News Update

UAE's Federal Tax Authority issues warning over VAT scam

Date: 10 Sep, 2019

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External URL: https://www.arabianbusiness.com/banking-finance/427698-uaes-federal-tax-authority-issues-warning-over-vat-scam

The UAE’s Federal Tax Authority on Tuesday issued a warning after reports of scammers trying to target bank customers over VAT refunds.

In response to reports that some bank customers have received emails from unidentified sources impersonating banks and financial institutions requesting personal data in the promise of helping them claim VAT refunds, the FTA reaffirmed that they can only be processed through its official website.

The authority said that some recipients have been asked to provide personal data, including names, credit card numbers, and PIN codes, claiming that providing the information will allow them to recover VAT.

“Refunding taxes for legally eligible applicants is a direct transaction between the registered business and the FTA, and does not call for any intermediaries,” it said in a statement.

“The process is completed via advanced electronic systems, available on the FTA’s official website, which includes security features for financial transactions. It is done through official channels using the International Bank Account Number (IBAN), and via systems under the authority of – and electronically linked to – the UAE Central Bank.”

The FTA warned all registered businesses, calling on them to remain vigilant and maintain the confidentiality of their personal data.

FTA's dialogue led to smooth VAT implementation in the UAE, says Abdulla Al Gurg

Date: 10 Sep, 2019

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External URL: arabianbusiness.com/politics-economics/427427-ftas-dialogue-led-to-smooth-vat-implementation-in-the-uae-says-abdulla-al-gurg

The UAE’s Federal Tax Authority’s (FTA) dialogue with larger corporations will eventually trickle down to smaller traders, among whom the value-added tax (VAT) process has sometimes been problematic, according to according to Abdulla Al Gurg, the CEO of the Easa Saleh Al Gurg Group (ESAG).

According to Al Gurg, ESAG – which is the exclusive UAE agent for the British American Tobacco Company and its subsidiaries – is one of the most significant sources of revenue from VAT and excise tax in the country.

Despite some concerns that were expressed ahead of the implementation of VAT, Al Gurg said he believes the process was overall handled smoothly.

“I respect them [the FTA] and admire their hard work creating something from nothing,” he said. “It must have been a huge challenge to take it from the point of just being an instruction to the point of actual being a thing that we live by.”

Al Gurg added that “everything has a process, and I think it couldn’t have been better”.

“I admire the approach and willingness of discussion they had with us,” he added.

“You don’t get a lot of government entities that are very open in dialogue.”

Trickle-down effect

Although he said that some – particularly smaller companies – have faced difficulties with the VAT process, he is confident that the FTA’s willingness to address them with larger companies will have a trickle-down effect on the economy.

“I’m not saying there are no problems, but when there is a problem, it is handled and taken care of,” he said. “Maybe the small traders don’t feel that way. It’s a very different experience

“But if they are willing to change for us, the effects will ripple through,” he added. “It just needs a bit more patience.”

In June, the government announced that it collected AED 27 billion in VAT last year, far exceeding its target of AED 12 billion.

IMF says VAT should be doubled to 10% in Saudi Arabia

Date: 09 Sep, 2019

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External URL: https://www.khaleejtimes.com/business/global/imf-says-vat-should-be-doubled-to-10-in-saudi-arabia

The International Monetary Fund (IMF) has suggested that the value-added tax (VAT) should be doubled from five percent to 10 percent in Saudi Arabia in consultation with the other Gulf countries.

Analysts expect the hike in VAT rate will come only after 2021 once Kuwait and Oman will also be ready to implement it and as a customs union, the increase makes sense across the GCC countries.

“The introduction of the VAT in January 2018 was a landmark achievement, with revenue collections exceeding expectations. The reduction in the registration threshold at the beginning of 2019 has also gone smoothly. Staff suggested that consideration be given to raising the VAT rate from 5 to 10 percent, in consultation with the GCC,” IMF said in a report prepared its staff after consultation with the authorities in the Kingdom.

The UAE and Saudi Arabia introduced the five percent value-added tax from January 2018 with both the countries surpassing their tax collection targets.

Thaddeus Best, an analyst at Moody’s Sovereign Risk Group, said as a customs union, it is logical that GCC countries would seek to keep their VAT rates harmonised in order to prevent tax arbitrage opportunities emerging within the GCC.

“However, as the hesitant implementation of five percent VAT across the GCC since 2018 shows, there is some scope for VAT differentials to be tolerated, so long as they are relatively small and temporary, as it is currently the case in the GCC with only three out the six countries having implemented the measure so far. Nevertheless, we think it is unlikely that Saudi Arabia, the UAE and Bahrain would raise VAT rates further until the remaining GCC sovereigns have finalised their VAT frameworks,” Best told Khaleej Times.

VAT receipts set to boost Ras Al Khaimah surplus in 2019, says Fitch

Date: 06 Sep, 2019

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External URL: https://www.arabianbusiness.com/politics-economics/426118-vat-receipts-set-to-boost-ras-al-khaimah-surplus-in-2019-says-fitch

Fitch Ratings has affirmed Ras Al Khaimah’s long-term foreign-currency issuer default rating (IDR) at ‘A’ with a stable outlook, saying the emirate has a low and declining government debt burden and high GDP per capita.

The ratings are also supported by the benefits of RAK’s membership of the UAE, while the emirate’s small size and weaknesses in the policy framework weigh on the ratings, Fitch said in a statement.

“The emirate derives substantial support from its membership of the UAE… Close integration within the UAE has allowed the emirate to focus on its development strategy and build a relatively diversified economy dominated by manufacturing and services,” it added.

Fitch said it expects the debt of the government and its state-owned enterprises to fall to below 20 percent of GDP in 2019 from 33 percent in 2015.

It added that the debt will fall further to close to 17 percent of GDP in 2020 as the government uses VAT receipts for the early repayment of AED678 million of private placements.

Fitch noted that the government’s fiscal surplus increased to 2.6 percent of GDP in 2018 from 1.4 percent in 2017, buoyed by the recovery of mining and quarrying activities and receipts from the sale of the government’s 41 percent stake in Union Cement Company.

Fitch also forecast a fiscal surplus of 2.7 percent of GDP in 2019, largely underpinned by RAK’s receipt of close to two years’ worth of VAT, amounting to over 2 percent of GDP.

VAT was introduced in the UAE in 2018 and collected at the federal level, but an agreement on the share to be remitted to individual emirates was only reached in early 2019, which delayed the disbursement of the first year’s collection.

Fitch added that GDP growth will slow slightly to 2.5 percent in 2019 from 2.8 percent in 2018 as the momentum from the rebound after the Qatar embargo fades and UAE-wide growth is expected to remain muted while the development of RAK’s container port could also spur new investment in the free zones and the broader economy.

However, the continuation of the housing market slump in Dubai has led to a reduction in building permits and mortgages issued in RAK and could also weigh on tourism, Fitch said.

Decreasing hotel occupancy rates were seen during the first half of 2019 although they remain high.

“The government is making progress on developing the emirate as a tourist destination, and a doubling of hotel capacity by 2023 is in the pipeline. A further escalation of tensions between Iran and the US and its regional allies could also have repercussions for RAK,” Fitch noted.

VAT registration call for BD 18,750–500,000 generating entities

Date: 03 Sep, 2019

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External URL: https://www.nbr.gov.bh/releases/57

The National Bureau for Revenue (NBR) highlighted that the VAT registration process is open for entities generating or expected to generate between BD 18,750 and BD 500,000 in annual vatable supplies.

Concerned entities that wish to register early for VAT with the NBR will have the option of choosing the date to start implementing VAT until the end of the grace period.  The NBR stressed that collaboration and raising awareness on technical and procedural aspects of VAT are of utmost importance to ensuring the success of the VAT application process.

The NBR noted the positive cooperation provided by businesses regarding the proper application of VAT, adding that more than 4500 entities have registered for VAT since its launch within the Kingdom on 1 January 2019.

 

For further information, please contact the Call Center on 80008001 or email vat@nbr.gov.bh, in addition to leveraging the information available on NBR’s website (www.nbr.gov.bh), Twitter, Instagram and YouTube channel.

How to make 'recovery of cost' under VAT

Date: 27 Aug, 2019

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External URL: https://www.khaleejtimes.com/business/how-to-make-recovery-of-cost-under-vat

Taxability of ‘recharges’, typically applicability of VAT is a subject matter of debate and interpretation across the VAT jurisdictions. The term ‘recharge’ also commonly known as ‘recovery of cost’ is generally not defined in the legal statues but has gained significant importance from a VAT determination viewpoint, purely because it is not clear whether a recharge in itself involves any supply of goods or services attracting VAT.

A recharge happens when there are three entities involved. For example, Entity B incurs costs charged by Entity A which are then recharged by Entity B to Entity C. In each of the supplies, the VAT treatment could potentially change, depending on nature of the transaction, relationship between the entities and whether recharge is at cost or with a mark-up.

The challenge in determining the VAT liability for recharges are multi-fold.

First, it needs to be determined whether the costs that are recharged were incurred for customer’s direct benefit or were they, in fact consumed by the supplier and later recharged to the customer.

Second, it needs to be determined whether the recharge in itself constitutes an independent supply or is it ancillary to the principal / main supply. Also, it is equally important to ascertain whether the person reimbursing the amount is acting in the capacity of an agent (i.e. recovering payment made on behalf of another person) or recovering the expenses incurred as a principal.

FTA begins procedures on updated excise goods

Date: 24 Aug, 2019

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External URL: http://www.wam.ae/en/details/1395302781424

The Federal Tax Authority, FTA, has begun carrying out procedures related to implementing the latest Cabinet Decision on Excise Goods, Excise Tax Rates, and the Method of Calculating the Excise Price, issued in August 2019, which expanded the scope of excise goods to include electronic smoking devices and liquids, and sweetened drinks.

The new Decision goes into effect on 1st January 2020, adding these products to the list of Excise Goods, which included tobacco and tobacco products, energy drinks, and carbonated drinks – products that have been subject to Excise Tax since 1st October 2017.

In a press statement issued today, the Authority asserted that the new Decision is part of the government’s continuous efforts to promote healthy lifestyles in the UAE community and curb the spread of diseases stemming from consumption of harmful goods. These measures align with the UAE Vision 2021, which seeks to ensure the UAE is among the best countries in the world across all sectors.

As part of the first phase of implementing the Cabinet Decision, the FTA called on producers, importers, and stockpilers of sweetened drinks with added sugar to abide by the Decision and start registering for excise tax purposes, noting that Excise Tax is an indirect tax that is imposed on certain products deemed harmful in an effort to curb their consumption.

The Authority revealed that it has updated the electronic registration system for excise goods to allow for adding the new products included in the amended Cabinet Decision.

An entirely new registration procedure was put in place as of 18th August 2019, and the FTA called on all concerned businesses – including producers, importers, and stockpilers of Excise Goods – to take the initiative and register said goods in the new system.

Transfer of a Business as a Going Concern - VATP015

Date: 22 Aug, 2019

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External URL: http://www.allaboutvat.com/wp-content/uploads/Summary-VATP-015-Transfer-of-a-Business-as-a-Going-Concern-21Aug2019.pdf

In accordance with Article 7(2) of the Federal Decree-Law No. (8) of 2017 on Value Added Tax (the “Decree-Law”), the transfer of whole or an  independent part of a business from a person to a taxable person for the purposes of continuing the business that was transferred is not considered to be a supply for VAT purposes.

As a consequence of not being a “supply” for VAT purposes, such transfer of  a business, commonly known as a “transfer of business as a going concern” or a “TOGC”, is not subject to VAT. This rule has a compulsory application.

Summary

This Public Clarification discusses the conditions that have to be met for a  transfer to qualify as a transfer of a going concern under Article 7(2) of the
Decree-Law.

UAE Cabinet to expand list of excise taxable products in January 2020

Date: 21 Aug, 2019

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External URL: http://wam.ae/en/details/1395302780784

In a step to reduce consumption of unhealthy goods and modify consumers’ behaviour, the UAE Cabinet adopted a decision to expand the list of excise taxable products to include sweetened beverages, sugary drinks and electronic smoking devices, starting 1st January 2020.

According to a statement released by the Cabinet General Secretariat, “The decision comes to support the UAE government’s efforts to enhance public health and prevent chronic diseases directly linked to sugar and tobacco consumption.”

“A tax of 50 percent will be levied on any product with added sugar or other sweeteners, whether in form of a beverage, liquid, concentrate, powders, extracts or any product that may be converted into a drink,” the statement added.

“The decision also requires manufacturers to clearly identify the sugar content in order for consumers to make sensible healthy choices.

“A tax of 100 percent will be also levied on electronic smoking devices, whether or not they contain nicotine or tobacco, as well as the liquids used in electronic smoking devices. The decision aims at reducing the consumption of harmful products that put the health of people and environment at risk,” it continued.

“In 2017, the UAE Government started introducing excise tax on specific goods, which are typically harmful to human health or the environment,” the General Secretariat of the Cabinet concluded.

Expo 2020 will drive VAT in UAE by US$8bn

Date: 21 Aug, 2019

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External URL: https://www.intergameonline.com/coin-op/news/expo-2020-will-drive-vat-in-uae-by-us8bn

Dubai’s Expo 2020 will drive VAT revenues over $8bn this year, according to Rajiv Hira, chairman, RHMC Managing Consultants. However the large increases would not be sustained long-term.

Hira, in a newspaper interview in the Arabian Business, said that over 300,000 businesses and tax groups registered for VAT would provide the figures.

Nearly 200 countries are participating in the Expo 2020, reports the tax consultancy, with growth in retail, hospitality, aviation and shipping.

“Considering the distribution of $7.3bn (AED27bn) on account of VAT, it can be easily concluded too touch around $8bn although we will be observing an increase in capital spending at a faster and larger scale, whereas VAT collection will not increase in that speed.”

In another report, the VAT tax revenues are being split between central and local government, by the UAE Cabinet, at a ratio of 30-70 in favour of local government.

Around 25 million people are expected to visit Dubai for Expo 2020.

MoF announces amendment of the Cabinet Decision on excise goods, rates

Date: 21 Aug, 2019

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External URL: http://www.wam.ae/en/details/1395302781065

In order to direct efforts towards reducing the negative effects of harmful consumption patterns, the Ministry of Finance announced the details of the amendment of Cabinet Resolution No. (38) of 2017 regarding excise goods, excise tax rates and the formula to calculate the excise price.

In addition to the goods currently subject to excise tax (i.e. tobacco products, soft drinks and energy drinks), excise tax will also be imposed on e-cigarettes and the liquids used with them, as well as beverages sweetened with added sugar.

The decision to amend excise goods and the formula of calculating excise price is to achieve government directives in terms of rationalizing consumer behavior related to harmful products, which contributes to raising community members’ public health levels, and reducing the negative health consequences caused by these products. This decision is in line with the UAE’s commitment to implementing the GCC Unified Agreement for Excise Taxes and to complement efforts to achieve economic integration among the GCC countries.

Obaid bin Humaid Al Tayer, Minister of State for Financial Affairs, pointed out that these new amendments to the Cabinet’s decision on excise tax are part of the UAE’s keenness to reduce harmful consumer practices by establishing a legislative and procedural base that supports national efforts to curb unhealthy practices that cause chronic diseases.

He said: “These amendments comes in line with the government’s orientation that excise tax policy targets consumption patterns harmful to public health, in order to complement efforts to raise awareness about the damaging effects of consumables harmful to health. It contributes to strengthening the health system’s work in controlling prevalent diseases and reducing the cost of treating them, promoting community health, motivating individuals to spend effectively, reducing the negative impact of harmful substances on the environment, and encouraging producers to develop better alternatives.”

Pursuant to these amendments, effective 1 January 2020, a 100% excise tax on electronic smoking appliances and liquids used in these devices, and 50% excise tax on beverages and sugary drinks has been set. These goods were identified in addition to existing excise goods such as tobacco and tobacco products (100%), energy drinks (100%) and soft drinks (50%). The decision also specified the formula of calculating the excise and retail price, and the Federal Tax Authority (FTA) shall have the power to determine the procedures necessary to prove the classification of any product as an excise good.

At the same time, the Cabinet set the minimum standard price for tobacco products, which set the excise price of tobacco products not less than 0.4 dirhams per roll of cigarettes, and 0.1 dirhams per gram of hookah tobacco, ready-to-use tobacco and similar products. The Minister of Finance will issue a decision on the implementation date, which is set to be before 1 January 2020.

Sugary drinks to cost more in UAE from January 2020

Date: 20 Aug, 2019

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External URL: https://www.khaleejtimes.com/news/government/sugary-drinks-to-cost-more-in-uae-from-january-2020-

The UAE will levy excise tax on additional sugary and smoking products from next year in order to reduce consumption of these unhealthy products linked to chronic diseases.

The UAE Cabinet has approved a proposal to impose 50 per cent excise tax on products with added sugar and sweeteners, whether in the form of a beverage, liquid, concentrate, powders, extracts or any product that may be converted into a drink. While 100 per cent excise tax will be levied on electronic smoking devices – whether or not they contain nicotine or tobacco – liquids used in electronic smoking devices will also be levied the same tax.

From October 2017, the UAE started to levy 50 per cent “sin tax” on sugary and energy drinks and 100 per cent tax on smoking products in order to curb the consumption of these harmful products.

Anurag Chaturvedi, managing partner at Chartered House Tax Consultancy, said the new products which are likely to be included in the list are candies, cookies, cakes, pastries, pies, doughnuts, canned juices, ice creams, yogurts, milkshakes etc.

“We have already seen the impact on energy drinks, where a fall of 65 per cent in sales was reported after the introduction of the excise tax. Definitely, I see a reduction in the sale of these products as the prices shall go up. With VAT already being levied on these products and with the addition of excise tax, prices will go up and consumers automatically shall reduce the consumption of these products,” said Chaturvedi.

He said UAE businesses must expedite their process as January 1, 2020, provides not too much time for companies to upgrade their systems, educate their employees and be prepared for this new introduction of excise levy on products with added sugar and sweeteners.

A statement released by the Cabinet General Secretariat said that manufacturers of these sugary products must clearly identify the sugar content to make it easier for the consumers to make sensible healthy choices.

Nirav Shah, director at Fame Advisory DMCC, said it would be very interesting to see what this list will include as sweetened beverages could be as common as soft drinks, or the authorities will restrict it to excessive sugary sports drinks only.

“Inclusion of e-cigarette is interesting too, as their contention has been that they do not contain tobacco and used frequently by people trying to stop tobacco consumption. Moreover, all of these items will have to comply with stringent requirements for sale in local markets, similar to other products covered in excise,” Shah said.

The UAE will also add tobacco products used in shisha under excise tax from the fourth-quarter of this year, prohibiting the import of any type of shisha tobacco into the country if they don’t bear the digital marks.

The UAE enjoys one of the highest tax compliance rates of close to 100 per cent for tax return requirements of excise tax, which is estimated to generate up to Dh7 billion in annual revenues for the UAE federal budget. With the addition of new items under the “sin tax”, revenues are expected to increase next year. The UAE also imposed five per cent value-added tax (VAT) on a host of goods and services from January 2018, which helped the UAE raise Dh27 billion.

99% of firms in Bahrain sign up for VAT

Date: 19 Aug, 2019

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External URL: https://www.zawya.com/mena/en/economy/story/99_of_firms_in_Bahrain_sign_up_for_VAT-SNG_150314917/

The National Bureau for Revenue (NBR) has announced that 99 per cent of relevant enterprises operating in Bahrain have successfully registered with tax authorities.

The NBR identified 12 enterprises that are in violation of Bahrain’s VAT Law by not submitting a registration application, paying the tax by the deadline, or filing their return form.

 The bureau said they had been fined, warned of further action which may lead to the suspension of their Commercial Registration.

New UAE tax rule on two products from November 1

Date: 19 Aug, 2019

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External URL: https://www.khaleejtimes.com/business/local/fta-to-implement-phase-2-of-tobacco-marking-scheme

The Federal Tax Authority (FTA) is ramping up its efforts in preparation to implement the second phase of the ‘Marking Tobacco and Tobacco Products Scheme’, where it will be expanded to cover waterpipe tobacco (known in Arabic as ‘Mu’assel’) and electrically heated cigarettes as of November 1, 2019.

Digital Tax Stamps will be made available for purchase by producers and importers of waterpipe tobacco and electrically heated cigarettes, the authority revealed, as it held its second awareness workshop in Dubai to introduce them to the scheme’s procedures and objectives, as well as the timeline for the second phase. The workshop was led by FTA experts and representatives from De La Rue, the company commissioned by the authority to operate the system.

The FTA asserted that the scheme was launched to support its efforts to collect taxes, combat tax evasion, and protect consumers from commercial fraud. The FTA went on to note that these preparations follow the successful implementation of the Scheme’s first phase, where the sale and possession of any cigarette packets not bearing the ‘Digital Tax Stamps’ was prohibited across local markets as of Thursday, August 1, 2019.

FTA director general, Khalid Ali Al Bustani, said: “This workshop is part of the authority’s plan to raise tax awareness among taxable businesses, maintain constant communication with professionals working across all economic activities, and keep them in the loop with regards to the latest developments in tax procedures. These workshops allow us to listen to their opinions and suggestions, and address any obstacles they may be facing to ensure a smooth implementation of tax laws. The authority is committed to strengthening its partnerships with the various relevant entities in both the government and the private sector. These strategic partnerships are crucial for successfully implementing the tax system.”

He added that the FTA is also dedicated to organising continuous awareness campaigns, seminars, and workshops for all business sectors. FTA experts went into the details of the upcoming phase two of the ‘Marking Tobacco and Tobacco Products Scheme’, noting that as of November 1, 2019, the Digital Tax Stamps will be made available for purchase, where producers and importers of waterpipe tobacco (‘Mu’assel’) and electrically heated cigarettes are required to place them on these products to indicate that all due taxes have been settled. As of March 1, 2020, it will be prohibited to import into the UAE any of the Excise Goods outlined in FTA Decision No. (2) of 2019 on Marking Tobacco and Tobacco Products, if they do not bear the stamps. Then starting on June 1, 2020, it will no longer be permissible to supply, transfer, store, or possess said Excise Goods in the UAE unless they have the stamps.

Federal Tax Authority launches new electronic system to register excise goods

Date: 17 Aug, 2019

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External URL: http://www.wam.ae/en/details/1395302780330

The Federal Tax Authority,FTA, has launched a new electronic system for registering excise goods as part of its plans to continuously develop the tax system as a whole, and excise tax procedures, in particular.

In a press statement issued today, the authority explained that the new system offers accurate and transparent procedures for registering excise goods with clear guidelines and standards in addition to the new reporting requirements related to excise tax returns and declarations.

The launch is aligned with the UAE leadership’s directives to enhance the country’s global competitiveness through continuous improvement of government services and ensuring accurate and transparent processes.

The FTA called on all businesses dealing with excise goods to follow the new process of registering excise goods and ensure all required documents are readily available when submitting the registration request for the goods. The requirements clarified in the new guides include products details, ingredients, marketing information including images and videos, lab tests in some cases, and the retail price of the product based on the UAE retailers or in the relevant country in case it is not sold in the UAE.

In relation to the new reporting requirements of the excise tax, the authority urged the excise taxable persons to comply with the new declarations and tax return forms and reporting requirements including import, produce, release from designated zones, and local purchase scenarios, which ensures increased transparency and accuracy. Additionally, The Authority pointed to the new manuals and guides it launched to raise awareness among taxpayers and offer them instructions on how to register excise goods in the new system, and comply with the new reporting requirements and forms in the excise tax system. The FTA invited businesses subject to excise tax to make use of these manuals to educate their staff about the new system, as well as the procedures for implementing excise tax in general.

Any Person who produces or imports an excise good to be sold in local markets is subject to excise tax, as is any Person who stockpiles said goods or releases them from a designated area, the FTA asserted, urging all relevant businesses to take the initiative and register their excise goods in the new system, as per the terms and conditions stipulated in the Cabinet Decision on excise goods, which specifies the tax rates they are subject to and outlines the method used to calculate excise prices.

The FTA asserted that there is no threshold for excise tax, meaning that any business with activities involving excise goods is required to go ahead and register in the new system, calculate its tax amounts, and refer to the FTA website for information and manuals that outline the required procedures for producers and importers of excise goods, and for excise goods stored in designated zones.

Expo 2020 Dubai to help drive VAT revenues over $8bn this year

Date: 14 Aug, 2019

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External URL: https://www.arabianbusiness.com/politics-economics/425747-expo-2020-dubai-to-help-drive-vat-revenues-over-8bn-this-year

Increased spending on Expo 2020 will help value added tax (VAT) revenues in the UAE push to over $8 billion (AED30bn) this year, according a Dubai-based tax consultancy.

Revenues will also be boosted by a growth in retail, hospitality, aviation and shipping, but Rajiv Hira, chairman, RHMC Management Consultants, said the huge increases will not be sustained over the longer term.

Hira told Arabian Business: “Considering the distribution of $7.3bn (AED27bn) on account of value-added tax, it can be easily concluded to touch around $8bn (AED30bn), although we will be observing an increase in capital spending at a faster and larger scale, whereas VAT collection will not increase in that speed, due to the following factors: Entities will be entitled able to claim input tax on capital spending; and VAT is already paid on account of advances for the projects related to 2020 (including other capital spendings).”

What is the penalty for not submitting a tax return on time?

Date: 12 Aug, 2019

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External URL: https://www.thenational.ae/business/money/vat-q-a-what-is-the-penalty-for-not-submitting-a-tax-return-on-time-1.897461

The Federal Tax Authority always gives businesses a minimum of 28 days after the end of the reporting quarter to prepare and file their VAT return. When the 28th of the following month falls on either a Friday or Saturday, the deadline moves to the next working day. Any VAT returns not filed by the given deadline should be submitted as soon as possible afterwards. The FTA portal will allow you to file a return for a quarter after the deadline has passed. In fact you cannot file another VAT return until you have filed the previous one, so it forces you to file returns sequentially, even if you have missed a deadline.

The FTA impose separate penalties for failing to file a return and failing to make payment by the given deadline.

There is an automatic penalty for missing a filing deadline which is Dh1,000 in the first instance and then Dh2,000 for subsequent missed deadlines within 24 months.

If you fail to settle the tax due by the deadline you will be charged 2 per cent of the unpaid tax, which is charged immediately after the due date. This rises to 4 per cent of the unpaid tax if you have not paid up within seven days of the deadline. If you have still not paid a month after the deadline, you are charged at a rate of 1 per cent each day until the penalty reaches 300 per cent of the tax due. Note that if you make a payment but fail to file the corresponding return, the FTA will not recognise the payment until the return is filed.

Dubai businessman Khalaf Al Habtoor urges for end to Skype ban in UAE

Date: 07 Aug, 2019

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External URL: https://gulfbusiness.com/dubai-businessman-khalaf-al-habtoor-urges-for-end-to-skype-ban-in-uae/

Dubai billionaire businessman Khalaf Al Habtoor has urged the UAE leadership to reconsider fees such as VAT while also renewing his call to lift the ban on VoIP services such as Skype and WhatsApp.

“Our region is going through tough political conditions that affect the economic climate in general,” the founder and chairman of conglomerate Al Habtoor Group said on Twitter.

The Emirati businessmen urged UAE leaders “to reconsider some of the laws, practices and fees imposed, which will have a positive impact on the economy”.

The UAE imposed a 5 per cent value added tax (VAT) on goods and services in January 2018.

Tally Solutions Hosts ‘Bahrain VAT Summit’ to Discuss VAT Implementation and Compliance in the Next Half Year of 2019

Date: 07 Aug, 2019

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External URL: https://www.albawaba.com/business/pr/tally-solutions-hosts-%E2%80%98bahrain-vat-summit%E2%80%99-discuss-vat-implementation-and-compliance

Tally Solutions, a leading international accounting and compliance software provider, recently hosted a summit on value-added tax (VAT) in Bahrain as part of its ongoing efforts to raise awareness of businesses on the new taxation system in the country.

The recently concluded ‘Bahrain VAT Summit’ at the Sheraton Bahrain Hotel featured renowned VAT and technology experts, who shed light on the changes that had taken place in the country six months after the implementation of the VAT law. They also tackled the proposed steps that could be taken in the remaining half of 2019 to ensure correct and timely VAT compliance and implementation.

Guest speaker Manu Nair, CEO of the Emirates Chartered Accountants Groups, discussed the key reforms rolled out at the national level during the first 180 days of VAT implementation and their subsequent business impact. Further, Nair highlighted the expectations in the next 180 days of VAT in the country to help companies prepare better.

The attendees consisted of VAT-registered businesses with queries around the new law; companies which were planning to voluntarily register; and enterprises with questions about the registration requirements for the second and third phases of VAT deployment.

UAE VAT collection set to grow 30% to Dh35 billion in 2019

Date: 01 Aug, 2019

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External URL: https://www.khaleejtimes.com/business/local/uae-vat-collection-set-to-grow-30-to-dh35-billion-in-2019-

Greater compliance due to new legal aspects such as country-by-country reporting and Base Erosion and Profit Shifting (Beps), increased spending for Expo 2020, and more companies listing for value-added tax (VAT) will help the UAE to increase its revenues through VAT by up to 30 per cent this year, say tax experts.

Jomon K. George, chairman of The Institute of Chartered Accountants of India’s South Region, estimated that the UAE’s VAT collection is expected to increase by Dh8 billion or 30 per cent in 2019 to reach Dh35 billion as compared to Dh27 billion last year.

“With increased Expo 2020 spending, VAT revenues would easily be Dh35 billion-plus this year. The way Expo is being marketed by Dubai, naturally the spending and consumption will increase which will enhance tax collection in the UAE, notably in Dubai,” George said.

Sangeetha Nahar, executive member of The Institute of Chartered Accountants of India (ICAI) – Dubai chapter, believes that awareness is spreading and the market is becoming more mature.

Banned in UAE: Sale and possession of cigarettes without Digital Tax Stamps is prohibited from 1st August

Date: 01 Aug, 2019

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External URL: https://gulfnews.com/uae/government/banned-in-uae-sale-and-possession-of-cigarettes-without-digital-tax-stamps-from-august-1-1.1564572318879

Abu Dhabi: From tomorrow, August 1, the sale and possession of all types of cigarettes not bearing the Digital Tax Stamps will be prohibited across UAE markets – the Federal Tax Authority (FTA) announced.

Prohibiting the sale in local markets of cigarettes packets not bearing the Digital Tax Stamps is part of the timeline set for the ‘Marking Tobacco and Tobacco Products Scheme’, which went into effect at the beginning of 2019.

What does the tax stamp mean?

The scheme seeks to electronically track cigarettes packs from the production facility and until they reach the end-consumer, in order to protect consumers from low-quality products, combat tax evasion, and ensure that the Excise Tax due on these products has been settled.

This is as per Cabinet Decision No. (42) of 2018 on Marking Tobacco and Tobacco Products and FTA Decision No. (3) of 2018 on Implementing the Marking Tobacco and Tobacco Products Scheme.

“The Authority has sought to implement an integrated and widespread awareness campaign starting from the second quarter of 2018 – several months before the ‘Marking Tobacco and Tobacco Products Scheme’ went into effect – to allow sufficient time for local markets to prepare for the Scheme and avoid any adverse effects to their commercial activities,” FTA Director General Khalid Ali Al Bustani explained.

“Furthermore, the Authority collaborated with the system operator to carry out an extensive awareness campaign through its official website, social media accounts, newspapers, television, and radio. Workshops were organised, bringing together individuals and organisations involved in the manufacture and trade of tobacco and tobacco products, introducing them to the Scheme, and answering their queries.”

Public Clarification Disbursements and Reimbursements -Ref#VATP013

Date: 01 Aug, 2019

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External URL: http://www.allaboutvat.com/wp-content/uploads/Public-Clarification-No.13.pdf

In commercial transactions, a person may incur expenses and subsequently recover such expenses from another party. The VAT treatment of the subsequent recovery of expenses depends on whether the recovery is
tantamount to a “disbursement” or “reimbursement”.

VAT Public Clarification Disbursements & Reimbursements VATP013

Date: 31 Jul, 2019

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External URL: http://www.allaboutvat.com/wp-content/uploads/VATP013-Disbursements-and-Reimbursements.pdf

The key elements to consider payments as disbursements:

The payments should be made as an agent of the principal.

The invoice should be in the name of principal.

There should be authorisation from principal for payt.

There should not be any markup on the transaction.

VAT Public Clarification VAT Treatment of Options and Option Premiums VATP014

Date: 31 Jul, 2019

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External URL: http://www.allaboutvat.com/wp-content/uploads/VATP014-Public-clarification-Option-premiums.pdf

This PC clarifies that options in only equity and dent instruments would be treated as exempt.

Significantly tax credit notes can be issued for reversing any earlier wrongly charged VAT and the resultant VAT impact should be executed by both the parties in their VAT records.

Designated Zones for the purposes of the Federal Decree-Law No. (8) of 2017 on  Value Added Tax

Date: 31 Jul, 2019

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External URL: http://www.allaboutvat.com/wp-content/uploads/Designated-Zones-11-07-2019-Latest.pdf

Based on:
– Cabinet Decision No. (59) of 2017 on Designated Zones for the purposes of the
Federal Decree-Law No. (8) of 2017 on Value Added Tax (effective 1 January
2018); and
– Cabinet Decision No. (35) of 2018 on Amending the List of Designated Zones
Annexed to the Cabinet Decision No. (59) of 2017 on Designated Zones for the
purposes of the Federal Decree-Law No. (8) of 2017 on Value Added Tax (effective
18 June 2018).
– Cabinet Decision No. (43) of 2019 on Amending the List of Designated Zones
Annexed to the Cabinet Decision No. (59) of 2017 on Designated Zones for the
purposes of the Federal Decree-Law No. (8) of 2017 on Value Added Tax (effective
4 July 2019).

NBR holds two consecutive VAT workshops

Date: 29 Jul, 2019

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External URL: https://www.nbr.gov.bh/releases/56

The National Bureau for Revenue (NBR) held two consecutive interactive VAT workshops to recap general and sector-specific VAT concepts, including invoicing and filing.

Following a question-and-answer session, 138 attendees representing 85 entities were given the opportunity to visit a unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.

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

Bahrain’s economic growth to decelerate further in 2019

Date: 25 Jul, 2019

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External URL: https://www.ameinfo.com/industry/finance/bahrains-economic-growth-decelerates-2019

The economic outlook for Bahrain’s economy remains clouded by persistent weakness in government finances, evident by significant fiscal deficits and rising public debt levels, large external financing needs, a general slowdown in non-oil activity and limited prospects for oil sector growth.

According to ICAEW’s latest Economic Insight report, economic growth in Bahrain more than halved last year, from 3.7% in 2017 to 1.8% in 2018, with further deceleration seen in 2019 to 1.6% amid a major drive to overhaul government finances, which include spending cuts, new taxes and other fiscal consolidation measures.

FTA Board of Directors Holds 9th Meeting, Showcases Report on the Authority’s Accomplishments and Ongoing Development Projects

Date: 24 Jul, 2019

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External URL: https://www.tax.gov.ae/press-releases/FTA-Board-of-Directors-Holds-9tht

The Board of Directors of the Federal Tax Authority (FTA) held its ninth meeting today (Wednesday, July 24, 2019) headed by FTA Chairman His Highness Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, UAE Minister of Finance, at the Ministry of Finance’s headquarters in Dubai.

The Board looked into the performance of the FTA’s various systems, which facilitate registration, the submission of Tax Returns, and refunding tax to legally eligible groups through multiple Schemes, including the VAT refunds for nationals building new residences in the UAE, the Tax Refunds for Tourists Scheme, and the VAT Refunds for Business Visitors.

The FTA Board of Directors ratified the Authority’s financial statements for 2017 and 2018, and approved several executive decisions regarding the FTA’s internal regulatory and administrative policies and operations. Attendees at the meeting then went on to showcase the Authority’s recent accomplishments, where the various tax schemes have exhibited improved performance, and the number of businesses and tax groups registered for VAT surpassed 307,000, while the number of those that registered for Excise Tax totalled 724.

Furthermore, the figures revealed that the user base for the tax system is expanding rapidly, which compelled the Authority to authorise more than 123 clearing and forwarding companies, increase the number of accredited Tax Agents to 395, and commission 28 accredited tax accounting software vendors.

H.H. Sheikh Hamdan bin Rashid Al Maktoum applauded the FTA’s performance and achievements, which were also lauded by experts, as well as local and international institutions. H.H. went on to highlight the Authority’s efforts to achieve the tax system’s stated developmental, economic, and social objectives, citing the strategic partnerships the FTA has forged with government and private entities, which catalysed the drastic increase in self-compliance rates and in tax awareness among taxpayers and the public.

“The tax system has begun achieving many of its main objectives, most notably the diversification of the UAE’s resources,” H.H. added. “This allows us to continue providing high-quality services for future generations, in line with the UAE Vision 2021 and its objectives to build a sustainable ecosystem and integrated infrastructure.”

NBR holds two consecutive VAT workshops

Date: 23 Jul, 2019

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External URL: https://www.nbr.gov.bh/releases/55

The National Bureau for Revenue (NBR) held two consecutive interactive VAT workshops to recap general and sector-specific VAT concepts, including invoicing and filing.

Following a question-and-answer session, 210 attendees representing 125 entities were given the opportunity to visit a unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.Today’s workshop is a continuation of a series of workshops organised by the NBR to provide an inclusive platform for all stakeholders from the public and private sector in order to increase businesses’ awareness of VAT return filing procedures ahead of deadlines. 

UAE must allow itself flexibility on tax regime

Date: 23 Jul, 2019

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External URL: https://gulfnews.com/business/analysis/uae-must-allow-itself-flexibility-on-tax-regime-1.65340045

VAT itself must be treated as a work in progress and changes made where and when needed.

In 2018, the UAE’s Gross Domestic Product (GDP) was estimated at $414 billion. It was in the same year that a value-added tax (VAT) of 5 per cent was introduced for the first time, with a targeted revenue of Dh12 billion.

The federal share of the revenues was set at 30 per cent, and the seven emirates claiming the remainder 70 per cent. According to the CIA Factbook’s 2017 estimates, UAE’s household consumption alone represented 34.9 per cent of GDP, which when multiplied by $414 billion and then by 5 per cent produces a projected VAT revenues’ figure of Dh26.5 billion.

That said, VAT revenues collected in 2018 surpassed the announced target, with Dh27 billion. Of the Dh27 billion, Dh8.1 billion went to the federal government and Dh18.9 billion to the seven emirates in proportion to the share of VAT-related transactions that took place in each emirate.

As a result, Dubai claimed the highest share among the seven, receiving more than 40 per cent of the Dh27 billion collected in VAT revenues. Given that more than one year elapsed since VAT’s introduction, it is time to discuss its impact and what can be improved moving forward.

NBR holds two consecutive VAT workshops

Date: 23 Jul, 2019

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External URL: https://www.nbr.gov.bh/releases/55

The National Bureau for Revenue (NBR) held two consecutive interactive VAT workshops to recap general and sector-specific VAT concepts, including invoicing and filing.

Following a question-and-answer session, 210 attendees representing 125 entities were given the opportunity to visit a unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.Today’s workshop is a continuation of a series of workshops organised by the NBR to provide an inclusive platform for all stakeholders from the public and private sector in order to increase businesses’ awareness of VAT return filing procedures ahead of deadlines.

Federal Tax Authority showcases progress made on Indirect Taxes in the UAE

Date: 18 Jul, 2019

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External URL: https://www.ameinfo.com/industry/real-estate/federal-tax-authority-indirect-taxes-uae

The Federal Tax Authority (FTA) is invested in facilitating procedures for the Value Added Tax (VAT) Recovery on the Building of New Residences by UAE Nationals programme, asserted His Excellency Khalid Ali Al Bustani, FTA Director General, at a discussion held at the Majlis of H.E. Abdullah Muhair Al Kutbi in Al Mushrif, Abu Dhabi.

“The VAT Recovery on the Building of New Residences by UAE Nationals programme is in line with the wise leadership’s vision to develop a modern housing system for citizens and ensure their wellbeing,” H.E. Al Bustani explained, revealing that the second quarter of 2019 witnessed significant growth in the number and value of transactions submitted by UAE nationals who’ve built new homes. More than 390 applications – worth approximately AED18 million ($4.9 million)– were submitted in Q2 2019 by UAE citizens who successfully recovered the taxes they incurred on building their homes, up from 235 application (worth AED9.76 million or $2.66 m) submitted in Q1 2019. This amounts to a 66% growth in the number of applications received and an 84.4% increase in the value of these transactions.

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

Date: 17 Jul, 2019

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

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

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

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

FTA reports 110 percent growth in number of authorised tax agents in 2019

Date: 16 Jul, 2019

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External URL: https://www.emirates247.com/news/emirates/fta-reports-110-percent-growth-in-number-of-authorised-tax-agents-in-2019-2019-07-16-1.687012

The first half of 2019 saw the number of authorised tax agents increase by more than 110 percent to exceed 370 agents, up from 176 at the end of 2018, asserted the Federal Tax Authority, FTA, as it hosted the second Meeting of Tax Agents.

The authority noted that the growth in the number of authorised agents provides a wider array of options for taxable persons or entities who choose to deal with the authority via an agent. This, in turn, promotes self-compliance among businesses, as it offers them counsel and support to carry out their tax obligations.

FTA Director-General, Khalid Ali Al Bustani, inaugurated the meeting, which was attended by all 370 tax agents. He said, “These periodic meetings truly embody the effective collaboration between government entities and the private sector, which work together for the greater good and to elevate the national economy.”

Noting that the authority has published a series of guides and e-learning modules on its website covering the legislative and executive aspects of the tax system, Al Bustani urged tax agents to benefit from these publications and study them extensively to improve their knowledge of the UAE tax system.

IMF urges Oman to introduce VAT as soon as possible

Date: 12 Jul, 2019

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

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

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

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

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

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

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

Daily cash limit for VAT refunds set at AED7,000

Date: 10 Jul, 2019

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

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

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

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

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

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

Date: 10 Jul, 2019

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

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

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

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

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

 

Do not fall for this VAT refund scam

Date: 09 Jul, 2019

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

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

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

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

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

Date: 09 Jul, 2019

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

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

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

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

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

Shipping and logistics VAT guide released

Date: 07 Jul, 2019

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

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

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

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

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

Emirates NBD offers VAT-based loan solution to SMEs

Date: 03 Jul, 2019

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

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

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

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

Federal Tax Authority launches new website

Date: 03 Jul, 2019

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

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

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

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

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

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

NBR holds an interactive VAT workshop

Date: 03 Jul, 2019

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

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

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

VATP012 - Importation of goods by agents

Date: 02 Jul, 2019

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

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

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

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

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

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

Bahrain scraps fees on 200 government services

Date: 02 Jul, 2019

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

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

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

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

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

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

 

UAE VAT collection exceeds expectations

Date: 01 Jul, 2019

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

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

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

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

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

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

Dubai biggest beneficiary of VAT revenue

Date: 01 Jul, 2019

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

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

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

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

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

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

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

Date: 26 Jun, 2019

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

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

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

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

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

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

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

 

High VAT revenues fortify UAE government finances

Date: 25 Jun, 2019

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

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

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

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

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

44% of UAE SMEs still unaware of automated VAT solutions

Date: 21 Jun, 2019

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

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

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

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

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

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

VAT Administrative Exceptions User Guide

Date: 20 Jun, 2019

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

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

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

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

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

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

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

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

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

VAT-Administrative-Exceptions-Form

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

Date: 20 Jun, 2019

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

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

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

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

Will VAT rate go up in GCC?

Date: 17 Jun, 2019

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

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

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

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

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

 

2nd phase of VAT registration deadline

Date: 15 Jun, 2019

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VAT Registration

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

Mandatory Registration

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

Process for registration

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

Abu Dhabi looks at attracting MICE with new VAT waiver

Date: 14 Jun, 2019

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

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

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

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

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

Tourists to recover VAT through self-service kiosks

Date: 11 Jun, 2019

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

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

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

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

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

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

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

Top 5 positive changes in GCC, thanks to VAT

Date: 09 Jun, 2019

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

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

Increased transparency and accountability

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

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

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

No VAT for international companies holding shows at ADNEC

Date: 13 Jun, 2019

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

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

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

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

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