UAE to be fastest growing GCC economy in 2019: IIF
Date: 09 Jan, 2019
“Consumer inflation will ease in 2019 in Saudi Arabia and the UAE after the VAT related spike in 2018. Downward pressure from the low rental prices will persist,” IIF analysts said.
The UAE will be the fastest growing economy in the GCC region this year along with Oman, driven by non-oil sector, Dh50 billion Abu Dhabi stimulus package and projects linked to Expo 2020 Dubai, according to a new report released on Wednesday.
The Institute of International Finance (IIF) analysts projected the UAE’s real GDP to grow 3.1 per cent in 2019 compared to 2.9 per cent estimated for 2018. But growth is projected to slow down to 2.7 per cent in 2020. Nominal GDP is estimated to increase from $434 billion (Dh1.592 trillion) in 2018 to $444 billion (Dh1.629 trillion) in 2019 and $458 billion (Dh1.681 trillion) in 2020.
Taimur Khan, Research Manager, Knight Frank, said in an another UAE research that outlook for the UAE’s GDP growth in 2018 and 2019 remains positive on the back of higher oil prices, a range of stimulus packages and easing of business regulations in both Abu Dhabi and Dubai, which are likely to support activity in both the public and private sectors.
International Monetary Fund had predicted 3.7 per cent growth for the UAE for 2019 in its October forecast. While World Bank on Tuesday predicted 2 per cent in 2018 which is expected to accelerate to 3.0 per cent in 2019 and 3.2 per cent in 2020 and 2021.
According to IIF forecast, Oman’s real GDP growth is also projected at par with the UAE at 3.1 per cent for this year and 3.4 per cent in 2020. While Saudi Arabia’s real GDP is predicted to grow 2 per cent in 2019, Kuwait at 0.4 per cent, Qatar at 2 per cent and Bahrain at 2.4 per cent.
NBT call centre responds to over 1,000 VAT queries
Date: 08 Jan, 2019
External URL: http://www.newsofbahrain.com/bahrain/50016.html
The Call Centre has successfully responded to over 1,000 VAT related queries per day through its hotline (8008001) and by email (firstname.lastname@example.org) since the induction of the VAT on January 1, 2019. The National Bureau for Taxation (NBT) noted that the sudden influx of queries reflects consumers and investors’ eagerness to expand their VAT procedural and legal framework knowledge. As a result, the NBT will increase the total number of people employed in the Call Centre to advance its customer service standards and to equip the centre with the resources it needs to manage sudden influxes.
The NBT reiterated that all its communication channels are open to further queries related to the VAT procedural or legal framework. Citizens can contact the Call Centre on 80008001 or email@example.com in addition to taking advantage of the information available on NBT’s website (www.nbt.gov.bh), Instagram and Twitter (@NetworkNBT).
Meanwhile, Consumers in the Kingdom have been urged to ensure that they don’t overpay for goods and services to businesses who may take advantage of the current confusion in the market and charge extra bucks for goods and services. Taking advantage of the existing confusion in the market, certain businesses may swindle the customers by charging extra and many customers are worried over being cheated in the name of VAT.
Ministry receives 224 VAT related complaints
Date: 07 Jan, 2019
External URL: http://www.newsofbahrain.com/bahrain/49974.html
The Ministry of Industry, Commerce and Tourism (MOICT) yesterday confirmed that it has responded to a total of 224 VAT related complaints in addition to more than 1,130 VAT inquiries, since its induction on January 1st, 2019. The Ministry’s ‘Companies Control’ and ‘Consumer Protection’ directorates have successfully inspected more than 430 vendors across the Kingdom to ensure the correct application of the VAT.
The Ministry is committed to continue monitoring the movement of all goods and service in accordance with the newly published list of basic food items that are not subject to VAT, it said in a press release issued. “All sales outlets are required to comply with the Kingdom’s VAT Law and its executive regulations.” Consumers can report violations by calling 80008001, the ministry added.
The Central Bank of Bahrain (CBB) on Saturday reiterated its commitment to continue monitoring all financial institutions to ensure the correct implementation of Value Added Tax (VAT). Interest payments on loans, deposits, currencies trading, issue or transfer of ownership of securities (equities or debt), and life insurance and reinsurance contracts are not subjected to VAT, the CBB highlighted. As many as 94 goods and services have been exempted from VAT, according to authorities.
Federal Tax Authority announces results, successes of first year of VAT implementation
Date: 05 Jan, 2019
External URL: http://wam.ae/en/details/1395302730638
Khalid Ali Al Bustani, Director General of the Federal Tax Authority (FTA), asserted that in the first year of implementing Value Added Tax (VAT) in the UAE, the Authority registered many successes from deploying easy-to-use, hi-tech electronic systems to ensuring high compliance rates among businesses across the country.
The VAT system has been praised by experts and local, regional and international official bodies, he added, noting that despite the challenges that were expected at the beginning of implementation – which was a common occurrence in many countries that introduced VAT around the world – the UAE successfully rolled out a seamless and flexible tax system, complete with a progressive legislative environment that meets the highest standards in the field.
The news came in a press statement issued by the Authority to mark the first anniversary of the introduction of VAT in the UAE, which went into effect on January 1, 2018, at a 5% rate on the supply of most goods and services in the country.
“In collaboration with all concerned entities, the Federal Tax Authority set the foundations for a holistic and balanced tax system, making the UAE one of the first countries in the world to implement a fully electronic paperless tax system,” Al Bustani said. “Our advanced system encourages auto-compliance with procedures, all the while maintaining transparency and accuracy, as directed by the UAE’s wise leadership, which strives to make the UAE one of the best countries in the world by 2021.”
The FTA Director General revealed that the number of businesses that registered in the tax system during the first year of implementation exceeded 296,000 companies and tax groups, noting that the rates of compliance among Taxable Persons in the UAE are increasing remarkably. Statistics show that the total number of periodic Tax Returns received by the Authority from businesses registered for VAT purposes exceeded 650,000 in 2018, he said, adding that this high compliance rate was due to the easy procedures set for submitting Tax Returns and paying due taxes, available 24/7 via the e-Services portal on the FTA official website: www.tax.gov.ae . The platform was designed according to international best practices and provides flexible and varied payment mechanisms, as well as information and guidance to promote tax awareness.
“The Federal Tax Authority was among the 8 most searched names in the UAE on global search engine Google in 2018,” he revealed. “This demonstrates that in a short period of time, the Authority successfully became the centre of attention among large segments of society and across various sectors. It also confirms that the FTA website was among the most viewed and most interactive websites in the UAE. ”
“The FTA will continue to upgrade its integrated tax management systems, increasing efficiency and providing all facilities to ensure compliance with tax procedures and laws, designed to meet the highest international standards,” Al Bustani noted.
Blockchain can help VAT
Date: 04 Jan, 2019
External URL: http://www.newsofbahrain.com/bahrain/49923.html
Blockchain, the revolutionary technology which has been steadily gaining popularity in recent years can greatly help in the implementation and management of VAT, according to an expert While VAT is expected to boost revenue for the government, it comes with challenges related to TAX collection as well as issues related to companies that may try to evade taxes. Both issues can be addressed with the use of VAT, says a leading IT expert.
According to Yaqoob AlAwadhi, NGN International CEO, blockchain can help facilitate tax collection without added costs of intermediaries. He said that blockchain can cut VAT administration costs by eliminating the need for third-party intermediaries: agents, escrow, trusted banks, and many others that according to him “slows down the entire transaction process”. “Blockchain is a safe and effective tool for the management of value-added tax. This technology would contribute to reducing the costs of managing Tax and accelerate its collection by 80 per cent,” he said.
He urged the government to be a pioneer in the GCC in using “Blockchain” in the collection of value-added tax, “as this technology eliminates the role of intermediaries such as accounting companies or banks between the merchant and the government.” “Blockchain speeds up government access to tax revenues from the final consumer of the service or Item, and also accelerate the process of refunding the merchant and supplier of the tax”.
Purchase of gold and jewellery now subject to VAT
Date: 01 Jan, 2019
The Kingdom of Bahrain is imposing a new VAT (value-added tax), making it the third Gulf Cooperation Council (GCC) member state to impose VAT, following the UAE and Kingdom of Saudi Arabia. The initial rate of VAT in Bahrain is 5%.
The purchase of gold and silver jewellery and the charges paid for making of the jewellery would be subject to VAT. Pearls and gemstones are, at least for now, exempt from VAT. According to Diamond World, during the last week of December “there was pre-VAT rush in gold jewellery shops” as consumers enjoyed the last days of pre-VAT prices.
As for penalties, failing to register within the required period for more than 60 days will be penalised a maximum 10,000 Bahraini Dinar ($26,527). Failing to submit a VAT return or not making a payment within the required period will be penalized between 2.5%-5% of the due tax amount.
Input Tax Apportionment: Special Methods
Date: 31 Dec, 2018
Wef 1st Jan 2019, taxable entities can apply for the alternate method for input tax apportionment in relation to its industry.
It is not compulsory to apply for special apportionment method. However, if there are differences of Aed 250k or more in the standard apportionment method and the alternate method applicable for the industry, then the annual adjustments have to be done in the immediate return subsequent to the first tax year.
Click here to learn more.
VAT ushers in second year, carrying positive influence on economic growth
Date: 28 Dec, 2018
External URL: http://wam.ae/en/details/1395302729470
The Value-Added Tax will usher into its second year of implementation just in a few days from now in both the UAE and Saudi Arabia, carrying forward a positive influence on economic growth in both countries, with other GCC States projected to come aboard the VAT system either in 2019 or the year after.
According to the International Monetary Fund’s forecasts, cited by a report recently issued by the Federation Gulf Cooperation Council Chambers, the introduction of VAT in the Gulf region could generate new revenue of 1.5 to 3 percent of non-oil GDP.
The report spotlighted the impact generated by the new tax and its contribution to the economic diversification efforts ongoing across the Gulf region to secure the necessary funds required to finance infrastructure projects and public services.
On the UAE, the report said VAT was introduced on 1 January 2018 at a rate of 5 percent to provide a new source of income which will be continued to be utilised to provide high-quality public services and help government move towards its vision of reducing dependence on oil and other hydrocarbons as a source of revenue.
According to published reports, VAT in the UAE has helped drive the economy by building different streams of income to help the country wean itself off oil.
Along with its partners across the GCC, the Kingdom of Saudi Arabia has chosen to implement a standard VAT tax rate of 5 percent effective January 2018. In line with GCC Supreme Council Resolution made in its session No. 36 on authorising the Financial and Economic Committee to complete the necessary requirements of GCC VAT Unified Agreement, Saudi Arabia approved the Agreement with a Royal Decree No. M/51. The country issued its National VAT Law with Royal Decree No. M113 and published its Implementing Regulations issued by GAZT Board of Directors Resolution No.3839.
In the meantime, the Bahrain VAT Law has been published and sets out the general principles for the application of VAT in the country. In line with the GCC VAT Unified Agreement, VAT will be implemented in Bahrain on 1 January 2019.
NBT highlights efforts to enhance consumer protection and compliance ahead of VAT induction
Date: 27 Dec, 2018
External URL: https://www.nbt.gov.bh/releases/15
The National Bureau for Taxation (NBT) today highlighted its ongoing efforts to enhance consumer protection and compliance with the VAT law and its Executive Regulations in preparation for its induction on January 1, 2019.
The NBT has introduced various initiatives to enhance transparency and increase consumers’ awareness in regards to their rights. In this context, consumers are reminded that they are not required to register for VAT nor are they expected to go through the registration certificate procedures.
Consumers are also encouraged to make sure that shops clearly display their VAT registration certificate prior to paying the VAT.
Consumers are reminded to call 80008001 or email firstname.lastname@example.org to report any violations including levying tax on goods and service not subject to VAT or charging VAT prior to its induction.
Over 1,000 enterprises register for VAT first phase
Date: 26 Dec, 2018
External URL: https://www.nbt.gov.bh/releases/14
The Assistant Undersecretary for Development and Policy of Public Revenues at the Ministry of Finance and National Economy, Rana Ebrahim Faqihi, today affirmed that over 1,000 local and international enterprises have begun registering for the first phase of the Value Added Tax (VAT) implementation – effective on January 1, 2019, at a standard rate of 5%.
The Assistant Undersecretary highlighted the VAT registration process, noting that 668 enterprises have already received their VAT Registration Certificate and more than 500 companies have initiated the process of registration.
The Assistant Undersecretary went on noting that the ministry’s call center is fully prepared to provide swift general and technical assistance to taxpayers. As of today, the call center has successfully responded to more than 1,500 tax-related inquires of which 90% were immediately settled by VAT experts, as well as promptly responding to more than 500 email inquiries.
Faqihi went on noting that the National Bureau for Taxation (NBT) will continue to advance its multiple communication platforms well after the VAT’s induction to ensure information is suitably accurate and to continue to provide a platform where citizens can report misconducts; such as charging VAT prior to induction and applying VAT on goods and services that are not subject to VAT.
Faqihi concluded by urging citizens to contact the call center on 80008001 or email@example.com for general and technical inquiries in addition to taking advantage of the information available on the NBT’s website (www.nbt.gov.bh) and the information available on Instagram and Twitter platforms
Royal directives to review VAT application mechanisms during trial period hailed
Date: 25 Dec, 2018
External URL: https://www.nbt.gov.bh/vat_news_8
Finance and National Economy Minister Shaikh Salman bin Khalifa Al Khalifa hailed the Royal directives of His Majesty King Hamad bin Isa Al Khalifa to review the VAT mechanisms during the trial application period and observe the citizens needs through the exemption of basic commodities and services.
The Ministry of Finance and National Economy as well as the governmental entities concerned with the application of VAT will implement the Royal directives by ensuring the soundness of application procedures from day one of the trial period while taking into consideration the importance of market stability and the steady and smooth supplies of commodities and services to the citizens and residents to ensure the continuity of development and growth of the sectors whilst ensuring the citizens’ needs, he said.
This came during the meeting held at the Ministry of Finance and National Economy premises in the presence of Industry, Commerce and Tourism Minister Zayed bin Rashid Alzayani and Bahrain Chamber of Commerce and Industry (BCCI)’s deputy chairman Khalid Najibi.
Shaikh Salman stressed the importance of continuous communication, consultation and discussion with the Bahrain Chamber of Commerce and Industry regarding the VAT mechanisms. He cited the ongoing cooperation and discussion of viewpoints to reach the results that would serve the aspirations in the interest of the homeland and the citizen foremost.
Taxpayers in UAE and Saudi Arabia: Get ready for official tax audits in 2019
Date: 25 Dec, 2018
Taxpayers in the UAE and Saudi Arabia will have to brace themselves for official audits next year as the roll-out of the 5 per cent VAT since January 1 this year overcomes a number of hurdles and teething problems.
Now that regulations are in place, taxpayers are expected to prepare for audits by the UAE’s Federal Tax Authority and Saudi Arabia’s General Authority of Zakat and Tax next year. It is an exercise that will test their resources and the accuracy of record keeping as well as the filing of tax returns.
The two states were the first countries in the Arabian Gulf to introduce the levy following the implementation of excise taxes on energy and fizzy drinks and cigarettes in 2017.
“In the UAE and Saudi Arabia, next year there will be a lot of full-scale tax audit activity undertaken on businesses,” said David Stevens, GCC VAT
Implementation Partner at advisory EY.
“These businesses need to prepare themselves to be able to completely justify all of their numbers, all of their data, all of their statements, all of their payments, all of their invoices, all of their record-keeping, and all various other aspects of their VAT compliance that will come under increased scrutiny by the authorities as we go into the second year of operation.”
GCC countries are introducing taxes to cope with the crash in Brent oil prices from more than $115 per barrel in mid-2014 to around $50 per barrel currently.
The International Monetary Fund estimated that the introduction of VAT in the region could generate new revenue of 1.5 to 3 per cent of non-oil GDP.
Bahrain will be the third country to introduce the levy on January 1, 2019, but it plans to introduce a more complex system that has a lot of items exempt from VAT amid a lack of clarity over many aspects of the regulations.
Meanwhile, in the UAE and Saudi Arabia, the tax authorities – which toiled in 2018 to clarify ambiguities about VAT rules and regulations – will need to continue this exercise into 2019 as they begin to conduct tax audits.
“The authorities will be launching audit activity while there are some areas with unclarified rules, so they won’t know how to enforce them,” said Mr Stevens.
“The pressure falls on the authorities to resolve any unsettled, non-clarified or disputed areas of interpretation. They need those clarified so that auditors can do their job and taxpayers need that to make sure they are fully compliant.”
Companies in 2018 struggled to be compliant for various reasons. Some waited too long, some did not expect the levies to be introduced, while others changed their processes to comply, but their work was dogged by mistakes.
Finance Ministry committed to ensuring transparency, consumer protection in VAT implementation
Date: 22 Dec, 2018
External URL: https://www.nbt.gov.bh/vat_news_6
The Assistant Undersecretary for Development and Policy of Public Revenues at the Ministry of Finance and National Economy (MoFNE), Rana Ebrahim Faqihi, affirmed the Ministry’s commitment to increasing consumers and businesses’ awareness about the VAT procedures and legal framework, in line with the VAT Law and its Executive Regulations, underscoring the Ministry’s commitment to strengthening consumer protection and transparency.
Faqihi added that the Ministry of Finance and National Economy and the National Bureau for Taxation have dedicated resources towards raising VAT procedural and legal framework awareness, including an extensive series of workshops for business owners and companies that will be subject to the VAT, in addition to directly communicating with businesses to ensure effective and seamless implementation of VAT on January 1, 2019.
The Assistant Undersecretary noted that all registered businesses are required to display their VAT registration certificate, which includes the business’s Commercial Registration number and the VAT registration date, in a prominent place that is clearly visible to consumers prior to levying the 5% VAT, to avoid violations.
The Assistant Undersecretary stressed that all registered businesses are also legally required to display the final prices of all goods and services – inclusive of tax before any sale.
The Assistant Undersecretary went on noting that it is a violation to mislead consumers.
The Assistant Undersecretary concluded by highlighting NBT’s efforts towards establishing multiple communication channels including the hotline 80008001, establishing the email firstname.lastname@example.org, as well as detailing VAT information uploaded on NBT’s recently launched website www.nbt.gov.bh
Event in Bahrain on VAT implementation regulations and VAT challenges
Date: 21 Dec, 2018
Bahrain Chapter-The Institute of Chartered Accountants of India in association with MCA Pyramid Consulting hosted a successful event on VAT implementation regulations and VAT challenges. A session on Supply chain Digitization was also conducted. Excom members with speakers Mr Girish Chand, Mr Ashish Chakravarti. Thank you to the speakers, MCA Pyramid consulting and, CA Lakshmanan R
Saudi Arabia collects twice as much VAT as expected in 2018- budget document
Date: 18 Dec, 2018
Saudi Arabia collected 45.6 billion riyals ($12.16 billion) from value-added tax (VAT) in 2018, more than double its initial estimate, budget documents showed.
The Saudi budget expects total tax revenues of 166 billion riyals this year, up from an initial estimate of 142 billion riyals, the document showed.
The Saudi government has said it expects VAT, which was introduced earlier this year, to be one of the main generators of non-oil revenue. ($1 = 3.7507 riyals) (Reporting by Stephen Kalin and Marwa Rashad; Editing by Gareth Jones)
Phase 2 of tourist VAT refund scheme rollout from Dec 16
Date: 13 Dec, 2018
The Federal Tax Authority (FTA) on Wednesday said all preparations were complete to launch phase 2 of the Tax Refunds for Tourists Scheme from Sunday, December 16. The scheme would cover 12 air, land and sea ports across the UAE.
The first phase went into effect on November 18, 2018, covering the Abu Dhabi, Dubai and Sharjah international airports.
The second phase will cover Al Ain International Airport, Al Maktoum International Airport and Ras Al Khaimah International Airport; as well as 2 sea ports: Zayed Port in Abu Dhabi and Port Rashid in Dubai; and 4 land ports: Al Ghuwaifat Border Post in Abu Dhabi, Hili Border Port and Al Madheef Border Crossing in Al Ain, and Dubai’s Hatta Border Exit.
“The FTA coordinated with the system operator Planet, running all necessary experiments to ensure the scheme is implemented smoothly and accurately,” said Khalid Ali Al Bustani, director-general of FTA.
Al Bustani projects daily refunds of value-added tax (VAT) to grow quickly in the coming period. The number of refund requests processed surpassed 3,800 daily transactions.
The FTA asserted that to be refundable, tax invoices must be issued by retail stores included in the scheme and registered in the system; these venues can be identified by visibly showcasing ‘tax-free’ stickers on their storefronts.
The FTA had outlined conditions for a tourist to be eligible for a tax refund, namely: The tourist in question is at least 18 years old; goods eligible for the scheme are supplied to an overseas tourist who was on UAE soil when the purchase was made, and who intends to exit the UAE along with the purchased items within 90 days; goods must be exported out of the UAE by the tourist within 3 months of the date of supply.
Finance Ministry highlights VAT exemptions
Date: 13 Dec, 2018
External URL: https://www.nbt.gov.bh/vat_news_4
The Assistant Undersecretary for Development and Policy of Public Revenues at the Ministry of Finance and National Economy, Rana Ebrahim Faqihi, highlighted that the 5% Value Added Tax (VAT) will not be applied on 94 basic foodstuffs in addition to essential sectors such as education, health, real estate, oil and gas among other important sectors.
Bahrain’s National Bureau for Taxation, the entity responsible for tax administration and collection according to Law and regulations, launched a new website (www.nbt.gov.bh). The website provides more information to taxpayers and collectors on the Kingdom’s newly introduced VAT and its registration process. Bahrain’s VAT Law will be implemented starting Jan 1st 2019, in line with the unified VAT agreement approved by the Gulf Cooperation Council at the Riyadh Summit in 2015.
Saudi Arabia & Bahrain VAT deadlines fall in December
Date: 11 Dec, 2018
VAT will also come into effect in the Kingdom of Bahrain with effect from 1 January 2019, with an obligation for some businesses to register in December 2018.
Small businesses whose obligation to register for VAT in the Kingdom of Saudi Arabia (KSA) was deferred under transitional provisions will have to submit an application for registration by 20 December 2018. In addition transitional arrangements which meant that VAT did not have to be paid in respect of existing contracts come to an end on 31 December, meaning that contract prices may need to be renegotiated.
VAT was introduced in the KSA with effect from 1 January 2018.
Appreciating the challenge facing businesses in the region, the minister of finance Mohammed Al-Jadaan, together with the board of the General Authority on Zakat & Tax (GAZT), approved the inclusion of transitional provisions in the VAT Implementing Regulations in September 2017. Two of these transitional provisions may now require action by businesses.
Under KSA VAT rules, any person whose annual value of taxable supplies exceeds or is expected to exceed the mandatory registration threshold of SAR375,000 ($100,000) is required to register for VAT with GAZT within 30 days.
However, if the annual value of their supplies does not exceed SAR1 million ($267,000) the transitional rules provided relief from registration in advance of 1 January 2018. The rules defer the effective date of registration for these businesses to 1 January 2019, but the application for registration has to be submitted by 20 December 2018.
“To allow sufficient time to gather the necessary information and documentation for the registration application, together with the time it may take for GAZT to process your application, it is important that businesses affected by this transitional provision, who have not already voluntarily registered, start the process as soon as possible,” Joanne Clarke said.
Key VAT issues in spotlight
Date: 06 Dec, 2018
The Bahrain British Business Forum (BBBF) and BDO hosted a meeting at the Gulf Hotel Convention Centre to discuss the upcoming introduction of VAT in Bahrain. The meeting featured BDO Bahrain’s VAT specialists Smita Roy, BDO Partner (leader VAT), and Marlon Appleton, BDO senior manager (VAT), as guest speakers.
More than 130 BBBF members were given a presentation by Ms Roy and Mr Appleton, who provided latest information from the Finance Ministry about the implementation of VAT in Bahrain on January 1, 2019. They also shared their experience from the implementation and practice of VAT in Saudi Arabia, the UAE and the UK.
Ms Roy said: “With the VAT implementation just weeks away, it is critical for businesses in Bahrain to understand that VAT will impact every aspect of business from transactions, processes, documentation to people; and it is vital they be ready and prepared for the change. While this indirect tax system is new to Bahrain, VAT regime has been in place in various countries for quite some time and BDO’s VAT experts with their rich experience can provide comprehensive support to companies in navigating the VAT journey in Bahrain.”
“To avoid many of the pitfalls experienced by businesses in Saudi Arabia and the UAE, it is important for businesses to have an action plan for VAT readiness to ensure smooth transition to VAT. The readiness measures should be effectively deployed to avoid last minute chaos,” added Mr Appleton.
Federal Tax Authority: Profit Margin Scheme applies only to used cars already subjected to VAT
Date: 03 Dec, 2018
External URL: http://wam.ae/en/details/1395302724911
The Federal Tax Authority (FTA) has announced that only those goods which have previously been subject to VAT before the supply in question may be subject to the Profit Margin Scheme. As a result, stock on hand of used goods which were acquired prior to the effective date of Federal Decree-Law No. (8) on Value Added Tax (VAT law), or which have not previously been subject to VAT for other reasons, are not eligible to be sold under the profit margin scheme. VAT is therefore due on the full selling price of such goods.
The Authority had clarified the above to address questions from the audience at an awareness session recently organised at the Abu Dhabi Chamber of Commerce and Industry to raise awareness among car dealers about the procedures and tax treatment for this vital sector, as well as the efforts made by the FTA to remove obstacles facing those working in the sector.
The session brought together several car dealers, experts and other stakeholders from the industry, where the FTA team introduced them to the procedures for implementing VAT and the Profit Margin Scheme.
In a press statement issued today, FTA Director-General Khalid Ali Al Bustani asserted that the Federal Tax Authority has been committed, since the tax system went into effect, to raising awareness among all business sectors to abide by their tax obligations, by means of various media and digital channels, as well as direct contact through awareness campaigns across all seven emirates. The Authority also provides various tax awareness instruments through its website, which was designed according to international best practices.
“The Federal Tax Authority is committed to enhancing its partnerships with business sectors and providing assistance for them to fully comply with tax regulations,” Al Bustani said. “The Authority maintains constant communication with retailers, producers and service providers to identify their views and ensure a smooth and seamless implementation of the UAE tax system with minimal effects on their business activities.”
VAT backlash blow to MPs’ re-election
Date: 28 Nov, 2018
A PUBLIC backlash against the previous parliament, fuelled by anger at the imminent introduction of Value Added Tax (VAT), has been credited with dashing the hopes of 13 MPs seeking re-election.
Of 23 incumbent MPs who ran for parliament again this year, only two successfully defended their seats in the first round of voting on Saturday – Adel Al Asoomi and Isa Al Kooheji.
Thirteen of them were dumped outright by voters, while eight face a second-round run-off this weekend.
The cull is an indication of widespread dissatisfaction at parliament’s performance during the past four years.
However, 27 MPs who supported the introduction of VAT in January were singled out for criticism – both ahead of the election and on election day itself.
Influential social media accounts posted the names and pictures of those who voted in favour of VAT as part of a campaign encouraging voters not to support them again.
Pictures and messages reminding people were also circulated on the day of the election on Saturday.
“The public is upset and angry,” explained political analyst Fareed Ghazi, a lawyer who served in parliament between 2002 and 2006.
“People don’t want MPs who imposed taxes on them, didn’t secure compensation or financial benefits and even tightened restrictions on political and human rights.
“Voters today are extremely intelligent and have strong opinions.
“This translated into the outcome of the first round of the election.”
Seventeen of the 27 MPs who last month voted in favour of VAT tried to defend their seat.
Large firms must register for VAT before January 1st
Date: 28 Nov, 2018
Companies in Bahrain with sales exceeding BD5 million annually must register with tax authorities before January 1, ahead of the rolling out of Value Added Tax (VAT).
The announcement was made today by Finance Ministry Assistant Under-Secretary for
Development and Revenue Policies Rana Faqihi.
She said VAT of five per cent would be rolled out in a phased manner, starting with companies exceeding annual sales of BD5m.
They should register with the National Bureau for Taxation (NBT), the entity in charge of managing the tax, before January 1.
A series of briefings will also be held to ensure businesses are ready for the first phase of VAT.
An NBT hotline has been set up for VAT enquiries on 80008001, or people can e-mail email@example.com.
Ninety-four basic foodstuffs and other basic goods and services are exempt from VAT, in addition to a number of other goods and services including education and health services.
Economy, VAT dominate discussions among voters in Bahrain’s local elections
Date: 21 Nov, 2018
As Bahrain gears to hold its fifth parliamentary and municipal elections, the impending implementation of Value-Added-Tax and rising inflation rate are driving discussions between candidates and voters across the island-kingdom.
The general elections for the lower house of parliament and the municipality council will be held on November 24 with many districts expecting to hold a run-off vote on December 1 as independent and past Members of Parliament are expected to fight incumbents for their seats.
But a key issue across the governorates is the topic of VAT and how it may affect constituents in the coming year. Bahraini legislators approved a draft law on October 7 that would impose VAT for the first time in the kingdom, starting from 2019. Saudi Arabia and the United Arab Emirates are the first two countries introducing VAT at a 5 percent rate, as part of a Gulf Cooperation Council (GCC) agreement in 2018.
New entity to handle tax refunds at Dubai airport
Date: 19 Nov, 2018
External URL: http://www.gdnonline.com/Details/431728
Planet, a new entity recently appointed by the UAE’s Federal Tax Authority (FTA) will operate the Tourist Refund Scheme (TRS) at Dubai International (DXB), said a statement from Dubai Airports.
This closely follows the recent announcement by the FTA, outlining conditions and procedures for tourists to claim their Value Added Tax (VAT) refunds when exiting the country.
A ‘Tax Free Tag’, generated whilst shopping with the required passport or GCC ID, must be attached to the sales receipt upon purchase in-store. Prior to check-in the customer will then need to validate the Tax Free Tag and goods at one of the Planet validation points situated across DXB’s three terminals.
Upon successful validation, the tourist is offered a choice of refund via credit card or cash. Those customers who prefer a cash refund can have it processed at one of the Travelex outlets in the airport’s airside departure areas.
Dh10,000 cap on daily VAT refund for tourists
Date: 13 Nov, 2018
The maximum value added tax (VAT) refund that can be given to a tourist in a 24-hour period has been capped at Dh10,000, according to Decision No 2 of 2018 issued by Shaikh Hamdan Bin Rashid Al Maktoum, Deputy Ruler of Dubai, Minister of Finance, and Chairman of the Board of the Federal Tax Authority (FTA).
The decision also stipulates that tax cannot be refunded under the scheme unless the total value of tax inclusive purchases issued by the same taxable person is Dh250 or more.
The decision comprises seven clauses and stipulates that VAT refund claims shall be provided by retailers participating in the tax refunds for tourists as of November 18.
An overseas tourist may get a refund at the Abu Dhabi, Dubai and Sharjah International airports as of next Sunday. The tourists may also recover VAT at the other airports, land and seaports in the UAE as of December 16.
The decision outlined the five steps that retailers must follow when a customer asks to make a purchase under the scheme, including age and identity verification.
Click here to know more about FTA Decision No 2 of 2018 on Tax Refunds for Tourists Scheme
Verify that used cars were subject to VAT, says FTA
Date: 06 Nov, 2018
The Federal Tax Authority (FTA) has called on retailers to verify that used cars were subject to the value added tax (VAT) before applying the Profit Margin Scheme, during an awareness workshop for car dealers.
The workshop applauded the high tax compliance rate and increased tax awareness among businesses in the automotive sector, and reiterated its commitment to empowering businesses. The authority also introduced various procedures and tax treatment for the key sector, highlighting the FTA’s steps to address any obstacles that businesses face. More than 100 dealers, experts and stakeholders participated in the workshop, which was organised by the FTA in collaboration with the Dubai Municipality and Al Aweer Auto Market in Dubai.
“Tax laws in the UAE have prioritised the establishment of an environment conducive to continued growth and prosperity in commercial activities – a sector of great importance in the government’s plans to diversify sources of income,” FTA director-general, Khalid Ali Al Bustani, asserted.
The FTA experts presented a detailed explanation of the procedures and legalities surrounding VAT on the sale of new and used vehicles. They also shed light on the Profit Margin Scheme, its terms and conditions, the supplies eligible for it, and the obligations for the Taxable Person.
The authority’s representatives asserted that according to Federal Decree-Law No. (8) of 2017 on VAT and Cabinet Decision No. (52) of 2017 on the Executive Regulations of said Decree-Law, the Profit Margin Scheme is only applicable to supplies that already incurred VAT prior to the current supply. Therefore, the stock of used goods purchased before Federal Decree-Law No. (8) of 2017 went into effect (or that didn’t incur tax for any reason) do not qualify for the Profit Margin Scheme, and VAT is instead calculated on the items’ full price.
How VAT in Bahrain impacts neighbouring GCC countries
Date: 05 Nov, 2018
Value-added tax, being all pervasive, impacts a country’s economy as well as the industries therein. Furthermore, VAT impact also spills over to the import and export of goods and services. The UAE, all along, has business ties with Bahrain through either a local presence in Bahrain (as branch or local entity) or through export/import of goods or services.
Typically, after the introduction of VAT in a country, businesses discover that their entire business ecosystem – i.e., their vendors, suppliers and customers located in and outside the country – are also part of their business. Underlying reason for this tectonic shift is the fact that in VAT, businesses cannot take unilateral decisions and have to take decisions bilaterally as a buyer can debate on the applicability of VAT (for example, whether the transaction qualifies as ‘export’ or not).
As mentioned above, dependency between the supply chain intensifies, particularly, in cases of outbound supply of goods (like goods being supplied to Bahrain from the UAE).
Typically, in such transactions there are two aspects to be vetted, one whether the supply qualifies as export from UAE and whether the transaction qualifies as import in Bahrain. Thus, it is advisable for UAE entities having business interests in Bahrain to initiate early dialogue on the likely impact to identify possible issues and documentation requirements to avoid VAT debates/disputes with customers.
Import of goods
Typically, VAT is payable at the time of import of goods (unless facility of deferment is provided) along with customs duty.
Thus, after introduction of VAT, imports in Bahrain may attract VAT and thus, at the time of import itself it will be critical to determine the applicability of VAT on goods being imported in Bahrain (as certain goods such as specified medicines may not attract VAT). Also, procedural aspects like declaration of the VAT registration number on import documents, linking of the VAT number with customs, etc, also become critical during transition.
UAE businesses told to keep tax data confidential
Date: 04 Nov, 2018
The Federal Tax Authority (FTA) has called on businesses registered for tax purposes not to disclose their financial or tax data to any person or organisation that is not officially authorised to deal with such data.
The authority stressed in a statement issued on Saturday that it is necessary to remain vigilant about messages received via e-mail or mobile phone and not to share tax registration numbers (TRN) or financial account numbers with any entity.
It urged all registered businesses to maintain the confidentiality of their data, noting that it did not authorise any entity to request tax-related financial or accounting information or any other matters relating to tax registrants.
Businesses registered with the Authority for tax purposes can submit their tax returns within the deadline and pay taxes due for specific tax periods by visiting the e-Services portal on the FTA website – eservices.tax.gov.ae – available 24/7, accessing the tax return form, entering the data, then pressing ‘submit’. Users can then proceed to pay their due taxes by clicking on the ‘My Payments’ tab.
UAE gold retailers pin hopes on VAT refund for tourists
Date: 01 Nov, 2018
Dubai: The UAE’s gold and jewellery sector endured its toughest quarter ever between July to end September, with demand dropping to 6 tonnes, a 13 percent decline from Q3-17, according to the latest update from the World Gold Council. Some of the “retailers registered losses for the first time”, the report adds.
“One cannot remember a quarter that has been this tough, at least not in recent memory,” said John Mulligan, Head of Member and Market Relations at WGC.
But the imminent introduction of VAT refunds for tourists could provide some much needed relief, according to jewellery industry sources here. “That (tax refunds) would be key to recovery – tourist-related buying of gold and jewellery in the UAE is down 30 percent in the year to date,” said Abdul Salam K.P., Executive Director at Malabar Gold & Diamonds and board member on the Dubai Gold and Jewellery Group.
KPMG in Bahrain Discusses the Implications of Bahrain Introducing VAT From Next Year
Date: 30 Oct, 2018
Around 200 senior executives from the Bahrain business community attended today a session organized by KPMG in Bahrain to jointly discuss the recently published VAT Law, the implications and consequences the new tax will have across the main economic sectors of the Kingdom. Being 60 days away from VAT implementation in the Kingdom of Bahrain, the half-day event was an ideal platform for delegates to discuss and understand the type of changes they need to make to comply with the new tax environment.
Philippe Norré, Partner and Head of Tax & Legal at KPMG in Bahrain and Ali Al Mahroos, Senior Tax Manager at KPMG in Bahrain were the keynote speakers. During the event, they reviewed practical steps companies must take in the next few weeks to be VAT ready in time. There were lessons to be learnt from the United Arab Emirates and the Kingdom of Saudi Arabia but in particular the very specific Bahrain environment and the specifics of the Bahrain system were reviewed against actions required.
“VAT will not impact the business itself, but it will change how companies administer their business. VAT does not need to be only a burden and risk to businesses but it can also be an opportunity for better processes, optimization of systems, introduction of technology for tax and better risk management.
Federal Tax Authority’s Board of Directors adopts budget for 2019
Date: 29 Oct, 2018
External URL: http://wam.ae/en/details/1395302716698
The Federal Tax Authority’s, FTA, Board of Directors today held its sixth meeting, chaired by H.H. Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance, held at the Ministry of Finance premises.
During the meeting, the Board adopted the FTA’s proposed budget for 2019, in addition to a number of executive decisions regarding the authority’s internal regulations, policies and operations.
Furthermore, the Board discussed a detailed report outlining the FTA’s achievements over the past period, as well as the latest developments with regards to the authority’s activities, the registration process for Value Added Tax, VAT, and Excise Tax, import declarations, Tax Returns on Excise Tax and VAT, and audit procedures. The report revealed a high rate of tax compliance in the UAE.
Sheikh Hamdan commended the authority for the continued progress of its systems, confirming that the FTA has successfully strengthened its partnership with the private sector, providing all necessary facilities to ensure self-compliance with tax regulations in a seamless manner supporting economic activities.
Tourists can begin reclaiming VAT as of November 18
Date: 22 Oct, 2018
External URL: http://wam.ae/en/details/1395302715464
The Federal Tax Authority (FTA) has announced that Tax Refund for Tourists Scheme goes into effect on November 18, allowing eligible tourists to request refunds of the Value Added Tax (VAT) incurred on their purchases.
The first phase will see the digital system of the Tax Refund for Tourists Scheme implemented at Abu Dhabi, Dubai and Sharjah International Airports. As of mid-December, the system will be fully operational to include all airports and land and sea ports in the UAE, as stipulated in the Cabinet Decision which aims to strengthen the UAE’s leading position as a major destination on the global tourism map.
More clarity needed for VAT on healthcare, education in UAE
Date: 22 Oct, 2018
The UAE Cabinet has approved the Federal Budget for 2019 with more than half of the budget allocated for community, education and healthcare keeping in mind the UAE’s National Agenda 2021.
To make the UAE a preferred education and healthcare destination in the world, the government is taking all efforts to improve and build a robust infrastructure (including setting up world-class hospitals, universities, etc., in the country) and also ensuring all constituents of the eco-system are geared up. To make it happen, even the newly introduced VAT law has been carefully drafted to play an important role in shaping up these sectors.
FTA simplifies VAT refund procedures for UAE nationals building new residences
Date: 16 Oct, 2018
External URL: http://wam.ae/en/details/1395302714321
Khalid Ali Al Bustani, the Director-General of the Federal Tax Authority, FTA, has announced that procedures to reclaim Value Added Tax, VAT, for UAE nationals who are building new residences have been simplified with electronic procedures.
The announcement was made today through a press release that detailed the latest updates on the VAT refund process for UAE nationals building new residences. Al Bustani said the FTA was committed to adhering to the vision of the UAE’s wise leadership to develop a modern housing system and to deliver the best standards of life and well-being within the framework of care that the state provides, as the focus of development plans and as part of the basic objectives of all initiatives and projects carried out by state institutions.
Al Bustani said, “The happiness of UAE citizens is the top priority for the Federal Tax Authority. We are committed to implementing our services through the most advanced, innovative, and easy-to-use digital systems.”
FTA determines tax treatment for 'compensation-type payments'
Date: 14 Oct, 2018
External URL: http://wam.ae/en/details/1395302713843
The Federal Tax Authority, FTA, has issued a public clarification regarding tax treatment of compensation-type payments, noting that value added tax, VAT, is imposed on supplies of goods and services and if any payment does not relate to a supply of goods or services, then the payment is not subject to VAT.
The Authority noted that as part of business agreements, businesses usually make payments to compensate each other for any loss, negligence or other errors. VAT should not be applied to such amounts if they do not relate to a supply.
In a recent press statement, the Federal Tax Authority noted that under Article 02 of Federal Decree-Law No. 08 of 2017 on Value Added Tax, VAT is imposed, among other things, on taxable supplies of goods and services. Taxable supply is defined in Article 01 of the same Law as a “supply of goods or services for a consideration by a person conducting business in the UAE and does not include exempt supply”.
Bahrain’s parliament approves draft VAT law
Date: 08 Oct, 2018
Bahraini legislators approved a draft law on Sunday that would see value-added tax (VAT) imposed for the first time in the kingdom, state news agency BNA reported.
The House of Representatives approved a Gulf Arab agreement to introduce VAT after a royal decree ordered parliament to hold an extraordinary session on Sunday, BNA reported, without giving details of the vote.
The move came a few days after Bahrain’s wealthier neighbours Saudi Arabia, the United Arab Emirates and Kuwait offered a $10 billion aid package to avoid the risk of a debt crisis in the country, which was also tied to fiscal reforms.
The bill is yet to be approved by the parliament’s upper house, which is expected to hold a similar session later this week.
FTA clarifies VAT on healthcare of employees' families
Date: 07 Oct, 2018
The Federal Tax Authority issued a clarification on insurance that states that an employer would only be able to claim the input VAT on the health insurance provided to employees’ families if it is the legal obligation of the employer to provide the insurance.
Pratik Shah, partner at Dhruva Advisors, said there is no legal obligation in Dubai on the employer to provide health insurance to the family of an employee, whereas Abu Dhabi mandates employers to provide such extended benefits.
“It would be interesting to see how an employer having head office in Abu Dhabi and having operations and employees situated all over the country will split the recovery of VAT and vice-versa. VAT being a federal-level law should ideally provide a ‘level playing field’ for all tax registrants. However, this would lead to employers situated in Abu Dhabi at an advantageous position to employers situated in the rest of Emirates,” Shah said.
Bahrain parliament approves VAT agreement
Date: 07 Oct, 2018
Dubai: Manama: Bahrain is set to become the third Gulf Cooperation Council (GCC) to implement the unified agreement on Value Added Tax (VAT) on goods and services.
On Sunday, the kingdom’s bicameral parliament, holding an extraordinary session upon a royal order issued last week, approved VAT at the rate of five per cent effective from January 1 next year.
The lower and upper chambers of the parliament also approved new pension rules for ministers and members of the Council of Representatives, the Shura Council and the Municipal Council.
VAT and changes to the pension system are part of efforts to fix public finances hit hard by the drop in oil prices which also pushed Bahrain’s dinar to its lowest in more than a decade.
In February, Bahraini Minister of Finance Shaikh Ahmad Bin Mohammad Al Khalifa said that Bahrain would introduce a VAT and would have everything set up by the end of 2018.
FTA sets September 30 deadline for submitting tax returns
Date: 30 Sep, 2018
External URL: http://wam.ae/en/details/1395302710744
The Federal Tax Authority (FTA) has called on businesses registered in the Value Added Tax (VAT) system whose tax period ended on 31st August, 2018, to submit their tax returns as soon as possible and not wait until the deadline to avoid any delays.
The Authority stressed the need to submit tax returns and settle due taxes no later than Sunday, 30th September 2018. The FTA reminded that according to Federal Decree-Law No. (8) for 2017 on VAT and its executive regulations, tax returns must be submitted to the FTA no later than the 28th of the month following the end of the tax period in question, and according to Federal Law No. (7) of 2017 on tax procedures, the deadline shall be extended to the next working day if the 28th falls on an official holiday.
FTA introduces Northern Emirates retailers to simplified registration procedures
Date: 29 Sep, 2018
External URL: http://wam.ae/en/details/1395302710912
The Federal Tax Authority, FTA, held an awareness session in the Emirate of Ajman for retailers and other representatives from the private sector in all Northern Emirates in collaboration with the chambers of commerce, introducing them to the simplified online procedures for registering in the Tax Refunds for Tourists Scheme, which allows eligible visitors to recover the Value Added Tax, VAT, they incurred on their purchases.
The Authority revealed a notable increase in the number of agreements signed with retailers to register them in the Scheme, equip them with the necessary technology to implement it, and link them to airports and land and sea ports in the UAE. The FTA asserted that dedicated offices would be established in various locations where tourists can recover taxes; the Authority went on to note that it will be clearly outlining the taxes that are eligible to be refunded through the Scheme’s digital system – the most advanced of its kind in the world.
Experts opine - Bahrain to start VAT soon
Date: 26 Sep, 2018
Bahrain will be the next country to implement five percent value-added tax (VAT) after the UAE and Saudi Arabia as part of the GCC framework agreed between the six states, according to tax experts.
Bahrain seems to be the next country to implement VAT if we listen to tax experts’opinions that are recently appearing online.
We share here links to two articles that appear to indicate that Bahrain might be announcing VAT soon.
FTA sets requirements for recovering tax on entertainment services for employees
Date: 24 Sep, 2018
External URL: http://wam.ae/en/details/1395302709797
The Federal Tax Authority, FTA, has determined the “Entertainment Services” supplied to employees, for which registered businesses cannot recover the taxes they incurred, explaining that these are mainly the expenses associated with activities to entertain personnel, such as staff parties that are free to attend.
The authority noted that according to Federal Decree-Law No. (8) of 2017 on Value Added Tax, VAT, and its Executive Regulations, VAT incurred on goods or services purchased to be given away to staff free of charge, in order to reward them for long service, should be blocked from recovery (unless the business accounts for a deemed supply). Examples of these gifts include long service awards, retirement gifts, Eid gifts, or gifts for other festivals or special occasions, gifts given on the occasion of a wedding or birth of a child; employee of the month gifts, or a dinner to reward service.
FTA urges retail companies to register in ‘Tax Refund Scheme for Tourists’ system
Date: 22 Sep, 2018
External URL: http://wam.ae/en/details/1395302709370
The Federal Tax Authority, FTA, has invited retailers, outlets and shops registered for Value Added Tax, VAT, to register in the digital system of the Tax Refund Scheme for Tourists, which will come into effect as of the fourth quarter of 2018.
The Authority is implementing the Scheme in cooperation with Planet, and has identified four basic conditions for registering, namely: the retailer must be registered with the Authority for VAT and have a tax registration number, TRN; the supplier’s sales of goods must not be excluded from the refund scheme, as determined by the Authority; the retailer must submit a request to participate in the Scheme as determined by the FTA; and finally, the retailer must meet the financial credit requirements specified by the system operator and be committed to submitting Tax Returns and paying due taxes regularly.
Dubai Chamber workshop familiarises companies with VAT refund scheme for tourists
Date: 20 Sep, 2018
External URL: http://wam.ae/en/details/1395302709143
The Dubai Chamber of Commerce and Industry recently hosted a workshop aimed to familiarise retailers and members of the business community with the UAE’s new Value-Added Tax, VAT, refund scheme for tourists.
The workshop, hosted at Dubai Chamber’s premises, was organised by the Federal Tax Authority, FTA, in cooperation with Planet, the Tourist Refund operator for the tourist refund scheme which will be rolled out in the last quarter of 2018.
More than 250 members of the business community attended the workshop where participants were briefed on the steps, processes and procedures associated with registering under the UAE’s new VAT refund scheme for tourists.
Registration for ‘Tax Refunds for Tourists scheme’ is now open
Date: 19 Sep, 2018
Committed to ensuring the proper implementation of the UAE’s tax laws, maintaining the country’s Reputation as a pioneer and strengthening its international competitiveness, the Federal Tax Authority (FTA) has announced that registration for the Tax Refunds for Tourist Scheme is now open for retailers, As per Cabinet Decision No.(41) of 2018 on introducing the Tax Refunds for Tourists Scheme. Those wishing to register for the Scheme, operated by Planet on behalf of the FTA, must meet a set of Specific terms and conditions.
Terms and conditions for Retailers to Register:
- Be registered with the Federal tax Authority and hold a valid Tax Registration Number for VAT Purposes.
- Be a seller of goods that are not excluded from refund as determined by the Federal Tax Authority.
- Submit an application to join the scheme as determined by the Federal Tax Authority and be Subject to a credit check by the operator.
- Regularly submit VAT returns and settle payable tax to the FTA.
Retailers who meet the necessary requirements can register through the retailers’ Registration link: https://www.planetpayment.ae
They can also register through the FTA website www.tax.gov.ae by clicking on: Paying Tax >> VAT >>Tourist Refund Scheme
UAE VAT boosts revenue base and could raise 1.7% of GDP
Date: 19 Sep, 2018
The introduction of VAT in the UAE may raise up to 1.7 per cent of the country’s gross domestic product, the rating agency Moody’s said.
“The implementation of VAT in the UAE marks a positive step towards revenue diversification,” said Thaddeus Best, a Moody’s analyst and co-author of the report.
The UAE’s 5 per cent VAT on goods and services introduced on January 1, may raise up to Dh24 billion per year in additional revenues for the country although take-up is likely to be lower in the first few years, Mr Best said.
Under VAT rules, the federal government will retain 30 per cent of the revenues, with the rest distributed across the emirates, according to an yet to be announced sharing formula.
“Depending on the structure of the formula, it could potentially have redistributive effects for the less wealthy emirates such as Sharjah,” the report said. However, this would be an indirect outcome, it added.
VAT implementation has had only a “modest” impact on inflation, the agency said and any inflationary impact on household purchasing power has been mitigated by zero-rated and exempt items (such as certain educational, healthcare and transport services in the country as well as the first sale or rent of residential buildings), and by deflationary trends in the real estate market.
5% VAT 'a starting point' for GCC, says banking chief
Date: 18 Sep, 2018
The 10th MENA CFO conference heard that VAT violators are being censured, with 3,000 offences recorded in Saudi Arabia in the first two months of 2018.
Gulf Cooperation Council (GCC) states could see higher rates of value-added tax (VAT) in the future, with the current five percent rate applied in the United Arab Emirates (UAE) and Saudi Arabia seen as a ‘starting point’, according to one UAE banking executive.
Pointing out that he was speaking in a personal capacity rather than for his employer, Emirates NBD, the bank’s group financial controller, Asim Rashid, said: “My personal view is that five percent is a starting point. The governance and administration of VAT is not cheap.
After gold, this sector may get VAT exemption
Date: 11 Sep, 2018
Following UAE’s decision to exempt gold and precious metals from the value-added tax, the maritime industry could also get a relief as the Federal Transport Authority is negotiating VAT exemption with the Federal Tax Authority, confirmed a senior official on Monday.
Hessa Al Malek, executive director of maritime transport at UAE’s Federal Transport Authority, said the meeting with the Federal Tax Authority will be held soon to discuss the issue.
Firms in UAE's designated zones: Are all your supplies VAT-free?
Date: 09 Sep, 2018
The basic tenet of identifying and listing some of the free zones in the UAE as ‘designated zones’ under the country’s’s value-added tax legislation was to make them VAT free and consequently, be consistent with the tradition of keeping free zones typically free from taxes.
Though in intent and spirit it appears the legislation has achieved the objective, in practice, there are still instances and activities that result in the application of VAT on transactions within the designated zones. Consequently, the companies can blindly not apply VAT on any transaction it enters within the designated zones.
VAT refund for UAE tourists to start in November
Date: 05 Sep, 2018
The UAE’s Federal Tax Authority has appointed Planet as its exclusive tax refund operator for the Tourist Refund Scheme which will be rolled out in November 2018.
“The FTA has announced that from November 2018, eligible tourists will be able to receive a proportion of the VAT as a refund when they shop at registered stores,” said an invitation sent to retailers and tax consultancies across the UAE by the FTA and the Dubai Chamber of Commerce and Industry to brief them about how to register for the tourist refund scheme.
“We wish to invite you to an event organised by the FTA and their exclusive tax refund operator, Planet, who will be operating the Tourist Refund Scheme,” said the invite.
VAT will attract more global investors to UAE realty
Date: 21 Aug, 2018
When value-added tax (VAT) was introduced in the UAE and Saudi Arabia on January 1, 2018, initially stakeholders were wary on the potential impact of the new tax policy on the economy.
A study conducted by Alliance Business Centers Network said that the UAE would be least affected by the imposition of VAT because it is one of the lowest globally compared to countries such as the UK, Switzerland, Germany, Mexico, South Africa and Australia. The study revealed that the VAT in UK and France was 20 percent, which is substantially higher than the five percent implemented in the UAE and Saudi Arabia.
With the adoption of VAT in the real estate sector, investors and stakeholders are weighing the impact on market valuations. According to Deloitte, in the UAE, commercial property is clustered in the taxable bracket and therefore the costs of buying or leasing such property are likely to increase.
Moreover, stakeholders in the UAE real estate sector see the pricing of ancillary services such as brokerage, maintenance services, car parking, facility management and property management increase as such services will be subject to VAT and do not fall within the exemption for rental of residential real estate, even where provided in connection with a residential contract.
Federal Tax Authority launches first phase of ‘Tax Clinic’ in Ras al-Khaimah
Date: 13 Aug, 2018
External URL: http://wam.ae/en/details/1395302703494
The Federal Tax Authority (FTA) has officially launched phase one of its “Tax Clinic” initiative, which seeks to maintain direct and constant communication with taxable businesses.
For three months, the campaign will cover all seven emirates to raise tax awareness across the country, urging taxable businesses to register with the Authority and promoting compliance with Tax Return requirements and the timely payment of due taxes. Phase one will take place in Ras al-Khaimah over the course of three days – from 7:30 am to 2:30 pm – until August 14, 2018, at the headquarters of Ras al-Khaimah’s Department of Economic Development (RAK-DED) and Ras al-Khaimah Economic Zone (RAKEZ).
A press statement issued today explained that the “Tax Clinic” campaign will be organised as a collaboration between the Federal Tax Authority and the departments of economic development and municipalities in all emirates. Two teams of analysts and specialists from the FTA’s Registration, Tax Returns and Taxpayers Services will go on an extensive tour, which includes several meetings and an interactive seminar in each individual emirate, with taxable businesses that have not yet registered in the tax system or that have fallen behind on submitting their Tax Returns and settling their due taxes – particularly, small and medium enterprises (SMEs).
Gold jewellery demand down by 24% in the UAE
Date: 12 Aug, 2018
Demand for gold jewellery fell by 24 percent in the United Arab Emirates year-on-year in the second quarter of the year, according to a report by the World Gold Council (WGC), mainly due to the introduction of a new 5 percent value-added tax (VAT) in January that was applied to a variety of goods and services, including gold jewellery.
“VAT in both UAE and Saudi Arabia has played an important part in the softness this year,” Alistair Hewitt, United Kingdom-based director of market intelligence in the WGC told Zawya in an email interview last Monday. The World Gold Council (WGC) said in its Q2 2018 report that gold demand fell by 10 percent year-on-year in Saudi Arabia, where VAT was also introduced in January.
UAE gold jewelry demand fell by 23 percent in the first quarter year-one year, while demand rose 16 percent in the fourth quarter of last year ahead of the introduction of VAT, according to previous reports published by the WGC.
FTA launches ‘Tax Clinic’ to promote compliance with tax return submissions
Date: 08 Aug, 2018
External URL: http://wam.ae/en/details/1395302702832
The Federal Tax Authority, FTA, has announced a new campaign as part of its efforts to communicate directly and consistently with businesses.
The “Tax Clinic” seeks to increase the number of registered taxable businesses and promote compliance with the timely submission of tax returns and payment of due taxes.
The campaign kicks off on 12th August, 2018, in Ras al-Khaimah, before moving on to Fujairah and then the rest of the emirates for a duration of three months, where representatives from the authority will be present at the clinic to answer taxpayer queries regarding registration with the FTA and other tax obligations. They will encourage those who are yet to register for Value Added Tax, VAT, to promptly do so in order to avoid administrative penalties. The experts will also introduce attendees to the procedures required for submitting accurate tax returns and settling due taxes.
Vat gets vote of confidence
Date: 06 Aug, 2018
External URL: https://www.khaleejtimes.com/vat-gets-vote-of-confidence
Companies in the UAE and Saudi Arabia have given a vote of confidence to the implementation of VAT with 65 per cent of them having successfully filed their first VAT returns by April 2018.
According to the Association of Chartered Certified Accountants (Acca) and Thomson Reuters’ VAT Return Filing and Compliance survey conducted in April, only 18 per cent of companies had found filing their first VAT returns “challenging” and eight per cent “very challenging”.
Pierre Arman, market development leader for tax and accounting at Thomson Reuters, said that at the time of the survey in April, a lot of companies’ first VAT return deadline had been pushed by the Federal Tax Authority by one or two months, hence, about a third of firms did not file a VAT return at the time.
Half-year review: VAT in real estate
Date: 06 Aug, 2018
Six months into its implementation in the UAE, the 5 per cent value-added tax (VAT) has generally had a limited impact on real estate values, if average market prices in the second quarter are anything to go by. Villa and apartment sales prices retreated by an average 4 per cent over the quarter, while apartment and villa rents were down 3 per cent and 2 per cent respectively, according to Asteco’s second-quarter market report.
Various factors contribute to VAT’s muted impact on real estate, but analysts agree prevailing market rates have in a way helped belie fears of a tax backlash.
FTA latest clarification on Entertainment and Employee related expenses
Date: 29 Jul, 2018
Article 53 of Cabinet Decision No. (52) of 2017 on the Executive Regulation of the Federal Decree-Law No. (8) of 2017 on Value Added Tax (“VAT Executive Regulations”) stipulates input tax which is nonrecoverable by businesses (which, in most cases, will mean Taxable Persons).
There are a number of circumstances in which businesses have sought clarity over the definition of ‘entertainment’ for the purposes of the input tax restriction, and in particular what should constitute entertainment of staff or business contacts as opposed to incidental business-related expenses which would be recoverable under normal VAT
This Public Clarification explains the application of Article 53 of the VAT Executive Regulations with regards to VAT which is non-recoverable in respect of entertainment or hospitality of any kind.
VAT incurred on any costs which are used for a genuine business purpose, or which are incidental to a business purpose e.g. food and drink provided during a business meeting, shall be recoverable (subject to normal VAT recovery rules). However, where the hospitality provided becomes an end in itself and could be construed as the purpose for attending an event, such costs will be considered to be entertainment in nature and the VAT incurred shall not be recoverable. More information on how to define whether costs are incidental to a business purpose, or considered to be an end in themselves, is provided below.
FTA classifies ‘eligible goods’ for calculating VAT
Date: 25 Jul, 2018
External URL: http://wam.ae/en/details/1395302700713
The Federal Tax Authority, FTA, has determined three main categories of “eligible goods” for calculating Value Added Tax, VAT, on the basis of the profit margin scheme.
These are second-hand goods, meaning tangible movable property that is suitable for further use as it is or after repair; antiques, i.e. goods that are over 50 years old; and collectors’ items, such as stamps, coins, currency and other pieces of scientific, historical or archaeological interest.
The authority asserted that only those goods, which had been subject to VAT before the supply in question, may be subject to the profit margin scheme. The profit margin is defined as the difference between the buying and selling price of an item and is inclusive of taxes.
The announcement was made in a “Public Clarification” about eligible goods under the profit margin scheme, as per Federal Decree-Law No. (8) on VAT. The FTA offers the clarifications service through its website.
The Director-General of FTA, Khalid Ali Al Bustani, asserted that the new service was launched as part of the authority’s efforts to empower businesses and the general public, and educate them about their rights, obligations and the UAE tax system.
“As part of its comprehensive awareness campaign targeting all segments of society, the FTA published a series of guides that cover all legislative and executive aspects of the UAE tax system, as well as e-learning programmes and infographics,” he said, noting that these efforts reflect the FTA’s commitment to transparency and accuracy in implementing tax procedures.
He called on businesses and experts to take advantage of the Public Clarifications service on the authority’s website, which complements the other guides and publications, and help further raise awareness of the UAE tax system and related procedures and laws.
In a press statement issued on Wednesday, the FTA called on registered businesses to carefully verify eligible goods for the profit margin scheme, reiterating that only those goods which have previously been subject to VAT before the supply in question, may be subject to the scheme.
As a result, stock on hand of used goods that were acquired prior to the effective date of Federal Decree-Law No. (8) on VAT, or goods that have not previously been subject to VAT for other reasons, are not eligible to be sold under the profit margin scheme. VAT is, therefore, due on the full selling price of these goods.
VAT in Saudi
Date: 25 Jul, 2018
When Value Added Tax (VAT) was introduced in the UAE and Saudi Arabia on January 1, 2018, initially stakeholders were wary on the potential impact of the new tax policy on the economy. While a study by Alliance Business Centres Network revealed that the UAE will be least affected by the imposition of VAT, the introduction of VAT in Saudi Arabia is changing the market dynamics and bringing more transparency to the sector.
A report published by JLL clarifies that VAT is applied to any real estate transaction in the country. The 5 per cent rate is implemented on the sale of a residential, commercial, transfer of ownership of undeveloped land, and the sale of partly completed construction works.
However, rental agreements are exempted from VAT charges, which may impact the sale of new property combined with the 5 per cent VAT on brokerage as buyers may divert from buying new property and instead opt for leasing as an alternative. Cost for leasing, though, may also increase as ancillary services are subject to VAT.
Similar to the UAE, VAT will contribute to the government’s initiatives for economic diversification and continued improvement of public services to the general public.
In conclusion, the above-mentioned views on the potential impact of VAT are only assumptions, since real estate is a long-term product, the real effect of VAT in both countries will be defined further in the coming years.
VAT regulations maintain real estate investment competitiveness
Date: 18 Jul, 2018
External URL: http://wam.ae/en/details/1395302699470
The Federal Tax Authority, FTA, has called on persons dealing with commercial real estate to apply the basic Value Added Tax, VAT, rate of five percent on all sales and rent of such properties, urging buyers to pay the due VAT before proceeding with the transfer of ownership.
In a press statement issued today, the FTA stressed that tax laws had specifically aimed to provide a suitable environment for the continued growth and prosperity of the real estate sector – one of the most important economic sectors in the government’s plans to diversify sources of income, and one of the most attractive sectors for investors.
“With the exception of selling unrented commercial property and rental contracts for commercial units, all other property is either not subject to or exempt from the five percent VAT rate on businesses,” Al Bustani noted, adding that rented commercial property is not considered a supply when sold to Taxable Persons.
The Authority went on to explain that the sale of unrented commercial properties, or off-plan selling of commercial properties, is subject to five percent VAT, as is the rental of commercial property. However, taxes paid on the property’s expenses during a given rent period can be recovered through the Tax Return of the tenant if he/she is registered and entitled to a refund. It is also possible to recover the entirety of taxes incurred on construction that is purchased according to the capital assets system if the cost of the property is more than five million dirhams.