UAE passes Federal Law No. 7 of 2017 for Tax Procedures

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Source: ABU DHABI, 31st July, 2017 WAM/Hatem Mohamed- Emirates News Agency site

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.