UAE has no plan to hike VAT
Date: 12 Nov, 2020
Dubai- November 12, 2020:
The UAE’s Ministry of Finance said it raised Dh11.6 billion in value-added tax (VAT) revenues in the first eight months of 2020 and the government has no plans to raise VAT to more than five per cent.
The UAE and Saudi Arabia levied five per cent VAT from January 1, 2018 and later Bahrain also introduced it. Saudi Arabia, the region’s largest economy, hiked the VAT to 15 per cent from July 1, 2020. Oman is set to become fourth country in the GCC to impose VAT from April next year.
Saeed Rashid Al Yateem, assistant under-secretary of resource and budget at Ministry of Finiance, affirmed that there are no plans or decisions at the moment to raise VAT to more than five per cent in the UAE.
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FTA to issue tax residency certificates
Date: 08 Nov, 2020
Dubai- November 8, 2020:
Tax residency and commercial activities certificates will now be issued through the Federal Tax Authority of the UAE, the FTA said.
Applications for the certificates can be made through the FTA’s e-services portal from November 14, the authority added.
Tax residency certificates are issued to eligible government entities, companies and individuals looking to benefit from double taxation avoidance agreements signed between the UAE and other countries, while the commercial activities certificate enables applicants to refund VAT paid in advance outside of the UAE.
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Income tax to be introduced in Oman: Ministry
Date: 04 Nov, 2020
Dubai- November 4, 2020:
Oman is said to be weighing up plans to introduce income tax on high earners in 2022 as part of the finance ministry’s 2020-2024 economic scheme, as the Gulf state seeks to restore finances battered by low oil prices.
The plan aims to bring Oman’s fiscal deficit down to 1.7 per cent of gross domestic product by 2024, from a preliminary deficit of 15.8 per cent this year.It also has a target of increasing non-oil revenues to 35 per cent of total government revenue by 2024, from 28 per cent this year.
“The government recognizes the need to strengthen the Sultanate’s revenue-raising framework by decreasing its reliance on hydrocarbon revenues,” it said in its bond prospectus.
“The initiative is under study and all aspects of its application are being considered. It is expected to apply the tax in 2022,” the 2020-2024 medium term economic balance document said.
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FTA Board of Directors review Authority’s performance indicators in the meeting
Date: 31 Oct, 2020
Dubai- October 31, 2020:
The FTA Board of Directors, chaired by H.H. Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and Minister of Finance, and Chairman of the Authority’s Board of Directors, approved a number of executive decisions related to the Authority’s operational activities and organisational and administrative policies during its 13th meeting.
The Authority’s financial statements for the period covering the first quarter ending on 31st March, and the period ending on June 30th, 2020, were approved. This was in accordance with the international accounting standards related to reviewing the quarterly financial statements.
During the virtual meeting, the Board reviewed indicators of FTA’s performance adopted by the Authority in all areas relevant to its activities during the first nine months of 2020, including registration systems, filing returns, tax refunds for groups legally qualified to recover, such as UAE nationals’ homebuilders refund, tax refunds for tourists and for foreign business visitors.
H.H. Sheikh Hamdan bin Rashid confirmed that the reports reviewed during the meeting showed that the Authority continues to maintain its distinguished performance across all activities, while continuing its development plans to upgrade its services in accordance with the best standards to achieve customer happiness.
The is also a 210% growth in tax amounts refunded to UAE Nationals during 2020 for the construction of their new homes to a value of 270 million AED.
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Voluntary disclosures by UAE businesses on VAT or excise tax will face heavy penalties
Date: 20 Oct, 2020
Dubai- October 20, 2020:
There is a major development in the UAE tax litigation landscape.
In a very significant twist, the voluntary disclosures made by UAE based businesses on their actual VAT obligations will now be charged with late payment penalties (up to 300% of the tax due). Late payment penalties would apply from the due date of the tax return and not from the date of the voluntary disclosure.
This is according to a ruling by the UAE Federal Supreme Court judgment on an appeal filed by the UAE Federal Tax Authority.
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Tax payment through the new version of the eDirham card
Date: 19 Oct, 2020
Abu Dhabi- October 19, 2020:
The new generation of the eDirham cards have been included as one of the official payment channels provided by the authority. Tax payments can be processed via the new eDirham cards as of Sunday 1st November, 2020, as payments will not be accepted through the existing eDirham cards with effect from the same date.
In order to ensure a smooth transition to the new generation of the eDirham, the authority calls on VAT registrants to prepare to make the switch to the new version. This comes to replace the old version of the eDirham, which will be suspended and will not be available to use for the Authority’s transactions as from the beginning of November 2020.
The FTA stresses that the new version of the eDirham will provide users with a more diverse set of options that are both easier to use and adhere to the highest standards of safety and excellence.
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Oman to implement 5% VAT in six months
Date: 13 Oct, 2020
Oman- October 13, 2020: Oman has issued a decree to start levying a 5 per cent value-added tax (VAT) in six months’ time to offset a slump in oil prices and an economic downturn exacerbated by coronavirus.
The tax will be on most goods and services, though with some exceptions. Essential food items, medical care, education and financial services will be exempt from the planned levy, according to a royal decree detailing the tax.
Saudi Arabia, the UAE and Bahrain have already introduced the tax, with Riyadh tripling it this year. Oman, Kuwait and Qatar have not yet introduced the tax.
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Oman removed from the EU Blacklist
Date: 06 Oct, 2020
Oman- October 6, 2020: Oman was eliminated from the EU list of non-cooperative jurisdictions for tax purposes (the “EU Blacklist”). Oman was previously included on the EU Blacklist on 12 March 2019 for not making sufficient progress in implementing information exchange protocols.
Oman has been removed from the EU blacklist as per the Council of the EU press release dated 6th October 2020. Oman is, therefore, no longer regarded as a non-cooperative tax jurisdiction by the EU Council.
This development comes after recent steps taken by Oman to improve its tax framework and implement exchange of information protocols.
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Saudi Arabia: Real Estate Transaction Tax - A new tax introduced
Date: 02 Oct, 2020
Riyadh- October 2, 2020: Saudi Arabia will exempt real estate transactions from a 15 per cent VAT (value-added tax) and instead impose a new 5 per cent tax on property deals. The Saudi finance minister affirmed that the order aimed to support Saudi citizens who want to buy homes.
The country is facing a deep recession, with the economy shrinking by 7 per cent in the second quarter and unemployment hitting a record high of 15.4 per cent. The government had in July tripled VAT to 15 per cent to boost non-oil revenues, but the move set off limited domestic demand.
The official announcement can be accessed through the following link:
Higher educational institutions can claim VAT refund
Date: 14 Sep, 2020
Abu Dhabi- September 13, 2020: The Federal Tax Authority (FTA), has confirmed that higher educational institutions making only zero-rated and/or standard-rated supplies may recover input tax in full, except where recovery is specifically blocked.
Blocked input tax includes value-added tax (VAT) incurred on certain entertainment services, and motor vehicles that have been purchased, leased, or rented and made available for personal use, the FTA said on Sunday.
The Authority noted that higher education institutions providing exempt supplies are eligible to recover only a portion of the input tax incurred.
The FTA’s Basic Tax Information Bulletin focuses on the tax treatment for the higher education sector in respect of universities and higher education institutions recognised by the competent federal or local government entity regulating the higher education sector where the course is delivered.
Oman’s ruler expected to approve VAT to boost economy
Date: 03 Sep, 2020
03 Sept, 2020– Oman’s legislature is proposing to implement a value-added tax after January 2022 as falling oil revenue pressures its finances, following similar moves by Gulf Arab neighbours.
A joint committee of the State Council and Shura Council suggested the time frame and sent a draft law for approval to Sultan Haitham Bin Tariq Al Said. He took power in January vowing to take steps to bolster the near $80 billion economy that his predecessor had sidestepped.
Oman would become the fourth of the Gulf Cooperation Council’s six states to collect VAT, a move agreed by the bloc years ago. The UAE imposed a 5 per cent VAT in 2018 on most goods and services.
Zero VAT for face masks and sanitisers
Date: 02 Sep, 2020
Dubai- September 2, 2020: Medical equipment like disposable suits, hand sanitisers, face masks, respirators for air purification and gloves will be subject to zero-rated value-added tax (VAT) in the UAE. A resolution stipulating this was adopted by the UAE Cabinet to mitigate the repercussions of Covid-19 and support the healthcare sector in the country.
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, chaired the meeting at Qasr Al Watan in Abu Dhabi. He hosted virtually a number of teaching staff and students from different schools in the UAE.
He stressed that education has always been a top priority. “The country exerts unwavering efforts to develop the educational system despite all circumstances,” he said.
UAE Federal Tax Authority launches smart app to detect uncertified tobacco products
Date: 25 Aug, 2020
Abu Dhabi-August 25, 2020: Tax evasion and trade in inferior products and counterfeit goods are among the main challenges facing tax authorities around the world. As part of its on-going efforts to protect consumers from commercial fraud and combat tax evasion with various mechanisms and utilizing the latest technologies, the Federal Tax Authority (FTA) has launched a smart application that can be applied to check on the legality of trademarked tobacco products.
The app enables consumers to scan the stamps placed on the tobacco packages to verify that it is an Authority accredited digital tax stamp, ensure that these products meet the standard specifications, are not smuggled, and have been subjected to tax. Should the consumer discover that the stamps are not accredited, they can file a report to the FTA directly from the smart application. The Authority will then cooperate with the relevant authorities to take legal actions against violators.
The Authority said in a press release issued today that the application has been instigated under the banner, “Monitor yourself, fight fraud”, adding that users can install the app, known as ‘FTA DTS’, on their smart phones via the Apple Store and Google Play.
Commenting on the initiative, His Excellency Khalid Ali Al Bustani, Director-General of the Federal Tax Authority, said: “The ‘FTA DTS’ smart application is one of the effective tools that support the ‘Marking Tobacco and Tobacco Products Scheme’, which came into effect at the beginning of 2019 to combat tax evasion, protect public health and reduce the risks to consumers from the inferior products entering local markets.”
Dubai Refreshment wins court case over tax issue
Date: 18 Aug, 2020
DUBAI- August 18, 2020: Dubai Refreshment Co (DRC)., the distributor of PepsiCo products, has said the First Instance Federal Court of Abu Dhabi has ruled in its favor related to the tax assessment and penalties case applied by the Federal Tax Authority. In a statement on Monday, it said the court rejected the case and obliged the plaintiff to pay the expenses and waive the fees.
It said the court canceled the objected decision and ruled again to cancel all administrative penalties. All other requests were rejected by the court who obliged the authority to pay the fees and expenses, DRC said in a statement posted on Dubai Financial Market, where it is listed.
Earlier, the Tax Dispute Settlement Committee in Dubai had also ruled in favor of the company.
Earlier, the FTA had contended the DRC owed it Dh20.8 million on the stock of drinks held by the company in 2017, prior to the introduction of VAT, which came into effect from January 1, 2018. The Committee had ruled that the company owed only Dh8.8 million in taxes to the Authority.
Dubai Refreshment posted Dh18.65 million net profit for the first half of 2020 as compared to Dh30.88 million for the same period last year, a loss of 39.6 percent. While the second-quarter profit shrank 83 percent from Dh18.68 million to Dh3.13 million due to the impact of coronavirus.
During the annual general meeting held on March 23, 2020, DRC shareholders approved and paid a cash dividend of Dh0.70 per share, totaling Dh63 million.
VAT applicable for e-commerce sales, says FTA.
Date: 12 Aug, 2020
Abu Dhabi, UAE, 12 Aug, 2020: The Federal Tax Authority (FTA) has clarified that Value Added Tax (VAT) is applied on e-commerce services (also known as “electronic commerce”, sometimes referred to as the “digital economy”) upon their actual use or enjoyment in the UAE. Note that although many of the general rules of VAT apply to e-commerce, there are a number of special rules that apply specifically to e-commerce transactions.
This guide issued by the FTA clarifies how the VAT Law applies to the supply of goods and services provided through electronic means, such as the internet or similar electronic networks. The guide incudes guidance on the application of VAT on goods and services supplied within the scope of e-commerce, and the imposition and accounting for VAT on those supplies.
The guide outlines the tax treatment of the supply of electronic services, such as services that are provided directly over the internet, an electronic network, or an electronic market, including the supply of domain names, web-hosting and remote maintenance of programs and equipment, software (including the updating thereof), images, text and information provided electronically such as pictures, screen savers, electronic books, documents and other digitized files, music, movies and games on demand, and online magazines.
Other services identified under the banner of ‘electronic services supplies’ include the supply of advertising space on a website and the rights associated with that advertisement, and Political, cultural, artistic, sports, scientific, educational or entertainment broadcasts, including broadcasts of events, live streaming via the internet, the supply of distance learning services, and services of any equivalent type that have a similar purpose and mission.
The FTA Director-General, His Excellency Khalid Ali Al Bustani, noted: “Tax legislation in the UAE is characterized by transparency and accuracy, and takes into account the strengthening of the nation’s leadership position as a central economic and commercial center, not only regionally but also at a global level. In light of the increasing importance of the e-commerce sector, clear mechanisms for procedures have been identified. Value Added Tax, as it relates to the supply of goods and services through electronic means, contributes to supporting the activities of this vital sector, which depends on a locally developed digital and technological infrastructure.”
His Excellency added: “The Federal Tax Authority is keen to apply the best international standards in all its activities and the services it provides to its customers, and to contribute to preserving the advanced competitive position of the country across all sectors, with the means to encourage creativity and innovation.”
His Excellency Khalid Al-Bustani asserted that the FTA is making continuous efforts to contribute to supporting the national economy in general, and the digital economy. His Excellency mentioned, in particular, that the e-commerce sector is witnessing rapid growth, as the UAE is one of the fastest growing e-commerce markets in the region, enhanced by the availability of an advanced digital infrastructure, and a growth-friendly legislative environment.
The FTA indicated that all goods and services purchased through online shopping sites are subject to 5% VAT if the place of supply is in the UAE, like any other purchases made by traditional means, as per the special provisions governing the tax treatment of supplies.
The guide, which has been published on the FTA’s website, www.tax.gov.ae, makes the point that in traditional trade transactions, goods and services are usually supplied from a physical location such as a store or representative office, with the supplier or recipient present at the same site. For e-commerce, however, it generally refers to the supply of goods and services that take place on the internet or similar electronic networks, where goods and services are obtained or supplied through electronic means such as computers or mobile phones via websites or electronic applications (apps).
The guide also provides guidance on the VAT treatment of goods purchased through electronic platforms and services supplied through electronic means, indicating that taxable persons should charge VAT to customers when supplying taxable goods or services (generally, at the standards rate of 5%, or where the VAT Law permits, at a rate of 0%). If the supplies are exempt from tax, these supplies are not treated as a taxable supplies and therefore no VAT needs to be charged on these supplies.
The FTA clarifies in its guide that different conditions and requirements may apply to mandatory or voluntary registration, depending on whether a person has a place of residence in the UAE. A person has a place of residence within in the UAE for the purposes of VAT registration if he has a place of establishment in the UAE.
The guide also deals with the legal requirements for compulsory and voluntary registration, noting that a non-resident may not register voluntarily for VAT on the basis of his ‘taxable expenses. Furthermore, the guide sets out the criteria for determining the place of supply (whether it is inside or outside the UAE), the VAT treatment for supplies of goods through online platforms where the suppliers are UAE residents who are subject to tax, and for suppliers who are not resident in the UAE.
The guide also provides more information on the procedures for recovering input tax on e-commerce transactions and the application of the ‘reverse-charge mechanism’ which could apply on e-commerce transactions. The revers-charge mechanism aims to reduce the burden of compliance and the administrative burden related to collecting VAT from non-resident suppliers. It levels the playing field between the supply of services or goods from a supplier outside the UAE and by a local supplier. This ensures that local UAE suppliers in the country are not prejudices as a result of consumers purchasing online from foreign suppliers.
All other aspects related to the tax treatment of supplies made through agents and the requirements for tax invoices in e-commerce transactions are detailed in the guide, which is available on the FTA’s website, www.tax.gov.ae.
FTA continues to accomplish achievements, says Hamdan bin Rashid
Date: 21 Jul, 2020
Abu Dhabi – July 2, 2020:
H.H. Sheikh Hamdan bin Rashid Al Maktoum chairs first FTA Board of Directors meeting since Cabinet reconstitution
The FTA Board of Directors, chaired by His Highness Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, UAE Minister of Finance and Chairman of the FTA Board of Directors, has held its first meeting since the UAE Cabinet of Ministers approved the decision to reconstitute the FTA’s Board of Directors.
During the virtual meeting held on Monday morning, His Excellency Obaid Humaid Al Tayer, Minister of State for Financial Affairs, was elected as Vice Chairman of the FTA’s Board of Directors.
- The FTA continues to accomplish positive results and achievements, reflecting the strength of the national economy despite challenges faced by the global economy due to the effects of combating the spread of COVID-19.
- The FTA supports taxpayers in fulfilling their obligations by efficiently providing services remotely.
- AED 206 million in tax refunds for 3,124 for UAE Citizens building new residences -a growth of 136.7% over a period of 6 months.
- An increase of VAT registrants to 335,530 and Excise Tax registrations to 1,159.
UAE's Federal Tax Authority issues warning over VAT scam
Date: 10 Sep, 2019
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
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.”
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
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
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
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 firstname.lastname@example.org, 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
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
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
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.
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
UAE Cabinet to expand list of excise taxable products in January 2020
Date: 21 Aug, 2019
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
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
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
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
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.
New UAE tax rule on two products from November 1
Date: 19 Aug, 2019
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
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
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
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
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
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
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
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.
“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
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
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
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
– 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
– 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
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
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
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
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.
UAE must allow itself flexibility on tax regime
Date: 23 Jul, 2019
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
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.
Federal Tax Authority showcases progress made on Indirect Taxes in the UAE
Date: 18 Jul, 2019
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
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
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
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
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
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
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!
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
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
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
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
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
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
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
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
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
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
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
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
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
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.
NBR holds an interactive workshop for representatives working in the service sector
Date: 20 Jun, 2019
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
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
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.
- 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.
- 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.
- 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
- To register for VAT, VAT payers must first create NBR profile.
- 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.)
- The VAT payer submits the profile creation request. This NBR profile can be created online.
- If VAT payer’s NBR profile is approved, they will be provided with login details to access the registration form.
- The registration form can be completed in a “single click”. This registration form can be accessed online.
- 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
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
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
Following the signing of the Common VAT Agreement by GCC member states, value-added tax (VAT) has become an important step towards ensuring the region’s socio-economic resilience. The new tax regime is a proactive policy meant to diversify the GCC economy, bringing fundamental positive changes to the region. Below are some of these transformative effects felt just more than a year after the system’s implementation.
Increased transparency and accountability
VAT is simpler to implement compared to other indirect taxes. It is also more transparent because the system entails that it be levied at each stage of the supply chain. Indeed, higher transparency and accountability levels are among the benefits of introducing VAT to the regional market.
Companies required to register for VAT purposes contributes to the transparency level by enabling concerned government authorities to track businesses and monitor effectively their compliance. This provision also leads to the creation of a reliable and updated database, thereby aiding the governments in their respective economic performance assessments.
Businesses are critical to collecting VAT from consumers. While before they have limited reporting requirements, companies are now required to maintain all necessary records such as tax invoices and make timely report to the government. To comply with their duties under the VAT tax regime, it is imperative, therefore, that they make sure that their relevant processes and transactions are compliant with the provisions of the law.
UAE's VAT collections exceeds expectations by a wide margin in 2018
Date: 03 Jun, 2019
UAE residents paid Dh27 billion in value-added tax (VAT) last year, surpassing the government’s target of collecting of Dh12 billion, an increase of 125 per cent. It even surpassed the goal of Dh20 billion VAT revenue collections for 2019.
The total VAT collection was also close to the UAE’s nine-month of surplus, which stood at Dh28 billion during the January-September 2018 period.
Analysts expect that VAT revenues will further increase in 2019 as companies analyse their incomes, expenses and IT systems to ensure that correct VAT has been paid. This, in turn, will help the government to increase its spending on the infrastructure and public welfare programmes.
Shoppers can also enjoy VAT-free shopping at one of the malls.
Date: 30 May, 2019
24-hour mega sale for Eid Al Fitr at malls in UAE
Shopping malls in Abu Dhabi has announced a 24-hour mega sale during Eid Al Fitr holidays.
For the third year running, Yas Mall is offering visitors big savings and even receive VAT back on purchases of Dh1,000 or above.
Also read: 15-day Ramadan sale in Dubai; free parking, entry
Running straight through from 10am on June 5, 2019, to 10am the following day, shoppers visiting Yas Mall during the 24-hour extravaganza will enjoy incredible exclusive offers and discounts, as well as tax-free shopping.
Also read: Dubai Duty Free announces Eid sale
For all purchases of Dh1,000 or more, shoppers will receive a Yas Mall gift card loaded with their VAT amount. This exclusive offer will only be available during the 24-hour event.
Shoppers can also win instant prizes from mystery boxes and a triple grand prize give away as part of the sale event.
Starting at 10am, Dalma Mall in Abu Dhabi will be open for 24 hours and offer a Mega Sale from June 5 to June 6, 2019.
The mall will be celebrating four days of mesmerizing Eid festivities starting with the 1st day of Eid Al Fitr.
UAE Cabinet approves VAT revenues distribution between federal and local governments
Date: 30 May, 2019
External URL: http://wam.ae/en/details/1395302765668
The UAE Cabinet has approved distribution of the value-added tax (VAT) revenues totalled approximately AED27 billion between the federal and local government.
According to the decision 30 percent of the revenue will go to the federal government, and 70 percent to the local governments.
The decision ensures the sustainability and the quality of government services. It also contributes to the development of economic and social projects and public services.
The VAT was introduced in the UAE on 1st January 2018. The rate of VAT is 5 percent. VAT provides the UAE with a new source of income which will be continued to be utilised to provide high-quality public services.
FTA urges tax agents to comply with standards
Date: 28 May, 2019
The Federal Tax Authority, FTA, has called on tax agents to comply with the five ‘Professional Standards for Tax Agents’, published in a new guide on the subject, in all of their transactions to ensure uninterrupted activity.
The new guide was issued through the FTA’s official website, offering a detailed explanation of the standards and conditions required for practising the profession of tax agent in the UAE.
In the new guide, the FTA offered a detailed explanation of the five professional standards that should be met by tax agents, noting that a system has been put in place to track and ensure compliance with these standards.
The system relies on three methods, first of which is reviewing the timeliness and accuracy of the taxable persons’ returns if they have appointed a tax agent. The second approach is monitoring requests for clarifications and other correspondence with the FTA sent by tax agents, to ensure that their professional and technical knowledge meets the level expected of them under the outlined professional standards. The FTA has accredited 357 tax agents who meet the technical standards, conditions and qualifications required, and who have passed the exams set by the Authority.
Pre-VAT rush to buy gold, second phase to be implemented from July 1
Date: 28 May, 2019
FTA applies penalties for digital tax evasion on cigarettes
Date: 25 May, 2019
Penalties for not implementing the new digital tax stamp scheme on tobacco products include fines of Dh20,000 to more than Dh50,000, the Federal Tax Authority said on Saturday.
A ban on the import of any type of cigarettes into the UAE not bearing the digital tax stamps came into effect on May 1. The sale, importation or production of tobacco products not bearing the digital tax marks will be prohibited in the UAE as of August.
The penalties have been set “in an effort to protect consumers, prevent contraband, low-quality products from entering local markets, and halt sales of smuggled goods in the UAE,” the FTA said in a statement.
Bahrain hosts VAT workshop for construction professionals
Date: 25 May, 2019
National Bureau for Revenue’s workshop aimed at smooth registration of companies earning $1.3-13m
Bahrain’s National Bureau for Revenue, a part of the kingdom’s government, recently held a value-added tax (VAT) workshop for construction professionals to boost clarity in the sector and support their registration for VAT, which Bahrain started levying in January 2019.
The session saw the bureau providing 45 representatives from 29 vendors a rundown on general and sector-specific concepts surrounding VAT, such as invoicing and filing.
The workshop was followed by a Q&A session, and a visit to an interactive demo center that offers a more hands-on understanding of VAT.
State news agency, BNA, reported that the session was part of National Bureau of Revenue’s goal to work as a platform for all public- and private-sector stakeholders to ensure streamlined company registration by June of firms with an annual income of $1.3-13m (BHD500,000-5,000,000).
VAT was made mandatory for companies in the UAE and Saudi Arabia last year, with Bahrain following suit in 2019.
Dubai airport clerk stole Dh70,000 in VAT refunds
Date: 24 May, 2019
A tax refund company employee went on trial accused of stealing Dh70,000 this week.
The 34-year-old Filipino forged electronic documents on his company’s system, which refunds value added tax (VAT) to travellers at Dubai International Airport. He then deposited the money onto credit cards for his own benefit.
The accused’s duty was to receive travellers refund documents and use the username and password in the company system to refund money to travellers.
However, the director of the tax refund company noticed two credit card numbers repeatedly appeared in tax refund transactions for different travellers.
“Some travellers who applied for cash refunds were in a hurry to catch their flights,” said the company director. “The defendant changed their refund transactions from cash to credit card payments and put the refund amount for his benefit onto two credit cards.”
Saudi imposes tax on e-cigarettes and sugary drinks
Date: 20 May, 2019
Saudi Arabia has imposed a special tax on electronic cigarettes and sugary drinks, extending similar taxes introduced in 2017 as it seeks to reduce a budget deficit caused by low oil prices.
The General Authority of Zakat and Tax said a 100 per cent tax would be levied on electronic cigarettes and products used in them, and a 50 per cent tax on sugared drinks.
Saudi Arabia, the Arab world’s largest economy, already had a 100 per cent tax on cigarettes and tobacco products, a 100 per cent tax on energy drinks and a 50 per cent one on fizzy drinks.
The authority took the decision on May 15 and it became effective from Saturday after publication in the official gazette.
The taxes fall under the category of selective taxes on products deemed harmful to public health.
Saudi Arabia, the world’s top oil exporter, introduced a 5 per cent value-added tax (VAT) in January 2018 to improve non-oil revenue generation after a plunge in oil prices from mid-2014 bruised its revenues.
The IMF last week said the VAT introduction had been successful, but that the Saudi government should consider raising the rate, which is low by global standards.
UAE says processing over 8,000 VAT refunds per day
Date: 16 May, 2019
The United Arab Emirates Federal Tax Authority (FTA) processes around 8,110 refunds per day on value added-tax (VAT) paid on goods and services bought in the country, it was announced on Wednesday.
The UAE, along with Saudi Arabia, introduced VAT on January 1, 2018, as part of the region’s bid to diversify its revenue streams away from hydrocarbons. Last year, the FTA announced that the Tax Refunds for Tourists schemes, which allows tourists to claim a refund on VAT paid on goods bought during their visit, will be rolled out to all UAE airports and ports and to around more than 4,500 retailers across the country.
In a press statement issued by WAM, the state news agency, Khalid Ali Al Bustani, director-general of the FTA, said that as part of the authority’s efforts to manage and collect federal taxes, various tax refund mechanisms have been launched for legally eligible groups to recover VAT, including the Tax Refunds for Tourists schemes, of which nearly 8,110 transactions were processed on a daily basis.
IMF suggests hiking VAT; commends Saudi reforms
Date: 16 May, 2019
The International Monetary Fund has recommended that the 5 per cent value-added tax (VAT) levied in Saudi Arabia and the UAE as part of a GCC-wide framework should be raised, saying it is low by global standards.
The IMF suggested in a country note on the kingdom released late on Wednesday that the decision should be taken following consultations with GCC countries.
“The introduction of VAT has been very successful, and consideration should be given to raising the rate from 5 per cent, which is low by global standards, in consultation with other GCC countries,” it said in the note.
The UAE and Saudi Arabia levied 5 per cent VAT on a host of goods and services from January 1, 2018, in order to bolster the revenues of the Gulf governments as part of diversification initiatives. Other Gulf countries will levy VAT at a later stage. Currently, it is one of the lowest in the world.
UAE marks 500 successful days of VAT
Date: 15 May, 2019
External URL: http://wam.ae/en/details/1395302762871
As the Federal Tax Authority, FTA, marks 500 days of the Value Added Tax, VAT, in the UAE, Khalid Ali Al Bustani, Director-General of the FTA, revealed that the rates of compliance with tax laws and procedures have increased exponentially among all taxable businesses.
The tax came into effect on 1st January, 2018, at a rate of five percent on the supply of most goods and services.
In a press statement issued by the authority, Al Bustani added, “Compliance was made possible through the seamless, flexible, and clear procedures the FTA has rolled out through electronic, fully paperless systems that are among the most advanced of their kind in the world, underpinned by a sophisticated legislative environment that meets the highest standards in the field.”
“The FTA implemented an easy-to-use system for submitting tax returns and paying taxes via the e-Services portal, available 24/7 on the FTA’s official website,” he added.
Al Bustani said that as part of the authority’s efforts to manage and collect federal taxes, various tax refund mechanisms have been launched for legally eligible groups to recover VAT, including the Tax Refunds for Tourists schemes, of which nearly 8,110 transactions were processed on a daily basis.
IMF urges Saudi Arabia to mull VAT rate increase
Date: 15 May, 2019
Economic reforms in Saudi Arabia have started to yield positive results, with non-oil growth picking up and female labour force participation and employment increasing, according to the International Monetary Fund (IMF).
The IMF hailed the successful introduction of value-added tax, saying it has underpinned an increase in non-oil fiscal revenues.
It added that consideration should be given to raising the rate from 5 percent, which is low by global standards, in consultation with other GCC countries.
Consulting VAT Expert before VAT Submissions to Avoid Penalties
Date: 11 May, 2019
Ignorance is bliss but not in the case of VAT. The VAT is a very crucial matter in UAE and it should thus be dealt with carefully. Being careless about it may make a lot of hurdles for the companies based in UAE.
Businesses who fail to comply with the rules and regulations of VAT may have to face serious penalties. These penalties may harm the business as well as the reputation of the businessman in the market. that is why it is important for the companies to get help from the VAT consultants in UAE.
The VAT experts are preferred because they have a better understanding of the proceedings of the VAT. They know the right procedure to follow for UAE VAT registration. That is why they are a very good option to consider by the companies for their compliance with the VAT laws in UAE
No matter where you live if tax laws have been implemented on you, you must comply with them, or else you will have to pay heavy penalties.
NBR holds a workshop for professionals working in audit firms
Date: 08 May, 2019
External URL: https://www.nbr.gov.bh/releases/48
The National Bureau for Revenue (NBR) held a workshop primarily aimed at increasing professional auditors’ VAT awareness to better equip them with the knowledge they need to provide accurate VAT advisory and audit services.
A total of 57 professionals attended the workshop that provided a detailed presentation of the Kingdom’s VAT regulatory and procedural aspects, including registration requirements, filing requirements, and mechanisms for dealing with VAT-payers to better meet their needs.
Today’s workshop ensures the smooth implementation of VAT, particularly in regards to companies with an annual supply of BHD 500,000 to BHD 5,000,000 that are expected to complete their registration by June.
UAE residents confident about state of their finances, impact of VAT falling
Date: 07 May, 2019
Residents in the United Arab Emirates continue to be upbeat about the state of their finances, while fewer and fewer report they are seeing any impact from the introduction of value-added tax (VAT) on goods and services since last year, according to a new survey released on Tuesday.
The Consumer Confidence Tracker Q1 2019 from financial website yallacompare surveyed around 1,000 UAE residents on the state of their finances and attitudes towards work.
The results found that 21 percent of respondents feel more confident about their finances than they did 12 months ago, compared to 22 percent in Q4 last year and 14 percent in Q3 2018.
NBR holds an interactive workshop for representatives working in the retail and wholesale sectors
Date: 06 May, 2019
External URL: https://www.nbr.gov.bh/releases/47
The National Bureau for Revenue (NBR) held an interactive VAT workshop for professionals working in the retail and wholesale sectors, during which the NBR recapped general and sector-specific VAT concepts, including invoicing and filing.
Following a question-and-answer session, 59 representatives from 38 vendors were given the opportunity to visit the unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.
Today’s workshop is a continuation of the series of workshops organized by the NBR to provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BHD 500,000 to BHD 5,000,000 by June.
VAT Financial Guarantee or Cash Deposit Release for Non Registered Importers User Guide VAT 702
Date: 01 May, 2019
1. About this guide
This guide is prepared to help non-registered importers to submit a request to liquidate partially or completely an eGuarantee or refund partially or completely an eDirham deposit provided while importing goods under tax suspension.
2. About VAT 702
VAT 702 is a form provided by the Federal Tax Authority (“FTA”) pursuant to which a nonregistered importer notifies the FTA to either cancel or liquidate an eGuarantee or to refund or collect an eDirham deposit. In line with the relevant legal provisions, there would be specific scenarios where a non-registered importer would provide an eGuarantee or an eDirham deposit to clear goods at customs, which are subject to tax and duty suspension. Upon export of the goods, the importer is eligible for a refund or a return of the financial guarantee.
NBR holds interactive workshop for retail and wholesale sectors representatives
Date: 22 Apr, 2019
External URL: https://www.nbr.gov.bh/releases/46
The National Bureau for Revenue (NBR) held an interactive VAT workshop for professionals working in the retail and wholesale sectors, during which the NBR recapped general and sector-specific VAT concepts, including invoicing and filing.
Following a question-and-answer session, 48 representatives from 36 vendors were given the opportunity to visit the unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.
Today’s workshop is a continuation of the series of workshops organized by the NBR to provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BHD 500,000 to BHD 5,000,000 by June.
Attendees can now register for VAT workshops
Date: 21 Apr, 2019
External URL: https://www.nbr.gov.bh/releases/45
The National Bureau for Revenue (NBR) today introduced a new electronic service to allow VAT payers to register their interest to attend upcoming VAT workshops by submitting a simple form at https://www.nbr.gov.bh/workshop_registration.
The workshops will introduce attendees to key VAT concepts, including invoicing and filing, as well as providing them with the opportunity to visit the interactive demo-center. The registration feature builds on Bahrain’s intensive efforts to increase all VAT payers’ solid understanding of key VAT concepts in addition to ensuring the smooth registration of companies with annual supplies between BHD 500,000 and BHD 5,000,000 by June.
Can I avoid a Dh22,000 penalty imposed by the FTA?
Date: 16 Apr, 2019
If you fail to file the return the FTA does not recognise any payments that you have made. Therefore you get fined not only a later filing fee but also interest on the amount of the tax due, until the point at which you file the return.
The penalty for missing the filing deadline is Dh1,000 for the first offence and then Dh2,000 for every subsequent missed deadline.
VAT Treatment of Education Services
Date: 15 Apr, 2019
The supply of educational services and related goods and services by kindergartens, pre-primary, primary, secondary and higher education institutions is subject to the zero-rate.
In order for the zero-rate to apply:
The school or educational institution must be licensed by the Ministry of Education in Bahrain or be under its supervision, and Supplies must be provided directly to a student who is enrolled in that school or institution.
Certain educational services are not subject to the zero-rate (and will be subject to the 5% rate), including:
Professional education; and Vocational training, unless such vocational training is provided by a polytechnic educational institution which is licensed by the Ministry of Education in Bahrain.
VAT Healthcare Guide
Date: 15 Apr, 2019
An overview of the VAT rules and procedures in relation to the healthcare sector in Bahrain and, if required, how to comply with them the necessary background and guidance to help you to determine how a supply is treated
for VAT purposes.
Financial Services VAT Guide
Date: 15 Apr, 2019
This document sets out some of the general principles of Value Added Tax (VAT) in the Kingdom of Bahrain (Bahrain) specifically relevant to the financial services and the insurance sectors. The main aim of this document is to provide the reader with:
An overview of the VAT rules and procedures applicable to the financial services and the insurance sectors in Bahrain and, if required, how to comply with them the necessary background and guidance to help you to determine how a supply is treated for VAT purposes.
NBR holds an interactive workshop for representatives working in the manufacturing sector
Date: 10 Apr, 2019
External URL: https://www.nbr.gov.bh/releases/44
The National Bureau for Revenue (NBR) held an interactive VAT workshop for professionals working in the manufacturing sector, during which the NBR recapped general and sector-specific VAT concepts, including invoicing and filing.
Following a question-and-answer session, 46 representatives from 24 vendors were given the opportunity to visit the unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.
Today’s workshop is a continuation of the series of workshops organized by the NBR to provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BHD 500,000 to BHD 5,000,000 by June.
VAT implementation in focus
Date: 04 Apr, 2019
VAT Digital Economy Guide
Date: 04 Apr, 2019
External URL: https://www.newsofbahrain.com/bahrain/52526.html
The National Bureau for Revenue (NBR) has published a guide that mainly focuses on educating the public on the VAT treatment of e-commerce and the VAT treatment of electronic services. ‘The VAT Digital Economy Guide’ aims to educate the public about the application of VAT on e-commerce and electronic services. The document sets out the general principles of Value Added Tax (VAT) in relation to the digital economy sector in the Kingdom.
The main aim of the document is to provide the reader with an overview of the VAT rules and procedures in the Kingdom in relation to the digital economy sector and how to comply with them if required. It also explains the necessary background and guidance to help determine how supply is treated for VAT purposes.
“This guide is intended to provide general information only and contains the current views of the National Bureau for Revenue (NBR) on its subject matter. “No responsibility is assumed for the VAT laws, rules or regulations in the Kingdom. “This guide is not a legally binding document and does not commit the National Bureau for Revenue or any taxpayer in respect of any transaction.
FTA begins process for refunding VAT to business visitors
Date: 02 Apr, 2019
External URL: http://wam.ae/en/details/1395302752645
The Federal Tax Authority, FTA, has begun implementing the Value Added Tax, VAT, refunds for business visitors while noting that a dedicated application form for the procedure is available on its website.
In a press statement issued today, the FTA explained all the procedures with regard to the refund of VAT to business visitors. The FTA also published a guide through its website which can be accessed through the link: Guide – VAT Refunds for Business Visitors.
Khalid Ali Al Bustani, FTA Director-General, said, “Reciprocity is a key condition for the procedure, whereby the authority will collaborate with countries that refund VAT for UAE businesses visiting their territories.
“The procedure abides by Federal Decree-Law No. (8) of 2017 on VAT and its Executive Regulations, which call for refunding taxes on supplies or imports made by a person not residing in the UAE or any of the Implementing States, provided they meet the necessary conditions.”
The FTA clarified that the period of each refund claim shall be a calendar year, noting that for claims in respect of the 2018 calendar year, it started accepting refund applications as of 1st April, 2019. However, in subsequent calendar years, the opening date for refund applications submission will be 1st March of the following year. That means for the period 1st January to 31st December, 2019, applications will be accepted as of 1st March, 2020.
Early registration key to a smooth Bahrain VAT transition
Date: 02 Apr, 2019
Bahrain introduced a 5% value-added tax (VAT) in the Kingdom from January 1st, 2019.
The tax registration in the country is split across phases and requires businesses to enrol across each phase based on their threshold. As such, the larger businesses with annual supplies exceeding BHD 5,000,000 ($13.25 million) are mandated to register in the first phase, whereas businesses with the annual supplies value exceeding BHD 500,000 ($1.32 million) are mandated to register in the second phase.
Similarly, businesses whose annual supplies exceeds BHD 37,500 ($99,375) are mandated to register in the third phase. In addition, voluntary VAT registration is available for businesses even if the annual supplies are less than the mandated registration threshold limit. While it is voluntary, and entrepreneurs can register if their annual supplies exceed BHD 18,750 ($49,687) benefits of registering under VAT are immense and it is recommended that businesses that have not yet enrolled, start immediately to assess the impact of tax on their operations.
Upon registering under VAT, businesses are given a VAT number which can be displayed on invoices, letterheads, websites and other forms of business stationery. While early registrations help businesses add VAT to the sale price of goods and services when they sell to commercial and non-commercial consumers, it can also help in claiming the Input VAT – a mechanism by which a VAT registered business can deduct input tax from the output tax for a period and remit the balance tax payable to the National Bureau for Revenue.
VAT is a simple process, and The National Bureau for Revenue (NBR) has introduced several knowledge and process guides to make registration seamless and accurate. As such, with the help of NBR, early registered businesses can prepare well in advance and ensure that the process is completed easily, eliminating the risk for unnecessary delays, and incorrect information, which may lead to hefty fines or rejection.
UAE considers adding more 'harmful' products to excise tax list
Date: 01 Apr, 2019
The UAE is mulling the inclusion of new products on its excise tax list, according to a statement by the Ministry of Finance, which implemented the fee on three categories in October 2017.
The ministry is conducting a joint study with officials in Saudi Arabia “on the addition of new goods to the selective tax list, as well as to determine tax rates on certain harmful substances,” its statement said.
While it did not share details of the goods it is considering to add to the tax list, it said in 2017 that it aims to reduce the consumption of harmful substances.
Basic food products NOT subject to VAT
Date: 01 Apr, 2019
NBR holds an interactive workshop for representatives working
Date: 01 Apr, 2019
External URL: https://www.nbr.gov.bh/releases/43
The National Bureau for Revenue (NBR) held an interactive VAT workshop for professionals working in the construction sector, during which the NBR recapped general and sector-specific VAT concepts, including invoicing and filing.
Following a question-and-answer session, 88 representatives from over 50 vendors were given the opportunity to visit the unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.
NBR holds an interactive workshop for representatives working in the construction sector
Date: 01 Apr, 2019
External URL: https://www.nbr.gov.bh/releases/43
The National Bureau for Revenue (NBR) held an interactive VAT workshop for professionals working in the construction sector, during which the NBR recapped general and sector-specific VAT concepts, including invoicing and filing.
Following a question-and-answer session, 88 representatives from over 50 vendors were given the opportunity to visit the unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.
Introducing Digital Tax Stamps Scheme in the UAE
Date: 01 Apr, 2019
1st Jan 2019
Importers will be able to order stamps to be sent to the Manufacturers for application to the pack of cigarette products
1st May 2019
No cigarette products without a digital tax stamp will be permitted to be imported into the UAE. Customs departments will undertake checks on
products from this date and penalties for non-compliance may apply.
1st August 2019
No cigarettes will be allowed to be stored, held out for sale, imported or produced anywhere in the UAE unless they carry a Digital Tax Stamp with
end-to-end traceability. Penalties for non-compliance with this rule may apply. It would therefore be advisable for businesses to consider this final deadline date into their supply chain planning to ensure all unmarked products have been sold prior to this time.
Arab Regional Tax Forum opens in Dubai
Date: 31 Mar, 2019
External URL: http://wam.ae/en/details/1395302752099
Arab Regional Tax Forum has discussed ways of balancing tax policies, Arab countries’ competitiveness in managing them, as well as the challenges facing these nations in pursuing their tax policies.
The two-day forum which opened today at the Grand Hyatt Hotel in Dubai, is organised by the Ministry of Finance, MoF, and the Arab Monetary Fund, AMF, in cooperation with the Federal Tax Authority, FTA, and the International Tax and Investment Centre, ITIC.
Dr. Abdulrahman Al Hamidy, Director-General of AMF; and Khalid Al Bustani, Director-General of the FTA attended the ceremony. Senior officials from the Ministry of Finance, top tax policy and administration officials from all AMF member states, senior tax and finance executives from multinational enterprises, tax experts from international organisations, and renowned public finance academics also attended the event.
Dr. Abdulrahman Al Hamidy opened the forum with a welcome speech, following which Sir Mark Moody-Stuart, Honorary Co-Chairman of ITIC and the Director General of the FTA gave the keynote addresses.
The FTA Director-General stressed the importance of holding meetings with senior officials and experts, especially in light of the great economic transformation the region is undergoing. He expressed hope that the Arab Regional Tax Forum will benefit all Arab countries through the discussions and knowledge-sharing on key issues.
UAE's FTA sees more businesses registering for taxes in 2019
Date: 31 Mar, 2019
The number of UAE businesses registering for taxation in 2019 is set to grow from levels previously seen in 2018 as more companies become tax compliant, the head of the Federal Tax Authority said.
The limited number of businesses and people that registered for taxation last year was due to a lack in compliance, Khalid Al Bustani said at the sidelines of the Arab Regional Tax Forum in Dubai on Sunday. However, he said the authority had conducted numerous awareness campaigns to limit the number of those penalised for non-compliance.
The rise in the number of new businesses launched in the UAE will also result in an increase in the number of registrations this year, he added.
“Regarding registration, this is a dynamic process because we have companies that are still reaching the compulsory threshold, when they reach that they need to register,” Mr Al Bustani said.
The Emirates introduced a 5 per cent VAT in January last year, and in 2017, it rolled out an excise tax on fizzy and energy drinks and tobacco, to diversify income and create new revenue streams as part of a plan to lower dependence on oil revenues. The International Monetary Fund estimates the introduction of VAT in the Arabian Gulf region could generate between 1.5 to 3 per cent of non-oil GDP in new revenue.
Bahrain publishes VAT guide on financial services
Date: 31 Mar, 2019
Bahrain’s National Bureau for Revenue stated that a 5% standard tax is applicable where the payment for the services is made by way of fees, commissions or commercial discount.
The Bahrain National Bureau for Revenue (NBR) has released the first edition of its Financial Services VAT guide (FSI VAT Guide) and Islamic finance products generally have the same VAT treatment as their conventional financial product counterpart.
NBR stated that a five per cent standard tax is applicable where the payment for the services is made by way of fees, commissions or commercial discount.
Additionally, tax exemption will be applied where the payment for the services is made by way of an implicit margin or spread, including interest.
MCA is now a FTA approved Tax Agent
Date: 27 Mar, 2019
MCA Management Consultants has qualified to represent clients to FTA in matters relating to VAT after earning the approval as a FTA accredited Tax Agent.
MCA has met the stringent conditions specified by the Federal Tax Authorities to attain this approval. The conditions safeguard the interest of registered VAT entities and ensure that VAT computation, filing and audit is as per the guidelines contained in the various statutes of the VAT law in UAE.
Businesses in UAE urged to conduct pre-audit checks of VAT returns for expected tax audits this year
Date: 27 Mar, 2019
Al Dhaheri Jones and Clark (ADJC) reminded companies anew of properly filing their value added tax (VAT) returns in anticipation of a possible tax audits by the Federal Tax Authority (FTA) this year. The Dubai-based consultancy firm, which is a registered tax agent in the UAE as approved by the FTA, warned that hefty penalties await tax violators in pursuant of Cabinet Resolution No. (40) of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE. Since the implementation of VAT in the UAE at the start of 2018, the number of tax returns received from businesses registered for VAT purposes has exceeded 650,000 as per the report of the FTA.
NBR holds interactive workshop for retail/wholesale sectors
Date: 27 Mar, 2019
External URL: https://www.nbr.gov.bh/releases/42
The National Bureau for Revenue (NBR) held another interactive VAT workshop for professionals in the retail and wholesale sectors, during which the NBR recapped general and sector-specific VAT concepts, including invoicing and filing.
Following a Q-and-A session, 90 representatives from 48 vendors were given the opportunity to visit the unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.
Today’s workshop is a continuation of the series of workshops organised by the NBR to provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BD 500,000 to BD 5,000,000 by June.
Over 300,000 businesses now registered for VAT in the UAE
Date: 26 Mar, 2019
More than 300,000 businesses have now registered for WAT in the UAE, according to the Federal Tax Authority (FTA).
At a meeting chaired Sheikh Hamdan bin Rashid Al Maktoum, also Deputy Ruler of Dubai, it was also revealed that the number of approved tax agents operating in the UAE has increased to 316.
It also confirmed the success of the VAT refund procedures for Emiratis building new homes, with 235 applications approved, enabling citizens to recover a total of AED9.76 million.
Sheikh Hamdan commended the positive results, saying: “The Federal Tax Authority has developed comprehensive plans to encourage tax compliance, raise the registration rate among taxable businesses, and combat tax evasion.”
The FTA also announced that the Tax Refunds for Tourists Scheme, which was introduced in November, was recording nearly 6,000 refund transactions per day.
Business visitors to UAE to get VAT refund
Date: 26 Mar, 2019
The Federal Tax Authority has completed preparations to launch the “VAT refunds for business visitors scheme” from April 2.
The scheme aims to reciprocate the efforts made in countries that offer VAT refunds to visiting UAE businesses,” the FTA said in a statement.
To be eligible for the VAT refund, the first condition is that foreign businesses must not have a place of establishment or fixed establishment in the UAE or in any of the VAT-implementing GCC states.
FTA board reviews developments of ongoing projects
Date: 26 Mar, 2019
External URL: http://wam.ae/en/details/1395302750976
The Board of Directors of the Federal Tax Authority, FTA, has issued a number of executive decisions concerning the Authority’s operations and administrative policies during its 8th meeting, chaired by H.H. Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, Minister of Finance, and FTA Chairman.
During the meeting, held on Tuesday at the Ministry of Finance’s Dubai headquarters, the Board reviewed a report on the developments of ongoing projects and the FTA’s recent achievements. The report also covered results pertaining to its registration processes for VAT and excise tax and transactions related to filing tax returns, payment of outstanding taxes and collection of recoverable taxes.
The report pointed out that the level of tax compliance in the country has increased, with the number of registrants for VAT exceeding 300,000 registered businesses – tax groups and individuals. Meanwhile, the number of registrants for excise tax reached 719, and the number of approved tax agents increased to 316.
The report confirmed the success of the VAT Refund Procedures for UAE Nationals Building New Residences, with many citizens benefiting from the simple and straightforward electronic procedure that enables them to claim refunds on the taxes incurred on the construction of their new villas and apartments. The study noted that 235 applications were approved, enabling citizens to recover a total of AED9.76 million.
Sheikh Hamdan bin Rashid commended the positive results and major strides the Authority has made since its inception. The FTA saw to the implementation of simple and clear cutting-edge electronic systems, leading to encouraging compliance levels from business sectors. This success was the result of streamlined procedures, an advanced legislative environment, and adherence to high international standards and best practices.
VAT refunds for pavilions at Expo 2020 Dubai
Date: 24 Mar, 2019
VAT Refund for Expo 2020
Date: 21 Mar, 2019
In accordance with the Cabinet Decision No. 1 of 2019 on the ‘Refund of Value Added
Tax Paid on Goods and Services Connected with Expo 2020 Dubai’, Official Participants
of the Expo 2020 are able to claim a refund of VAT incurred by them on the import or
supply of certain Goods and Services.
This document provides guidance for Official Participants of Expo 2020 in respect to the following:
- The conditions which have to be met to be entitled to claim the VAT refund;
- The process to be followed to claim VAT; and
- Information required to complete the relevant forms.
Additional details on the registration requirements along with the importing and customs
details are covered in this user guide.
Click here to know more
Cabinet Decision is primarily for Expo 2020 Official Participants
Date: 20 Mar, 2019
This Cabinet Decision is primarily for Expo 2020 Official Participants which includes Countries and Inter Govt agencies. They can claim VAT refund in case they are not VAT registered. Condition is that commercial exhibition space is less than 20% and VAT refund value is more than Aed 200 per transaction. Expo 2020 Bureau will largely administer this process.
Click here to know more
Is Bahrain facing VAT implementation hurdles
Date: 20 Mar, 2019
Saudi Arabia and the UAE led the way in January 2018 with the introduction of a 5 percent value-added tax (VAT) as part of the unified GCC VAT Agreement – and Bahrain followed suit in January 2019. This measure in Bahrain, however, could be facing some hiccups.
Value-added tax (VAT) is a type of consumption tax that is placed on the supply of goods and services. It takes into account the “value added” at every step of the supply chain. The GCC framework on VAT, which has been spurred by efforts toward tax transparency and the GCC’s diversification goals, gives sufficient leeway for member states to be flexible on VAT implementation in industries based on local contexts and specifications. Bahrain, for instance, has decided to exclude oil products from VAT, as part of its essential goods exclusion.
Could blockchain transform the GCC's VAT system?
Date: 20 Mar, 2019
With the introduction of VAT in the Middle East (UAE, Saudi in 2018 and Bahrain in 2019), the governments had a clean sheet to work with.
From e-registration to manual e-filing, they’ve introduced a lot of technology in a very short amount of time. Companies also had to adapt very quickly and both parties are just beginning their journey of tax and revenue automation.
While the GCC VAT system has just been born, other parts of the world have already traveled a long way in this automation path and there is no doubt these developments will come sooner rather than later in the region.
Tourists to Bahrain will be offered VAT refunds through a VAT refund desk at the Bahrain International Airport.
Date: 19 Mar, 2019
External URL: https://www.newsofbahrain.com/bahrain/52179.html
Tourists to Bahrain will be offered VAT refunds through a VAT refund desk at the Bahrain International Airport. This comes as the Kingdom’s National Bureau for Revenue (NBR) announced the launch of a VAT refund desk at the Bahrain International Airport yesterday. The set up is in collaboration between the Bahrain Airport Company and international payment specialist Planet Payment. The NBR stated that the new desk will offer VAT refund solutions for tourists and non-residents visiting the Kingdom as well as citizens residing abroad. “The VAT refund desk uses an integrated system that allows VAT refund claims on local purchases from over 300 retail outlets across the Kingdom,” the NBR stated.
“The VAT refund desk represents one of many measures the Kingdom is implementing to expand regional and international tourist base, while increasing market competitiveness and expanding growth across Bahrain’s established tourism sector,” it added. Chief Commercial Officer of the Bahrain Airport Company, Ayman Zainal said, “The BAC is pleased to support the Ministry of Finance and National Economy and the National Bureau for Revenue in Bahrain with this important function. Two dedicated stands will be set up at the airport, where tourists can avail hassle-free VAT refunds on their shopping.” The Country Manager of Planet Payment, Eyad Al Kourdi, commented, saying, “Planet is proud to be working closely with the National Bureau for Revenue and the Bahrain Airport Company to deliver a fast, efficient and state-ofthe-art digital VAT refund scheme as the Kingdom’s tourism and retail sectors continue to grow and attract shoppers from across the world.” The NBR explained the VAT refund process stating, “Claimers are required to present their passports, entry visa permits, GCC National IDs, or residency permits for Bahraini nationals living abroad, when shopping VAT free”.
KPMG Organizes a Seminar on Tax Compliance and Reporting for Businesses in Bahrain
Date: 17 Mar, 2019
Approximately 200 key members from the business community in the Kingdom of Bahrain attended an exclusive seminar organized by KPMG in Bahrain for VAT registered and to-be registered businesses to discuss tax compliance and reporting obligations. This in preparation for the first VAT return cycle coming up in April this year. VAT has now been live in the Kingdom of Bahrain for nearly three months and by latest 30 April 2019, VAT registered businesses will be required to submit their first VAT return to the National Bureau for Revenue (NBR).
Philippe Norré, Partner and Head of Taxes and Corporate Services at KPMG in Bahrain was the keynote speaker and shared insights from his long experience in rolling out and leading KPMG’s Global Indirect Tax Compliance approach. He explained and discussed the detailed requirements outlined by the Bahraini VAT legislative framework. “Not only are VAT registered businesses required to submit correctly completed VAT returns and do by deadline together with any payment due, but the compliance and reporting obligations for VAT do require keeping a set of quality documents to support the numbers reported and allowing for an end-to-end reconciliation including with the General Ledger (purchase orders, contracts, invoices, import and export documentation, debt and credit notes and others). As further official guidance notes are issued by NBR a proper knowledge management process is required to keep fully abreast of all developments around VAT in Bahrain. ” He commented during the event.
Real Estate guide for Bahrain
Date: 17 Mar, 2019
Summary of VAT on Real Estate sale/Lease
- No VAT on furniture, unless charged separately from accommodation.
- VAT to be charged on services provided in addition to serviced space
- VAT to be charged on provision of space for retails and promotional stands for < 1 month
- Normal place of rules applicable for insurance of real estate property
Click here to know more
NBR announces the opening of a new VAT refund desk for visitors at Bahrain International Airport
Date: 17 Mar, 2019
External URL: https://www.nbr.gov.bh/releases/39
Bahrain’s National Bureau for Revenue (NBR) today announced the launch of a VAT refund desk at the Bahrain International Airport. Launched in collaboration between the Bahrain Airport Company and Planet, the new desk offers VAT refund solutions for tourists and non-residents visiting the Kingdom of Bahrain as well as citizens residing abroad.
The VAT refund desk uses an integrated system that allows VAT refund claims on local purchases from over 300 retail outlets across the Kingdom.
The VAT refund desk represents one of many measures the Kingdom is implementing to expand regional and international tourist base, while increasing market competitiveness and expanding growth across Bahrain’s established tourism sector.
Commenting on the announcement, the Chief Commercial Officer of the Bahrain Airport Company, Ayman Zainal said:
“BAC is pleased to support the Ministry of Finance and National Economy and the National Bureau for Revenue in Bahrain with this important function. Two dedicated stands will be set up at the airport where tourists can avail hassle-free VAT refunds on their shopping.”
The Country Manager of Planet, Eyad Al Kourdi, also welcomed the launch of the new desk saying:
“Planet is proud to be working closely with the National Bureau for Revenue and the Bahrain Airport Company to deliver a fast, efficient and state-of-the-art digital VAT refund scheme as the Kingdom of Bahrain’s tourism and retail sectors continue to grow and attract shoppers from across the world.”
The NBR also outlined the following steps for completing VAT refund submissions at the Bahrain International Airport:
Claimers are required to present their passports, entry visa permits, GCC National IDs, or residency permits for Bahraini nationals living abroad, when shopping VAT Free.
Claimers need to request VAT free tags, available at retail stores, upon completing their purchase. The tags can be attached to receipts, which will be validated along with purchased goods at the VAT refund desk during check out.
Refunds will be paid in cash or via a credit/ debit card account provided by the claimer.
We must ensure smooth VAT implementation
Date: 15 Mar, 2019
Bahrain being part of GCC, is obliged to comply and apply the VAT treaty which came to face and absorb some difficulties. First, it is better to mention that the new VAT is of certain features including, among other things, a small rate of five per cent compared with 17 to 20pc in developed countries including Germany, France and the UK. Also, the exemption of many essential products and services “zero rated” from the VAT. I believe, such strategy is intended due to the absence of taxation culture in the region.
This year, the implementation of VAT in Bahrain, is in progress but not free from obstacles. Including, some companies are yet to complete IT systems, train staff, comprehend the process, registration issues, VAT return process and confusion over tax invoices. Moreover, other related issues have started as consequence to VAT, namely prices increase to face VAT. Such points need time to settle and firm actions are required. By all means, costs rationalisation is needed and there should be regulations to supervise and control the market to escape adverse consequences due to VAT.
How to claim VAT refund for Tourist?
Date: 14 Mar, 2019
External URL: https://www.planetpayment.com/en/countries/uae/#
Tourist leaving the country can claim the VAT refund within 90 days from the date of purchase.
You will receive 85% of the tax paid, minus a fee of 5 AED per Tax Free tag validated. Tax Free tags are stuck to every invoice that you obtain.
There are two counters for claiming the refund. One in the checkin area and the other past immigration. The check-in area counter can process refunds of bills upto 8000 AED and can refund to your credit card directly. If you need cash, you can process the claim at this counter, but to obtain the refund in cash you must go past immigration and collect in US Dollars from Travelex counter.
To claim for bills of value over 8000 AED you are expected to carry and show the item at the counter after immigration in the terminal. They will follow the similar method of directly crediting your card or collect cash from Travelex.
You will not get the full VAT refunded as you are supposed to get only 85% refund, plus pay 5 AED for the tag placed on your bill and the exchange fee to convert to US dollars.
Planet is the official agent for processing refunds and has counters in the check in area, and inside the airport.
UAE expects to reach deal with EU soon on tax-haven blacklist
Date: 13 Mar, 2019
The UAE expects to reach an amicable solution with the European Union soon on the issue of including the emirate in the list of non-cooperative jurisdictions for tax purposes, said a senior UAE banking official.
“I am sure this issue will be solved in the near future. I think it was due to lack of communication and lack of understanding. The EU will be approached and discussed; I’m sure there will be a way out,” said Abdul Aziz Al Ghurair, chairman of the UAE Banking Federation and CEO of Mashreq Group.
“Because we have chosen to be international financial centre, so we have to comply with world regulations. We had issues like this in the past and were solved,” Al Ghurair told media on the sidelines of a banking conference in Dubai on Wednesday.
The UAE on Wednesday regretted the European Union’s decision to include it on a list of non-cooperative jurisdictions for tax purposes. This inclusion was made despite the UAE’s close cooperation with the EU on this issue and ongoing efforts to fulfill all the EU’s requirements, Wam said in a statement.
The UAE said it had shared with the EU a detailed timeline of actions that it is currently implementing in accordance with its sovereign legal process and constitutional requirements.
Dubai Refreshment Co's 2018 profits drop 54% after VAT, excise tax
Date: 12 Mar, 2019
The implementation of value-added tax (VAT) and excise tax amounted to 60 percent of the Dubai Refreshment Company’s net local revenue and led to higher consumer prices, according to a statement to shareholders posted to the Dubai Financial Market.
In the statement, Dubai Refreshment Company, which is the sole bottler and distributor for PepsiCo in the UAE, said that the company “was forced to pass these taxes to the consumer”.
“This happened at a time when other sugary non-carbonated drinks were not subject to the excise tax and as such did not need to increase their prices,” the statement added.
In 2018, Dubai Refreshment Company’s net profit fell 54 percent to AED 42.3 million ($11.52 million). Revenues totalled AED 646 million ($175.87 million), a 26 percent decline when compared to the year before.
“The situation was especially difficult in the first few months after the excise tax implementation, however, through a combination of sales improvement and cost reduction initiatives, the company has been able to stabilise the situation and return to reasonable profitability,” the statement said.
Dubai Refreshments distributes carbonated, non-carbonated and bottled water products. Some of brands under Dubai Refreshments’ portfolio include Pepsi, Diet Pepsi, 7-Up, Diet 7-Up, Mountain Dew, Miranda, and Shani, Mountain Dew and Aquafina.
What inflation? Cost of living set to decrease in UAE in 2019
Date: 10 Mar, 2019
Following a big jump in inflation in 2018 after the implementation of a 5 percent value-added tax, some economists believe that the UAE economy will slip into deflation this year following a persistent decline in housing and fuel prices and an oversupply in the retail and hospitality sectors.
Monica Malik, chief economist at Abu Dhabi Commercial Bank, said the UAE consumer price index contracted by 2.4 percent on a year-on-year basis in January from a 0.4 percent rise in December.
“We had expected to see deflation from January as the impact of the introduction of VAT in 2018 dropped out of the annual data and with the fall in housing and fuel prices,” she said.
The UAE levied 5 percent VAT on a host of goods and services from January 1, 2018 as part of a GCC framework agreed among the Gulf nations, resulting in a spike in inflation in the first few months of the implementation.
Contractors want faster processing on VAT refunds
Date: 09 Mar, 2019
Dubai for UAE’s contractors, when they get VAT refunds is getting to be as important as the amounts involved.
“As a main contractor, I will have to pay all the VAT-related costs to the subcontractor or supplier,” said K.A. Siddiqui, Partner at Dubai Walls Construction. “It automatically becomes part of the LPO (local purchase order). There can’t be any delay on our part because any delay will invite penalties and becomes a criminal offense.
“The second I invoice something, I have to pay up … whether the client had paid me or not.”
Which is why contractors are now insisting on clients and project promoters to, in turn, shorten the payment cycles in releasing funds due to them.
IMF says VAT launch in Bahrain a 'significant step'
Date: 07 Mar, 2019
Economic activity in Bahrain was subdued in 2018 and is expected to remain at about 1.8% this year, says the International Monetary Fund.
Economic activity in Bahrain was subdued in 2018 and is expected to remain at about 1.8 percent this year, according to the International Monetary Fund (IMF).
The IMF described the introduction of value added tax (VAT) in January as “a particularly significant step”, as are plans for cost recovery in utilities and further means-tested subsidy reforms.
It added that the Fiscal Balance Program (FBP), accompanied by $10 billion in regional support, marks a major step in Bahrain’s reform agenda and has alleviated near-term financing constraints.
NBR holds interactive workshops
Date: 06 Mar, 2019
External URL: https://www.nbr.gov.bh/releases/34
The National Bureau for Revenue (NBR) held two consecutive VAT workshops for professionals working in the education, healthcare, service and utility industries, during which the NBR recapped general and sector-specific VAT concepts, including invoicing and filing.
Following a question-and-answer session, around 190 representatives from 100 companies and institutions were given the opportunity to visit the unique interactive demo-center that provides innovative learning experiences to maximize participants’ assimilation and implementation of the materials presented.
Today’s workshop is a continuation of the series of workshops organised by the NBR to provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BHD 500,000 to BHD 5,000,000 by June.
VAT challenges in spotlight at forum
Date: 04 Mar, 2019
External URL: http://www.gdnonline.com/Details/507804
Around 25 key officials from financial institutions in Bahrain attended an exclusive closed roundtable discussion organised by KPMG in Bahrain to discuss the challenges faced by the financial services sector following the formal introduction of Value Added Tax (VAT) in Bahrain. Philippe Norré, partner and head of indirect taxes at KPMG in Bahrain, was the moderator during the event and said “With their first VAT returns due latest by 30 April 2019, banks and other financial institutions still face lack of VAT treatment clarity around several typical financial offerings .
NBR holds interactive workshops for the food, hospitality, communications and entertainment industries
Date: 04 Mar, 2019
External URL: https://www.nbr.gov.bh/releases/35
The National Bureau for Revenue (NBR) held two consecutive workshops primarily aimed at increasing the VAT awareness of professionals working in the food & hospitality and communications & entertainment industries.
The workshops attracted 150 representatives from 85 vendors, and recapped general and sector specific technical VAT concepts, invoicing and filing requirements, as well as a question and answer session.
Following the workshop, attendees visited the unique interactive demo-center that provides innovative learning experiences to assist vendors in implementing VAT.
The NBR will continue to organize workshops that provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BHD 500,000 to BHD 5,000,000 by June.
Bahrain cutting budget deficit
Date: 03 Mar, 2019
External URL: https://thearabweekly.com/bahrain-cutting-budget-deficit
Bahrain recently quickened the pace of economic reforms by passing a package of laws, notably the introduction of a VAT and pension reforms.
The 5% VAT is one of the key commitments under the Gulf Finance programme. The agreement provides for the imposition of a VAT in all Gulf Cooperation Council countries during the current year.
The tax is to promote and diversify non-oil financial revenues. It comes after the introduction in December of a tax, ranging 50-100%, on tobacco and its derivatives, soft drinks and energy drinks.
Bahrain gov't revenues 'out of sync' with non-oil growth - Minister
Date: 27 Feb, 2019
Minister of Finance and National Economy says growth of Bahrain’s non-oil economy has averaged about 7.5% per year Bahrain gov’t revenues ‘out of sync’ with non-oil growth – minister Bahraini government revenues have not kept pace with the growth of the kingdom’s non-oil economy, according to Sheikh Salman bin Khalifa Al Khalifa, Minister of Finance and National Economy.
Speaking at the GCC Financial Forum in Manama on Wednesday, Sheikh Salman said that non-oil economic growth in Bahrain has averaged approximately 7.5 percent per year.
“There’s a very positive story in the non-oil economic growth space,” he said. “What has been the issue is that non-oil revenues generated by the government have not kept up with that growth.”
Bahrain is currently in embarking on a plan to balance its budget by 2022, a key requirement of a $10 billion aid package funded by neighbouring states including the UAE and Saudi Arabia.
Last year, the country managed to trim its deficit by 35 percent to $3.5 billion. On Monday, Bahrain’s government approved a draft budget for the coming two years that projects a reduction of the deficit to $1.63 billion by 2020.
“As we continue on our deficit reduction measures, it will be of extreme importance that we look at the reduction of operating expenditure and an increase in revenues, non-oil revenues in particular, and that all our spending on subsidies is directed towards citizens,” Sheikh Salman said at the event.
Since VAT was introduced in Bahrain on January 1, Sheikh Salman said that more than 2,000 companies have registered already, more than two-thirds of which are below the legal threshold and have registered because of the positive incentives of refunds.
“It’s working well,” he said, noting that laws passed in Bahrain have zero-rated and exempted certain industries to ensure that citizens are protected from inflationary pressure and that economic growth continues.
Looking to the future, Sheikh Salman said he predicts that Bahrain’s logistics, tourism, financial and oil and gas sectors will continue to be the biggest drivers of economic growth.
Earlier in the week, the governor of Bahrain’s Central Bank said he expects the economy to grow at between 2.0 and 2.5 percent in 2019, similarly to last year.
NBR holds workshops along with its first demo center to educate vendors
Date: 25 Feb, 2019
External URL: https://www.nbr.gov.bh/releases/32
The National Bureau for Revenue (NBR) held two workshops today for retail and wholesale vendors followed by an interactive demo center providing on-spot assistance and information regarding VAT, at the Ministry of Finance and National Economy.
The VAT demo center is designed to provide vendors with a live step-by-step guide on VAT readiness, and is part of the NBR’s efforts in ensuring the correct implementation of VAT within the Kingdom of Bahrain.
140 representatives from various retail and wholesale vendors attended two workshops that provided a general overview on VAT, sector specific content, invoicing and filing requirements, as well as a question and answer session, to ensure they are well informed on relevant VAT concepts.
The workshops were followed by access to the live demo center that provided an interactive experience on technicalities of VAT to ensure vendor readiness on VAT application.
The workshops and demo center are part of the NBR’s commitment to increase public and private stakeholders’ awareness and transparency regarding the treatment of the VAT across all sectors.
The NBR highlighted the importance of spreading awareness on VAT technicalities at this initial phase, given that companies with an annual revenue of BHD 500,000 to BHD 5,000,000 are set to register for VAT by June of this year.
Planet Payment to build Bahrain's tourist VAT refund scheme
Date: 21 Feb, 2019
External URL: http://tradearabia.com/news/TTN_351366.html
Rana Faqihi, the assistant undersecretary for Public Revenues Development, has signed a contract with international payment specialists Planet Payment to begin work on the VAT refund scheme for tourists, said a report.
Planet Payment has been chosen to oversee Bahrain’s VAT tourist refund scheme based on their knowledge and expertise in the field of international payment solutions
Planet has been operating for 30 years in 58 different countries regionally and worldwide, and currently operate the UAE’s VAT tourist refund scheme, it said.
The new refund system will be established and ready during this year, Faqihi noted.
Upon completion of the payment infrastructure, tourists visiting Bahrain will be able to claim refunds on a percentage of VAT paid on purchases during their visit to the kingdom. Reimbursements will be made through a fully integrated digital system that connects registered companies in the scheme to the points of exit at Bahrain International Airport, the report said.
MOFNE signs contract with Planet Payment to build VAT tourist refund scheme
Date: 20 Feb, 2019
External URL: https://www.nbr.gov.bh/releases/31
The Assistant Undersecretary of Development and Policy of Public Revenues, Rana Faqihi, today signed a contract with the international payment specialists Planet Payment, at the Ministry of Finance and National Economy. The contract has been signed to begin work on the tourist refund scheme for VAT paid by tourists during their stay in the Kingdom.
Planet Payment has been chosen to oversee Bahrain’s VAT tourist refund scheme based on their knowledge and expertise in the field of international payment solutions. Planet has been operating for 30 years in 58 different countries regionally and worldwide, and currently operate the UAE’s VAT tourist refund scheme.
Faqihi noted that the collaboration with Planet Payment is in line with the National Bureau for Revenue’s efforts in ensuring the correct implementation of VAT, and that the new refund system will be established and ready during this year.
Upon completion of the payment infrastructure, tourists visiting Bahrain will be able to claim refunds on a percentage of VAT paid on purchases during their visit to the Kingdom. Reimbursements will be made through a fully integrated digital system that connects registered companies in the scheme to the points of exit at Bahrain International Airport.
VAT reimbursements are a common practice introduced to increase visitor expenditure and boost the inflow of tourists as a stimulant for businesses’ competitiveness and overall economic growth.
Has VAT been a taxing experience?
Date: 20 Feb, 2019
External URL: https://www.meed.com/vat-regime-uae-pinsent-masons/
The introduction of VAT is just one of the many fiscal strategies that will enable the UAE to achieve its medium to long-term objectives to become an economic powerhouse and world-class business hub.
A VAT system by its nature is a flexible tool for governments to regulate their annual budgets, contributing to higher revenue intake and a healthier ability to influence economic growth. This is evidenced in numerous OECD, IMF and domestic Central Bank financial and economic reports. These indicate significant increases in tax-to-GDP ratios as a result of the introduction of a new VAT regime and/or the fluctuation of rates within mature regimes.
The UAE and indeed the GCC’s rationale for the introduction of VAT, together with the related revenues it hopes to generate, give some context to our consideration of whether it has impacted activity in the region, and in particular the construction industry.
VAT has the essential characteristic of an economically neutral tax—ie, it flows through businesses and tax supplies to final consumers. Once a new VAT system has been introduced and businesses have adjusted, VAT should not be a direct cost for businesses and careful management of associated compliance, cash flow and administration costs should limit the indirect impact. Associated inflation is also generally short lived.
For a VAT regime to be successful in its aim of neutrality for businesses, and therefore limit the impact on trade, there are a number of key contributing factors: the VAT rates and structure; VAT thresholds and phased introduction; administration of the system; and exemptions.
If we look at these in the context of the construction industry, they give us a clearer picture of some of the challenges that businesses may have faced during the first year of implementation in the UAE and Saudi Arabia, and the resulting impact on the industry across the region.
For such an important, high-value sector, the application of a considerably low rate of 5 per cent was crucial in aiding the industry to adjust to this new demand on working capital. Also, the implementation of a simple VAT system was tactical in supporting comprehension and early adoption, especially in the UAE where businesses did not historically have experience with federal tax regimes.
Over 2,000 local and international vendors registered for the VAT
Date: 18 Feb, 2019
External URL: https://www.nbr.gov.bh/releases/30
The National Bureau for Revenue (NBR) today announced that over 2,000 local and international vendors have registered for the VAT. The NBR recognized the private sector’s efforts exerted towards ensuring the proper implementation of the VAT, which includes registering for the VAT prior to levying the standard 5% tax.
Consumers are reminded that all registered vendors are legally required to display their VAT registration certificate that includes vendors’ Commercial Registration number and their VAT registration date, prior to levying the 5% VAT.
Should I pay tax on the sale of company assets?
Date: 18 Feb, 2019
Legislation states that VAT is charged on taxable supplies made in the normal course of your business. Some argue that selling fixed assets, such as furniture, is outside the normal course of business and is not vatable.
I don’t agree with this argument and advise charging the tax on the sale of all company assets. The purchase of assets used to generate taxable sales are part of most businesses’ normal activities. When you purchase the new office furniture you will be charged VAT on the purchase, which you can recover in full against your output VAT on taxable sales. It makes sense therefore that if you can recover VAT on a purchase of assets, you should then charge VAT on a subsequent sale of the same item.
Food delivery? VAT compliance should be on the menu
Date: 18 Feb, 2019
External URL: https://www.khaleejtimes.com/20190218/no-title
Getting food at your doorstep using technology could have never been imagined until the tech giants like Uber, Zomato and more recently Talabat and Careem have made it possible. Simply using fingers on customer friendly apps, one can now conveniently anytime during the day order food that will be delivered to your office or home.
Online food delivery apps typically work on the aggregator model where various restaurants are aggregated on the digital platform that allows customers to choose the restaurant and place the order. The order is passed to the restaurant that cooks the food and the app staff gets it delivered at the customer’s doorstep.
The food delivery apps earn income from various sources – delivery fee charged from customers, a commission from restaurants, premium listing fee from restaurants to list them on the app and third-party ad revenue through Google ads. Each source of revenue needs a close look to ensure its appropriate taxability.
The areas of attention for apps are more on identifying who’s the supplier of food & delivery and whether they are two separate supplies or one composite supply. Typically, the apps only act as pure delivery service providers obliged to account for VAT on the delivery fee. The VAT treatment may differ where food is simply picked up from the restaurant and delivered to the customer vis-à-vis where the app buys and store food packets to ensure faster delivery to the hungry customers during peak hours.
In the first situation, delivery fee from customers and commission from restaurants are taxable supplies. In the second situation, the app will have to account for VAT on the supply of food and its delivery to customers but simultaneously also be eligible to reclaim the VAT paid to the restaurant on the purchase of the food packets.
The VAT may still apply under the deemed supply provisions where the food bought by the app could not be sold but consumed internally by its staff. If VAT paid to the restaurant was recovered, there would be an obligation to account for VAT on the value of food unsold.
To entice customers hook on to the app, various promotional schemes are launched. A customer may be given a Dh50 voucher redeemable against the order to reduce his cash payout. The app will pass on the discount from its own income. Correct accounting for discounts, VAT and its appropriate reflection on the invoice is important. The VAT position will be different where the customer is given a voucher not sponsored by the app, rather by a third party. It is important to structure the transactions properly to avoid any VAT dispute later.
Separately, the customers may also be given freebies when the order value exceeds a threshold. This can be a free dessert etc. The app would typically ask the restaurant to pack the freebie along with the order and later pay the restaurant for the value of the freebie. Similarly, some apps also make the orders free of cost should the food is not delivered within a specified time. Whether supply of a freebie or making the food free qualify as a deemed supply and subject to VAT should be analysed.
The apps also earn revenue from placing adverts. The UAE VAT law considers online advertisements as a supply of electronic services subject to VAT based on their use and enjoyment in the UAE. It is critical to analyze the contract with the clients, their location and the location of the target audience. The app’s client may be located outside the UAE, but the adverts are targeted for the UAE audience to increase revenue for the client’s UAE based restaurants. Will this be considered a zero-rated supply (since the client does not have a presence in the UAE) or should it be subject to the standard rate of VAT since the use and enjoyment of the advert happens in the UAE. It is important the app is able to demonstrate legally the actual place of use and enjoyment of the adverts for appropriate VAT treatment.
Issuance and delivery of the tax invoice is mandatory in the VAT law. The app should issue a tax invoice to the customers and ensure it is delivered. It has been observed generally, the app emails a payment summary to the customer that captures the value of food plus the delivery fee and VAT on it. The food invoice is issued by the restaurant and delivered by the app staff to the customer. The app should also issue and deliver a separate simplified tax invoice to the customer for the delivery fee. Non-delivery of this invoice will be considered a non-compliance of the VAT law. Where the delivery fee is fixed, the amount of VAT on it should be considered inclusive. The VAT amount, however, needs to be shown clearly on the invoice.
The online delivery concepts are fairly new and the tax authorities across the globe are increasingly finding it challenging to tax them. Because of different business models prevalent, identifying and putting a tax treatment on every transaction becomes a task. It is critical for businesses to be vigilant on how the contracts are structured and ensure no transaction goes unnoticed by their tax team.
The impact VAT has had on UAE hiring levels
Date: 16 Feb, 2019
The majority (84 percent) of recruiters and human resource (HR) professionals in the UAE remain confident about their ability to recruit the right candidates for businesses, according to a new survey.
However, more than half (56 percent) have experienced candidates demanding above average salaries since the roll out of VAT, according to the Recruiter Sentiment Survey by LinkedIn, the world’s largest professional network.
The survey said the implementation of VAT in the UAE at the start of 2018 does not seem to have affected hiring rates, with most respondents (57 percent) seeing an increase in hiring from April to December 2018, when compared to the same period in 2017.
The top reasons for the increase in hiring from April to December 2018 were attributed to business growth (63 percent), availability of more suitable candidates (52 percent) and access to relevant talent insights (51 percent).
However, over half (55 percent) of respondents stated that there was a greater supply of candidates than available roles.
“It is interesting to see that despite the introduction of VAT, the UAE job market and workforce appears to remain confident. However, the new tax does appear to be putting added pressure on businesses as candidates demand higher salaries to compensate for the increase,” said Ghassan Talhouk, head of LinkedIn – UAE LinkedIn Talent Solutions.
The survey revealed that the most in-demand roles since the implementation of the VAT regime were tax and finance executives and IT specialists, as companies geared up for VAT -compliance.
According to the survey findings, transport, public administration and design sectors are among the hardest to find candidates for, while the hiring rates in IT, food and beverage and hospitality industries have peaked since the start of 2018.
IMF Managing Director commends UAE for strengthening its fiscal framework
Date: 09 Feb, 2019
External URL: http://wam.ae/en/details/1395302738139
The UAE is launching a fiscal risk management project with the IMF’s help and will produce its first fiscal stress test this year, according to Christine Lagarde, Managing Director and Chairwoman of the International Monetary Fund (IMF).
Speaking at the main session of the Fourth Annual Arab Fiscal Forum organized by the IMF, Arab Monetary Fund, AMF, and the UAE Ministry of Finance, today at the World Government Summit 2019, Lagarde commended the UAE and other countries in the region for strengthening their fiscal frameworks.
She said that the UAE as well as Saudi Arabia, Kuwait, Sudan and Lebanon have set up macro-fiscal units, a useful first step in strengthening the fiscal framework while Algeria has recently adopted a new budget law with a strong medium-term orientation. Bahrain has introduced a fiscal program designed to achieve balance over the medium term while Mauritania, Morocco, Jordan, and Lebanon are making great progress with medium-term public investment planning and execution. Egypt now publishes a fiscal risk statement with its budget and produces an internal in-year budget risk assessment.
Speaking on the importance of fiscal policy, the head of the IMF said it plays a vital role in creating and nurturing the vision of sustainable and inclusive growth, especially as encapsulated in the Sustainable Development Goals. “This is because we need fiscal space for spending on health, education, social protection, and public investment all key priorities in this region.” She noted that without a stable foundation, even the best policies can flounder.
Earlier in her speech, Lagarde expressed her happiness at being in Dubai which she called the “city of tomorrow” where “its economic leaders are dedicated to realizing the vision of a better tomorrow.”
“This vision is predicated on prosperity that is shared by all, benefiting the poor and the middle class, citizens and immigrants alike; and opportunities that are open to all, including women. It is a vision of fairness over cronyism and partiality, and of trust that government policy is oriented toward the common good.”
“This is a big vision. But as His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai,once said “The bigger your vision, the bigger your achievement will be we cannot let fear keep us small. We have to be brave to be big.”
Speaking about the economic environment in the Arab region, Lagarde said it has not yet fully recovered from the global financial crisis and other big economic dislocations over the past decade. “Among oil importers, growth has picked up, but it is still below pre-crisis levels. Fiscal deficits remain high, and public debt has risen rapidly from 64 percent of GDP in 2008 to 85 percent of GDP a decade later. Public debt now exceeds 90 percent of GDP in nearly half of these countries.”
She said that oil exporters have not fully recovered from the dramatic oil price shock of 2014. “Modest growth continues, but the outlook is highly uncertain reflecting in part the need for countries to shift rapidly toward renewable energy over the new few decades, in line with the Paris Agreement. With revenues down, fiscal deficits are only slowly declining despite significant reforms on both the spending and revenue sides, including the introduction of VAT and excise taxes. This has led to a sharp increase in public debt from 13 percent of GDP in 2013 to 33 percent in 2018,” she added Lagarde also drew attention to the broader economic context bearing on fiscal policy in the region. “We now think that the global economy will grow by 3.5 percent this year, 0.2 percentage points below what we expected in October. And risks are up, given escalating trade tensions and tightening financial conditions. Unsurprisingly, a weaker global environment has knock-on effects on the region through a variety of channels trade, remittances, capital flows, commodity prices, and financing conditions.”
She said the bottom line of all this is that “the economic path ahead for the region is challenging. This makes the task of fiscal policy that much harder, which in turn makes it even more important to build strong foundations to anchor fiscal policy.”
Speaking further on the importance of strong fiscal policy, Lagarde said the two key pillars of good fiscal management are robust fiscal frameworks, and good governance and transparency. “There is scope to improve fiscal frameworks in this region. Some of the weaknesses are short-termism and insufficient credibility,” she said.
“Corruption is the great disruptor of fiscal policy. Without trust in the fairness of the tax system, it becomes harder to raise the revenue needed for critical spending on health, education, and social protection. Governments might be tempted to favor white elephant projects instead of investments in people and productive potential. Add this up, and we have a recipe for unsustainable fiscal policy combined with social discord,” she said.
Lagarde concluded by saying that good fiscal policy requires good institutional foundations. “Solid foundations in areas such as fiscal frameworks and governance give citizens confidence that fiscal policy serves the good of all, not just the wealthy or the well-connected,” she said
Revealed: Impact of VAT in Saudi Arabia, UAE, one year on
Date: 07 Feb, 2019
2019 economic outlook: Weaker oil would put pressure on expenditure in countries with higher break-even prices
Early data suggests that the inflationary impact of the value-added tax (VAT) in both Saudi Arabia and the UAE has largely been contained, according to the most recent PwC Middle East Economy Watch.
Richard Boxshall, senior economist at PwC Middle East, writing in the report, said the impact of VAT in Saudi Arabia was “limited”, mainly because it raised more revenue than was initially expected.
“Overall, the new tax policy has been relatively successful in diversifying government revenue without producing excessive inflation,” he said. “A fuller picture will emerge over the next six months or so, including from studying Bahrain, which joined the VAT club this year.”
Saudi Arabia’s preliminary fiscal outturn data, released alongside the budget in December, estimates that VAT raised $12.2bn in 2018 – nearly a third more than it had expected.
In a January 2018 projection made by the General Authority of Zakat & Tax, the amount raised is equivalent to about 1.6% of GDP.
“This suggests a relatively high efficiency of collection in relation to private consumption by international standards,” said Boxshall.
“The VAT brought in more funds than the expat levy and excise taxes combined, and triple the amount from taxes on income and capital gains.”
While no data is available on the UAE as yet, Boxshall said it is likely to be higher in relative terms than in Saudi Arabia “because private consumption makes up a larger share of the economy”. Seventy percent of the revenues will be distributed to each of the seven emirates, potentially providing a substantial boost for some.
Best year for exporters
Boxshall said 2018 was the best in five years for Middle Eastern oil exporters, driven by two main factors – rising oil prices and increased government spending.
“This combination of stronger prices, as well as fiscal and structural reforms put these economies on a solid footing for 2019, despite a weaker final quarter marked by increased geopolitical risks and oil prices falling into correction by year’s end,” he said.
Oil market developments are likely to be the dominant economic driver for the region once again in 2019, following the sharp decline in prices in the final months of 2018, and OPEC and its allies agreeing to cut output by 1.2m barrels a day in November.
Boxshall said weaker oil would put pressure on expenditure in countries with higher break-even prices.
“This includes Saudi Arabia, whose 2019 budget envisages a 20% increase in capex and a 7% overall increase compared with the 2018 outturn,” he said. “However, Saudi Arabia’s low debt level (about 19% of GDP) means it can finance a larger deficit if needed, although it is still aiming to balance its budget by 2023.”
Active year for M&As and IPOs
Whatever happens at a macroeconomic level, 2019 is likely to be an active year for corporate transactions, which includes major M&A and IPO activity.
Banking sector mergers are under discussion in several countries. The region is widely recognised as being overbanked and has begun to consolidate over the past few years. As banks scale up through mergers, this should boost the sector’s capacity to finance projects and businesses, supporting growth.
Meanwhile, efforts to attract investment will continue, including the announcement of which sectors are eligible for 100% onshore foreign ownership under a new UAE law. There should also be progress in privatisation efforts in Saudi Arabia, Oman and Kuwait.
Applying VAT on EWA bills ‘unconstitutional’
Date: 06 Feb, 2019
External URL: http://www.newsofbahrain.com/bahrain/50956.html
A Bahraini lawyer has insisted that the recent decision by the Electricity and Water Authority (EWA) to apply Value Added Tax (VAT) on subscribers’ bills are unconstitutional, demanding immediate cancellation of the decision. This came as lawyer Mohammed Al Thawadi appeared before the High Administrative Court, which is examining a complaint lodged by him against the authority. The court said yesterday that it would issue its final verdict in the case on February 24.
In his statements, the lawyer asserted that the decision is unconstitutional, claiming that Articles 15 and 17 of the Constitution of the Kingdom stipulate that taxes should only be imposed through legislation. Mr. Al Thawadi also accused EWA of not adhering to the Unified GCCVAT Agreement.
“Article 29 did not stipulate the imposition of taxes on electricity supply services, but on the contrary, it gave each state the right to exempt some sectors in accordance with local law. “Additionally, Article 30 stipulates the exemption of government bodies from paying taxes, and therefore it is not permissible for the authority to collect taxes.” The lawyer’s last statement came after the authority denied the accusations during the previous hearing.
“The authority does not exercise its functions as sovereign and there is no monopoly of providing electricity and water supply services in the Kingdom,” the authority’s counsel had told the court. Further supporting his accusations against the authority, Mr. Al Thawadi said: “The authority’s claim that it does not operate in a sovereign manner and that there is nothing preventing competition with it from any other party in providing its services is incorrect.
The National Bureau for Revenue held 22 workshops on the treatment of VAT thus far
Date: 04 Feb, 2019
External URL: https://www.nbr.gov.bh/releases/28
The National Bureau for Revenue (NBR) held a total of 22 workshop on the treatment of VAT across various sectors within the Kingdom. The workshops, which have begun since December 2018, address all of the various sectors’ VAT inquiries to ensure effective implementation of VAT.
The workshops targeted government and private sector entities, including entities in the banking and finance, real estate and construction, sale and retail, auditing, and education sectors. The NBR affirms its commitment to increase public and private stakeholders’ awareness and transparency regarding the treatment of the VAT across all sectors in addition to advancing public-private cooperation.
To ensure the success of the initial phase of the VAT implementation, the NBR will organize a further series of workshops to raise awareness on the technical and procedural aspects of VAT.
VAT Public Clarification - Bank Interest and Dividends
Date: 29 Jan, 2019
Passively earned interest income from bank deposits and dividend income are, therefore, outside the scope of VAT, and there is no requirement to report them in the VAT return.
The clarification VAT P010 primarily states that bank interest and dividends are out of scope and need not be shown as exempt income in the VAT returns. Other interest income are considered as exempt income where there Is supply Management fee is subject to VAT. Please refer to clarification for full details.
VAT Public Clarification Donations, Grants and Sponsorships
Date: 28 Jan, 2019
The VAT treatment of donations, grants and sponsorships depends on whether the donor, grantor or sponsor, as the case may be, has received any benefit in return for such payments. Where any benefit is received in return for the payments, VAT implications will arise. However, where no benefit is received, the payments will be treated as outside the scope of VAT as they will not be seen as consideration for a supply.
The VATP011 clarification states where donation and grants do not have any supply, they are considered as out of scope. Generally, sponsorship will be subject to VAT as there is usually associated supply to such sponsorship. Click here to read more.
UAE clarifies when companies must de-register from VAT
Date: 26 Jan, 2019
Companies registered to pay value added tax in the UAE must apply to remove themselves from the system if they stop operating or anticipate a drop in the value of their taxable sales to below Dh187,500 per annum, the government said on Saturday.
Failure to de-register could elicit a fine from the UAE Federal Tax Authority, the official body that administers the tax said in a statement.
“Registrants will not be de-registered unless they have paid all due taxes and administrative penalties and filed required tax returns for the period in which they were registered, as stipulated under tax legislation,” the FTA’s statement added.
The UAE, together with Saudi Arabia, introduced a 5 per cent VAT on goods and services in January 2018, as part of plans to increase non-oil revenues and create a more transparent business environment.
Any company generating taxable sales of above the threshold of Dh375,000 per annum must register themselves on the government’s VAT system and pay all of the tax for which they are liable each year, while companies with taxable sales above Dh187,500 per annum can voluntarily register themselves to pay VAT.
However, if a company anticipates it will experience a drop in total annual sales to below that minimum threshold over a 30-day period ahead, it must de-register from VAT liability, the FTA said. The application must be submitted within 20 working days of the occurrence of that drop in sales, otherwise the company could be subject to a fine.
“Failing to submit the de-registration application within the period…will lead to the imposition of administrative penalties as stipulated in the VAT tax legislation,” the statement said.
The National Bureau for Taxation holds a workshop for audit firms
Date: 21 Jan, 2019
External URL: https://www.nbr.gov.bh/releases/23
The National Bureau for Taxation (NBT) today held a workshop primarily aimed at increasing professional auditors’ awareness in regards to the VAT procedures and legal framework in addition to equipping them with the knowledge they need to provide accurate VAT advisory and audit services.
The workshop attracted a number of representatives from various audit firms and addressed VAT-related inquires to ensure the use of best practice in auditing.
Today’s workshop is part of a series of workshops held by the NBT aimed at increasing public and private stakeholders’ awareness regarding VAT procedures and legal framework to achieve the highest level of compliance.
The NBT reminds taxable entities to refer to the list of audit firms that can aid in the implementation of VAT, which is available on the NBT’s website at the following link: https://www.nbt.gov.bh/licenced_acc.
FTA issues guidelines for foreign businesses' VAT refund in UAE
Date: 19 Jan, 2019
The Federal Tax Authority (FTA) has outlined four conditions that would allow foreign businesses to recover value-addded tax (VAT) incurred in the UAE.
To be eligible for the VAT refund, the first condition is that foreign businesses must not have a place of establishment or fixed establishment in the UAE or in any of the VAT-implementing GCC states.
Secondly, such foreign businesses must not be a taxable person in the UAE. Thirdly, they must also be registered as an establishment with a competent authority in the jurisdiction in which they are established; and finally, they must be from a country that implements VAT and that equally provides VAT refunds to UAE businesses in similar circumstances.
The authority clarified that the period of each refund claim shall be a calendar year, noting that for claims in respect of the 2018 calendar year, refund applications can be made as of April 1, 2019. However, for subsequent calendar years, the opening date for accepting refund applications will be March 1 of the following year; this means that for the period from January 1 to December 31, 2019, applications will be accepted as of March 1, 2020.
The FTA went on to stress that the minimum claim amount of each VAT refund application submitted by business visitors is Dh2,000, which may consist of a single purchase or multiple purchases. The Authority urged potential applicants to hold on to the original tax invoices on the purchases for which they would like to reclaim VAT, as they will be required to be submitted along with the refund applications.
The state may still submit a VAT refund application to reclaim VAT incurred in the UAE under this scheme, the FTA assured, outlining only three situations where VAT cannot be reclaimed.
The first situation is if the foreign business in question makes supplies in the UAE, unless the recipient is obliged to account for VAT under the reverse charge mechanism. Secondly, a VAT refund cannot be processed if the input tax in respect of any goods or services is “blocked” from recovery and, therefore, not recoverable by a taxable person in the UAE. The third situation where a refund is not possible is if the foreign business is a non-resident tour operator.
Khalid Ali Al Bustani, director-general, FTA, noted that this procedure reflects positively on many sectors, including tourism, trade, exhibitions, conferences, etc.
He further explained that reciprocity is a key condition for the procedure, whereby the Authority will refund the VAT to businesses resident in countries that refund VAT for UAE businesses visiting their territories.
NBT holds VAT policies workshop
Date: 17 Jan, 2019
External URL: https://www.nbr.gov.bh/releases/22
The National Bureau for Taxation (NBT) today held a workshop aimed at increasing the awareness of registered government entities on VAT treatment and policies.
Today’s workshop attracted representatives from around 30 government entities, and provided a summary of core VAT concepts in addition to reviewing the VAT treatment and policies.
During the workshop, the NBT reminded civil servants of the Cabinet’s decision to ensure that 1,400 public services are not subject to 5% VAT, in line with the Royal Directives of HM the King to review the VAT application process during its trial period.
The NBT continues to hold an extensive series of workshops to facilitate the exchange of technical expertise and to assure the correct application of the VAT.
Over 1,300 local and international vendors registered for the VAT
Date: 16 Jan, 2019
External URL: https://www.nbr.gov.bh/releases/21
The National Bureau for Taxation (NBT) today announced that over 1,300 local and international vendors have registered for the Value Added Tax (VAT).
• In line with NBT’s efforts to expand VAT awareness, the Call Centre has efficiently responded to over 7,000 VAT related queries.
• Consumers are reminded that all registered vendors are legally required to display their VAT registration certificate, which includes vendors’ Commercial Registration number and their VAT registration date, prior to levying the 5% VAT.
• Consumers are also encouraged to verify taxpayers’ registration status through the recently introduced Taxpayer Lookup tool accessible on https://www.nbt.gov.bh/vat/tp/ms prior to paying the 5% VAT charge.
• The NBT continues to support consumers and investors with all aspect of the VAT, and invites all stakeholders to take advantage of the information available online (www.nbt.gov.bh) and on NBT’s social media accounts (@BahrainNBT) in addition to calling and emailing the Call Centre on 80080001 or email@example.com for further queries.
NBT introduces a new system allowing consumers to verify vendors' VAT registration status
Date: 13 Jan, 2019
External URL: https://www.nbr.gov.bh/releases/19
The National Bureau for Taxation (NBT) today introduced a new service that allows consumers to verify vendors’ VAT registration status through a search tool accessible on www.nbt.gov.bh.
The new system allows consumers to pull up vendors’ official registration records by searching for its VAT Registration Number, Commercial Registration Number and QR code.
This new service builds on the government’s efforts to strengthen consumer protection and transparency to further build on the success of the VAT.
The new service aims to facilitate the monitoring mechanisms during the VAT’s initial stage, and strengthen regulatory compliance.
NBT distributes tax free logos to be added to goods and services that are not subject to VAT
Date: 13 Jan, 2019
External URL: https://www.nbr.gov.bh/releases/20
The National Bureau for Taxation (NBT) today announced that a tax exemption logo (VAT FREE) will be distributed across various establishments in order to place the logo on goods and services that are not subject to VAT. This new measure builds on the government’s efforts to strengthen consumer protection and transparency, ensuring the correct implementation of VAT.
NBT stressed the importance of the various establishments to adopt this measure, making sure the logo is clear and visible to consumers. In this regard, the NBT further stressed the importance of clearly placing the VAT certificate of registration that entitles these entities to collect VAT on products and services that are subject to it.
Cosmetic services subject to 5% VAT in UAE
Date: 13 Jan, 2019
Healthcare services that are not basic or preventive in nature but more cosmetic are subject to the standard 5 per cent VAT rate, tax experts said.
The majority of healthcare services under the UAE VAT law have been classified as zero-rated. This effectively means that such services are subject to VAT at zero per cent but with the eligibility to recover the VAT incurred on associated costs.
“The government has a keen interest and focus on promoting the healthcare industry in the UAE. Keeping this intent in mind, the government has kept basic and preventive healthcare supply at a zero rate of VAT. But there are a lot of activities that are still subject to VAT,” said Nimish Goel, partner at WTS Dhruva Consultants, while addressing a seminar on VAT.
Research reports suggest healthcare expenditure is projected to reach in excess of $100 billion in the GCC, with the UAE playing a prominent role. It is estimated that the UAE healthcare market is projected to reach Dh71.56 billion by 2020.
Dr Ramadan AlBlooshi, CEO, Dubai Healthcare City Authority – Regulatory (DHCR), said following the introduction of VAT at the beginning of last year, the authority received enquiries about its implementation.
“We are keen to provide a platform to help stakeholders have a better understanding of VAT to facilitate compliance in the free zone,” he said.
At the seminar, WTS Dhruva Consultants also launched a comprehensive VAT guide for companies operating in the healthcare sector in the UAE. The guide, titled: “VAT on Health Care in UAE – Impact and Insights” elaborated and addressed numerous issues related to healthcare service providers, insurance companies, and related products.
Dinesh Kanabar, CEO and founder of WTS Dhruva, said the VAT guide prepared by WTS Dhruva for the healthcare sector in the UAE is first of its kind in the country.
“The guide addresses numerous issues related to the activities of healthcare service providers,” he said.
FTA clarifies VAT for independent director fees
Date: 13 Jan, 2019
VAT for independent directors’ services depend mainly on whether the fees for the said directors were known from the outset or not.
The Federal Tax Authority (FTA) has confirmed that the date of supply for value-added tax (VAT) with regard to independent directors’ services is determined either in accordance with the general rules or the special rules, depending mainly on whether the fees for the said directors were known from the outset or not.
The authority said that where such fees are known from the outset, the date of supply shall be determined in accordance with the provisions of Articles (25) and (26) of Federal Decree-Law No. (8) of 2017 on VAT, depending on whether or not there will be periodic payments.
If such fees are not known from the outset, they shall be determined upon conclusion of the annual general meeting and the date of supply shall be established only when such fees become known.
The FTA explained that in instances where the board fees are known at the outset and involve periodic or multiple payments, the date of supply would be determined as per Article (26) of Federal Decree-Law No. (8) of 2017 on VAT, where the date of supply would be the earliest of the following three: The date of issuance of the tax invoice; the date the payment is due as shown on the tax invoice; and the date of receipt of payment.
If 12 months have passed from the date of provision of services and none of the aforesaid events has occurred, the date of supply will be triggered at the end of the 12th month.
As for the instances where board fees are known at the outset but there are no periodic or multiple payments, the date of supply would be determined as per Article (25) of the Federal Decree-Law No. (8) of 2017 on VAT. Accordingly, the date of supply would be the earliest of the following three: The date of issuance of a tax invoice; the date on which the provision of services was completed; and the date of receipt of payment.
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.
Emirates NBD launches VAT-based loan solution for SMEs
Date: 06 Jan, 2019
Dubai’s largest bank Emirates NBD has launched a new VAT-based loan solution for small and medium-sized enterprise (SME) customers.
The new programme eases the lending application process for SMEs as it allows them to validate their business turnover and income by providing the bank with copies of their VAT returns filed with the UAE’s Federal Tax Authority (FTA).
“Emirates NBD’s VAT-based loan offering symbolises our commitment to the UAE’s small and medium businesses and supports the objective of Expo 2020 Dubai to foster growth of the SME sector,” said Suvo Sarkar, senior executive vice president, Head of Retail Banking and Wealth Management at Emirates NBD.
The new programme will cover home, auto and business loan products.
Bank lending remains one of the biggest challenges faced by GCC-based SMEs, where less than 5% of bank loans are dedicated to small businesses in the region. It is believed to be among the lowest in the world.
Institutions such as Mashreq Bank argued that its SME loss rate stood too high at 20%, CEO Abdulaziz Al Ghurari said at the 2017 Middle East Banking Forum in Abu Dhabi, though it is not clear whether other banks face the same rates.
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”.
VAT Refunds for Business Visitors
Date: 02 Jan, 2019
Read the latest FTA guide dated Dec’18 which has been issued for Business visitors refund.
Click here to know more
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)
Professional services firm MCA expands to Bahrain ahead of VAT launch
Date: 14 Dec, 2018
Indian-founded professional services firm MCA, which offers a broad range of services covering the spectrum of accountancy, audit and assurance, international taxation, and technology and business management consulting, has on the eve of the VAT roll-out in Bahrain expanded from its current bases in the UAE and Oman to launch a new office in the Kingdom – MCA Bahrain.
The new venture has been launched in partnership with fellow Dubai-based professional services firm Pyramid Specialized Management Consulting (to operate under the legal name MCA Pyramid Consulting WLL), and will offer services in taxation, governance, risk and compliance, transaction advisory, supply chain, corporate services and business strategy among other areas.
Founded in India in 2008 by current Chairman T. N. Manoharan, MCA launched its Dubai arm the following year and has since grown to include further offices in Abu Dhabi, Sharjah and Muscat with a team of more than 75 employees and an established regional client base upwards of 600 to date. The Middle East branch is led by Managing Director Mannem Hanumantha Kumar.
The launch in Bahrain has been timed to coincide with the local VAT roll-out, scheduled to be implemented locally in the Kingdom from the start of next year following its earlier introduction in Saudi Arabia and the Emirates (the remaining GCC have committed to follow), with MCA to offer its expertise on VAT impact assessment, implementation, registration and compliance.
“With introduction of VAT in Bahrain, the decision to expand and open a new office was a logical step in our business growth strategy and it will strengthen our comprehensive basket of service capabilities in the region,” Manoharan said at the launch ceremony. “Further, it would improve transparency and compliance in general and have a positive impact on country rating.”
Also in attendance at the launch party in Manama were MCA Bahrain founding partners Kumar and S Venkatesh (MCA managing partner) and Pyramid founder and managing director R Lakshmanan, a former auditor for KPMG in Bahrain who established Pyramid in 2014 to specialise in housing finance, real estate, Islamic finance, and strategic advisory among other areas.
“We are delighted to launch operations in Bahrain in the 10th year of MCA, UAE. With significant expertise developed from VAT implementation in the UAE, MCA Bahrain is better positioned to cater to demand for VAT related services,” said Venkatesh. Lakshmanan added; “We have made a long-term commitment to this market and delighted to launch in Business-Friendly Bahrain.”
Both Kumar and Venkatesh have both previously served as the Chairman of the Dubai Chapter of the Institute of Chartered Accountants of India (ICIA), a role also held over time by esteemed sector leaders such as Deloitte partner Abbas Ali Mirza, BDO Patel & Al Saleh founder Russi J Patel, and Group CEO (UAE and Oman) of Crowe Mac and Crowe Global board member James Mathew.
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.
FTA: Electronic System to Return VAT to Tourists Entering Final Preparation Stages
Date: 14 Jul, 2018
External URL: http://wam.ae/en/details/1395302698859
The Cabinet Decision to implement a system that returns Value Added Tax (VAT) to tourists will cement the UAE’s status as a premier global tourist destination, asserted the Federal Tax Authority (FTA).
In a press statement issued today, the Authority explained that the Cabinet Decision has set clear standards branded with transparency and accuracy in returning VAT refunds to tourists visiting the UAE.
The Authority revealed that the project is nearing its final preparation stages, where an advanced system will be put in place to corresponds with international best practices. The system relies on an advanced integrated digital system to set up a direct connection with points of sale, as well as with all UAE ports of entry, allowing the global operator to coordinate among retailers registered with the FTA, and enable tourists to submit refund requests for their purchases.
FTA Director General Khalid Ali Al Bustani asserted that the Cabinet Decision to implement a system that returns VAT to tourists is in line with the forward-thinking vision of the UAE’s wise leadership to diversify the national economy and promote all economic sectors to increase their contribution to the Gross Domestic Product (GDP), including the country’s vibrant and promising tourism sector.
UAE banks now able to charge VAT on fees
Date: 14 Jul, 2018
Banks have started charging VAT on various services offered, following a June circular from the Central Bank of UAE, which rescinded a previous notice to the contrary.
In December, the Central Bank issued a notice informing banks that they should absorb VAT charges until they received further instructions.
In June last month, an amendment was issued, detailing 43 new caps on fees and commission charged on consumer-related banking services. The circular specified that “all fees set out in this amendment are exclusive of VAT charges.”
Tina Hsieh, senior manager for indirect tax at global consultancy PricewaterhouseCoopers, said banks will now revise their fees and commissions, publishing any revisions in their schedule of charges.
“To that end, retail customers, for example, will be paying VAT in addition to the fees or commissions charged by banks,” she added.
The December notice seemed to oppose the understanding of many banks at the time, according to PwC, “where the interpretation is that charging VAT on their (maximum) fees and commissions is not an increase in fee but rather is a levy of tax on behalf of the Federal Tax Authority”.
However, the Central Bank clarified the issue in the circular issued last month, giving banks the go-ahead to charge VAT on fees to individuals and companies.
“The new amendment which is effective as of July 1 includes both individuals and entities. Both will be charged a 5 per cent VAT on all fees and bank services with no exception,” said Abdul Aziz Al Ghurair, chairman of UAE Banks Federation in an interview with Al Bayan Economic.
UAE Cabinet approves VAT refund for tourists starting Q4 2018
Date: 11 Jul, 2018
External URL: http://wam.ae/en/details/1395302698458
The UAE Cabinet has adopted a decision to implement the value added tax refund system for tourists, which will integrate between retail outlets with tax refund points in line with the government’s efforts to achieve the efficient implementation of the tax system in the UAE.
According to a press statement, the new tax refund system supports the growth of the tourism sector in the UAE and maintain its position as a global destination for tourists. “The system will be implemented beginning the fourth quarter of 2018 in cooperation with an international specialised company in tax recovery services,” it added.
Non-resident tourists may refund VAT on purchases made at participating retailers, provided that such goods are not exempt from the tax system, through designated refund outlets.
The tourism sector contributes directly to the local economy. The number of passengers through the UAE’s airports reached 123 million passengers in 207, and the total contribution of the tourism sector to the country’s GDP reached 11.3 percent in 2017, equivalent to AED154.1 billion.
VAT refund decision strengthens Abu Dhabi as ‘destination of distinction,’ says Ghobash
Date: 11 Jul, 2018
External URL: http://wam.ae/en/details/1395302698542
Following the UAE Cabinet decision to implement the value added tax refund system for tourists, Saif Saeed Ghobash, Under-Secretary of DCT Abu Dhabi, said that the decision will provide “further impetus” to Abu Dhabi’s strategy to position the emirate as “a visitor-friendly destination of distinction.”
In a statement, Ghobash added, “The UAE in general, and Abu Dhabi specifically, will now have this added significant attraction to all types of tourists and business travellers, reinforcing the emirate’s position as a ‘go-to’ destination and further boosting potential visitor numbers.
“This new directive in is line with the UAE’s efforts to implement an efficient tax system in the emirates. It will directly support the growth of our tourism sector.”
“It will also work in concert with the recently announced reduction in tourism and municipality fees, which means that accommodation costs will be reduced across the emirate. Together, these directives strengthen Abu Dhabi’s position as a destination that affords the warmest of Arabian welcomes to the world,” he continued.
Commenting on the announcement, Sultan Al Mutawa Al Dhaheri, Executive Director of the Tourism Sector at the Department, said, “The announcement of this VAT refund directive is great news for visitors planning a trip to explore our extraordinary emirate. Already firmly established as an attractive and unique distinction, this will positively impact our global appeal. Future visitors will now feel the direct impact of this decision in their travel budgets, meaning they can potentially stay longer, explore further and experience more while they are here. Our extensive touristic and cultural offerings are now even more affordable and accessible than before.
“The tourism sector in Abu Dhabi has witnessed a significant growth in terms of visitors and offerings, in line with the development of leisure and cultural attractions in the capital,” Al Dhaheri said, adding that this new directive will guarantee “steady growth rates, especially with this year’s promising results thus far.”
“Tourists and visitors will be encouraged to stay in Abu Dhabi for longer periods, enjoy more tourist experiences and benefit from attractive offers with wide choices and competitive prices,” he concluded.
More relief as three UAE free zones are out of VAT scope
Date: 05 Jul, 2018
The UAE’s Federal Tax Authority (FTA) has added three new free zones to the list of designated zones that will be out of the five percent VAT scope imposed earlier this year.
The new addition sees the total designated zones increasing to 23 across the UAE.
Federal Decree Law No. (8) of 2017 on VAT specifies that any area meeting certain conditions and mentioned in the Cabinet decision is termed as designated zone for VAT purposes and should be treated as being outside the state for VAT purposes.
According to the FTA, the newly-added free zones are Al Ain International Airport Free Zone, Al Bateen Executive Airport Free Zone in Abu Dhabi, and International Humanitarian City – Jebel Ali in Dubai. The treatment of these areas as designated zones was effective from June 18, 2018.
Thomas Vanhee, partner at Aurifer Middle East Tax, said businesses that have transactions in the new designated zones will be relieved that no VAT applies on the supplies of goods inside the designated zones with some exceptions.
“Some businesses in these designated zones may potentially now deregister for VAT purposes. It will be important for them to assess again their transactions in the zone and determine which ones are actually subject to VAT and which ones are not. Although this constitutes an important relief, the transactions with designated zones can be complex,” said Vanhee.
Currently, eight designated zones are located in Dubai, five in Abu Dhabi, three in Ras Al Khaimah, two each in Fujairah, Sharjah and Umm Al Quwain, and one in Ajman.
FTA issues more clarification on labour accommodation
Date: 05 Jul, 2018
FTA issued clarification about the issue of the applicability of five percent VAT on labour accommodations.
“In the initial period, there was confusion whether labour accommodation is chargeable or not. Subsequently, it was clarified by the FTA that labour accommodation is treated as residential property and hence exempt from VAT. In essence, where additional services such as cleaning, Internet etc. are provided as part of the composite labour accommodation service, there is a single pricing and it is provided by the same supplier, it will be treated as residential property and will be exempt from VAT,” said Girish Chand, director at MCA Management Consultants.
He also pointed out that where the labour accommodation is a mixed supply consisting of various elements and it is charged separately, the tax treatment of each component will have to be determined separately.
FTA updates its e-Services to facilitate work of customs clearance companies
Date: 02 Jul, 2018
External URL: http://wam.ae/en/details/1395302697123
The Federal Tax Authority, FTA, has revealed details of updates to its electronic services, e-Services, which have been designed to provide a greater number of facilities for customs clearance companies that operate under its approval.
The authority says that the new developments have been introduced to simplify registration procedures and enable easy submission of tax returns.
The FTA’s e-Services updates were announced during the third seminar, organised by the authority in Dubai, for freight forwarders and customs clearance companies. The event was held to highlight the role of the authority’s e-Services in facilitating the work of shipping and clearance companies and ensuring the UAE’s smooth import and export trade.
Attended by about 100 stakeholders from various shipping, customs clearance and logistics organisations, the seminar saw a team of specialists from the FTA’s Taxpayers’ Services Department review the electronic processes carried out by the authority to facilitate the work of this important sector and brief the participants on the steps it has taken to overcome any obstacles that might be encountered.
Khalid Ali Al Bustani, Director-General of the FTA, said that the seminar formed part of the authority’s plans to raise the level of tax awareness among business sectors and ensure continuous communication with employees across all economic activities. He highlighted that the session was important to inform stakeholders about the latest tax procedures.
Businesses encouraged to file VAT returns and make payments on time
Date: 27 Jun, 2018
As businesses across the UAE gear up to file Value Added Tax (VAT) returns on June 28th 2018, Al Dhaheri Jones & Clark (ADJC) provides clarity on process and the importance of filing returns.
A VAT return is the formal statement of a registered entity’s VAT statement together with its supporting documentation and VAT payment for a specified tax period. These VAT returns are important as they contain the records of the tax paid by the users in a given period. It is a formal document that provides proof that the registered party has paid their VAT obligation.
“Filing returns on time is crucial for your business. A delay can not only cause a huge amount of stress, but your entire business could be under threat should you fail to comply. While non-compliance can lead to penalties, it also results in backdated payments, investigation by the authority and black-listing. As such, knowing the procedure and deadlines for filing and payment of VAT returns is significantly important to lower the chances of incurring VAT fines and penalties in the UAE,” said Mohammed Fathy, General Manager of Al Dhaheri Jones & Clark.
In the UAE, the administrative penalty for late registration is Dhs20,000 ($5,445). Other fines include Dhs15,000 ($4,084) for failing to display prices inclusive of VAT, Dhs3,000 ($817) for a first incorrect tax filing and Dhs5,000 ($1,361) for incorrect filings thereafter. Failure to submit a deregistration application will result in a fine of Dhs10,000 ($2,723). A first time tax offence will result in a Dhs1,000 ($272) fine and repeat offences within two years Dhs2,000 ($545).
“The Federal Tax Authority (FTA) in the UAE has given businesses enough time to comprehend and follow the legislative rules to file returns. While most businesses are now ready to file returns on time, we suggest that it is best to file returns and make payments before the deadline to ensure that the payments processed through banks reaches FTA on time,” added Mohammed Fathy.
Lessons learned from the UAE and Saudi Arabia’s roll-out of VAT
Date: 27 Jun, 2018
With the entire supply chain affected by VAT, firms cannot start its implementation soon enough
Two of the six GCC states, the UAE and Saudi Arabia, introduced VAT on 1 January 2018. With Bahrain, Qatar, Kuwait and Oman in the process of organising their VAT implementation, the experiences in the UAE and Saudi Arabia provide an indication of issues that businesses in the GCC may face when VAT is rolled out across the rest of the region.
One overriding challenge observed in both the UAE and Saudi Arabia was that businesses typically underestimated the scope and level of effort required to implement VAT. The combination of dealing with a new tax, coupled with the significant business and systems changes that were required, put a lot of pressure on companies to adapt.
To their credit, most organisations got there in the end, but as our survey shows, 77 percent felt that they could have started the process at least three months earlier.
Our survey also revealed that 90 percent of those in the consumer business sector found it took longer than three months to implement, and more concerning, all in the technology sector said it took them longer than six months.
Creating, drafting and implementing tax law is a challenging task. Even though the intention to implement VAT was announced more than a year before the go-live date, detailed legislation was understandably and for a variety of reasons released relatively late in the process in both countries. Both the UAE and Saudi Arabia took a considered view that good tax law cannot be rushed.
Unfortunately, a number of companies were hesitant to commence implementation projects until after the release of the VAT legislation and the timeline for registration for VAT purposes was announced, leading to truncated implementation and delays in the commencement of projects.
7 Ways to Avoid VAT Penalties in UAE
Date: 21 Jun, 2018
The United Arab Emirates and the Kingdom of Saudi Arabia began the implementation of Value Added Tax (VAT) on January 1, 2018 at the rate of five percent, while other GCC countries are expected to follow in the near future.
As VAT is new to the region, it is imperative for business owners to be aware and comply with the new regulations in order to avoid stiff penalties which could be as high as AED 50,000.
Seven tips for UAE businesses to avoid financial penalties that may be imposed due to violations, errors or incorrect record-keeping include:
Register for VAT
Every company offering taxable goods or services with an annual revenue of AED 367,000 and above is required to register for VAT. However, those with an annual revenue between AED 200,000 and AED 367,000 will have the option to register.
Record all transactions
The law requires businesses that meet the minimum annual turnover (as evidenced through financial records) to register and keep a record of all their business income, costs and other associated VAT charges, whilst ensuring all records are up to date.
Every business essentially plays the role of a tax agent, collecting on behalf of the government VAT on goods and services purchased by their consumers.
File VAT return
VAT returns must be filed monthly if your company has an annual turnover above AED 150 million. Businesses with revenue below that level must file quarterly.
Understand zero rates and exempt suppliers
The FTA has exempted some businesses in priority sectors from tax. Being a zero-rated supplier means that the goods being supplied are still VAT taxable, but at the rate of zero percent.
Reverse charges are the amount of VAT one would have paid on goods or services if they were purchased in the UAE. These charges apply when goods and services are imported from outside the GCC.
Get the basics right
A tax invoice must be issued within 14 days of the date of supply. It is mandatory for a tax invoice to include the name, address and tax registration (TRN) of the registrant making the supply.
Cut in hotel tax to help UAE's tourism industry compete with Europe
Date: 19 Jun, 2018
Restaurants in Abu Dhabi and Dubai will be bolstered by the recent drop in municipality fees.
That is according to Jennifer Pettinger-Haines, one of the founding members of the Global Restaurant Investment Forum, an international conference that brings together some of the leading investors from the international world of restaurants.
The reduction in municipality fees comes as both Dubai and Abu Dhabi try to market themselves as year-round holiday destinations, instead of their more traditional standing as winter sun destinations.
Ms. Pettinger-Haines, who is also a member of the Dubai Restaurant Industry Think Tank, was speaking in the wake of the municipality tax cuts announced last week in Abu Dhabi and Dubai.
“The recent announcement that municipality fees on sales at hotel facilities are going to be cut from 10 per cent to 7 per cent is great news for the industry, it was made all the better when we heard that Abu Dhabi was also taking measures to reduce tourism fees from 6 per cent to 3-and-a-half per cent and municipality fees to 2 per cent,” she said.
“These are very positive and significant steps in support of the UAE’s hospitality industry and come at a challenging time for many operators, especially as we head into the summer period. Only time will tell what the true impact will be, but it is a very positive gesture which will offer enhanced value to guests.”
Federal Tax Authority receives businesses’ VAT returns for tax period ending May
Date: 18 Jun, 2018
External URL: http://wam.ae/en/details/1395302695111
The Federal Tax Authority, FTA, announced that it has started receiving tax returns for the tax period ending 31st May, 2018, from businesses registered for Value Added Tax, VAT.
These returns were submitted via the e-Services portal on the authority’s official website, which enables easy and accurate tax submissions.
In a press statement issued on Monday, the FTA reaffirmed that 28th June is the deadline for the submission of tax returns for the tax period ending on 31st May, 2018, calling on all registered businesses to comply with the requirement and settle their payable taxes within the specified period to ensure payment with the FTA before 28th June to avoid financial penalties.
Khalid Ali Al Bustani, Director-General of the FTA, said that the authority has simplified the procedures of submitting the returns and paying due taxes through the electronic services available on the FTA’s official website, which was designed according to the best international standards. The site provides various flexible payment options and is the ideal tool to help businesses comply with tax deadlines, he added.
Al Bustani stressed the need to check the accuracy of all data entered during the submission process and to ensure that the amount owed is transferred to the correct GIBAN number. He added that the responsibility of ensuring that the transfer is made to the correct number is that of the taxable person. He reiterated that the authority is not responsible for following up on the transfer.
Website now allows taxable persons to connect directly with accredited tax agents
Date: 17 Jun, 2018
External URL: http://wam.ae/en/details/1395302694988
The Federal Tax Authority (FTA) has developed its e-Services to include new features allowing Taxable Persons to link their accounts with an accredited Tax Agency, authorising it to carry out registration procedures, submit tax returns, and complete tax transactions on behalf of the Taxable Person, who is kept posted with real-time updates.
In a press statement issued today, the FTA explained that this update was introduced to answer requests submitted by Taxable Persons and businesses registered with the Authority; they reflect FTA’s commitment to flexibility and constructive interaction with the business community as a means to establish an environment that encourages voluntary auto-compliance with tax procedures.
The new features allow Taxable Persons to nominate one or more persons as their Tax Agents, who would then represent them in all their transactions with the Authority, and help them comply with their tax obligations and exercise their rights. A Taxable Person can link their account on eservices.tax.gov.ae with that of an accredited Tax Agency with a simple procedure outlined on the FTA website.
“The Federal Tax Authority is committed to continuously developing its services to ensure flexibility and enable businesses to seamlessly implement the tax system and avoid any disruptions to their activities,” said FTA Director General Khalid Ali Al Bustani, explaining that: “An FTA-accredited Tax Agent can be appointed by any natural or legal person to represent them with the Authority, and help them comply with their tax obligations and exercise their rights.”
Saudi prices rise by 2.8% so far in 2018 as VAT makes impact
Date: 15 Jun, 2018
Prices in Saudi Arabia have risen by 2.8 percent year-on-year so far in 2018 due to the introduction of VAT and utility and fuel price reform, according to new research.
Jadwa Investment, citing the latest General Authority for Statistics (GaStat) inflation release for April, also showed that prices rose by 2.6 percent year-on-year in the month, declining by 0.2 percent month-on-month.
Jadwa said food and beverages prices rose by 5.7 percent year-on-year in April but declined by 0.9 percent month-on-month for the second time in a row.
Housing and utility prices rose slightly by 0.5 percent in April year-on-year, despite a spike in fuel prices in January, Jadwa noted, adding that housing rents, which have been showing negative growth rates since July 2017, weighed on this segment.
The research also said that after a decline in January, annual growth in point of sale retail sales have rebounded, with the average year-to-date rise of 13 percent, compared to 7 percent in the same period last year.
Despite the fact that this year saw the implementation of VAT, Jadwa said it still expects to see higher inflation rates in Ramadan.
FTA urges businesses to pay up VAT dues urgently - Non-compliance will result in penalties
Date: 13 Jun, 2018
Federal Tax Authority (FTA) on Wednesday urged all UAE businesses registered for Value Added Tax (VAT) who missed the deadline for filing their tax returns to pay their tax dues immediately.
“Respecting the deadline to file tax returns and pay due taxes is a legal responsibility borne by the registered tax person,” FTA said in an advertisement.
In case of non-compliance with tax payments on deadlines, businesses will be required to pay the estimated taxes along with administrative penalties.
Violations include the failure of tax registrants to submit the tax return within the timeframe specified in tax law and failure of tax person to settle the payable tax stated in the submitted tax return or tax assessment that was notified.
UAE's reform measures are truly bold undertakings
Date: 13 Jun, 2018
The recent spate of investor-friendly reform initiatives by the UAE government, including 10-year visas for investors and professionals as well as a move to allow 100 per cent foreign business ownership, along with some proactive stimulus packages unveiled by Abu Dhabi and Dubai separately will stir up investor confidence and accelerate the growth of the second largest Arab economy, experts and corporate leaders said.
Combined, the three-pronged stimulus programmes, undertaken by the federal government and two emirates, will give a major fillip to real estate, construction, information technology, small and medium enterprises sectors. In addition, these bold measures along with the easing of liquidity through the Dh50 billion package announced by Abu Dhabi will help banking and manufacturing sectors while considerably easing pressure on the business community, analysts said.
They said other critical measures, taken by Dubai, including a one-year freeze on school-fee hikes, waiver of some fees on aviation and real estate transactions, and cutting charges levied on businesses, will help arrest cost of living and doing business.
Most analysts and corporate leaders believe such bold strategies would help offset the impact of VAT-induced slowdown while reinforcing investor confidence leading to a pick up in foreign direct investments.
Abu Dhabi to introduce 30 per cent alcohol sales tax
Date: 12 Jun, 2018
Abu Dhabi will introduce a 30 per cent tax on alcohol sold in off-licence outlets.
Retailers have received a circular informing them about the introduction of the new tax.
The levy will come into force on June 15 after Ramadan, bringing it in line with Dubai, which already imposes a 30 per cent municipality tax on alcohol sold in off-licence outlets.
A Dh230 fee will also be introduced for special licenses, which enable non-Muslims to purchase alcohol. The licenses were previously free.
Retailers were informed about the changes, which are being brought in by the Abu Dhabi Department of Culture and Tourism, several weeks ago.
Many have displayed notices in stores to inform their customers of the changes, and some, such as Spinneys, are offering discounts in the run up to the introduction. The chain is offering a 15 per cent discount on the price of non-promotional items from tomorrow until the end of the month, according to staff at one of its stores.
News of the 30 per cent hike has been the subject of much discussion on social-media among expatriates – many of whom have said they will be stocking up before June 15.
No VAT impact on construction sector in UAE
Date: 12 Jun, 2018
The UAE’s construction industry has not been impacted by the recent introduction of 5 per cent value-added tax (VAT) and it will witness over 10 per cent expansion in 2018, the second-fastest growth rate in the world, according to industry executives and research reports.
The industry executives believe that Expo 2020 is not the end for the construction sector. Rather they are pinning hopes on multi-year plans such as Vision 2021 which would drive the industry in the post-Expo 2020 era.
“I see good potential for the construction sector. I would say VAT has not impacted us that much; however, there is a pressure on cash flow but people are getting used to it,” said Ravi Murthy, chief financial officer, Arabtec Construction.
Murthy attributed the strong growth potential for the industry to the hosting of Expo 2020 as well as growth in the hospitality and healthcare industries, with a massive inflow of visitors and medical tourists.
“Dubai has won the bid to host the World Chamber Congress which is coinciding with Expo 2020. More than 14,000 chambers from 100 countries will attend the event. If 10 per cent of those chambers do business, the requirement for hotels, infrastructure, road, entertainment, leisure and shopping is going to grow substantially. The UAE target is half a million medical tourists. As compared to the West, they are in the stage of implementation; there are about 43 hospitals with more than 100 beds, which is not enough to cater to the needs. There is a big potential for healthcare. Today, we have Dh740 billion worth of construction projects under way,” he said.
VAT workshop for businesses held in Dubai
Date: 11 Jun, 2018
External URL: http://wam.ae/en/details/1395302693992
Dubai Media City, Dubai Studio City and Dubai Production City have organised a series of workshops for their business partners, aimed at raising awareness about the impact of VAT on the diverse creative community based across the three business parks.
Held in collaboration with Morison Menon Auditors & Business Advisors, the complimentary Tuesday VAT Clinics are taking place over four weeks, with each exclusive, segment-specific workshop focusing on issues related to the introduction of VAT in January 2018. The series seeks to educate companies in the media sector about current tax rules and regulations, correct VAT implementation, and the maintenance of related records.
Highlighting important points for businesses to keep in mind when filing VAT returns, the workshops include a VAT impact analysis for each sector. The sessions feature an interactive component that encourages in-depth discussions between speaker and participants, and facilitates a comprehensive understanding of the subject.
Majed Al Suwaidi, Managing Director of Dubai Media City, Dubai Studio City and Dubai Production City, said, “Our media communities are committed to supporting the next phase of economic diversification in UAE. It is our endeavour at Dubai Media City, Dubai Production City and Dubai Studio City to provide our business partners across the media value chain with access to an enabling industry ecosystem – one that helps them evolve, flourish and build synergies with like-minded community members. The new Tuesday VAT Clinics initiative is a prime example of this approach.”
Samaco, Bentley roll out VAT-free sales initiative
Date: 09 Jun, 2018
SAMACO, the new dealer for Bentley brand in Saudi Arabia, whereby Samaco incurs value added tax (VAT) dues on behalf of clients who are interested to own Bentley car model Bentayga W12; to be the first car dealer to offer such outstanding initiative, coinciding with the holy month Ramadan for this year.
Commenting on this remarkable offer, Mohammed Rafah, CEO of Samaco, said that the VAT free initiative specifically launched for the holy month of Ramadan to spur our clients who wish to own a highly sophisticated car such as Bentley Bentayga W12. This is, in addition, to provide, for the first time, a 5-year open warranty plus free periodical maintenance service for 3 years.
In response to this remarkable initiative, we start to receive orders on Bentley Bentayga W12 from the first day of Ramadan, we, as well, granted our clients the opportunity to test-drive the car to be familiarized with its strong performance and advanced technical capabilities.
Noting that Bentley Bentayga is one of the strongest and luxurious SUV models, equipped with twin-turbo charged 6-liter W12 engine generates 600 HP and maximum torque of 900 n/m partied with automatic 8-speed gearbox (ZF) all four wheel drives. The car achieves 0 to 100 km/h in 4.1 seconds and accelerates to a top speed of 301 km/H, making it the world’s fastest SUV.
Timely stimulus heralds a new dawn for Abu Dhabi economy
Date: 07 Jun, 2018
External URL: http://wam.ae/en/details/1395302693407
A UAE newspaper has said that in a raft of sweeping initiatives which will transform the way we work and live in the capital, two words stand out: together and tomorrow.
“The AED50 billion stimulus package announced by His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, is as far-reaching as it is wide-ranging and will alter the landscape of Abu Dhabi, whether via help for small businesses, creating jobs or boosting tourism,” said The National in an editorial on Thursday.
“The four strata of society upon which Abu Dhabi’s economy depends – residents, citizens, tourists and investors – will all benefit from a string of sagacious economic and social measures. This is the boost the emirate’s non-oil sector has been waiting for.
“The need to re-evaluate the ever-evolving economic landscape made these 10 changes – the latest in a series introduced in recent months across the UAE – necessary, but few could have predicted the scale and speed at which they will be implemented,” it added.
The paper noted, “This year began with the introduction of VAT; just five months later, the government announced the introduction of 10-year visas and 100 percent foreign ownership of UAE companies. They were followed by a series of social reforms in Abu Dhabi, including AED3bn for neighbourhood facilities, double the number of housing loans and increased civic engagement with a volunteering and social innovation platform. All the changes aim to help residents and citizens feel invested in the future growth of their communities – not simply a diversification from an oil-dependent economy but equally, a diversification from feeling life in the capital is a transient pit-stop.”
After slow first quarter, new car sales start picking up in UAE
Date: 05 Jun, 2018
Sales of new cars slowed down in the UAE during the first quarter of 2018 following the introduction of five percent value-added tax (VAT) in January. However, industry executives are hopeful of reversing the trend and said sales will pick up in the second half of the year.
According to automobile distributors in the UAE, new vehicles sales dropped by 10 to 30 percent (depending on the brand) in the first quarter of 2018 due to strong buying in the last quarter of 2017 by nationals and residents prior to implementation of the consumption tax.
Industry executives are expected to post single-digit growth in new car sales this year due to strong appetite from buyers and introduction of new models in the market. They were of the view that VAT had a one-off initial impact in the first quarter and now both buyers and sellers treat it as an essential part of the deal.
Axel Dreyer, general manager, Galadari Automobiles Co, distributor of Mazda vehicles in the UAE, agreed that the anticipated drop in volume in the first quarter has become a reality as the fourth quarter of 2017 sales was above expectations due to pre-VAT buying. Hence, the volume in the following month was less.
“I’m confident that the great offers in the holy month of Ramadan from all brands will stimulate the market again and attract a lot of new car buyers,” Dreyer told Khaleej Times.
To a question, he said sales of new and pre-owned vehicles were impacted by VAT as buyers have preponed the purchases. For price sensitive pre-owned car customers, it is difficult to digest that they have to pay 5 percent extra on the selling price, although the car is 2-3 years old.
“I believe after more than 4 months, the customers are familiar with VAT impact on their purchases. At a certain stage, the customer has to decide what is more economical to use the old car with added repair costs or a new car with service package and less running costs,” Dreyer said.
Negative impact of VAT on UAE, Saudi only short-term – PwC
Date: 04 Jun, 2018
The introduction of value added tax (VAT) in the UAE and Saudi Arabia this year has had a negative impact on their economies in the short term with inflation rising, a new report by consultancy PwC has found.
Inflation rose to 3 percent year-on-year in Saudi in January, after a year in which consumer prices were largely suffering deflation, with a smaller step up in the UAE to 4.8 percent.
This compares to very low rates of inflation in the rest of the GCC where VAT is yet to be introduced (below 1 percent in Kuwait, Qatar and Oman).
The purchasing manager indices (PMIs) for Saudi and the UAE also showed a slump. Saudi had been close to a two-year high in December but dropped in January to a record low of 53 (albeit still above the 50-mark that signals economic expansion).
UAE, which had been at a record level in December, slipped more gradually, down to 54.8 in March, its second lowest reading in a year.
However, the implementation of the tax will prove beneficial for regional economies in the longer term, the report added.
“Although adjustments such as subsidies cuts and the introduction of VAT this year have had short-term negative impacts, they should make the economy more efficient,” the report said, referring to the UAE.
According to the latest IMF forecasts, the country’s real GDP growth is expected to reach 2 percent in 2018 ( up from an estimated 0.5 percent in 2017) and average 3.1 percent in 2019-23. The deficit is narrowing and is expected to return to a surplus by 2022.
UAE Exchange now authorised to accept VAT payments
Date: 03 Jun, 2018
Companies can now make their VAT payments in any of the 150 UAE Exchange branches in the country
Money transfer company UAE Exchange has announced that it has now been authorised to start accepting value added tax (VAT) payments on behalf of the Federal Tax Authority (FTA) in the country.
All entities registered with the FTA who have a valid tax registration number (TRN) and a GIBAN account number can now make their VAT payments in any of the 150 UAE Exchange branches in the country, including 18 in Dubai metro stations.
The UAE introduced VAT alongside Saudi Arabia from January 1 this year at a rate of 5 percent.
It applies to most goods and services including groceries, fuel and utility bills.
In May, the UAE Cabinet decided to refund VAT for institutions working in the exhibitions and conferences sector. The change is intended to support the country’s status as a hub for the meetings, incentives, conferences and exhibitions (MICE) industry and to attract leading event organisers.
The UAE also reversed the application of the tax on the wholesale gold, diamonds and precious metals market.
VAT impact on gold, diamonds to be reduced between registered dealers, says FTA
Date: 30 May, 2018
External URL: http://wam.ae/en/details/1395302691936
The Federal Tax Authority, FTA, has asserted that the new Cabinet Decision issued to regulate Value Added Tax, VAT, incurred by gold and diamond dealers registered with the FTA seeks to establish the adequate legislative environment and infrastructure for the gold and diamonds sector to thrive.
The Decision also improves cash flow among registered suppliers of gold and diamonds, reduces their tax burden, helps them maintain smooth commercial operations, and cements the UAE’s status as a leading global hub for the gold, diamond and jewellery trade sector.
In a press statement issued today, the Authority noted that the decision only pertains to commercial transactions between registered dealers. As per the reverse charge mechanism, registered dealers shall not charge VAT when supplying another tax registered merchant with gold, diamonds or products where the principal component is of gold or diamonds, as long as the latter intends to resell such products, or use them to manufacture gold, diamonds or products where the principal component is of gold or diamonds. The registered recipient must include such supplies in his tax returns.
The Cabinet Decision maintains that Taxable Persons are generally entitled to deduct the tax they incur on their inputs in their tax returns; hence registered gold and diamonds recipients can recover the tax they incurred on their purchases in the same tax return in which they calculate their due taxes, thus maintaining liquidity and cash flow.
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FTA outlines licensing procedure for exhibition, conference services
Date: 30 May, 2018
External URL: http://wam.ae/en/details/1395302691934
The Federal Tax Authority, FTA, has asserted that the Cabinet Decision to refund Value Added Tax, VAT, on services provided at exhibitions and conferences seeks to cement the UAE’s status as a leading destination for local, regional and international forums.
The Decision supports the UAE leadership’s directives to ease the tax burden on business sectors, and empower them to play an effective role in the country’s sustainable development, the Authority explained.
In a press statement issued today, the Authority called on businesses providing exhibition and conference services as defined by the Authority to register in the VAT system and acquire a Tax Registration Number, TRN, as well as a licence from the FTA to provide these services according to a set of conditions that allow them to recover taxes on their services.
Refunds can be claimed for two types of services, the Authority indicated; the first is the grant of the right to access, attend or participate in a conference, while the second is the grant of the right to occupy space for the purpose of conducting a conference or an exhibition.
The new Decision reflects the widespread awareness around the importance of the dynamic exhibitions and conferences sector, which attracts investors from financial markets around the world. The UAE has become a magnet for investors across all sectors with its robust infrastructure and diversified economy.
Khalid Ali Al Bustani, FTA Director-General, said, “The Federal Tax Authority is committed to supporting UAE-based businesses to voluntarily and seamlessly comply with tax procedures, making use of the Authority’s advanced electronic systems and avoiding any disruption to their business activities.”
“Tax legislation in the UAE has helped build a strong collaborative relationship between the FTA and all tax stakeholders, including taxpayers and all relevant government bodies, in an effort to realise the objectives of the tax system in firmly maintaining the UAE’s lead on global competitiveness indexes,” he added.
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Saudi companies urged to file VAT returns by month-end
Date: 28 May, 2018
Saudi’s General Authority of Zakat and Tax has urged companies and entities registered for value-added tax (VAT) to file their tax declaration for the month of April by Thursday, May 31.
Companies whose annual value of taxable goods and services exceeds SAR40m have to declare their returns every month, according to local media reports.
Meanwhile, entities whose annual values of taxable goods and services are less than SAR40m are required to file their tax declarations every three months.
The tax authority emphasised that companies that failed to submit their declaration in time would face fines of between 5 per cent to 25 per cent of the value of tax that was due to be paid.
In addition, the penalty for not paying tax in any given month is equivalent to 5 per cent of the unpaid tax.
Saudi Arabia implemented the first phase of VAT from January 1 this year.
All companies with annual revenue exceeding SAR1m are required to register for the tax. After the first phase, companies with annual revenues of between SAR375,000 ($100,000) and SAR1m have until December 20, 2018 to register.
UAE, Saudi Arabia mobile phone shipments hit by vat
Date: 28 May, 2018
The introduction of value-added tax (VAT) and poor job security have taken a toll on first quarter mobile phone shipments into the UAE and Saudi Arabia.
According to the latest numbers from research firm International Data Corporation (IDC), total mobile phone shipments into the UAE declined by 14.7 per cent quarter-on-quarter, and 5.4 per cent in Saudi Arabia quarter-on-quarter, while smartphone shipments into the UAE were down 4.6 per cent.
Nabila PopalNabila Popal, a senior research manager at IDC, said the UAE market was experiencing a significant shift in consumer spending as evidenced by the first-ever cancellation of the spring edition of Gitex Shopper.
She added that the true impact of this shift could be seen in the independent retail stores of Deira, the traditional trading and commerce centre of Dubai, where shops that were previously impossible to lease are now sitting vacant.
“Organised mall-based retail chains that focus exclusively on consumer electronics are also struggling. Businesses in Qatar, meanwhile, will continue to suffer from the prevailing political challenges and import embargoes that have already impacted the country’s mobile phone market,” she said.
“The size of the overall market in Saudi Arabia is expected to decline over the coming years as a direct result of the new expat dependent tax,” said Kafil Merchant, a research analyst at IDC.
“A significant portion of the local population is expected to leave the country due to the introduction of this levy, with the exodus expected to run into the millions. The full impact remains to be felt, however, as many expatriates are waiting for the school year to end before leaving,” he said.
The report states that Nokia continues to dominate the vendor landscape for feature phones, garnering 87 per cent share of the overall GCC market in first quarter.
Monday, May 28, 2018, is the final deadline for submitting Tax Returns
Date: 23 May, 2018
External URL: http://wam.ae/en/details/1395302690821
The Federal Tax Authority (FTA) has announced the release of eight educational awareness videos targeting businesses, introducing them to the simple four-step procedure for submitting tax returns through its website: www.tax.gov.ae.
In a press release issued on Wednesday, May 23, 2018, the FTA explained that the videos can be viewed on its official website and social media channels, as well as through all news websites. The new videos constitute a comprehensive guide outlining the steps and procedures required to complete and submit Tax Returns and pay taxes, and making them easier to understand and follow for businesses.
The Authority went on to caution that this coming Monday (May 28, 2018) is the final deadline for submitting Tax Returns and paying due taxes for the Tax Period that ended on April 30. The FTA urged the businesses included in this Tax Period to comply with the deadline in order to avoid administrative penalties.
FTA Director General Khalid Ali Al Bustani said: “Launching the videos is part of the Federal Tax Authority’s plan to raise tax awareness among businesses and members of the community from all backgrounds. These educational and awareness efforts are part of our strategy to improve our services and encourage self-compliance with tax procedures using our advanced electronic systems.”
“The Authority is multiplying its efforts to ensure businesses and individuals all over the UAE know their rights, their obligations, and how to correctly implement the tax system,” he added. “The FTA has released more than 60 guides covering all legislative and implementing aspects of the UAE tax system, in addition to e-learning modules, infographics, and animations in Arabic and English about Excise Tax, Value Added Tax, and the objectives behind them.”
DED receives 8,166 consumer complaints in Q1, 2018
Date: 23 May, 2018
External URL: http://wam.ae/en/details/1395302690687
The Commercial Compliance and Consumer Protection (CCCP) sector in the Department of Economic Development saw a 30 percent increase in consumer complaint during the first quarter (Q1) of 2018 compared to the same period last year as more and more consumers continued to come forward and raise their concerns with the authorities as well as merchants.
CCCP, while continuing its efforts to enhance the role of DED in consumer protection and reinforcing Dubai’s reputation as a safe shopping destination for residents as well as tourists, received 270 complaints a day on average in a total of 8,166 complaints in first three months of the current year as compared to 6,275 complaints during Q1, 2017.
The Consumer Protection section in CCCP dealt with 1,007 issues out of which consumer complaints accounted for 81 percent. The rest included 1,062 notes and 779 enquiries received from consumers. Complaints received from inside the UAE accounted for 37 percent and the nationality-wise breakdown of complainants is as follows: India (13 percent), Egypt (10 percent), Saudi Arabia (7 percent) and Jordan (5 percent).
The services sector had a 33.9 percent share in the total complaints received while 16.7 percent were from the electronics sector, 10.7 percent relating to e-commerce, 7.9 percent regarding automobiles, and 6 percent about car rentals. Textiles and personal items (3.5 percent ), furniture (3.1 percent ), shipping (2.7 percent ), clothing and accessories (2.6 percent ) also featured among the complaints while 10 percent were from various sectors.
UAE's robust hospitality and travel sector remains unfazed by VAT impact
Date: 21 May, 2018
The UAE’s robust hospitality and travel sector has remained unfazed by the impact of the value-added tax (VAT) during the first few months of its implementation. The number of visitors rose 2 per cent to 4.7 million in the first quarter, while occupancy rate up 0.7 per cent to 87 per cent witnessing a sustainable growth.
Experts in the hospitality and travel sectors have described the impact of the tax as being modest or negligible.
“The value-added tax, like any other tax regimes, is part of a government’s fiscal reforms and is expected to accelerate economic growth and development of societies in the long run,” said Sameer Bagul, EVP and MD at Cleartrip Middle East. “While it is true that initial adjustments following the introduction of tax in the UAE had sent shockwaves across various industries and businesses, which have long been accustomed to minimal taxation, the travel sector has seen a modest impact as airlines remain subject to zero tax rates, thus leaving no impact on airfares.”
However, Bagul noted that travel agents and travel management companies who earn commissions and service fees have to bear five percent of revenue as cost. He further described this as an investment in the economy.
“On the other hand, hotels in the country are subjected to five percent VAT, in addition to the existing 20 percent municipality fee and service charges combined, making the average room rates costlier. Additionally, various leisure activities have seen pricing adjustments to include the five percent VAT from January 2018. Nonetheless, we have not witnessed any impact on our business despite these changes as we continue to grow very strongly in selling both hotels and hyper-local leisure experiences in the UAE,” he added.
The implementation of the VAT is likely to generate Dh12 billion in income in its first year of introduction, and may collect up to Dh20 billion in 2019. Experts have predicted that hospitality revenue in the UAE is set to increase by 10.8 percent annually to hit $9.8 billion by 2020. The government’s spending on the sector’s development is expected to grow by 4.3 percent over the next decade. Furthermore, with the opening of new attractions such as theme parks and the development of specialty entertainment areas, the UAE will continue to be a preferred destination for tourists from around the world; leaving experts optimistic about the hospitality industry’s growth in the coming years.
Laurent A. Voivenel, senior vice president of Operations & Development for the Middle East, Africa & India at Swiss-Belhotel International, noted that many global hospitality brands are familiar with the tax, and haven’t faced any major challenges in terms of execution. “Typically in a hotel be it the room revenue, food & beverage revenue, telecommunications such as telephone, TV/movies and Internet revenue, conference or banquet revenue, or any other rentals, each needs to be itemised separately for accounting purposes and must be consolidated to determine the operation’s VAT liability.”
Federal Tax Authority sets requirements and procedures to refund VAT on new residences for UAE nationals
Date: 19 May, 2018
External URL: http://wam.ae/en/details/1395302690015
The Federal Tax Authority (FTA) has set three requirements and procedures for UAE nationals to refund Value Added Tax (VAT) incurred on the new residences.
The conditions state that in order to refund VAT, applicants must be UAE national; the monetary cost in question must have gone towards financing the construction of a new residence, set to be used exclusively as a residential unit for the applicant and/or their family; and finally, the VAT refund only includes the money spent on establishing the unit, such as the amounts paid as building materials.
The FTA issued a comprehensive guide that clarifies the VAT refund process, publishing it on its official website. The guide can be viewed on the following link: https://www.tax.gov.ae/ar/pdf/VAT-Refund-Building-New-Residences-by-UAE-Nationals-User-Guide-full.pdf In a press release issued today, the Authority explained that UAE citizens have the right to recover VAT when constructing their own residences. They ought to submit a request to recover the tax incurred on construction costs from the FTA. The request must be submitted within six months from the completion date of the construction project, which precedes the date of occupancy of the building, or the date of issuance of a certificate of completion for the building by the competent authorities, or another date determined by the Federal Tax Authority whatever comes first.
FTA Director General Khalid Ali Al Bustani said: “The Authority has been providing transparent standards, procedures and mechanisms to ensure seamless procedures for citizens looking to recover Value Added Tax incurred on the construction of new residences. This, in turn, leads to achieving the vision of our wise leadership to develop a modern, stable housing system in the UAE.”
VAT Refund to Boost MICE Industry in the UAE
Date: 16 May, 2018
The UAE Cabinet’s decision to refund value-added tax (VAT) to the meetings, incentives, conferences and exhibitions (Mice) industry will make the country – especially Dubai – retain its competitive edge regionally and help position it as a bigger player on the global level as the refund money will be pumped back into the industry for marketing, generating more economic activity, say industry executives and tax experts.
In addition, the refund will continue to attract more foreign companies and business tourists to Mice events which take place in the UAE all round the year.
Humaid Matar Al Dhaheri, the group CEO of the Abu Dhabi National Exhibition Centre (Adnec), said the decision to refund VAT will significantly enhance the competitiveness of the industry and increase the capacity to attract niche global events, exhibitions and conferences.
It will trim costs incurred by organisers and international associations while also enabling local associations to submit more bids to host major international conferences and congresses.
“I am pleased to invite all public and private sector firms, partners, event organisers and specialised associations to make optimum use of such initiatives that will consolidate their presence in the UAE by strengthening the existing exhibitions and conferences portfolio and attracting and conducting new events,” Al Dhaheri said.
Satish Khanna, general manager, Al Fajer Information and Services, hailed it as a landmark decision for the industry, which will help the emirates to grow in terms of market size and come closer to other global Mice destinations such as Las Vegas.
He pointed out that exhibition companies will have more money at their disposal as a result of this government initiative and it will be distributed towards marketing the events and generate more activity in the country.
“Whatever we save will go into marketing and this will enhance the size of exhibitions and be beneficial for the Mice industry. Dubai is on the right track to be a global Mice destination. The UAE’s will attract more Mice players to the country,” Khanna said.
Ahmed Pauwels, CEO of Messe Frankfurt Middle East, said that VAT hasn’t noticeably affected their business. “Both in terms of exhibitors and our suppliers, we have not faced any undue hindrance in our business functions. So, with the recent announcement of the refund facility, I am sure the outcome will prove to be extremely positive and welcomed by the market.”
ADNEC Group CEO praises VAT refund decision
Date: 14 May, 2018
External URL: http://wam.ae/en/details/1395302689011
Humaid Matar Al Dhaheri, Group CEO of ADNEC, has praised UAE Cabinet decision pertaining to VAT on exhibitions and conferences, inviting all public and private sector firms, partners, event organisers and specialised associations, to make optimum use of such initiative.
He further said that it will consolidate their presence in the UAE by strengthening the existing exhibitions and conferences portfolio and attracting and conducting new events.
“Our wise leadership has always been keen to support several national institutions and constantly aiming to drive the development of various economic and social sectors for the benefit of the country and its citizens, which is reflected in enhancing the emirate’s position globally and making it an ideal destination for hosting international conferences, exhibitions and events,” he said in a statement.
“The decision to refund Value Added Tax, VAT, by institutions working in the exhibitions and conferences sector will significantly enhance the competitiveness of the industry and increase the capacity to attract niche global events, exhibitions and conferences. It will trim costs incurred by organisers and international associations while also enabling local associations to submit more bids for hosting major international conferences and congresses and enhancing the support of partnerships with the public and private sectors,” he added.
Al Dhaheri went on to say, “The UAE, with its open, vibrant economy, world-class infrastructure and technological prowess, is at the forefront of shaping the business tourism sector at the regional and international levels. This would not have been possible without the generous support received from our wise and noble leadership and our corporate sister companies operating in this vital sector.”
Saudi tax authority exposes more than 5,000 VAT violations this year
Date: 14 May, 2018
External URL: http://www.arabnews.com/node/1302036/saudi-arabia
The General Authority of Zakat and Tax (GAZT) has stepped up its value-added tax (VAT) inspections in the build-up to Ramadan with its accompanying rise in trade.
The GAZT confirmed that it has issued orders for 5,212 VAT violations against non-compliant businesses since VAT was implemented in the Kingdom.
Violations ranged from issuing VAT invoices without all the required information to collecting taxes that exceed 5 percent, not including a tax number on the invoices and eligible businesses not registering for VAT.
The GAZT said in a statement that its field inspections across the Kingdom targeted several sectors, including shopping malls, car maintenance centers, electrical appliance stores, and food markets.
The authority aims through its field inspections to raise the awareness of businesses about the importance of applying VAT to follow up on whether they were complying with the tax, and to ensure proper application of all VAT procedures.
The GAZT urged all consumers to use the VAT smartphone app as it allows them to know if the businesses they deal with are registered in the VAT system and to report violating businesses.
MCA releases guide on How to File VAT Returns
Date: 13 May, 2018
MCA, the premier VAT advisory firm has shared a guide to help companies file returns due on the 28th day after their Tax period. This guide walks you through the steps of filing the returns including the payment steps.
The guide is available on our site. Click on this link to read the guide.
Cabinet approves resolution on VAT refunds for exhibitions, conferences
Date: 13 May, 2018
External URL: http://wam.ae/en/details/1395302688751
The Cabinet has approved a resolution pertaining to the Value Added Tax (VAT) for Conferences and Exhibitions, in line with the government’s ongoing efforts to support this sector and to enhance the country’s status as a hub for Meetings, Incentives, Conferences & Exhibitions (MICE).
The resolution provides for granting the facilities involved in organising exhibitions and conferences the right to refund the amounts levied on providing such services, to guarantee ease of doing business and competitiveness in this sector. It supports, at the same time, the efficient implementation of the tax system, as per the best integrational practices.
The resolution aims to support the UAE’s MICE sector and to maintain the country’s global lead in this field, in the light of the facilities offered to develop the sector and the keenness to provide the conducive environment, infrastructure and legislative framework for doing business and to attract the world’s leading event oragnising companies.
According to recent statistics, MICE’s annual contribution to UAE economy stood at AED 2.39 billion and is anticipated to grow to AED 5.1 billion by 2020.
UAE's maritime industry seeking VAT exemption
Date: 07 May, 2018
The UAE maritime industry is seeking exemption from the value-added tax levied earlier this year in line with global practices as many countries have relieved the industry from VAT, industry executives said.
They believe that the UAE needs to look at the fees and other charges in order to become more competitive and also needs to update its maritime law.
“It is important to think about the regulations especially the VAT because many countries around the world have exempted the shipping industry from VAT and it is important. There is discussion with the government and we hope this will be taken positively. I guess we have to apply what applies anywhere else; and the principal is that the shipping industry is usually kept free from VAT,” said Khamis Juma Buamim, managing director and group CEO, Gulf Navigation Holding.
The UAE Cabinet last week announced exemption for the gold and precious metals trade from VAT to revive the industry.
“In general, there are too many fees and charges and too many time-wasting [requirements to obtain services]. Time means money and people seriously think about how much time they spend [on obtaining these services],” he added.
UAE jewellers eye VAT relief on retail sales
Date: 03 May, 2018
Gold and jewellery industry executives in the UAE hope that the government will extend VAT exemption to the retail segment, similar to what was given to wholesalers and investors for the benefit of end-users.
“We welcome the move of VAT [value-added tax] exemption by the UAE Cabinet on the gold and diamond trade in the B2B market. One of the major tourist attractions of the UAE is the jewellery sector that generates billions of dollars in revenue every year and by exempting it from the tax, the benefit will be immense for the businesses and the overall economy,” said Firoz Merchant, chairman of Pure Gold Group.
“I hope that the government extends a similar exemption to the retail sector, which will not only benefit the jewellery retailers but also tourists and consumers,” he added.
“We are not expecting total VAT exemption on purchases as we have requested to charge only on making charges as raw gold [pure gold] is VAT-free and jewellery is made from raw gold,” said Anil Dhanak, managing director of Kanz Jewellery.
“Retail will greatly benefit once we go back to the old pricing structure and VAT is levied only on making charge which comes to around Dh1 per gram; it will be easy to absorb by retailers and even customers will not feel the pain.”
Trading in Gold and Diamond exempted from VAT
Date: 01 May, 2018
External URL: http://wam.ae/en/details/1395302686143
In line with the UAE Government’s efforts to ensure an efficient implementation of the Value Added Tax, VAT, while employing best international standards and maintaining the competitiveness of the local precious metals sector, the UAE Cabinet adopted a law to introduce the VAT Reversed Charge mechanism for investors in gold, diamond and precious metals.
This step aims to maintain UAE’s high ranking in the ease of doing business indicators, and allows investors in gold, diamond and precious metals to conduct business with ease. The VAT Reversed mechanism will contribute to stabilising the gold and diamond sector in the UAE as well as stimulating investment in this sector.
The law includes investments in precious metals such as gold, silver and platinum, used in trade in accordance with internationally accepted standards with a purity of 99 percent or more.
This comes in the light of the many initiatives offered by the UAE to investors. It also provides the optimal environment, infrastructure and legislations necessary for growth and supports UAE’s position as a global hub for trade.
The volume of gold trade in the UAE rose to AED244.3 billion in 2016, with a growth rate of 13 percent. The value of UAE’s imports of gold amounted to AED142.4 billion in the same year, while exports amounted to AED75.9 billion, and re-export amounted to AED26 billion.
The gold, diamond and precious metals sector is one of the vital national economic sectors and one of the most important for the economic diversification that is expected to witness significant growth in the coming period as part of the UAE’s diversification objectives.
FTA cautions against granting exceptions when charging taxes unless specified in tax laws
Date: 29 Apr, 2018
External URL: http://wam.ae/en/details/1395302685476
The Federal Tax Authority, FTA, has reiterated its call for all registered businesses to collect Value Added Tax, VAT, and Excise Tax on all taxable transactions and from all customers, cautioning against excepting any individual or organisation that does not fall under one of the excepted categories specified in the UAE tax laws.
In an official statement issued today, the FTA urged taxable businesses to remain vigilant and precise in their business transactions. Businesses must avoid granting exceptions from VAT, the Authority warned, clarifying that no transaction may be considered as outside the scope of tax, exempt, or zero-rated unless it was stated in the legislation or announced by the Ministry of Finance or the Federal Tax Authority, where any such exception was made, this is considered illegal and the supplier shall be liable for any tax not collected on the supply.
The Federal Tax Authority reassured businesses that it periodically issues updated official notices that clearly specify the categories that are not subject to tax, exempt, or zero-rated, as stipulated in UAE tax laws and formal cabinet decisions.
FTA Board approves Tourists Refund Scheme
Date: 25 Apr, 2018
External URL: http://wam.ae/en/details/1395302684624
The Federal Tax Authority’s, FTA, Board of Directors has formally approved implementation of Tourists Refund Scheme at its fifth meeting, held on Wednesday at the Dubai Ruler’s Court.
The meeting was headed by H.H. Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance.
The scheme seeks to ensure high preparedness and adherence to international standards among UAE businesses. It is set to include comprehensive procedures to connect outlets and points of sale across the UAE with the refund system.
The Board also adopted the proposed design and security specifications of the brand to be used as a marker for tobacco products, allowing them to be tracked electronically in order to ensure that the Excise Tax on these products is paid. This advanced system seeks to prevent excise tax evasion and will be implemented in the near future in coordination with Customs Departments, as well as Departments of Economic development departments, and manufacturers and importers of tobacco products.
During the meeting, the FTA Board of Directors approved a set of executive decisions concerning the internal regulatory and administrative policies of the Authority and its operational activities. The Board reviewed a comprehensive report covering the achievements made by the Federal Tax Authority, as well as the successful implementation of the UAE tax system. The reports revealed a remarkable increase in the number of businesses registered for VAT before the end of penalty waiver period issued by the Authority to exempt businesses from late registration penalties, where 281,000 of them are now registered for value-added tax, VAT, while 637 are registered for excise tax.
Saudi Inflation Starts to Decline as VAT Impact Lessens
Date: 25 Apr, 2018
Saudi Arabia’s inflation rate has started to slowly decline as the impact of value-added tax (VAT) and subsidy cuts introduced at the start of the year begin to lessen.
Consumer prices rose by 2.8 percent year on year in March, according to official statistics released on April 24, compared to a rate of 2.9 percent in February.
Inflation leapt to 3 percent year-on-year in the immediate aftermath of the introduction of a 5 percent VAT charge in January.
The new tax was introduced by the Kingdom in an effort to boost its non-oil revenues as well as narrow its fiscal deficit caused by lower oil revenues. The UAE also introduced VAT in January.
While Saudi households initially struggled with the higher rate of inflation and started cutting back on spending, analysts say public sector bonuses, pledged by the government, will help boost consumer purchasing power.
In January, a royal order outlined a range of bonuses and benefits to be paid out to public sector workers, pension holders, students and members of the military.
90,000 registered businesses to submit tax returns, pay due taxes by end of April
Date: 22 Apr, 2018
External URL: http://wam.ae/en/details/1395302683794
The Federal Tax Authority, FTA, has revealed that approximately 90,000 businesses registered for Value Added Tax, VAT, are required to submit their tax returns and pay their taxes no later than 29th April 2018.
Over 85,000 of these companies had their first quarterly tax period end in March, while the remaining businesses saw their monthly periods end on the same date. In a statement issued today, the Authority renewed its call to all businesses registered for VAT to expedite the submission of their tax returns and pay their due taxes on time in order to avoid administrative penalties.
FTA Director-General, Khalid Ali Al Bustani, called on registrants to check their tax periods and the deadline for submitting tax returns and paying due taxes through the eServices portal on the FTA website. “Businesses whose tax periods ended on 31st March should submit their tax returns, and then pay their due taxes before the deadline specified by the Authority,” he explained, “The majority of registered businesses included in quarterly tax periods are small and medium enterprises,” Al Bustani said.
“The Authority sought to streamline the procedures of filing tax returns and paying taxes to encourage taxable persons to comply and carry out their transactions by themselves electronically to meet their tax obligations in mere minutes and with four simple steps. Taxable persons may, at any time, enlist assistance from the FTA-accredited tax agents listed on the website,” he added.
FTA calls for timely submission of quarterly and monthly tax returns
Date: 18 Apr, 2018
External URL: http://wam.ae/en/details/1395302682838
The Federal Tax Authority, FTA, has called today on businesses registered for Value Added Tax, VAT, and whose quarterly and monthly tax periods ended by March 31st, 2018, to file their tax returns and pay their due taxes by April 29th.
In a press statement, the authority explained that according to the 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 each month, or according to the law no. (7) of 2017 on Tax Procedures the following day if the 28th falls on public holiday.
Khalid Ali Al Bustani, FTA Director-General, said that filing tax returns and paying taxes is a legal obligation that must be carried out to ensure businesses compliance with tax legislation.
Al Bustani also called on registered businesses to check their tax periods and the deadline for submitting tax returns, and pay taxes through the eServices portal on the FTA website as soon as possible and not to wait until the deadline.
Businesses whose tax periods ended on March 31st can submit their tax returns, and then pay their dues before the expiry of the payment period, he explained.
He said, “The electronic tax transfer procedure may require some time for banks to process the payment after it has been submitted by the taxable person; this processing time may lead to payments reaching the authority after the deadline if the payment was not submitted early enough, in which case, the taxable person incurs administrative penalties.”
“Tax returns and payments may be submitted 24 hours a day on the website,” Al Bustani added.
VAT facilitates dynamic governance for SMEs
Date: 16 Apr, 2018
External URL: http://wam.ae/en/details/1395302682513
The introduction of Value Added Tax (VAT) in the UAE has served an opportunity for small and medium enterprises (SMEs) to review their processes and identify opportunities to streamline operations.
“VAT in the UAE was introduced to boost the development of the economy. However, SMEs in the country have also been able to introduce governance in their operations with the introduction of the new tax. As VAT requires the businesses to adjust prices, processes and procedures it offered an opportunity for many companies to review and audit their business practices, make use of digital tools and cut costs on unnecessary expenses,” said Mohammed Fathy, General Manager of Dubai-based consultancy, Al Dhaheri Jones & Clark.
Introduction of VAT has helped businesses adapt digital solutions wherever possible. From record-keeping to filing returns, VAT has allowed SMEs to align their processes. Additionally, businesses have had the opportunity to train teams and make them familiar with not just VAT regulations, but also internal operations.
In addition, VAT compliance has served as an opportunity for SMEs to refresh existing investments in business applications and introduce new business efficiencies, better customer engagement, employee empowerment and potential new business models, which has streamlined the governance and operations across companies.
“While VAT compliance mandates SMEs to integrate and report in accordance with the Federal Tax Authority (FTA) rules, it also requires businesses to implement practices that comply with these rules. This gives them an opportunity to automate workflows, provide real-time data insights, and also transition to a digital system which is not just fast and quick, but also safe and secure. Overall, the introduction of VAT has served as a boon for the SME industry, which has helped them integrate and implement governance across functions, departments and operations,” added Mohammed Fathy.
FTA meets 20 accredited tax agents, calls for greater compliance
Date: 16 Apr, 2018
External URL: http://wam.ae/en/details/1395302682420
Khalid Ali Al Bustani, Director-General of the Federal Tax Authority, FTA, held a meeting with 20 accredited tax agents to discuss their duties in terms of spreading awareness among businesses, supporting them in complying with the tax system, and strengthening the relationship between the FTA and taxable persons.
The meeting went on to explore the means of increasing cooperation and coordination among all stakeholders in order to increase compliance and spread awareness around the tax system, its principles, and ways to implement and monitor it. Furthermore, the tax agents were introduced to the support services provided by the Authority to help taxpayers comply with the laws while ensuring minimum impact on their activities.
“The tax agent’s profession requires advanced qualifications, know-how, competencies and practical experience in order to be able to perform his/her role with accuracy, and to meet stringent standards,” asserted Al Bustani, adding that tax agents registered with the FTA can be assigned to any person or entity for the purpose of representing them with the Authority, and assisting them in carrying out their obligations and exercising their tax rights.
Federal Tax Authority starts roadshow on VAT
Date: 15 Apr, 2018
External URL: http://wam.ae/en/details/1395302682220
The Federal Tax Authority (FTA) has launched a roadshow to communicate directly with businesses subject to Value Added Tax (VAT) that haven’t registered yet, urging them to benefit from the exemption given by the Authority until April 30, 2018, which took into consideration the lack of preparedness among businesses in an effort to promote compliance and help them avoid administrative penalties.
In a press statement issued today, the Authority explained that the new initiative, which went into effect as of early last week and will run until April 24, 2018, is organised in collaboration with economic departments and some municipalities across all seven emirates. The roadshow will see a team of FTA tax experts and analysts, as well as representatives from the Tax Registration Department, go on a tour covering the entire country, organising interactive seminars and workshops to introduce taxable businesses to the three-step registration procedure, which can be completed in 15-20 minutes -when all requirements are well prepared- through the Authority’s official website.
Besides spreading awareness of VAT registration procedures, the FTA explained that the new initiative seeks to listen to taxable businesses that have not yet registered for VAT, in order to identify and address the reasons and obstacles that have prevented them from doing so. The Authority indicated that these workshops are organised in coordination with economic development departments and some municipalities, who invite unregistered businesses to attend these seminars at the customer service centres of each emirate’s department of economic development.
The Federal Tax Authority will announce the tour on social media in order to expand the scope of beneficiaries. The first meeting brought the FTA experts together with businesses subject to VAT in Ras al-Khaimah. The tour started in Abu Dhabi Department of Economic Development (DED) on Sunday, April 15, followed by Dubai DED on Monday, April 16, and then two consecutive sessions in Ajman DED on Tuesday and Wednesday, April 17 and 18. On Thursday, April 19, the FTA experts will be in Sharjah DED, before moving on to Umm Al Qaiwain on April 22 and 23, and then wrapping up the tour in Fujairah Municipality on April 24.
The Authority has called on businesses to attend these events in order to have all their queries and concerns answered by a team of experts, in order to overcome any obstacle preventing them from registering for VAT. The FTA reiterated its commitment to coordinating with local and federal authorities to ensure transparency and a smooth implementation of the UAE tax system that does not affect business operations in any sector.
98.8% compliance with Tax Return regulations
Date: 11 Apr, 2018
External URL: http://wam.ae/en/details/1395302681284
Tax compliance in the UAE is one of the highest in the world, as 98.8 percent of all businesses and groups registered for Value Added Tax, VAT, have complied with submitting their Tax Returns on time, where the rate increased after follow-ups from the Federal Tax Authority,FTA, asserted Khalid Ali Al Bustani, Director-General of the FTA.
His remarks came during the media roundtable held in Dubai on Wednesday to look back at the first 100 days of VAT, which went into effect on 1st January 2018.
Al Bustani stated that this high level of commitment is due to the guidance provided by the FTA, as well as the clarity and simplicity of the procedures, which allow taxable persons to submit tax returns and pay their dues online, any time and from anywhere. Users can access the e-Services portal on the Authority’s official website, which was designed in accordance with international best practices to provide diverse and flexible payment solutions, as well as information and guidance to promote tax awareness and help businesses meet deadlines.
This advanced system now has 275,000 registrants, Al Bustani explained, noting that it allows taxable persons or their representatives to complete all procedures without having to be physically present at the authority. Starting from opening up an account on the portal, to registering for VAT, to paying due taxes.
VAT is bringing about a 'change' in payments
Date: 09 Apr, 2018
The 5% VAT levy on goods and services is bringing a change in the way retail merchants have to manage ‘change’. Items with the 5% VAT have changed the price from 5.00 to 5.25, thus expecting either the customer to give the 25 fils coins, or take back 75 fils from the merchant.
The UAE government has clarified that there is no scarcity of small coins, however merchants have to gear up now to handle a larger volume of coins.
However, retail will see a bigger impact when more and more customers switch to a cashless mode using their debit cards. The bank charges on debit/credit card will impact profitability that is already under stress due to the 5% VAT.
Gold Losing Its Luster In Dubai As Market Struggles With 5% VAT
Date: 09 Apr, 2018
While investment demand has picked up in the global gold market, physical demand remains lackluster as seen in Dubai, the world’s epicenter of the bullion market
The struggling physical market was a key topic among participants during the seventh annual Dubai Precious Metals Conference. Chandu Siroya Vice Chairman, Dubai Gold & Jewellery Group noted that physical gold demand has dropped significantly since the start of the year after a 5% value-added tax was added to purchases with the United Arab Emirates.
According to reports, wholesale gold jewelry sales in UAE’s gold district saw a decline of as much as 60% in the first three months of the year as a result of the VAT.
“A lot of companies didn’t sell for the first 20 days after the VAT came in, and only later got back to selling,” Siroya said during a panel discussion at the conference. “We also saw that around 20 offices became available for rent in the gold souk. Unfortunately, the market is down significantly, both at the wholesale and retail levels.”
The dismal description of the UAE’s first-quarter gold demand comes after a dismal 2017. Stats from the World Gold Council showed that jewelry demand fell to a 20-year low last year to 42.8 tonnes.
Jewellery industry, government in talks to levy VAT only on making-charges
Date: 09 Apr, 2018
The gold and jewellry industry in Dubai is talking to the government to levy value-added tax (VAT) only on the making charges of the jewellry rather than the whole single piece as the new tax regime has taken shine off the yellow metal in the first quarter of this year.
Chandu Siroya, vice-chairman, Dubai Gold and Jewellery Group (DGJG), said the group has proposed that VAT to be implemented at the labour component only.
“We are talking to different sources in the government and we are very hopeful about the positive outcome of it. The government will find some solution for us… And we will go back to become a preferred choice.”
Gautam Sashittal, CEO, Dubai MultiCommodities Centre (DMCC), said: “What is important for us is to remain competitive as an industry globally. Even though the underline value of metal is quite significant, the actual margins are very small. So even 5 per cent VAT can make a big difference. So we and DGJG have made representation on how VAT regime could work and these discussions are ongoing at the moment.”
Sales of gold jewellery will spurt if VAT is levied only on the value-addition of the gold jewellery. As witnessed prior to the introduction of VAT on January 1, 2018, demand for gold jewellery had increased substantially in Dubai both from the residents and tourists.
Beware of VAT fraud
Date: 27 Mar, 2018
External URL: https://www.khaleejtimes.com/beware-of-vat-fraud
The introduction of the value added tax (VAT) in the UAE will bring forth a number of benefits to the country’s economy and business environment, but experts warn business owners to beware the threat of fraud.
Speaking at an event at the Dubai Chamber on Tuesday, experts from management consultancy, Metis, said that issues such as increased stress on working capital, the disruption of existing banking arrangements, and an increased vulnerability to fraud in the most extreme of cases, are potential pitfalls that many business owners and industry professionals haven’t considered yet.
“The VAT has become a very important strategy tool for the UAE government,” said corporate advisor, Grant T. Huxham. “Usually, taxation, of any kind is very clear, but there are certain codes and phrases that business owners need to be aware of. One area that has left some business owners with questions are freezones. There are 14 listed freezones that are not taxable, however you also have to be aware that there are certain freezones where the tax does apply. This is where issues of fraud can happen.”
Companies which are particularly vulnerable, include small and medium sized enterprises, which according to the UAE Ministry of Economy, represents more than 94 per cent of the total number of companies operating in the country.
Huxham cautioned business owners to beware of fraudsters, especially if they regularly engage with freezones. “Many companies from overseas will send you an invoice saying that they are going to tax you, because of the VAT law. This is a case of fraud if they are not registered to collect the tax in the UAE. My advice is to set up a meeting with the relevant authorities and to ask for clarity on the topic if you are unsure. The location of the delivery of the service is important because that will determine if the VAT will be applicable to you or not.”
Limited VAT impact on real estate sector
Date: 20 Mar, 2018
External URL: http://wam.ae/en/details/1395302676096
The Federal Tax Authority, FTA, and Dubai Land Department, DLD, have confirmed that the UAE’s recently introduced VAT will have a limited impact on the real estate sector.
FTA and DLD have stated that all real estate transactions, with the exception of the sale of vacant commercial properties and commercial property leases, will be either not subject to or exempt from the five percent VAT, while leased commercial property will not be considered a supply during their sale by the taxable person and will therefore not be taxable.
The components of the tax-exempt real estate sector include bare lands, provided that they are sold or leased when no building or engineering works are on such lands. Upon commencement of any real estate development work, tax will be applied.
Residential buildings are not taxable if sold or rented. These include apartments, buildings, residential villa complexes, housing for workers and students, accommodation for armed forces and police, and homes for the elderly, orphans and nursing homes. The law stipulates that the period of the lease shall be more than six months or to the holders of the identity card issued by the Federal Authority for Identity and Citizenship. However, this does not apply to buildings not fixed on lands, hotels and hotel apartments, or apartments offering services in addition to housing.
85% components of Dubai's property sector not subject to tax
Date: 20 Mar, 2018
No VAT on sale of leased commercial property by taxable person, says FTA
Leased commercial property will not be considered a supply during its sale by the taxable person, therefore, it will not be taxable, the Federal Tax Authority (FTA) and Dubai Land Department (DLD) clarified on Tuesday.
Both the government entities emphasised that there has been a limited impact of value-added tax (VAT) on the UAE’s real estate as majority of the transactions are either not subject to or exempt from the five per cent VAT. Currently, only the sale of vacant commercial properties and commercial property leases are subject to taxation.
Sultan Butti bin Mejren, director-general of DLD, pointed out that 85 per cent of components in Dubai’s total real estate sector are not subject to VAT.
“When reviewing the details of sales, rents and other transactions, we found that the value of bare land sales, residential properties, and occupied commercial and retail properties comprise the largest percentage of total properties traded during 2017. This ratio is expected to remain over the coming years and even stands to increase with commercial offices continuing to improve their leasing operations and minimise empty units,” he added. Sailesh Jatania, CEO of Gemini Property Developers, said it would be a big relief for the buyers to exclude sale of the leased commercial supply by a taxable person from the taxation.
He confirmed that there is a limited impact of VAT on the residential property but there is a direct impact on the commercial property. “As far as commercial property is concerned, the cost for the buyer is high. Buyers are demanding to reduce the price of retail units, because they have to pay VAT as well,” he said.
FTA urges consumers to ask for invoices
Date: 18 Mar, 2018
External URL: http://wam.ae/en/details/1395302675581
The Federal Tax Authority, FTA, has urged all consumers in the UAE to request tax invoices from retailers when purchasing products or services subject to Value Added Tax, VAT, to prevent attempts to manipulate the tax system.
The Authority urged all taxable businesses to issue tax invoices when providing any supply, in order to avoid administrative penalties. In a new awareness message issued today, and as part of the FTA’s consumer awareness campaign “Be Aware of Your Rights”, the Authority stressed that failure to issue a tax invoice or alternative document when providing a product or service will expose the taxable business to an administrative penalty of AED5,000 for each tax invoice or alternative document. Similarly, failure to issue a tax credit note or alternative incurs an administrative penalty of AED5,000 for each notice or alternative document.
The FTA urged consumers to verify the VAT amount on prices displayed in tax invoices. The Authority has launched online instruments and services to enable consumers to easily verify the value of the tax – namely, the VAT Calculator, launched in January – as well as to ensure that the issuer of the invoice is actually registered with the FTA, through the TRN Verification service.
New Guide - Taxable Person - issued by FTA
Date: 15 Mar, 2018
FTA has released a new guide book titled TAXABLE PERSON GUIDE FOR VALUE ADDED TAX dated March 1, 2018.
This guide is the main reference guide to VAT in the UAE. It provides with:
– an overview of the main VAT rules and procedures in the UAE and how to
comply with them;
– assistance with the more likely questions that businesses might have; and
– references to more specialised publications where they have been published.
It replaces the previous guide on the same subject.
You may download the guide at the following URL: https://www.tax.gov.ae/pdf/Taxable-Person-Guide-Issue-1-March-2018.pdf
KPMG sheds light on VAT challenges in Saudi, UAE
Date: 14 Mar, 2018
Around 100 business leaders and senior finance executives gathered yesterday at an event organised by KPMG in Bahrain to review and debate the first 100 days of VAT in the GCC and the lessons to be learnt for Bahraini businesses from the introduction of value-added tax (VAT) in the Kingdom of Saudi Arabia (KSA) and the United Arab Emirates (UAE).
The half-day seminar, ‘VAT compliance for Bahrain businesses in KSA and UAE: the do’s and don’ts in Bahrain and beyond’ examined the current implications on Bahraini businesses with operations in or with Gulf countries that have already implemented VAT, how to tackle these, how to ensure a correct tax treatment from business partners and what to expect in Bahrain including process and technology solutions.
Businesses must display VAT inclusive prices to avoid penalties
Date: 13 Mar, 2018
External URL: http://wam.ae/en/details/1395302674234
The Federal Tax Authority, FTA, has asserted that all businesses subject to Value Added Tax, VAT must display prices of goods and services inclusive of tax in order to avoid administrative penalties.
The authority called on consumers and service recipients in the UAE to be aware of their rights, noting that prices displayed on items – or announced for provided services – should be inclusive of tax.
The displayed price should be the total amount that consumers will pay upon receiving the Tax Invoice, which should include the full price, followed by the total price to be paid and the amount of tax charged therein.
Late registrations penalties waived till end of April
Date: 05 Mar, 2018
The UAE Federal Tax Authority extended the exemption period for administrative penalties for late VAT registrants until the end of April to help businesses get ready for the five per cent levy introduced on January 1.
“The Board [of directors of the Authority] approved a plan to exempt businesses that are late in registering with the Authority from administrative penalties until April 30, 2018,” the authority said in a statement on Wednesday. “This takes into consideration the lack of readiness of some businesses during the first phase of VAT implementation, and reflects FTA’s commitment to assisting businesses and encouraging them to be compliant with the tax procedures and to avoid administrative penalties.”
About 260,000 companies out of an estimated 350,000 have registered for VAT, the authority’s director general Khalid Al Bustani said in January, but the FTA is showing leniency in terms of imposing fines for late registration. To help companies comply correctly with VAT regulations, the authority extended the deadlines for filing tax returns, a move experts say will help struggling businesses.
However, the VAT will be applicable from January 1, 2018 as for all other businesses.
FTA signs MOU with Central Bank for Tax Collection
Date: 26 Feb, 2018
The Federal Tax Authority (FTA) has signed a Memorandum of Understanding (MoU) with The Central Bank of the United Arab Emirates to facilitate tax collection through the UAE Funds Transfer System (UAEFTS) that offers a timely processing of fund transfers between bank accounts.
The UAEFTS will facilitate the payment of tax using the GIBAN (Generated IBAN) issued by the FTA to registered entities. This is closely linked to the TRN of the person paying the tax and the FTA unique entity identifier code 868.
As a remitting institution, the CB103/CB102 shall be used to accept and process tax payments to the credit of FTA in UAEFTS.
Key elements required for in CB102/CB103 that will need to be provided by the taxable entity:
- Purpose of Payment [TAX / GRI]
- Amount to be Paid to FTA
- GIBAN [The IBAN representation of the TRN of the Taxable entity]
Abu Dhabi's DED closes 15 commercial facilities for price hike violations
Date: 21 Feb, 2018
External URL: http://wam.ae/en/details/1395302668566
The Department of Economic Development, DED, in Abu Dhabi shut down 15 commercial facilities in the emirate during the month of January due to price hikes on goods.
Ahmed Tarish Al Qubaisi, Acting Director of the Commercial Protection Administration, said that the DED has conducted 98 campaigns, 50 of which were implemented in Abu Dhabi, 28 in Al Ain and 20 in the Al Dhafra Region. The campaigns focussed on the major points of sale and shops in the markets, which are visited by significant numbers of consumers to ensure that these facilities do not raise prices unjustifiably and that they implement VAT for the facilities that are registered in the tax system of the Federal Tax Authority.
He noted that a total of 3,520 inspections were conducted throughout January, 1,350 of which were in Abu Dhabi, 1,120 in Al Ain and 1,050 in Al Dhafra. As a result of these inspections, 85 tickets were issued, 47 of which were issued in Abu Dhabi, 34 in Al Ain, and 4 in Al Dhafra.
Al Qubaisi said that tickets were issued against those facilities that collected VAT without being registered in the tax system of the Federal Tax Authority and increased prices excessively for the period preceding the implementation of the tax by checking the previous bills. This is as per Item No. 77 of the Tickets Schedule in which it is stated that additional fees or services are imposed on the consumer unjustifiably, and Item No. 72 regarding the failure to adhere to the undertaking and the circulars presented by the DED or the instructions, conditions and controls issued by it.
Al Qubaisi called upon the consumers to contact the DED through the Contact Centre of the Abu Dhabi Government in case they detect any explicit violations in VAT implementation.
Filing returns in 4 Steps - Guide issued by FTA
Date: 19 Feb, 2018
External URL: http://wam.ae/en/details/1395302668161
The Federal Tax Authority, FTA, has issued 50 guides and e-learning modules covering some legislative and implementation aspects of the UAE’s tax regulations as part of the authority’s comprehensive awareness campaign.
Khalid Ali Al Bustani, FTA Director-General, said that this step reflects the FTA’s continued commitment to adopting the highest standards of transparency and accuracy in implementing tax procedures. The guides and e-learning modules cover many tax aspects, including import and export declaration, registration for Excise Tax, Value Added Tax, and Tax Groups, Excise Tax refund, filing tax returns, warehouse keepers and designated zones.
The announcement coincided with the launch of the FTA’s comprehensive awareness campaign, “Filing returns in 4 Steps”, which seeks to familiarise businesses registered for VAT purposes with the FTA’s advanced online system. The FTA’s online tax system was launched earlier this month, and started receiving tax returns for the first tax period, which ended for some businesses on 31st January, 2018, as these are now required to file their returns before 28th February, 2018.
Al Bustani called on businesses and specialists to benefit from these guides and e-learning modules to raise awareness among stakeholders and provide a comprehensive introduction to the UAE tax system with all its legislations and mechanisms. This will enable the FTA to obtain accurate and comprehensive information, which helps promote tax culture among the various business sectors, thus ensuring the successful implementation of the tax system.
For more visit https://www.tax.gov.ae/e-learning.aspx
UAE and KSA will be the only GCC country with VAT this year
Date: 18 Feb, 2018
“Kuwait, Qatar, Bahrain and Oman will need more time than expected for implementing the GCC agreement to introduce Value Added Tax, even though Saudi Arabia and the United Arab Emirates have already implemented the tax”, says the Deputy Director of Financial Affairs Department at International Monetary Fund (IMF) Abdelhak Senhadji.
In December 2017, Saudi Arabia and the UAE introduced excise taxes on energy drinks, fizzy drinks and cigarettes, and they introduced VAT one month later. Bahrain had also introduced excise taxes in December 2017 but the government suspended the introduction of VAT until a joint committee of the Cabinet and the parliament decides on a mechaplot nism to help Bahrainis with limited income to deal with the consequences of implementation of the tax system.
According to a report issued by the ratings agency S&P last month, Qatar was not expected to introduce VAT in this phase as it was faced with the threat of a boycott and the closing of travel, trade and diplomatic ties by the UAE, Saudi Arabia and Bahrain.
UAE VAT to stay at 5%, affirms Minister of State for Financial Affairs.
Date: 13 Feb, 2018
The UAE’s government has no intention of raising the current rate of Value-Added Tax (VAT) or excise tax in the medium term, Obaid Al Tayer, the country’s Minister of State for Financial Affairs confirmed.
“If you’re referring to the next five years, we don’t see anything [relating to] increasing the VAT rate or the excise rate. I also want to confirm that there aren’t any studies or any legislation regarding introducing income tax,” Al Tayer told reporters in Dubai on Saturday.
Apparently the minister was quashing the social media chatter on VAT to be increased to 10% in the near future.
FTA urges businesses to complete and submit tax returns for the first tax period before February 28
Date: 03 Feb, 2018
External URL: https://www.tax.gov.ae/filling-vat-returns.aspx
The Federal Tax Authority (FTA) has set up integrated electronic systems to allow Taxable Persons to register, file tax returns and pay their due taxes seamlessly, asserted FTA Director General His Excellency Khalid Ali Al Bustani.
The system encourages voluntary compliance, H.E. Al Bustani said, calling on all businesses registered with the Authority – whose first Tax Period ends on January 31, 2018 – to file their returns for the first Tax Period no later than February 28, 2018. The FTA Director General reiterated the importance of early preparation for submitting tax returns within the set timeframes, reminding registered businesses to submit their tax returns on a monthly or quarterly basis, as determined by the FTA based on their annual revenue, and within the deadlines set in Federal Decree-Law No. (8) of 2017 on Value Added Tax, as well as its Executive Regulation.
H.E. Al Bustani noted that the Federal Tax Authority had made some exceptional adjustments to the first tax periods for VAT in order to afford more flexibility to businesses following requests from a large number of businesses subject to VAT, which entered into effect in the UAE on January 1, 2018. These exceptional adjustments included extending Tax Periods from one to three months for some businesses at the beginning of implementation in 2018, with Tax Periods returning to a monthly basis later on.
The first quarterly Tax Period – which was meant to expire by the end of January or February 2018 – was extended, H.E. reminded, by merging it with the following period, making the first Tax Period four months for some businesses and five for others. Meanwhile, businesses whose first Tax Period was three months ending in March 2018 were not included in these adjustments.
VAT TRN is sufficient, no need to ask fro VAT Certificate
Date: 27 Jan, 2018
External URL: http://wam.ae/en/details/1395302662854
The FTA has urged businesses to conduct transactions on the basis of TRN (Tax Registration Number) and not to insist on VAT Certificates.
Many businesses that did not meet the deadline for registration have been issued with provisional TRN and as such are not able to download the VAT certificate from the FTA site. In light of these business partners may conduct business on the basis of TRN and not have to insist on VAT Certificates.
The Federal Tax Authority, FTA, has confirmed that businesses are not required to present a tax certificate in order to conduct their commercial activities and can simply use their Tax Registration Number, TRN.
In a statement issued on Saturday, the Authority called on all businesses and stakeholders in the UAE to carry out commercial or other transactions using TRNs provided by businesses, urging them not to require tax certificates in order to ensure smooth operations and minimise disruption of work.
Committee of Consumer Protection reviews VAT impact
Date: 27 Jan, 2018
External URL: http://wam.ae/en/details/1395302662885
The Higher Committee of Consumer Protection is ensuring continued coordination between all state departments concerned with the Value-Added Tax to corroborate consumers’ confidence in the market stability and sound application of the tax and prevent any unjustifiable price hikes, Sultan bin Saeed Al Mansouri, Minister of Economy, has affirmed.
The minister’s remarks came at a meeting of the Higher Committee of Consumer Protection at the Ministry of Economy in Dubai recently.
“The committee received growing calls from the consumers during the first days of the VAT application. People had some concerns, but their worries have ebbed with the passage of time and by the end of the first fortnight of the application, the calls received by the committee declined from 3261 on the first day of the application to 493 on January 15,” said the minister at the meeting.
Khalid Ali Al Bustani, Director General of the Federal Tax Authority (FTA), who attended the meeting, said the complaints received by the committee address three main issues: price hikes, tax registration numbers and erroneous calculation of VAT on some commodities.
“Traders and departments against whom the complaints were filed have been notified and were given a grace period to rectify their strategies as per the tax rules and condition,” Al Bustani added.
“The committee is in constant follow-up of the market to prevent any violations and in case of any non-abidance, all legal measures have been taken against the violators,” Mohammed Ahmed bin Abdul Aziz Al Shehhi, Undersecretary for Economic Affairs in the Ministry of Economy, who attended the meeting, said.
DUBAI, 27th January, 2018 (WAM)
VAT cannot be charged if older contracts are silent on VAT
Date: 26 Jan, 2018
Health clubs cannot charge VAT on membership contracts issued last year – unless they made clear reference to the tax at the time, a senior government official has said.
Ahmad Al Zaabi, acting director of consumer protection at Dubai Economy, said gyms and other clubs could only charge VAT, or any other tax, on contracts signed last year “if the documented agreement terms specified the same”.
His comments came after Fitness First members became embroiled in a dispute with the health club over VAT being applied to memberships signed and paid for last year.
Many members have complained about demands from the company to pay the tax for the 2018 portion of their membership, with some claiming they were denied entry to the club until the tax was paid.
Mr Al Zaabi said: “For example, the agreement should state that the fee applicable does not include VAT or any of the tax concerned, and also specify that the merchant reserves the right to charge VAT or any other tax that may be implemented in the country at any point during the agreement period.”
He said if this does not happen, the contact will be considered “silent” and the merchant “cannot charge VAT from the consumers, or to gain an accepted settlement with their consumers”.
Tourist VAT refund coming soon, says FTA
Date: 24 Jan, 2018
In a recent press conference, the FTA chief Khalid Al Bustani said they are in talks with four international firms to establish refund centres at airports for facilitate refund of VAT to tourists departing UAE.
These firms have experience in managing refund of VAT and will be soon finalized.
In the same meeting the FTA also announced that over 260,000 businesses and 10,000 groups have already registered.
Online Shopping Purchases Subject to VAT
Date: 19 Jan, 2018
External URL: https://www.tax.gov.ae/online-shopping.aspx
The Federal Tax Authority (FTA) has confirmed that all purchases made through online shopping portals are subject to the same 5% Value Added Tax (VAT) as any other purchase made through traditional outlets if the products purchased online are received within the United Arab Emirates.
The Authority explained in an awareness flyer issued today that according to Federal Decree-Law No. (8) of 2017 on Value Added Tax and its Executive Regulations, all online sales are subject to VAT where a seller’s supplies exceed the mandatory registration threshold of AED375,000 over the previous 12 months or the coming 30 days.
FTA makes amendments to the first tax period
Date: 18 Jan, 2018
The Federal Tax Authority, FTA, has made some exceptional amendments to the first tax period for those subject to value-added tax, VAT, to be more flexible with the business sectors included in the tax.
The tax period for some businesses will, therefore, be four months, and five months for other businesses while businesses with a three-month tax period ending in March will not be affected by the amendments, he further added.
You can view the first tax period for your organization by logging into your account on the e-services portal on the FTA’s website.
As per the regulations, the tax declaration must be submitted to the authority no later than on the 28th day after the end of the relevant tax period.
FTA relaxes the timeline for filing the first VAT returns
Date: 16 Jan, 2018
The Federal Tax Authority (FTA) has relaxed the timeline for filing the first value-added tax (VAT) returns, easing reporting and compliance pressure on companies, especially SMEs.
The first tax return filing for companies with more than Dh 150 million turnovers was one month. For others, it was quarterly. Now, firms can file their first tax returns after four or five months in June as per the new timelines appearing on the FTA’s dashboard after log-in by a member company. Such an extension in filing returns shall help firms to better comply.
Government Declares which Free Zones are Exempt from VAT
Date: 09 Jan, 2018
The Cabinet has passed a decision on the Designated Free Zones for the purpose of the implementation of Value Added Tax.
The designated zones are special zones for VAT purposes, which are generally considered outside of the UAE in terms of value-added taxation. While VAT applies throughout the UAE, in the designated zones VAT generally does not apply. Only fenced free zones with special controls on goods and services going in and out could benefit from this status.
|No.||Designated Zone ( Abu Dhabi)|
|1||Free Trade Zone of Khalifa Port|
|2||Abu Dhabi Airport Free Zone|
|3||Khalifa Industrial Zone|
|No.||Designated Zone (Dubai)|
|1||Jebel Ali Free Zone (North-South)|
|2||Dubai Cars and Automotive Zone (DUCAMZ)|
|3||Dubai Textile City|
|4||Free Zone Area in Al Quoz|
|5||Free Zone Area in Al Qusais|
|6||Dubai Aviation City|
|7||Dubai Airport Free Zone|
|No.||Designated Zones (Sharjah)|
|1||Hamriyah Free Zone|
|2||Sharjah Airport International Free Zone|
|No.||Designated Zones (Ajman)|
|1||Ajman Free Zone|
|No.||Designated Zones (Umm Al Quwain)|
|1||Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port|
|2||Umm Al Quwain Free Trade Zone on Sheikh Monhammed Bin Zayed Road|
|No.||Designated Zones (Ras Al Khaimah)|
|1||RAK Free Trade Zone|
|2||RAK Maritime City Free Zone|
|3||RAK Airport Free Zone|
|No.||Designated Zones (Fujairah)|
|1||Fujairah Free Zone|
|2||FOIZ (Fujairah Oil Industry Zone)|
Traders not to charge more than 20 fils in addition to the bill amount
Date: 08 Jan, 2018
The Abu Dhabi Department of Economic Development (ADDED) on Thursday said that a small change of 10 fils and 5 fils can be rounded off to 25 fils and traders should not charge customers more than 20 fils in addition to the bill amount.
The statement comes after complaints from consumers that they are not being handed out the exact change after the purchase of items post introduction of VAT (value added tax) in the UAE from January 1.
Elaborating further, the Department8 said if the bill shows Dh10 and 5 fils, one may pay up to Dh10.25, and if the bill is Dh10.35 fils, it is fine to pay up to Dh10.50 fils.
“This is to stop any confusion about the lack of 10 and 5 fil coins in the market,” ADDED stated.
VAT is levied on most items including food and beverages, electronic goods, jewelry, among others.
Further, the consumer protection department of Ministry of Economy has warned traders to pay the exact change or face penalties. “The ministry emphasizes the right of the consumer to recover any amounts of money and no trader has the right to take any additional amounts on the goods,” Hashem Al Nuaimi, Director of Consumer Protection Department at the Ministry of Economy, told Gulf News on Thursday. He asked members of the public to report any complaint via the call center in the Ministry of Economy on the number 600522225, which works from 7 am to 10:30 pm.
VAT-free Salik recharge only if done online
Date: 02 Jan, 2018
There is a 5 per cent value-added tax (VAT) when you buy a Salik (toll gates) recharge card or tag from a petrol station or supermarket but no extra charge when you recharge your Salik account online or via the RTA website.
There is no VAT on Salik charge – it is still Dh4 deduction from smart tags every time a vehicle passes under these toll gates.
Last month, the Roads and Transport Authority (RTA) has clarified that VAT will not be levied on Salik or public transport facilities, after rumours on social media that VAT will also apply on Salik.
Passengers and commuters of public transport facilities like the buses, metro, tram and maritime transport, as well as cab passengers, will not be subject to VAT.
This is an excerpt from a Khaleej Times article and which you can read here.
Retailers warned against unjustified price hike
Date: 02 Jan, 2018
The Department of Economic Development (DED) in Abu Dhabi has warned it will monitor any price hikes after the UAE implemented value-added tax (VAT) from January 1 and asked consumers to report any violations and complaints.
The Department collected price details of products in 2017 from retailers and it will verify in the first quarter of 2018 to ensure that the price hikes are not beyond the permitted level in line with the implementation of five per cent VAT.
The UAE has levied VAT at five per cent following thorough research studies conducted by competent bodies at ministries and federal entities. Economists have projected that inflation in the UAE will marginally inch up due to VAT as the tax rate is one of the lowest in the world.
This is an excerpt of an article in the Khaleej Times which you can read here.
Provisional Tax Registration Numbers issued, says FTA
Date: 24 Dec, 2017
In a statement on Saturday, as reported in the Gulf News, the Federal Tax Authority has started issuing provisional tax registration numbers to Tax Groups, and will soon be issuing provisional tax numbers to individual businesses to ensure that there is no delay in the January 1, 2018 deadline for VAT roll-out in UAE.
It is presumed that the permanent numbers will be issued once the application has been fully reviewed and amendments made by business to ensure completeness.
Multiple stores 'change prices ahead of VAT'
Date: 23 Dec, 2017
A number of retailers across the UAE have begun raising prices ahead of the January launch of the VAT, according to members of staff at each store who asked to remain anonymous. Importantly, the staff members said the retailers who have raised prices are not yet collecting VAT and are not claiming to be charging VAT.
Retailers have a number of mechanisms they can use to try and pre-empt any negative impact from the introduction of a tax.
Multiple instances of price increases across stores including major pharmacies, fashion retailers, clothiers, and household goods sellers have been found. Speaking on the condition of anonymity because of the sensitivity of the topic, staff members said that they had been asked to reprice multiple products to reflect the introduction of VAT, before the tax is officially implemented on January 1, 2018.
Several retailers declined to comment for this story.
While stating that retailers taking advantage of customers under the guise of VAT was an important issue to address, the FTA’s Al Bustani emphasised, however, that any complaints about retailers increasing prices and not telling customers was “not [the FTA’s] responsibility,” as it was “not a tax issue.”
This is an excerpt from a news story in Gulf News which you can read here.
What UAE Property Buyers and Renters Need to Know Now
Date: 23 Dec, 2017
As the United Arab Emirates (UAE) is gearing up for the rollout of the first-ever tax in the country, here are the implications for the real estate sector
- Real estate brokering is defined as a service under the new UAE tax law, which will take effect 1 January 2018.
- This means that UAE residents renting or buying property in the UAE will pay an additional 5% to the UAE government, collected by their broker, on the total commission of a rent or sale.
For owners of residential properties, either homeowners or investors of residential buildings, there is no need to register for VAT as long as they do not have any other business activities. The first supply of a new residence that is upon the first handover by a developer is zero-rated within the first three years after its construction. Subsequent sale or rental of such property is exempt from VAT whenever such transaction occurs.
Owners of commercial property, however, will have to register with the Federal Tax Authority (FTA) if the value of supply (the lease and/or sale) over the preceding 12 months or the coming 30 days exceeds Dh375,000. The VAT rate for such sale and rent of a commercial property is 5%. However, such owner, by registering with the FTA, will generally also be able to recover VAT with respect to expenses related to the supply of the building.
This is an excerpt from a news article published in the Arabian Gazette and you can read it here.
No VAT on withdrawals from other banks' ATMs in UAE
Date: 22 Dec, 2017
The VAT will be payable only on the fee charged by the banks, which is a nominal amount of Dh2 per transaction. While many residents in the UAE are struggling to understand how the value-added tax (VAT) will impact the way they interact with their banks, experts say that there is no reason to be alarmed.
Customers will not be charged five percent VAT on the amount withdrawn from ATMs other than their own bank, rather only on the Dh2 fee charged by the banks, according to tax experts. The five percent VAT will be levied on the Dh2 fee charged by banks when withdrawing from ATMs of other banks – which translates to around a nominal 10 fils per transaction.
This is an excerpt from a Gulf News article which you can read here.
Government declares: No increase in salaries to reduce VAT impact
Date: 20 Dec, 2017
There will be no increase in salaries to cope with the levying of the value-added tax (VAT), Obaid Humaid Al Tayer, Minister of State for Financial Affairs, told the Federal National Council on Tuesday.
Al Tayer said the tax will have a minimal socioeconomic impact on people and investments.
In the medium term, the impact of the tax will be 0.11 percent and as the economy grows it will go further down, Al Tayer added. The minister told reporters after the House’s session that the government is ready for implementation of VAT, while the “readiness of the businesses is their own responsibility”.
Al Tayer told the House that the impact on current and future investments in the country is expected at 0.68 percent, adding that VAT is aimed at “achieving financial sustainability” for the government. The minister was answering questions about the implementation of VAT from the beginning of next year.
This is an excerpt from an article from Gulf Times and you can read the complete article here.
No plans to delay VAT in UAE for businesses
Date: 18 Dec, 2017
There are no plans to delay VAT for businesses or banks in the UAE and no company will be exempted or will be given an extension for applying, the Minister of State for Financial Affairs announced on Tuesday.
“The date is set for levying VAT from January 1, 2018, and the government is ready for VAT,” minister Obaid Humaid Al Tayer said during a session of the Federal National Council (FNC), held in its headquarters. During the session chaired by FNC Speaker Dr Amal Al Qubaisi, council members raised concerns over the readiness of businesses for VAT, and the impact of VAT on the overall national economy to the minister.
“The imposition of value added tax is a historic step forward,” said the minister, adding that it is a step forward towards achieving “financial stability”.
However, a statement by the Chairman of UAE Banks Federation, Abdul Aziz Abdulla Al Ghurair, revealed the concerns that banks in the UAE had over the VAT, highlighting that banks are not ready and require a six-month extension.
“The government does not like to postpone anything, so it’s impossible to exempt anyone from the tax. There will not be any favours given to anyone,” said the minister.
This is an excerpt from a Khaleej Times article and you can read the complete article here.
MCA on panel of VAT Clinic by Khaleej Times
Date: 15 Dec, 2017
Khaleej Times organized a VAT Clinic on 15th December at the Indian Consulate which drew a large crowd of professionals and businessmen.
Professionals from the Institute of Chartered Accountants of India (ICAI) Dubai Chapter clarified some of the misconceptions regarding the tax at the Indian Consulate in Dubai.
The VAT Clinic is organised by Khaleej Times in collaboration with the ICAI Dubai Chapter and Qadi Accountants.
Girish Chand, director of MCA Management Consultants, along with Manu Nair, CEO of Emirates Chartered Accountants Group; Sangeetha Nahar, senior manager of finance at Dubai Properties Group; and Dilip Jain, VAT lead at the ICAI VAT Faculty participated in this event.
“The reality of the tax has set in and we should do our best to prepare for it from next year,” he said. “The ICAI has looked at VAT in a very broad way,” said Madhukar Hiregange, chairman of the Indirect Tax Committee. “Our target is to have 500 people who are capable of training to be ready to help individuals very soon. Any expert that learns about VAT has the responsibility to raise awareness. One of the biggest challenges of VAT will be how business owners can continue to run their businesses in the region.”
Read more about it on the Khaleej Times Online Edition.
Education and health care largely escape VAT price increase
Date: 10 Dec, 2017
The Federal Tax Authority (FTA) delivered a piece of welcome news to UAE residents on Wednesday morning, when it confirmed that both education and healthcare will be zero-rated when the country introduces VAT next year.
There has been some confusion since August 2017, which the FTA blames on a mistranslation, as to whether or not private education would be subject to a 5 percent rate hike on January 1, 2018.
According to the long-awaited draft of the FTA’s executive regulations on VAT, the supply of educational services shall be zero-rated if the following conditions are met: Firstly, the institution’s curriculum must be in accordance with the Ministry of Education, and secondly, the institution must be recognized by the Ministry of Education.
You can read the complete article here.
UAE’s VAT on gold jewellery will be on the entire piece
Date: 09 Dec, 2017
The VAT (value-added tax) on gold jewellery will likely apply to the entire piece, which effectively means an additional payout of Dh7-Dh8 a gram at today’s prices, according to industry sources. But on gold bars, deemed as investible assets, no such tax will apply. (There will also be no duty on loose diamonds.)
Fine of Dh100,000 on retailers using VAT to raise product prices
Date: 07 Dec, 2017
A fine of Dh100,000 would be imposed on suppliers and retailers who raise prices of products more than the stipulated VAT (Value Added Tax).
According to Al Bayan newspaper, the Ministry of Economy stressed that it will slap a huge penalty on those who try to make an extra buck on the pretext of VAT.
Dr Hashim Al Nuaimi, director of the consumer protection department, said that in cooperation with other financial bodies in the country, the ministry has established a committee to monitor the markets before and after the implementation of VAT on January 1, 2018.
He added that the panel will conduct surprise inspections to ensure the implementation of VAT as well as the selective tax. Immediate action would be taken if the committee detects any violations, Al Nuaimi pointed out.
Read the complete article here.
Administrative Penalties for Violations of Tax Law in the UAE Declared by The UAE Cabinet
Date: 06 Dec, 2017
Cabinet Resolution No. (40) of 2017 on Administrative Penalties for Violations of Tax Law in the UAE
The Cabinet has issued Resolution No. (40) of 2017 on Administrative Penalties for Violations of Tax Law in the UAE. This Resolution outlines the scope of the resolution, general provision of the Administrative Penalty, methods of amending Administrative Penalties, the objections framework and responsibility of issuing Executive Decisions.
The Resolution is effective as of the date of its issuance on 24th September 2017, excluding table two which came into effect as of 1st October 2017, and table three which will come into effect as of 1st January 2018.
This Resolution includes the tables of Violations and Administrative Penalties appendix to the Cabinet Decision No. (40) of 2017, including table one, two and three.
No VAT on Salik, RTA clarifies
Date: 06 Dec, 2017
In a huge relief to UAE residents, the Roads and Transport Authority has clarified that value-added tax (VAT) will not be levied on Salik (toll gates) or public transport facilities.
The statement comes after rumours on social media that VAT, which is set to roll out in the UAE from January 1, will also apply on Salik.
There are seven Salik gates in Dubai, and a toll of Dh4 is automatically deducted from smart tags every time a vehicle passes under these toll gates.
Read the full article here.
No delay to UAE's VAT launch despite plea, says tax chief
Date: 01 Dec, 2017
The UAE is fully committed to introducing VAT on January 1 despite calls for it to be put back by a senior banker, it was announced on Wednesday.
Khaled Al Bustani, director general of the Federal Tax Authority, said in an interview with Arabian Radio Network that there would be no delay to its implementation.
He also said the authority is seeing a surge in registrations as the deadline for companies to register for VAT looms.
He claimed financial institutions in the UAE are not yet ready and needed more time to prepare.
But Al Bustani insisted there “is no discussion” about delaying agreements to bring in the new tax in the new year, adding that the law surrounding VAT clearly states that January 1 2018 is the start date.
Etisalat, du to charge VAT on products and services
Date: 29 Nov, 2017
The UAE’s telecom service providers, etisalat and du, will charge five per cent value added tax on the services and products they offer to the consumers in the country.
“Starting from the 1st of January 2018, most of etisalat’s products and services shall be subject to a five per cent value added tax in compliance with federal laws and regulations levying and regulating the tax in the UAE,” it said in a statement.
Du also said on its website that it would apply the standard VAT rate of five per cent from January 2018 to its products and services.
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, on Monday approved the executive regulations for VAT.
UAE Cabinet approves VAT Executive regulation
Date: 28 Nov, 2017
The UAE cabinet on Monday, 27 September, approved the executive regulation, which is expected to provide final details on how VAT will impact various goods and services.
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai, signed the Executive Regulation for VAT.
The United Arab Emirates cabinet on Monday approved the executive regulation of the value-added tax (VAT) that is expected to include all of the remaining details on the new tax’s impact on goods and services.
The UAE cabinet issued decree Number 52 of the year 2017 concerning the executive regulation of the Federal Law No. 8 of 2017 on value-added tax, which outlines the supply of goods and services in all cases, including supply in special cases.
According to the statement, the VAT executive regulation will also define details on mandatory and optional tax registration, as well as tax groups, exemptions and details on deregistration.
It will also include details on the tax due dates, where charges will be incurred, tax refunds and penalties in case of violations.
VAT will have moderate impact on UAE inflation
Date: 26 Nov, 2017
Inflation in the UAE is set to witness a moderate increase next year with the implementation of five per cent value added tax (VAT) from January 2018, analysts said.
“Inflation in the UAE is expected to be circa 2.5 per cent in the current year. Introduction of VAT in 2018 is likely to see this rise to over three per cent,” said Anita Yadav, head of fixed income research at Emirates NBD Research. She noted that there are multiple factors that affect inflation including interest rate hikes, currency strength and economic growth.
Akber Naqvi, executive director and head of asset management at Al Masah Capital, sees VAT increasing inflation by 1.5 per cent to two per cent in the first year post introduction. However, the impact will start to normalise in the following years as the initial impact will be factored in during the first year of introduction.
According to the International Monetary Fund, UAE inflation is projected to reach 3.6 per cent in 2018, almost 80 basis points higher than the estimated 2.8 per cent in 2017.
Tax Agents, Tax Accounting Software Vendors can now register in UAE
Date: 26 Nov, 2017
The Federal Tax Authority (FTA) has officially opened registration for individuals interested in working as tax agents and for tax accounting software vendors, in addition to providing the necessary technical support to help these vendors as they assist UAE-based businesses comply with tax regulations.
In a statement on Saturday, the FTA has defined standards and specifications that must be met by the tax agent, who is defined by Federal Law No. (7) of 2017 on Tax Procedures as any person registered with the authority in the register, who is appointed on behalf of another person to represent him before the authority and assist him in the fulfilment of his tax obligations and the exercise of his associated tax rights.
Who can be a tax agent?
The tax agent must be of good conduct and behaviour, never having been convicted of a crime or misdemeanour prejudicial to honour or honesty, irrespective of whether or not he may have been rehabilitated. He/she must hold a certified Bachelor or Master degree in tax, accounting or law from a recognised educational institution. If the applicant holds a bachelor degree in any other field, he/she may submit a tax certification from an internationally recognised tax institute.
Applicants must also provide a certification of relevant and recent experience of at least three years in either tax, qualified accounting or law, and a certificate proving their verbal and written communication skills in both Arabic and English. Furthermore, they must pass the Authority’s Tax Agent exam, provide a medical fitness certificate, as well as a copy of the liability insurance contract against professional errors. Candidates are to carry out their activity through a legal person licensed by the competent authorities.
Read the full article here.
UAE Government makes it convenient to file VAT Returns
Date: 22 Nov, 2017
The UAE has retained its top global ranking in terms of ease of payment of taxes, thanks to fewer taxes in the country. Analysts are unsure about the impact of the VAT on the country’s ranking, however , hey see the authorities going in the right direction with digital platform and regulations.
Released by World Bank and PriceWaterhouseCoopers on Tuesday, the Paying Taxes 2018 report noted that it takes just 12 hours to file taxes in the UAE as compared to 29 hours in Bahrain, 47 hours in Saudi Arabia, 55 hours in Luxembourg, 63 hours in Switzerland and 64 hours in Singapore. The report comes at a time when the UAE and Saudi Arabia are set to roll out value-added tax (VAT) at five per cent – which is also one of the lowest in the world – from January 2018.
Girish Chand, director, MCA Management Consultants, said that despite the UAE being the latest entrant in the VAT regime, it has adopted simple and logical implementation of VAT.
“This has been done by maintaining a single rate of taxation at five per cent and keeping very limited activities in the zero rated and exempt category. Also the tax return mechanism is very simple where the information required is at summary level. The tax authorities have facilitated an online return filing mechanism making it convenient to file the return,” Chand added.
Read the complete report here.
VAT-specific deadlines for owners of commercial properties
Date: 20 Nov, 2017
Owners of commercial properties in the UAE will need to keep in mind two deadlines related to the upcoming VAT.
One, they will need to register with the Federal Tax Authority if the sales or rental proceeds exceeded Dh375,000 in the previous 12 months. And, two, if the owners believe they are likely to generate more than Dh375,000 over the next 30 days.
These commercial properties could be used for offices, retail, hotel, F&B (food and beverage), or any such activity, and which will be assigned a 5 per cent VAT. But land sales for the purpose of building a commercial property is exempt from VAT’s ambit.
Read the full article here.
5% VAT on fuel from January 1 in Saudi Arabia
Date: 19 Nov, 2017
The standard Value Added Tax (VAT) of five per cent will be applied to purchasing petrol, Saudi Arabia’s General Authority of Zakat and Tax (GAZT) has said.
The confirmation was stated in a reply to an online question whether there would be a VAT rate of petrol. “The VAT rate of five per cent for petrol will be applied starting January 1, 2018,” GAZT said.
Last week, the authority said the local transport of passengers and goods within Saudi Arabia, and associated services would be subject to the standard 5 per cent VAT rate, with businesses collecting the tax from travelers upon purchasing the travel ticket.
However, it said that the international transport of passengers and goods will be zero-rated according to the Unified VAT Agreement for the Gulf Cooperation Council (GCC) and the VAT Implementing Regulations.
The zero-rated services include excess baggage and seat reservation fees, maintenance, repair and modification of qualified international transport, storage charges, port charges, parking fees, customs duties, customs clearance fees, transport-related fees, air navigation services fees and aircraft crews.
Read the full article here.
VAT Applicable on Food, Water and Electricity
Date: 12 Nov, 2017
The UAE residents will have to pay 5 percent value-added tax (VAT) on food, water and power and higher education from next year.
Girish Chand, director, MCA Management Consultants, said both Saudi and the UAE authorities have brought these categories under the VAT.
Khalid Al Bustani, director general of Federal Tax Authority said, the tourists in the UAE will also get refunds on the returns. He further said that they are working with the parties involved in the project.
Under the VAT regulation, higher education institutes which are more than 50 percent funded by the government, will not be charged VAT but the rest will be.
Khalid Al Bustani, director general of Federal Tax Authority, on Wednesday said the tourists in the UAE will also get refunds on the returns. He said the authority is working with the parties involved in the project and expected to be rolled out ahead of VAT implementation.
This is an excerpt from an article published in the Khaleej Times and you can read it here.
Fines for Tax violations could be upwards of Dh 50,000
Date: 10 Nov, 2017
The UAE government’s message to businesses is clear: Take taxes seriously, because non-compliance costs.
Earlier this month, the UAE Council of Ministers announced the penalties for failing to comply with the country’s new tax laws.
Set fines for failing to adhere to tax laws range from Dh1,000 to Dh50,000, however other violations will incur a penalty of 50 percent of the unpaid tax, which could be significantly more than Dh50,000.
Observers are quick to point out that penalties are an integral part of any legislation for non-compliance with tax laws.
Publishing the penalties has the added incentive of showing to people that the authorities are serious about implementing taxes throughout the UAE.
The excise tax, a duty on energy drinks, tobacco products, and carbonated drinks came into effect on October 1, while value-added tax (VAT) will launch on January 1, 2018.
Following repeated claims of VAT being delayed, Federal Tax Authority (FTA) Director-General Khalid Ali Al Bustani said earlier this month that these claims were false and the tax was fully on track to launch on January 1.
So how do these penalties compare to the rest of the world?
The vast majority of countries around the world have established tax programmes. Globally, the Gulf remains one of the last tax-free regions.
According to others, however, the UAE’s penalties are harsher when compared to Saudi Arabia’s, the only other Gulf country to have announced penalties. This is to enforce compliance among many businesses in the UAE who have never dealt with taxes.
Read the original article on Gulf News here.
Draft of the UAE Executive Regulations for VAT to be Released Soon
Date: 08 Nov, 2017
The UAE’s Ministry of Finance will release the draft of the Executive Regulation of Federal Decree-Law No (8) of 2017 on Value Added Tax in the coming few days which will provide more clarity and details on exactly what items will be taxed.
The Executive Regulations clarify several topics, including keeping accounting records and commercial books related to tax purposes, a period of record-keeping mechanism and saving.
VAT is set for implementation across the UAE from January 1, 2018, at a rate of 5 percent. The implementation comes as GCC governments grapple with lower oil prices, which are pressuring the governments’ revenues and hence, spending.
VAT will follow the rollout of excise tax in the UAE that began from October 1, and that impacted prices of tobacco products, carbonated drinks, and energy drinks.
Guidelines for Smooth VAT Rollout Issued by UAE Tax Authority
Date: 01 Nov, 2017
17 point guidelines for businesses to help companies in the UAE to transition to the new tax system
The UAE Federal Tax Authority (FTA) has issued a guideline to the local businesses for a smooth and effective imposition of the Value Added Tax System.
The newly-introduced VAT system is scheduled to go into effect on 1st January 2018, in accordance with the highest international standards.
The FTA said that the businesses must be aware of the following things before registering for the VAT system.
1. VAT is an indirect tax imposed on the supply of the goods and services. It is already implemented in over 150 countries, including all the 29 European Union states as well as Canada, New Zealand, Australia, Singapore, and Malaysia.
2. VAT is ultimately charged by the end consumers as it is charged at each step of the supply chain. Businesses only collect the tax on behalf of the government.
3. Businesses only pay the government the tax that they collect from their consumers. They may also reclaim from the government the VAT they had paid to suppliers.
4. VAT will provide the government a new source of income which will be used for the provision of various high-quality public services, including hospitals, roads, public schools, parks and civil services. The tax will also help the authorities to reduce its reliance on oil thereby building a stable and sustainable knowledge economy.
5. VAT rate has been fixed at 5 percent in the United Arab Emirates and is levied on the supply of all goods and services, including food, commercial buildings, and hotel services if no explicit provision is made to impose a zero rate or an exemption.
6. VAT’s zero rates is implemented on some goods and services, including health and education, gold for investment, the first supply of residential buildings, and the supply of international transport of passengers, goods, and exports.
7. VAT doesn’t apply to activities such as bare land, local transportation of passengers, the supply of residential buildings and the supply of some financial services.
8. Businesses involved in the supply of goods and services, which are subject to a zero rate, must register for VAT, but they can recover the VAT they incurred on their purchases. The businesses which supply exempt goods or services can’t recover VAT incurred on their purchases.
9. All those businesses must register for VAT whose taxable supplies and imports exceed the mandatory registration threshold of AED 375,000.
10. A business may register voluntarily for VAT if their supplies and imports are below the mandatory registration threshold, but exceed the voluntary registration threshold of AED 187,500.
11. A business with expenses exceeding the voluntary registration threshold may also register voluntarily for the VAT. This offer has specifically designed for the start-up businesses with no turnover yet to register for VAT.
12. All the businesses must apply for registration at the earliest. Failing to register by January 1, 2018, will result in fines as stipulated in Cabinet Decision No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE.
13. Businesses can register for VAT through the Federal Tax Authority’s website, which is available 24 hours a day, seven days a week.
14. Businesses can also form Tax Group which will be a useful tool to simply accounting for VAT. In this regard, the businesses that satisfy certain requirements covered under the Legislation – such as having a place of residence in the UAE and being related or associated parties – can form a Tax group.
15. Businesses are not allowed to impose VAT on any of their goods or services before January 1, 2018.
16. All the businesses must retain business records like Balance Sheet, Profit, and Loss, and records pertaining to fixed assets, payroll, inventory and stock levels as well as accounting records, including payments, receipts, purchases, sales, revenues, and expenses.
17. On their way to register for VAT, many businesses may be required to amend their core operations, financial management practices, the procedures they use to keep accounting books and records, and the technology they use in their accounting practices, in addition to changes in their human resources.
VAT to create 5,000 Jobs in UAE and KSA
Date: 12 Oct, 2017
External URL: http://www.arabnews.com/node/1176006/business-economy
DUBAI: Around 5,000 finance and accounting jobs would be generated with the introduction of the Value Added Tax (VAT) in the Gulf region, a tax law expert said on Wednesday.
The Unified Agreement for VAT of the Cooperation Council for the Arab States of the Gulf, which was signed by the six member states of the Gulf Cooperation Council, required signatories to enact domestic legislation that would introduce a 5 percent VAT on certain transactions.
Gulf states have been looking at other ways to reduce dependency on oil revenues, as well as create new income streams to fund government services including public health services, public owned or funded schools, parks and transport infrastructure.
It is estimated that the VAT’s imposition will raise between $7 billion and $21 billion annually — or between 0.5 percent and 1.5 percent of regional GDP. The IMF has said the returns could reach around 2 percent of region’s output.
Saudi Arabia and the UAE are expected to be the first Arabian Gulf countries to introduce the GCC-wide VAT on January 1, 2018, while other member states Kuwait, Qatar, Bahrain, and Oman have committed to implementing their own VAT taxation by next year.
Among the goods and service that would be subjected to VAT include electronics, smartphones, cars, jewelry, certain beverages, financial and accounting services, legal services, dining out and entertainment.
Certain services and goods such as nearly 100 food items, basic health services, transport and public education will be exempted from VAT.
The UAE has separately started to collect excise taxes at a rate of 100 percent on tobacco and energy drinks and 50 percent on fizzy drinks on October 1.
UAE's Federal Tax Authority Announces Service Fees and Administrative Fines
Date: 10 Oct, 2017
External URL: http://wam.ae/en/details/1395302635883
The UAE on Monday announced services fees and fines for non-compliance of value-added tax (VAT) laws as the country heads towards implementation of the consumer-focused taxation system from January 2018.
The regulations cover individuals, companies, tax agents and their legal representatives who come under the ambit of this new VAT regulations. The penalties range from as low as Dh3,000 and go up to Dh50,000 depending on the offenses committed by the entities or individuals.
As per the new regulations, if the person fails to keep required records and other information specified in the laws will be fined Dh10,000 in the first instance and Dh50,000 in case of repetition.
The law further states that if the person fails to submit data, records, and documents related to tax in Arabic to authority when requested, he would be penalized Dh20,000.
The UAE will implement 5 percent VAT – which is one of the lowest in the world – from next year on a host of goods and services as part of the GCC-wide agreement. As per the UAE regulations, companies that provide goods and services with an annual turnover of Dh375,000 or higher will be subject to VAT. While businesses with taxable supplies below Dh375,000 and above Dh187,500 will have the option to register. The UAE aims to raise Dh12 billion through VAT collections in the first year and Dh20 billion in the second year. Analysts and economist believe that the VAT will increase inflationary pressure in the country.
As part of the GCC deal, Saudi Arabia will also join the UAE from January 2018 while other Gulf nations will jump on the bandwagon at a later stage.
A press statement issued on Monday said the UAE Council of Ministers adopted Cabinet Decision No. 39 of 2017 on fees for services provided by the Federal Tax Authority and Cabinet Resolution No. 40 of 2017 on penalties for violations of tax laws in the UAE.
According to Federal Tax Authority, tax registration service and issuance of e-tax registration certificate will be free of charge but an attestation will incur a fee of Dh500. However, tax agents will have to pay Dhs 3,000 fee for registration and renewal for three years.
According to FTA, registration and renewal fee for an accounting software provider will be Dh10,000 for one year, whereas registering a Designated Zone will cost Dh2,000 per year.
However, there will be no service fee for registering a warehouse keeper or issuing an electronic warehouse keeper registration certificate. But an official printed certificate will cost Dh500.
You may refer to the following article for a complete list of the fines.
VAT Registration Final dates announced
Date: 08 Oct, 2017
The UAE FTA has announced that the online registration for VAT is now open.
- All businesses with a turnover of more than AED 150m should apply for registration before Oct 31, 2017.
- All businesses with a turnover of more than AED 10m should apply for registration before Nov 30, 2017.
- All businesses that must be registered before 1 Jan 2018 should submit their registration before 4 Dec 2017 to minimize the risk of not being registered for the beginning of the new year.
A business must register if
- The total value of its taxable supplies made within the UAE exceeds the mandatory registration threshold of AEED 375,000 over the previous 12 months, or
- It anticipates making taxable supplies with value exceeding the mandatory registration threshold of AEED 375,000 in the next 30 days
- If a business does not meet the threshold mentioned above then it is required to keep records which will enable the FTA to identify the details of the business activities and review transactions. The specifics regarding the documents which will be required and the time period required for keeping them can be found in Federal Law No (7) of 2017 on Tax Procedures and its executive regulation.
Businesses can register through the e-services portal on the FTA website, www.tax.gov.ae. You can contact the FTA Call center at 600-599-994 for any further assistance.
UAE VAT Registrations Now Open
Date: 02 Oct, 2017
External URL: https://eservices.tax.gov.ae/en-us/
The Federal Tax Authority (FTA) has launched the registration process for VAT Registration today, on October 1, 2017. Businesses that are eligible for mandatory registration are required to register via the FTA’s portal website.
In a prior statement, FTA said it will be assisting businesses in the UAE with regards to financial and technical systems to ensure readiness to comply with tax regulations. This covers both the excise tax in October 2017, and the Value-Added Tax (VAT), which will be implemented starting January 2018.
VAT is one of the most common types of consumption tax found around the world. Over 150 countries have implemented VAT (or its equivalent, Goods, and Services Tax), including all 29 European Union (EU) members, Canada, New Zealand, Australia, Singapore, and Malaysia.
VAT is charged at each step of the ‘supply chain’. Ultimate consumers generally bear the VAT cost while Businesses collect and account for the tax, in a way acting as a tax collector on behalf of the government. A business pays the government the tax that it collects from the customers while it may also receive a refund from the government on the tax that it has paid to its suppliers. The net result is that tax receipts to government reflect the ‘value add’ throughout the supply chain.
Taxable persons are required to settle their taxes within 15 days of the end of each month.
UAE Retail Sector will be affected by VAT
Date: 25 Sep, 2017
The appliances sector, especially consumer electronics, will be hardest hit by the introduction of value-added tax (VAT). As for other segments of the retail sector, the UAE’s first major tax will have varying degrees of impact.
This elasticity of demand, meaning the relationship between price and demand (a product type is considered elastic if demand drops when prices increase, and inelastic when demand isn’t changed by price increases), will impact how much retailers are able to absorb the cost of VAT.
Pricing strategies such as this will help retailers avoiding passing the entirety of the cost increase on to their customers.
According to Deloitte, however, products such as appliances, which have a high elasticity of demand, are not able to pass as much cost on to their customers if they are to remain competitive.
“When demand is perfectly inelastic (i.e. an increase in price has no effect on demand) retailers should be able to pass on the full burden of VAT to the customer. This is, however, seldom … the case,” said Deloitte in a research report on the impact of VAT on the retail industry across the Gulf.
The UAE and Saudi Arabia are among the first countries in the Gulf to implement the tax, that is expected to provide a new source of revenue for governments to spend on infrastructure and other public services.
The UAE is expected to issue VAT laws in the third quarter of this year and the online registration will begin in mid-September.
All businesses that meet the minimum annual income of Dh375,000 as confirmed by their financial records are required for compulsory registration with the VAT system.
Fines will be levied against the firms that failed to register with the system, the UAE’s Federal Tax Authority said earlier this month.
This is an excerpt from a news article published by The Gulf News. You can read the complete article by clicking here.
VAT can be Paid in Installments in Saudi, if Companies Meet Certain Criteria
Date: 20 Sep, 2017
Saudi Arabia’s General Authority for Zakat and Tax (GAZT) said it will allow the payment of value-added tax (VAT) charges in installments over a period of up to 12 months, a local newspaper said.
The authority stated this would be allowed if the person or entity being taxed presents evidence that they are unable to pay the tax when due, or are suffering hardship from paying the charges in a single payment.
The taxable person must send a request to the tax authority citing the reasons for inability to pay the tax by the due date. The authority will confirm whether the request is approved or rejected within 20 days
The Saudi tax authority has already opened registration for VAT on its online portal ahead of the official implementation of the tax starting January 2018.
Businesses are required to register for VAT by December 20, 2017 and the tax authority will impose a 10,000 Saudi riyals ($2,666) penalty on companies or entities that do not register within the deadline.
This is an excerpt from a news article published by Zavya. You can read the complete article by clicking here.
Theme Parks Tickets to Get Costlier Due to VAT in UAE
Date: 19 Sep, 2017
Set to be introduced in the UAE from January 2018, the five percent value-added tax on entertainment will result in an increase in the cost of water and theme park tickets in the UAE if the companies decide to pass on the tax burden to consumers, say tax experts.
Girish Chand, director at MCA Management Consultants, is of the view that there is no exempt category in the entertainment sector, hence all activities of the entertainment industry would come under VAT.
“It is expected that the ticket prices would be VAT inclusive considering that it is generally an advertised price. The service providers would have to review their profitability and decide whether they will absorb the VAT cost or pass on to the customers,” Chand noted.
The major theme and water parks in the UAE are IMG Worlds of Adventure, MotionGate, Bollywood Parks, Legoland, Wild Wadi Waterpark, Aquaventure Park, Ice Land Water Park, Dreamland Aqua Park and Ferrari World Abu Dhabi.
UAE residents, however, believe that there will be an impact initially but people will slowly adjust this increase in their entertainment budgets – especially for smaller families.
In Europe, entertainment is usually subject to the standard rate, which varies between 17 and 27 percent. In some cases though, when entertainment is offered by non-profit associations (e.g. theatre), it is exempt. In other cases, sometimes it is subject to a lower rate (e.g. cinemas).
This is an excerpt from an article published The Khaleej Times. To read the complete article click here.
Cloud Based ERP Solutions can achieve faster VAT Compliance
Date: 11 Sep, 2017
The implementation of Valued Added Tax (VAT) in Gulf Cooperation Council (GCC) countries next year will be a trigger for a massive wave of digital transformation as businesses prepare to ensure compliance with the new tax law, according to a new study by Oracle and Harvard Business Review (HBR).
You can read the original paper in our White Paper Section.
The study, based on a poll of 450 senior company executives from across the GCC, reveals 73 per cent of businesses consider VAT implementation a key opportunity to initiate wider digital transformation projects within their organizations.
With businesses required to automate their processes to ensure that transactions are captured flawlessly for VAT compliance, 66 per cent of respondents also said they would consider transitioning their business processes from on-premises systems to the cloud if major cost savings can be identified.
With the VAT compliance deadline quickly nearing, the Oracle/HBR study also explored the current VAT preparedness levels of businesses across GCC. While 21 per cent of respondents confirmed that they have initiated preparations to be VAT compliant; 30 per cent indicated that they currently have limited information on VAT.
On their biggest obstacles in their journey to be VAT-compliant, 68 per cent of surgery respondents said managing business process changes would be a key challenge.
This is an excerpt from an article published in the Gulf News. To read the complete article click here.
VAT to make it easier for SMEs to get bank loans
Date: 07 Sep, 2017
Obtaining credit facility from the banks will become easier for the small and medium enterprises in the UAE after the implementation of VAT as the companies will have to maintain their books from next year.
Pankaj Mundra, Chairman of the Institute of Chartered Accountants of India – UAE (Dubai) Chapter, says the major challenges for SMEs is that they have to maintain their books properly and regularly in order to be VAT-compliant.
Naveen Sharma, the vice-chairman of ICAI Dubai Chapter, states that the SMEs will be able to get more finance because their turnover will not be questioned by the lenders as their records will be clean.
The Institute of Chartered Accountants of India, Dubai Chapter, on Tuesday evening organized a technical seminar on up-coming value-added tax which was attended by 1,500 people. Justin Whitehouse, a partner, indirect tax, Deloitte & Touche (ME), Mayur Batra, managing director, Mayur Batra Group and Pugazhendhi, associate vice-president, Tally Solution, addressed the participants on the challenges faced by the companies and individuals prior to the VAT. The ICAI Dubai chapter added 600 new members in the last one year, reaching 2,200.
This is an excerpt from the article published in the Khaleej Times and you can read it by clicking here.
VAT and Excise Tax Plans and Procedures Approved by FTA
Date: 06 Sep, 2017
External URL: http://wam.ae/en/details/1395302630978
DUBAI, 6th September 2017 (WAM) — The board of the Federal Tax Authority, FTA, has finalised plans for the upcoming period, including procedures for the introduction of Excise Tax next month and Value-Added Tax, VAT, early next year.
The board approved these changes during its second meeting, which was chaired by H.H. Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance, with the attendance of its members from the Ministry of Finance in Dubai. The FTA board reviewed developments related to the issuance of laws that will regulate federal taxes in the country, such as Federal Law No. 07 of 2017 for Tax Procedures, Federal Decree-Law No. 07 of 2017 on Excise Tax and Federal Decree-Law No. 08 of 2017 on Value Added Tax.
Obaid bin Humaid Al Tayer, Minister of State for Financial Affairs and Deputy Chairman of the FTA Board of Directors, said that they are working on issuing executive regulations for these laws, to provide specific details about their implementation.
“We continue to steadily move forward in our preparations for the nation-wide tax laws in the UAE,” asserted H.H. Sheikh Hamdan bin Rashid. “The system we are developing will provide ample support for the sustainable social and economic development of the UAE; it will diversify revenue streams and establish sustainable sources of income, allowing the Government to carry on with its ambitious plans to develop future-ready infrastructure, and to continue providing high-quality services for the people.”
“We are entering a new phase in the implementation of the tax laws,” His Highness continued, adding, “as we gear up to inaugurate the registration process for taxable companies, as soon as all the necessary legislative, administrative and infrastructure requirements are met. The Federal Tax Authority’s website has been designed to meet the highest international standards, facilitate registration and offer a bundle of tax-related services.”
During the meeting, the Board of Directors adopted the proposed fees and fines, in accordance with the Authority’s responsibilities stipulated in Federal Decree-Law No. 13 of 2016 on the Establishment of the Federal Tax Authority. Also adopted were the violations outlined in Federal Law No. 07 of 2017 for Tax Procedures, Federal Decree-Law No. 07 of 2017 for Excise Tax and Federal Decree Law No. 08 of 2017 on Value Added Tax.
They also discussed the proposed options for the FTA’s new logo and reviewed the work of the completed workshops and awareness programs about the tax system, in cooperation with local chambers of commerce and industry. The first series of the awareness workshops on the principles of implementing a selective tax system and on VAT took place between March and May 2017, with 25 workshops being conducted with the participation of over 15,000 participants from various national business sectors.
The FTA started the second series of workshops in August 2017, in coordination with chambers of commerce and industry from various Emirates, targeting the various business sectors of the country. Separate workshops were conducted for each sector, including real estate, retail, import and export, as well as for companies that are subject to selective taxes. Ten workshops were already held, which saw the attendance of over 5,000 participants.
KSA Releases VAT Law
Date: 30 Aug, 2017
August 29, 2017 – KSA has released its final VAT Law and Regulations today. The GAZT had previously published its VAT Draft Implementation Regulations for public consultation in July.
Click here to read the final KSA VAT Implementation Regulations.
VAT will be implemented in the country on January 1, 2018, and businesses should start preparing for it and begin analysing how their operations will be affected.
The first step for businesses would be to confirm if they are required to register for VAT and make sure that they register according to the below-mentioned guidelines:
- If your company is large and has already registered itself for some other form of Tax in the Kingdom, then the company may be auto-registered for VAT. If you meet the above condition, you will receive a notification from GAZT but you still have to log-in to check and validate the information.
- If you have not received a notification but are eligible for VAT, you are required to start the registration process starting 28 August 20017.
- In the application process, you will have to provide information such as
- Are you an importer, exporter or both?
- Bank account details
- VAT eligibility start date
- Values of the VAT taxable supplies of 12 months
- Financial Representative details if you are not a Saudi National
The final regulations are different from the draft regulations issued before and businesses should take care to scrutinize the details.
You can access the final KSA VAT Implementation Regulations by clicking here.
UAE Petrol and diesel Prices to go up due to VAT
Date: 29 Aug, 2017
Five percent VAT will be applicable on both Petrol and Diesel when VAT will be implemented on January 1, 2018.
The President, His Highness Sheikh Khalifa bin Zayed Al Nahyan, on Sunday, 27 August 2017 issued Federal Decree Law No 8 for value-added tax with one of the lowest rates in the world.
Since petrol and diesel is a business activity, they would be subject to VAT, said Girish Chand, director MCA Management Consultants. “However, considering the low VAT rate and the insignificant composition in the overall spending of an individual, VAT on petrol and diesel would have a negligible impact,” Chand pointed out.
Chand explained that VAT rates are related to business activity, not end users, so there would not be different VAT rates for commercial and individual vehicles.
The UAE has aligned oil prices with international rates and they are adjusted every month by the Ministry of Energy.
For the month of August, the prices were revised upward by three fils with unleaded gasoline 98 at Dh1.89, unleaded gasoline 95 at Dh1.78 and unleaded gasoline 91 at Dh1.71; while diesel was increased by four fils to Dh1.88.
Based on this estimate, filling a 50-litre tank with unleaded gasoline 98 will today cost Dh94.5. Following the five per cent VAT implementation next year, the price will rise to Dh99.2. Similarly, the 2017 Land Cruiser 5.7 (EXR) with a 136-litre fuel tank capacity costs approximately Dh257 to fill unleaded 98 but following VAT, the consumer will have to shell out approximately Dh270.
This article is an excerpt from an article published on KhaleejTimes.com and you can read the complete article here.
Air travel, tution fees and doctor's fees to be VAT free
Date: 28 Aug, 2017
Air travel, tuition fees, and doctor’s fees will be free of VAT. On Sunday, August 27, The President, His Highness Sheikh Khalifa bin Zayed Al Nahyan, issued Federal Decree-Law No 8 on value-added tax which you can read here.
Five percent VAT will be levied on goods and services from January 2018 as a part of a GCC-wide agreement. Although tuition fees are exempt from VAT, extracurricular activities such as sports classes, music lessons, and school transport will be subject to VAT.
New residential buildings will be subject to zero rated during the first three years of operation after completion which is beneficial not only to prospective buyers of new homes but also good news for the UAE real estate sector. If a property buyer takes a unit directly within three years of completion of the project, the price will be zero rated and they buyer will be exempted from VAT if he wants to sell it later.
Air transport of passengers and goods which starts or ends in the state or passes through its territory, including related services, have been categorized as zero-rate d under the law. This is good news for the tourism sector as prices for hotels and restaurants increase with five percent VAT.
“International transportation (including airlines) is zero-rated. Similarly, the supply of local transport is exempt from VAT. The supply of international transportation of passengers and/or goods and its ancillary services are also zero-rated. The supply of local passenger transport in a qualifying vehicle, vessel or aircraft too is exempt from VAT,” said Girish Chand, director MCA Chartered Accountants.
The UAE is home to more than eight million expatriates from over 200 nationalities who fly regularly to their home countries in addition to traveling to other destinations of tourism.
Dubai International Airport received 43 million passengers in the first half of 2017, an increase of 6.3 per cent. In addition, a record 8.06 million international overnight tourists arrived in Dubai during the first six months of 2017, a 10.6 per cent increase over the same period last year.
Air travel would remain competitive for low-cost airlines who can price their fares more aggressively. At the same time, those who fly long haul on Emirates and Etihad will not have to pay extra on flights, particularly to the US where demand was seriously hit earlier this year due to the travel and electronics ban, he added.
The new VAT legislation also prohibits anyone having business in the UAE not to have more than one tax registration number (TRN).
UAE Releases its domestic VAT Law
Date: 27 Aug, 2017
The UAE has released the test of its domestic VAT Law today, Aug 27, 2017.
The UAE Government will be implementing VAT in the country on 1 January 2018. A standard VAT of 5% will be levied on goods and services such as food, consulting services, and maintenance works.
A few of the sectors that have been confirmed to enjoy VAT reliefs are healthcare, education, financial services, and exports. The law also specifies special rules for paying import VAT, defines VAT grouping rules and so on.
Federal Decree-Law No. (8) of 2017 on Value Added Tax has been issued on 23 Aug 2017. This Decree-Law shall be published in the Official Gazette and shall come into effect as of January 1, 2018.
The VAT Law specifies the following:
- Title One – Definitions
- Title Two – Tax scope and rate
- Title Three – Supply
- Title Four – Tax registration and deregistration
- Title Five – Rules pertaining to Supplies
- Title Six – Zero rates and exemptions
- Title Seven – Calculation of due tax
- Title Eight – Tax Period, returns, payment and reclaiming of tax
- Title Nine – Violations and Penalties
- Title Ten – General Provisions
- Title Eleven – Closing provisions
The Law refers to Executive Regulations which will provide clarity on the detailed treatment of the various aspects covered in the VAT Law. This is expected to be issued in the near future.
Companies should start their VAT preparation immediately as the implementation date for the law has been set for 1 January 2018.
The FTA website was recently launched and can be accessed here. FTA is the government entity that is responsible for the collection and management of federal taxes.
Businesses will be able to register online for VAT purposes from the middle of September 2017. You can access the English version of the VAT Law on the MoF Website by clicking here.
Firms need to prove VAT-compliance to Tax Authority
Date: 26 Aug, 2017
Speaking at a forum in Dubai on Saturday, Girish Chand, Director, MCA Chartered Accountants, said all the companies must maintain a record in order to show their turnover as well as whether they’re charging value-added tax (VAT) from the customer or not.
In addition, those companies which are not registered for VAT cannot charge the tax from the customers.
“When a tax official visits your company, he can ask for your records and it’s the responsibility of retailer, wholesaler or any other company to prove that their company’s turnover is less than mandatory threshold limit and hence, it’s not required to register for the VAT. In addition, he also needs to show his record if a company is charging the VAT from the client. Hence, maintaining record would become obligatory for all the entities operating in the UAE,” he added.
Mr. Girish was speaking at the VAT Talks conference held to discuss the impact of VAT on business operations especially their supply chain, working capital, commercial operations and IT systems.
You can view the latest VAT related events on our events page.
The UAE has announced that it will implement VAT from January 1, 2018, at five per cent. In addition to the UAE, Saudi Arabia has also announced the implementation of VAT as part of an agreement between Gulf states.
Mr. Girish pointed out that if a UAE-based supplier is exporting goods to any registered company in Saudi Arabia, then the local exporter here in the UAE will not have to charge VAT on the goods but the Saudi company will account using the Reverse Charge Mechanism. Similarly, it’s vice-versa for Saudi and Emirati companies.
MCA is an assurance, financial and business consulting and advisory services firm providing comprehensive and valuable solutions to their clients, using multidisciplinary professionals for over 8 years in Dubai and Sharjah, and now in Abu Dhabi.
You can reach them on 04 3319501 or write to GIRISH.CHAND@MCA.CO.IN
No VAT for international companies holding shows at ADNEC
Date: 13 Jun, 2019
External URL: http://wam.ae/en/details/1395302767635
Abu Dhabi National Exhibitions Company, ADNEC, today announced that it has obtained the Federal Tax Authority, FTA, License for waiver from Value Added Tax, VAT, for all international companies and organisations participating in or holding shows and conferences at its venues across the UAE with effect from 1st June, 2019.
The VAT waiver covers exhibitions and conferences held over a period not exceeding seven days. The waiver also stipulates that recipients shall not have a permanent base or established business in UAE and shall not be registered or obliged to register in UAE as per the UAE VAT Law.
Speaking on the announcement, Humaid Matar Al Dhaheri, Group CEO of ADNEC, said, “The VAT waiver for ADNEC-hosted event organisers and participants will further stimulate the business tourism sector in the UAE through enhancing the competitiveness of our venues to host major international exhibitions and conferences. This move supports our strategy to attract new and world-renowned events to our venues and increase our direct and indirect contributions to the Abu Dhabi economy.”
“The business tourism sector is a major contributor identified by Plan Abu Dhabi and Abu Dhabi Economic Vision 2030 to accelerate non-oil GDP growth. Through hosting more than 3,390 events and welcoming nearly 17.5 million visitors to date, our venues – Abu Dhabi National Exhibitions Centre and Al Ain Convention Centre – have delivered a direct and indirect economic impact of more than AED32 billion since ADNEC’s inception in 2005,” he concluded.
Sugar Sweetened Beverage – Excise update
Date: 01 Jun, 2019
Saudi’s General Authority for Zakat and Tax (Gazt) said it approved amendments to existing regulations on May 15, 2019. According to the guidance published in the official gazette, a 100 per cent tax will be enforced on e-cigarettes and its accompanying tools, and a 50 per cent tax on soft and sugary drinks.
The UAE imposed excise duty on certain items at the end of 2017 and is now considering the inclusion of more products on its excise tax list, according to a statement by the Ministry of Finance in April 2019.
Considering the probability of implementation of Excise on Sugar Sweetened Beverages, entities involved in the manufacturing, distribution and selling of these products should evaluate the impact of potential excise levy on their business model and operations.
Meeting with Thattai Hindu Merchants Community (THMC)
Date: 14 Dec, 2018
Meeting with members of Thattai Hindu Merchants Community (THMC), Kingdom of Bahrain and talk about implications of VAT on their businesses. A well organized and excellent event participation by Bhatia businessmen and businesswomen.
Drop in House Rents Soften VAT Impact in UAE
Date: 23 May, 2018
Although the levy of a 5 percent value-added tax (VAT) was expected to affect UAE residents in the form of increased living costs, the reduction in house rents has offset this impact to a great extent.
While global benchmarks suggest that households should allocate no more than 35 percent of their total monthly income on housing (in the form of either rents or mortgage payments), many families in Dubai currently spend over 40 percent of their combined income on rents.
“Tenants are definitely experiencing increasing higher living costs. It is, therefore, good news that rents continue to fall [by around 10 percent over the past 12 months]. This should help address the problem where accommodation costs in Dubai are generally too high,” says Craig Plumb, head of research, JLL Mena.
“Although the introduction of 5 percent VAT at the beginning of the year had an impact on overall costs for residents, this was more or less offset by reduced rents. This is mainly caused by an increased supply, employment challenges and the movement of tenants from one emirate to another seeking the best value for money,” observes John Stevens, managing director, Asteco.
Most of the UAE residential market has absorbed VAT’s limited inflationary impact in 2018. However, there has been an impact on residents’ disposable incomes.
“Dubai’s real estate market is heavily sentiment-driven and the introduction of VAT across Dubai has undoubtedly had a negative effect on this. It is more likely that it is the change in sentiment that may cause tenants to behave more cautiously. However, it is still too early to know with any degree of certainty,” suggests Thomas Bolton, Cluttons’ director – strategic projects.
UAE nationals can claim VAT refund on home construction
Date: 01 Apr, 2018
Emirati house owners have the right to a five percent value-added tax (VAT) refund when constructing their homes, the Federal Tax Authority (FTA) has stated.
The Authority has issued a guide with details for homeowners on how to claim the refund. It clarifies that only UAE citizens have the right to ask for the refund. They need no new account on the Authority’s website, and only need to download and fill a form and submit it back so the Authority
Anurag Chaturvedi, senior director at Crowe Horwath, told Khaleej Times that UAE nationals can claim the VAT refund against the construction expenses for a residential building if they construct it for themselves or their family members.
“UAE nationals can claim the refund against a newly constructed building to be used solely as residence, under Article (66) of Cabinet Decision No. (52) of 2017 on the Executive Regulations, of the Federal Decree-Law No (8) of 2017 on Value Added Tax,” he revealed.
Furthermore, the VAT refund is not allowed in relation to a building that will not be used solely as a residence by the person or the person’s family. “For example, it is not to be used as a hotel, guest house, hospital, or if the property is to be used for rental purposes or for any other purpose not consistent with it being used as a residence,” Chaturvedi said.
Nirav Shah, director at Fame Advisory DMCC, also stressed that the refund is only valid if the building is going to be used by the owner and his family. He also noted that the refund can only be claimed by Emirati nationals.
According to the guide issued by the FTA, an Emirati owner has the right to ask for the VAT refund if he bought a piece of land and allowed an authorised person or company to establish a housing unit on it. The guide says that the VAT refund only includes the money spent on establishing the unit, adding that it includes the amounts paid as building materials, except for electricity products of furniture or green areas.
On the other hand, the refund also includes VAT paid for doors, fire alarms systems, floors, kitchens, health units, bathrooms, windows, and electricity cables. A third entity is going to review the housing units to approve the refund and its amount after the Emirati owner submits the form. Moreover, the owner needs documents that prove his ownership for the unit, show the date of issuing the certification of establishment, prove the ownership of the land and show the value of VAT paid during the process.
Accredited Tax Accounting Software Vendors
Date: 31 Mar, 2018
|Solution Provider Name||Software Name||Software Version||Validity|
|Zoho Corporation Private Limited||Zoho Books||MILESTONE_ZFUAE_1||Till March 2019|
|Tally Solutions Private Limited||Tally.ERP 9||Release 6.3||Till March 2019|
|Sage Group PLC||Sage 50 Accounts (UK Edition)||126.96.36.199||Till March 2019|
|Sage Group PLC||Sage Evolution||7.20.5.002||Till March 2019|
|Sage Group PLC||Sage One Accounting||4.1.2||Till March 2019|
|Sage Group PLC||Sage X3||11||Till March 2019|
|Sage Group PLC||Sage 300||2018 (6.5)||Till March 2019|
|Focus Softnet FZ LLC||FocusI||FocusI||Till March 2019|
|Focus Softnet FZ LLC||FocusRT||FocusRT||Till March 2019|
|Focus Softnet FZ LLC||Focus8||Focus8||Till March 2019|
FTA releases VAT Information on its website Tax.gov.ae
Date: 23 Aug, 2017
External URL: https://www.tax.gov.ae/
The FTA has published its website at Tax.gov.ae.
The FTA offers live training courses that can help businesses better understand their tax obligations, FTA processes, and details about UAE tax laws. You can know about the latest upcoming events by clicking here.
KSA announces December 20, deadline for registration
Date: 18 Aug, 2017
External URL: https://www.bna.com/saudi-arabia-sets-n73014463204/
The confusion surrounding the deadline for registration in Saudi Arabia has been set to rest. The deadline for mandatory registration for VAT in KSA has been set as December 20, 2017.
The Saudi VAT law, announced on July 28, mentioned a deadline of “30 days” from its publication without a specific date, sparking speculation from professional advisers and media that businesses liable to pay VAT had only until Aug. 26 or 27 to register.
“All companies, businesses or entities which make an annual taxable supply of goods and services in excess of SAR 375,000 are legally required to register for VAT by 20th December 2017,” the new government website has declared.
Read more at Bloomberg site
VAT impact will be softened by businesses to stay competitive
Date: 18 Aug, 2017
In a recent article in Gulf News, the Banking Editor, Babu Das Augustine, presents the case that companies may absorb the VAT to stay competitive.
Analysts feel that given the weak overall demand, companies may not be able to pass on the full impact of VAT on the consumer. Read more about this on the Gulf News link
KSA VAT Registration process announced
Date: 18 Aug, 2017
The KSA Government has officially announced the process for VAT Registration in the country.
In order to register for VAT, businesses must first be registered at GAZT for Zakat and Income Tax.
Some large companies, particularly those already registered for other forms of tax in Saudi Arabia, will be auto-registered for VAT by GAZT:
- If this applies to your business, you will receive a notification from GAZT notifying you of this
- In that case, we advise you to log-in to check the validity of the information and to upload any supporting documents you may have on the following link: https://gazt.gov.sa/ then click on user login
If your company is not auto-registered, Registration will be open to all eligible companies and businesses starting 28 August 2017 also through the following link: https://gazt.gov.sa/ then click on user login.
The Registration form will require you to specify:
- Whether you are an importer
- Whether you are an exporter
- IBAN number (for refunds) – not required if already logged with GAZT
- VAT eligibility start date
- VAT taxable supplies (expected over next 12 months)
- VAT taxable supplies (past 12 months)
- VAT taxable purchases (expected over next 12 months)
- VAT taxable purchases (past 12 months)
- Financial Representative details (only mandatory if you are not a Saudi resident)
Online VAT Registration in UAE to begin mid-September 2017
Date: 15 Aug, 2017
The Federal Tax Authority will open online registration for tax purposes for businesses in mid-September 2017, head of Federal Tax Authority said on Tuesday.
Speaking at a press conference in Abu Dhabi on Tuesday 15th August, Khalid Ali Al Bustani, Director General of FTA said “The Excise Tax and VAT laws are expected to be issued during the third quarter of this year and the regulations concerning both laws in addition to federal tax procedures are expected to be issued during the fourth quarter of 2017.”
About 350,000 companies in the UAE will be covered under VAT starting from January 1. Excise tax will be implemented in the fourth quarter of this year.
“The Excise Tax and VAT laws are expected to be issued during the third quarter of this year and the regulations concerning both laws in addition to federal tax procedures are expected to be issued during the fourth quarter of 2017,” said Khalid Ali Al Bustani, Director General of FTA at a press conference in Abu Dhabi.
Inflation of 1.4% projected post VAT in UAE
Date: 15 Aug, 2017
At a press conference in Abu Dhabi, the Federal Tax Authority Director projected an optimistic inflation rate of 1.4% post VAT implementation in UAE. Although VAT will be a uniform 5%, the direct impact on consumer price is expected to be around 1.4%.
The new tax measures will not affect the UAE’s position or competitiveness as these taxes are amongst the lowest worldwide, the Federal Tax Authority’s top official highlighted.
FTA Chief Appointed by the President
Date: 02 Aug, 2017
External URL: http://bit.ly/2vnKCEY
ABU DHABI, 1st August, 2017 (WAM) – President His Highness Sheikh Khalifa bin Zayed Al Nahyan has issued a federal decree No. 84 of 2017 to transfer and appoint Khalid Ali Al Bustani, Assistant Undersecretary for International Financial Relations to the position of Director-General of the Federal Tax Authority, FTA, and the rank of an Undersecretary at the Ministry.
The Director General of the FTA will be responsible for managing the Authority’s business, and developing policies to achieve its strategic objectives, which include providing the national economy with new income sources to support its sustainable development.
H.H. Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, UAE Minister of Finance, and FTA Chairman, said: “The appointment of Khalid Al Bustani is a key decision in supporting efforts to build Emirati skills and capabilities in all the country’s important sectors. It also serves as a step in the right direction in ensuring that the new tax structure is implemented in the best, most efficient manner in the UAE through enhancing the Federal Tax Authority’s role in carrying out its responsibilities and assigned goals. Al Bustani has made valuable contributions to supporting the Ministry of Finance’s ability to manage the UAE’s financial policies. He also played a key role in launching a number of projects and initiatives which enhanced the Ministry’s services and overall performance. We have complete confidence in Al Bustani’s abilities to achieve the Authority’s strategic goals, in line with the Government’s overall vision to promote sustainable and comprehensive growth for the UAE.”
Al Bustani possesses vast practical knowledge in the financial policy field, where he previously held the role of Assistant Undersecretary for International Financial Relations at the Ministry of Finance. He made numerous valuable contributions which led to elevating the Ministry’s operations during his time there, where he was exposed to various areas, including financial management, international financial relations, and technology and data. During his time at the Ministry, Al Bustani also managed the international financial relations sector and the UAE’s financial relations with the GCC, the Organisation for Economic Co-operation and Development, regional and international organisations and funds, Global Forum on Transparency and Exchange of Information, in addition to overseeing negotiations and agreements relating to the avoidance of double taxation, and agreements pertaining to protecting and encouraging investments.
Al Bustani expressed his happiness and humble thanks to the UAE’s wise leadership for this great national responsibility he has now been entrusted with. He also expressed his appreciation to H.H. Sheikh Hamdan bin Rashid Al Maktoum and the Authority’s Board of Directors for their valuable recommendation to appoint him to the role of Director-General of the Federal Tax Authority. He revealed that he will use his extensive experience to achieve the FTA’s objectives, and enhance its role as a leading national institution that serves the growth and development of the national economy, and provides the best services to its clients.
The appointment comes following President His Highness Sheikh Khalifa bin Zayed Al Nahyan’s issuance of the Federal Decree Law No. 13 for the year 2016 on the establishment of the Federal Tax Authority, as an independent legal entity possessing the necessary legal capacity with financial and administrative independence.
Al Bustani will lead the FTA’s directives on data collection related to federal taxes and fines; the establishment of taxpayer records, as determined by existing tax laws; and the issuance of necessary directives and clarifications to taxpayers regarding their obligations towards federal taxes and fines, in accordance with the mechanisms issued by the FTA’s Board of Directors.
Al Bustani has held several positions at the Ministry of Finance since he joined in 1980. Prior to his current role as Assistant Undersecretary for International Financial Relations, he served as the Assistant Undersecretary for Resources and Budget, overseeing the International Financial Relations Department, Budget Management, and Revenue Development Department. In addition to his role and responsibilities at MoF, Al Bustani held the position of Director General of the Federal Customs Authority from 2009 to 2015.
During his career at MoF, Al Bustani participated in various projects including: the establishment of the General Pension and Social Security Authority, GPSSA, the e-Dirham system, the Federal Customs Authority, Al Etihad Credit Bureau, the Federal Public Debt Law, Mortgaging of Moveable Properties as Security for Debts Law, and the Committee responsible for overseeing the establishment of the tax system in UAE.
Al Bustani received a Bachelor’s Degree in Computer Engineering with honors from Boston University, USA, in 1980 and holds an MBA from Leicester University, UK, 2002.
UAE passes Federal Law No. 7 of 2017 for Tax Procedures
Date: 31 Jul, 2017
External URL: http://bit.ly/2uQAMt4
Source: ABU DHABI, 31st July, 2017 WAM/Hatem Mohamed- Emirates News Agency site http://bit.ly/2uQG47H
President His Highness Sheikh Khalifa bin Zayed Al Nahyan has issued the landmark Federal Law No. 7 of 2017 for Tax Procedures, which sets the foundations for the planned UAE tax system, regulating the administration and collection of taxes and clearly defining the role of the Federal Tax Authority, FTA.
“The Tax Procedures Law is a significant milestone towards establishing the UAE’s tax system and diversifying the economy,” said H.H. Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, UAE Minister of Finance and FTA Chairman.
“The Law, issued by President His Highness Sheikh Khalifa bin Zayed Al Nahyan is an all-encompassing legislative framework that lays the groundwork for the UAE’s plan to implement taxes as a means to ensure sustainability and diversify the government’s revenue streams. The increased resources will enable the Government to maintain the momentum of its development and infrastructure for a better future.”
The Law defines a clear set of common procedures and rules to be applied to all tax laws in the UAE, namely, VAT and excise tax laws, and clearly states the respective rights and obligations of the FTA and the taxpayer. The Law covers tax procedures, audits, objections, refunds, collection, and obligations – which include tax registration, tax-return preparation, submissions, payment and voluntary disclosure rules – in addition to tax evasion and general provisions.
When the Tax Procedures Law goes into effect, all UAE-based businesses will be required to keep accurate records for five years. The law also sets penalties for non-compliance, as well as clear processes for appeals which align with international best practices, and establishes a fair and transparent environment for the FTA to carry out its mandate.
“The UAE is committed to meeting the most stringent international standards,” H.H. Sheikh Hamdan bin Rashid said. “We are working to establish an optimal legislative and executive environment to ease the nation into the VAT and excise tax systems. Implementing these taxes gives the UAE further leverage when it comes to international competitiveness and brings us one step closer towards building the future envisioned by our wise leaders, who have called on all those in charge to innovate and strive to spread happiness among citizens and residents.”
The Tax Procedures Law also establishes the register of tax agents who may interact with the FTA on behalf of taxpayers, specifies the basic requirements for appointing said tax agents, and sets the standards for maintaining confidentiality by the Authority as well as its officers.
The new Law comes after the UAE, represented by the Ministry of Finance, ratified the Common Value Added Tax, VAT, Agreement of the States of the Gulf Cooperation Council and the Common Excise Tax Agreement of the States of the Gulf Cooperation Council, following Federal Decrees No. 31 and 32 of 2017, issued by H.H. Sheikh Khalifa. It is a follow-up step from Federal Decree-Law No. 13 of 2016 on the Establishment of the Federal Tax Authority, which created the FTA and tasked it with executing tax laws in the UAE.
KSA publishes its final VAT Law
Date: 30 Jul, 2017
External URL: https://www.uqn.gov.sa/articles/1501187155033127200/
July 28, 2017: The Kingdom of Saudi Arabia has released its final VAT law on its official Gazette on Friday, 28th of July. Please refer to our VAT Rule Book for KSA to learn about this in depth.
Some of the key highlights of the VAT law are listed below:
- All imports and supplies of goods and services in the KSA will be subject to VAT, according to Article 2.
- VAT will become effective in the KSA in the beginning of the next fiscal year, that is, January 1st, 2018.
- A hefty fine of SAR 10,000 will be applicable to businesses that fail to apply for the registration within the specified period, according to Article 41.
- Article 53 states that all persons liable to the VAT will have to register with the General Authority for Zakat and Tax (GAZT) within 30 days of the date of issuing the law, that is 30 days from July 28, 2017)
KSA releases draft regulations for implementing VAT
Date: 23 Jul, 2017
The General Authority of Zakat & Tax has on it’s site released a bilingual copy of the VAT Implementing Regulations. This contains 12 chapters and is available on our webpage – Rule Book KSA
Tax related jobs to rise in GCC
Date: 21 Jul, 2017
Recruitment firms are receiving enquiries for candidates with multi-skills of IT and taxation.
Most of the businesses in the UAE are either preparing or are on the verge of starting to transform their work set up, particularly the IT and taxation segments, as the country gears up for the unified tax regime on January 1.
Consequently, recruitment firms are receiving many enquiries for candidates with multi-skills of IT and taxation combined as the know-how of deploying new software compliant to new accounting standards will be inevitable.
A major part of being VAT-complaint revolves around updating finance and taxation modules of the organisations’ enterprise resource planning (ERP) systems. To this effect, there is bound to be a demand for job profiles that can help customise and make existing ERP systems VAT-compliant.
Shoura approves VAT Law
Date: 13 Jul, 2017
RIYADH – The Shoura Council on Wednesday approved the draft Value Added Tax (VAT) law. It also stressed the need for activating the uniform program for Citizens Account prior to implementing VAT.
Yahya Al-Samaan, assistant president of the Council, said that the Council took the decision after listening to the report of the financial committee on VAT, read out by its chairman Osama Al-Rabiah.
He said that the draft law is in line with the provisions of the uniform agreement, signed by the Gulf Cooperation Council (GCC) states to implement VAT.
GCC VAT Preparedness Improving
Date: 11 Jul, 2017
The majority (more than 60 per cent) of GCC businesses are now aware of the implementation of a value added tax in the region starting January 1, 2018, according to the latest survey results from a series of surveys conducted by audit, accounting and tax advisory firm Deloitte.
Deloitte has been conducting regular pulse surveys about how businesses and executives in the GCC are preparing for the implementation of VAT. Compared with Deloitte’s second Indirect Tax Survey conducted in May 2017, the findings of the new survey, launched in July, shows businesses have a more positive outlook on VAT.
Compared to previous statistics generated from the first Deloitte Indirect Tax Client Survey, GCC businesses have shown a turnaround in their views towards VAT. They are better informed and are becoming more aware of the impacts of the indirect tax.
“It is positive news that the majority of respondents feel very well-informed regarding reports of the introduction of VAT in the GCC and even more so that the number of respondents feeling this way has increased to 60 per cent from 25.6 per cent since the first survey. This means awareness about VAT in industry is increasing,” said Justin Whitehouse, Deloitte Middle East Indirect Tax leader.
MOF-UAE Release New FAQs
Date: 09 Jul, 2017
The Ministry of Finance (MOF) of the Government of the UAE has released a set of new FAQs relating to VAT. Click here to read the FAQs.
Saudi Arabia Releases VAT FAQ's
Date: 08 Jul, 2017
The General Authority of Zakat and Tax (GAZT) of the Kingdom of Saudi Arabia has released answers to Frequently Asked Questions (FAQ’s). Click here to learn more.
KSA commences pre-registration for VAT
Date: 06 Jul, 2017
As per an update by Deloitte, Kingdom of Saudi Arabia will pre-register large businesses automatically using the existing database with the economic departments. The minimum data for pre-registration is available, and businesses will receive email notification to complete the information.
Draft VAT Law published by KSA
Date: 01 May, 2017
Draft Law has been released by the Kingdom of Saudi Arabia for public discussion.
UAE Finance Ministry Releases VAT FAQs
Date: 29 Mar, 2017
External URL: https://www.mof.gov.ae/En/budget/Pages/VATQuestions.aspx
UAE’s MOF has released a new page on the website answering FAQs on VAT.
VAT and excise awareness sessions
Date: 12 Mar, 2017
The Ministry of Finance UAE, has released a calendar of workshop for VAT awareness. The sessions will be held in Abu Dhabi, Dubai, Sharjah, Ajman and Fujairah. Sessions are open to public and require prior registration through the ministry portal.