bahrain, and Oman have committed to implementing their own VAT taxation by next year.
Among the goods and service that would be subjected to VAT include electronics, smartphones, cars, jewelry, certain beverages, financial and accounting services, legal services, dining out and entertainment.
Certain services and goods such as nearly 100 food items, basic health services, transport and public education will be exempted from VAT.
The UAE has separately started to collect excise taxes at a rate of 100 percent on tobacco and energy drinks and 50 percent on fizzy drinks on October 1.
UAE's Federal Tax Authority Announces Service Fees and Administrative Fines
Date: 10 Oct, 2017
External URL: http://wam.ae/en/details/1395302635883
The UAE on Monday announced services fees and fines for non-compliance of value-added tax (VAT) laws as the country heads towards implementation of the consumer-focused taxation system from January 2018.
The regulations cover individuals, companies, tax agents and their legal representatives who come under the ambit of this new VAT regulations. The penalties range from as low as Dh3,000 and go up to Dh50,000 depending on the offenses committed by the entities or individuals.
As per the new regulations, if the person fails to keep required records and other information specified in the laws will be fined Dh10,000 in the first instance and Dh50,000 in case of repetition.
The law further states that if the person fails to submit data, records, and documents related to tax in Arabic to authority when requested, he would be penalized Dh20,000.
The UAE will implement 5 percent VAT – which is one of the lowest in the world – from next year on a host of goods and services as part of the GCC-wide agreement. As per the UAE regulations, companies that provide goods and services with an annual turnover of Dh375,000 or higher will be subject to VAT. While businesses with taxable supplies below Dh375,000 and above Dh187,500 will have the option to register. The UAE aims to raise Dh12 billion through VAT collections in the first year and Dh20 billion in the second year. Analysts and economist believe that the VAT will increase inflationary pressure in the country.
As part of the GCC deal, Saudi Arabia will also join the UAE from January 2018 while other Gulf nations will jump on the bandwagon at a later stage.
A press statement issued on Monday said the UAE Council of Ministers adopted Cabinet Decision No. 39 of 2017 on fees for services provided by the Federal Tax Authority and Cabinet Resolution No. 40 of 2017 on penalties for violations of tax laws in the UAE.
According to Federal Tax Authority, tax registration service and issuance of e-tax registration certificate will be free of charge but an attestation will incur a fee of Dh500. However, tax agents will have to pay Dhs 3,000 fee for registration and renewal for three years.
According to FTA, registration and renewal fee for an accounting software provider will be Dh10,000 for one year, whereas registering a Designated Zone will cost Dh2,000 per year.
However, there will be no service fee for registering a warehouse keeper or issuing an electronic warehouse keeper registration certificate. But an official printed certificate will cost Dh500.
You may refer to the following article for a complete list of the fines.
VAT Registration Final dates announced
Date: 08 Oct, 2017
The UAE FTA has announced that the online registration for VAT is now open.
- All businesses with a turnover of more than AED 150m should apply for registration before Oct 31, 2017.
- All businesses with a turnover of more than AED 10m should apply for registration before Nov 30, 2017.
- All businesses that must be registered before 1 Jan 2018 should submit their registration before 4 Dec 2017 to minimize the risk of not being registered for the beginning of the new year.
A business must register if
- The total value of its taxable supplies made within the UAE exceeds the mandatory registration threshold of AEED 375,000 over the previous 12 months, or
- It anticipates making taxable supplies with value exceeding the mandatory registration threshold of AEED 375,000 in the next 30 days
- If a business does not meet the threshold mentioned above then it is required to keep records which will enable the FTA to identify the details of the business activities and review transactions. The specifics regarding the documents which will be required and the time period required for keeping them can be found in Federal Law No (7) of 2017 on Tax Procedures and its executive regulation.
Businesses can register through the e-services portal on the FTA website, www.tax.gov.ae. You can contact the FTA Call center at 600-599-994 for any further assistance.
UAE VAT Registrations Now Open
Date: 02 Oct, 2017
External URL: https://eservices.tax.gov.ae/en-us/
The Federal Tax Authority (FTA) has launched the registration process for VAT Registration today, on October 1, 2017. Businesses that are eligible for mandatory registration are required to register via the FTA’s portal website.
In a prior statement, FTA said it will be assisting businesses in the UAE with regards to financial and technical systems to ensure readiness to comply with tax regulations. This covers both the excise tax in October 2017, and the Value-Added Tax (VAT), which will be implemented starting January 2018.
VAT is one of the most common types of consumption tax found around the world. Over 150 countries have implemented VAT (or its equivalent, Goods, and Services Tax), including all 29 European Union (EU) members, Canada, New Zealand, Australia, Singapore, and Malaysia.
VAT is charged at each step of the ‘supply chain’. Ultimate consumers generally bear the VAT cost while Businesses collect and account for the tax, in a way acting as a tax collector on behalf of the government. A business pays the government the tax that it collects from the customers while it may also receive a refund from the government on the tax that it has paid to its suppliers. The net result is that tax receipts to government reflect the ‘value add’ throughout the supply chain.
Taxable persons are required to settle their taxes within 15 days of the end of each month.
UAE Retail Sector will be affected by VAT
Date: 25 Sep, 2017
The appliances sector, especially consumer electronics, will be hardest hit by the introduction of value-added tax (VAT). As for other segments of the retail sector, the UAE’s first major tax will have varying degrees of impact.
This elasticity of demand, meaning the relationship between price and demand (a product type is considered elastic if demand drops when prices increase, and inelastic when demand isn’t changed by price increases), will impact how much retailers are able to absorb the cost of VAT.
Pricing strategies such as this will help retailers avoiding passing the entirety of the cost increase on to their customers.
According to Deloitte, however, products such as appliances, which have a high elasticity of demand, are not able to pass as much cost on to their customers if they are to remain competitive.
“When demand is perfectly inelastic (i.e. an increase in price has no effect on demand) retailers should be able to pass on the full burden of VAT to the customer. This is, however, seldom … the case,” said Deloitte in a research report on the impact of VAT on the retail industry across the Gulf.
The UAE and Saudi Arabia are among the first countries in the Gulf to implement the tax, that is expected to provide a new source of revenue for governments to spend on infrastructure and other public services.
The UAE is expected to issue VAT laws in the third quarter of this year and the online registration will begin in mid-September.
All businesses that meet the minimum annual income of Dh375,000 as confirmed by their financial records are required for compulsory registration with the VAT system.
Fines will be levied against the firms that failed to register with the system, the UAE’s Federal Tax Authority said earlier this month.
This is an excerpt from a news article published by The Gulf News. You can read the complete article by clicking here.
VAT can be Paid in Installments in Saudi, if Companies Meet Certain Criteria
Date: 20 Sep, 2017
Saudi Arabia’s General Authority for Zakat and Tax (GAZT) said it will allow the payment of value-added tax (VAT) charges in installments over a period of up to 12 months, a local newspaper said.
The authority stated this would be allowed if the person or entity being taxed presents evidence that they are unable to pay the tax when due, or are suffering hardship from paying the charges in a single payment.
The taxable person must send a request to the tax authority citing the reasons for inability to pay the tax by the due date. The authority will confirm whether the request is approved or rejected within 20 days
The Saudi tax authority has already opened registration for VAT on its online portal ahead of the official implementation of the tax starting January 2018.
Businesses are required to register for VAT by December 20, 2017 and the tax authority will impose a 10,000 Saudi riyals ($2,666) penalty on companies or entities that do not register within the deadline.
This is an excerpt from a news article published by Zavya. You can read the complete article by clicking here.
Theme Parks Tickets to Get Costlier Due to VAT in UAE
Date: 19 Sep, 2017
Set to be introduced in the UAE from January 2018, the five percent value-added tax on entertainment will result in an increase in the cost of water and theme park tickets in the UAE if the companies decide to pass on the tax burden to consumers, say tax experts.
Girish Chand, director at MCA Management Consultants, is of the view that there is no exempt category in the entertainment sector, hence all activities of the entertainment industry would come under VAT.
“It is expected that the ticket prices would be VAT inclusive considering that it is generally an advertised price. The service providers would have to review their profitability and decide whether they will absorb the VAT cost or pass on to the customers,” Chand noted.
The major theme and water parks in the UAE are IMG Worlds of Adventure, MotionGate, Bollywood Parks, Legoland, Wild Wadi Waterpark, Aquaventure Park, Ice Land Water Park, Dreamland Aqua Park and Ferrari World Abu Dhabi.
UAE residents, however, believe that there will be an impact initially but people will slowly adjust this increase in their entertainment budgets – especially for smaller families.
In Europe, entertainment is usually subject to the standard rate, which varies between 17 and 27 percent. In some cases though, when entertainment is offered by non-profit associations (e.g. theatre), it is exempt. In other cases, sometimes it is subject to a lower rate (e.g. cinemas).
This is an excerpt from an article published The Khaleej Times. To read the complete article click here.
Cloud Based ERP Solutions can achieve faster VAT Compliance
Date: 11 Sep, 2017
The implementation of Valued Added Tax (VAT) in Gulf Cooperation Council (GCC) countries next year will be a trigger for a massive wave of digital transformation as businesses prepare to ensure compliance with the new tax law, according to a new study by Oracle and Harvard Business Review (HBR).
You can read the original paper in our White Paper Section.
The study, based on a poll of 450 senior company executives from across the GCC, reveals 73 per cent of businesses consider VAT implementation a key opportunity to initiate wider digital transformation projects within their organizations.
With businesses required to automate their processes to ensure that transactions are captured flawlessly for VAT compliance, 66 per cent of respondents also said they would consider transitioning their business processes from on-premises systems to the cloud if major cost savings can be identified.
With the VAT compliance deadline quickly nearing, the Oracle/HBR study also explored the current VAT preparedness levels of businesses across GCC. While 21 per cent of respondents confirmed that they have initiated preparations to be VAT compliant; 30 per cent indicated that they currently have limited information on VAT.
On their biggest obstacles in their journey to be VAT-compliant, 68 per cent of surgery respondents said managing business process changes would be a key challenge.
This is an excerpt from an article published in the Gulf News. To read the complete article click here.
VAT to make it easier for SMEs to get bank loans
Date: 07 Sep, 2017
Obtaining credit facility from the banks will become easier for the small and medium enterprises in the UAE after the implementation of VAT as the companies will have to maintain their books from next year.
Pankaj Mundra, Chairman of the Institute of Chartered Accountants of India – UAE (Dubai) Chapter, says the major challenges for SMEs is that they have to maintain their books properly and regularly in order to be VAT-compliant.
Naveen Sharma, the vice-chairman of ICAI Dubai Chapter, states that the SMEs will be able to get more finance because their turnover will not be questioned by the lenders as their records will be clean.
The Institute of Chartered Accountants of India, Dubai Chapter, on Tuesday evening organized a technical seminar on up-coming value-added tax which was attended by 1,500 people. Justin Whitehouse, a partner, indirect tax, Deloitte & Touche (ME), Mayur Batra, managing director, Mayur Batra Group and Pugazhendhi, associate vice-president, Tally Solution, addressed the participants on the challenges faced by the companies and individuals prior to the VAT. The ICAI Dubai chapter added 600 new members in the last one year, reaching 2,200.
This is an excerpt from the article published in the Khaleej Times and you can read it by clicking here.
VAT and Excise Tax Plans and Procedures Approved by FTA
Date: 06 Sep, 2017
External URL: http://wam.ae/en/details/1395302630978
DUBAI, 6th September 2017 (WAM) — The board of the Federal Tax Authority, FTA, has finalised plans for the upcoming period, including procedures for the introduction of Excise Tax next month and Value-Added Tax, VAT, early next year.
The board approved these changes during its second meeting, which was chaired by H.H. Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance, with the attendance of its members from the Ministry of Finance in Dubai. The FTA board reviewed developments related to the issuance of laws that will regulate federal taxes in the country, such as Federal Law No. 07 of 2017 for Tax Procedures, Federal Decree-Law No. 07 of 2017 on Excise Tax and Federal Decree-Law No. 08 of 2017 on Value Added Tax.
Obaid bin Humaid Al Tayer, Minister of State for Financial Affairs and Deputy Chairman of the FTA Board of Directors, said that they are working on issuing executive regulations for these laws, to provide specific details about their implementation.
“We continue to steadily move forward in our preparations for the nation-wide tax laws in the UAE,” asserted H.H. Sheikh Hamdan bin Rashid. “The system we are developing will provide ample support for the sustainable social and economic development of the UAE; it will diversify revenue streams and establish sustainable sources of income, allowing the Government to carry on with its ambitious plans to develop future-ready infrastructure, and to continue providing high-quality services for the people.”
“We are entering a new phase in the implementation of the tax laws,” His Highness continued, adding, “as we gear up to inaugurate the registration process for taxable companies, as soon as all the necessary legislative, administrative and infrastructure requirements are met. The Federal Tax Authority’s website has been designed to meet the highest international standards, facilitate registration and offer a bundle of tax-related services.”
During the meeting, the Board of Directors adopted the proposed fees and fines, in accordance with the Authority’s responsibilities stipulated in Federal Decree-Law No. 13 of 2016 on the Establishment of the Federal Tax Authority. Also adopted were the violations outlined in Federal Law No. 07 of 2017 for Tax Procedures, Federal Decree-Law No. 07 of 2017 for Excise Tax and Federal Decree Law No. 08 of 2017 on Value Added Tax.
They also discussed the proposed options for the FTA’s new logo and reviewed the work of the completed workshops and awareness programs about the tax system, in cooperation with local chambers of commerce and industry. The first series of the awareness workshops on the principles of implementing a selective tax system and on VAT took place between March and May 2017, with 25 workshops being conducted with the participation of over 15,000 participants from various national business sectors.
The FTA started the second series of workshops in August 2017, in coordination with chambers of commerce and industry from various Emirates, targeting the various business sectors of the country. Separate workshops were conducted for each sector, including real estate, retail, import and export, as well as for companies that are subject to selective taxes. Ten workshops were already held, which saw the attendance of over 5,000 participants.
KSA Releases VAT Law
Date: 30 Aug, 2017
August 29, 2017 – KSA has released its final VAT Law and Regulations today. The GAZT had previously published its VAT Draft Implementation Regulations for public consultation in July.
Click here to read the final KSA VAT Implementation Regulations.
VAT will be implemented in the country on January 1, 2018, and businesses should start preparing for it and begin analysing how their operations will be affected.
The first step for businesses would be to confirm if they are required to register for VAT and make sure that they register according to the below-mentioned guidelines:
- If your company is large and has already registered itself for some other form of Tax in the Kingdom, then the company may be auto-registered for VAT. If you meet the above condition, you will receive a notification from GAZT but you still have to log-in to check and validate the information.
- If you have not received a notification but are eligible for VAT, you are required to start the registration process starting 28 August 20017.
- In the application process, you will have to provide information such as
- Are you an importer, exporter or both?
- Bank account details
- VAT eligibility start date
- Values of the VAT taxable supplies of 12 months
- Financial Representative details if you are not a Saudi National
The final regulations are different from the draft regulations issued before and businesses should take care to scrutinize the details.
You can access the final KSA VAT Implementation Regulations by clicking here.
UAE Petrol and diesel Prices to go up due to VAT
Date: 29 Aug, 2017
Five percent VAT will be applicable on both Petrol and Diesel when VAT will be implemented on January 1, 2018.
The President, His Highness Sheikh Khalifa bin Zayed Al Nahyan, on Sunday, 27 August 2017 issued Federal Decree Law No 8 for value-added tax with one of the lowest rates in the world.
Since petrol and diesel is a business activity, they would be subject to VAT, said Girish Chand, director MCA Management Consultants. “However, considering the low VAT rate and the insignificant composition in the overall spending of an individual, VAT on petrol and diesel would have a negligible impact,” Chand pointed out.
Chand explained that VAT rates are related to business activity, not end users, so there would not be different VAT rates for commercial and individual vehicles.
The UAE has aligned oil prices with international rates and they are adjusted every month by the Ministry of Energy.
For the month of August, the prices were revised upward by three fils with unleaded gasoline 98 at Dh1.89, unleaded gasoline 95 at Dh1.78 and unleaded gasoline 91 at Dh1.71; while diesel was increased by four fils to Dh1.88.
Based on this estimate, filling a 50-litre tank with unleaded gasoline 98 will today cost Dh94.5. Following the five per cent VAT implementation next year, the price will rise to Dh99.2. Similarly, the 2017 Land Cruiser 5.7 (EXR) with a 136-litre fuel tank capacity costs approximately Dh257 to fill unleaded 98 but following VAT, the consumer will have to shell out approximately Dh270.
This article is an excerpt from an article published on KhaleejTimes.com and you can read the complete article here.
Air travel, tution fees and doctor's fees to be VAT free
Date: 28 Aug, 2017
Air travel, tuition fees, and doctor’s fees will be free of VAT. On Sunday, August 27, The President, His Highness Sheikh Khalifa bin Zayed Al Nahyan, issued Federal Decree-Law No 8 on value-added tax which you can read here.
Five percent VAT will be levied on goods and services from January 2018 as a part of a GCC-wide agreement. Although tuition fees are exempt from VAT, extracurricular activities such as sports classes, music lessons, and school transport will be subject to VAT.
New residential buildings will be subject to zero rated during the first three years of operation after completion which is beneficial not only to prospective buyers of new homes but also good news for the UAE real estate sector. If a property buyer takes a unit directly within three years of completion of the project, the price will be zero rated and they buyer will be exempted from VAT if he wants to sell it later.
Air transport of passengers and goods which starts or ends in the state or passes through its territory, including related services, have been categorized as zero-rate d under the law. This is good news for the tourism sector as prices for hotels and restaurants increase with five percent VAT.
“International transportation (including airlines) is zero-rated. Similarly, the supply of local transport is exempt from VAT. The supply of international transportation of passengers and/or goods and its ancillary services are also zero-rated. The supply of local passenger transport in a qualifying vehicle, vessel or aircraft too is exempt from VAT,” said Girish Chand, director MCA Chartered Accountants.
The UAE is home to more than eight million expatriates from over 200 nationalities who fly regularly to their home countries in addition to traveling to other destinations of tourism.
Dubai International Airport received 43 million passengers in the first half of 2017, an increase of 6.3 per cent. In addition, a record 8.06 million international overnight tourists arrived in Dubai during the first six months of 2017, a 10.6 per cent increase over the same period last year.
Air travel would remain competitive for low-cost airlines who can price their fares more aggressively. At the same time, those who fly long haul on Emirates and Etihad will not have to pay extra on flights, particularly to the US where demand was seriously hit earlier this year due to the travel and electronics ban, he added.
The new VAT legislation also prohibits anyone having business in the UAE not to have more than one tax registration number (TRN).
UAE Releases its domestic VAT Law
Date: 27 Aug, 2017
The UAE has released the test of its domestic VAT Law today, Aug 27, 2017.
The UAE Government will be implementing VAT in the country on 1 January 2018. A standard VAT of 5% will be levied on goods and services such as food, consulting services, and maintenance works.
A few of the sectors that have been confirmed to enjoy VAT reliefs are healthcare, education, financial services, and exports. The law also specifies special rules for paying import VAT, defines VAT grouping rules and so on.
Federal Decree-Law No. (8) of 2017 on Value Added Tax has been issued on 23 Aug 2017. This Decree-Law shall be published in the Official Gazette and shall come into effect as of January 1, 2018.
The VAT Law specifies the following:
- Title One – Definitions
- Title Two – Tax scope and rate
- Title Three – Supply
- Title Four – Tax registration and deregistration
- Title Five – Rules pertaining to Supplies
- Title Six – Zero rates and exemptions
- Title Seven – Calculation of due tax
- Title Eight – Tax Period, returns, payment and reclaiming of tax
- Title Nine – Violations and Penalties
- Title Ten – General Provisions
- Title Eleven – Closing provisions
The Law refers to Executive Regulations which will provide clarity on the detailed treatment of the various aspects covered in the VAT Law. This is expected to be issued in the near future.
Companies should start their VAT preparation immediately as the implementation date for the law has been set for 1 January 2018.
The FTA website was recently launched and can be accessed here. FTA is the government entity that is responsible for the collection and management of federal taxes.
Businesses will be able to register online for VAT purposes from the middle of September 2017. You can access the English version of the VAT Law on the MoF Website by clicking here.
Firms need to prove VAT-compliance to Tax Authority
Date: 26 Aug, 2017
Speaking at a forum in Dubai on Saturday, Girish Chand, Director, MCA Chartered Accountants, said all the companies must maintain a record in order to show their turnover as well as whether they’re charging value-added tax (VAT) from the customer or not.
In addition, those companies which are not registered for VAT cannot charge the tax from the customers.
“When a tax official visits your company, he can ask for your records and it’s the responsibility of retailer, wholesaler or any other company to prove that their company’s turnover is less than mandatory threshold limit and hence, it’s not required to register for the VAT. In addition, he also needs to show his record if a company is charging the VAT from the client. Hence, maintaining record would become obligatory for all the entities operating in the UAE,” he added.
Mr. Girish was speaking at the VAT Talks conference held to discuss the impact of VAT on business operations especially their supply chain, working capital, commercial operations and IT systems.
You can view the latest VAT related events on our events page.
The UAE has announced that it will implement VAT from January 1, 2018, at five per cent. In addition to the UAE, Saudi Arabia has also announced the implementation of VAT as part of an agreement between Gulf states.
Mr. Girish pointed out that if a UAE-based supplier is exporting goods to any registered company in Saudi Arabia, then the local exporter here in the UAE will not have to charge VAT on the goods but the Saudi company will account using the Reverse Charge Mechanism. Similarly, it’s vice-versa for Saudi and Emirati companies.
MCA is an assurance, financial and business consulting and advisory services firm providing comprehensive and valuable solutions to their clients, using multidisciplinary professionals for over 8 years in Dubai and Sharjah, and now in Abu Dhabi.
You can reach them on 04 3319501 or write to GIRISH.CHAND@MCA.CO.IN
FTA releases VAT Information on its website Tax.gov.ae
Date: 23 Aug, 2017
External URL: https://www.tax.gov.ae/
The FTA has published its website at Tax.gov.ae.
The FTA offers live training courses that can help businesses better understand their tax obligations, FTA processes, and details about UAE tax laws. You can know about the latest upcoming events by clicking here.