In the presence of H.E. Jaber Mohammed Ghanem Al Suwaidi, General Director of the Crown Prince Court of Abu Dhabi, and with strong participation from entities concerned with the implementation of the tax system, the Federal Tax Authority (FTA) Director General His Excellency Khalid Ali Al Bustani delivered a comprehensive presentation on “The Implementation of Indirect Tax in the UAE ” at Majlis Al Bateen in Abu Dhabi.
In his presentation, he said that the Authority is intensifying its efforts to strengthen direct communication with business sectors across the country through workshops and awareness seminars, as well as through media, economic councils and meetings in the commercial and industrial zones, which are aimed at enhancing tax awareness and interacting with all taxable persons.
H.E. Al Bustani presented a detailed explanation of the taxes applied in the UAE, including 5% VAT for all sectors, with the exception of those exempt as per UAE tax laws, in addition to 100% Excise Tax for tobacco products and energy drinks, and 50% for carbonated drinks.
His Excellency said that the questions raised at the Majlis reflect the interest of UAE citizens in supporting the successful implementation of the UAE tax system and their commitment to complying with tax legislation.
H.E. Al Bustani introduced the mechanisms used for implementing the tax system and the basis of coordination between the FTA and its strategic partners in the public and private sectors. H.E. also stressed the Authority’s vision and its role in facilitating the implementation, underlining the importance of collaboration between the Authority and all relevant entities to achieve further success in the coming stage.
The FTA Director General pointed out that the registration for VAT is mandatory for any natural or legal person who carries out business in case their taxable supplies exceed AED375,000 during the previous 12 months or are expected to exceed that amount in the next 30 days. Registration, filing tax returns, and paying due taxes on time by taxable persons are fundamental legal responsibilities to ensure that businesses comply with tax legislation, H.E. Al Bustani asserted.
H.E. Al Bustani explained that according to Cabinet Resolution No. (40) of 2017 on Administrative Penalties for Violations of Tax Law in the UAE, the administrative penalties facing businesses subject to VAT that have not registered include not being able to impose the tax on customers or pay tax on import prior to the disclosure of the imported goods, and the payment of the tax on all supplies made in the period in which the company was supposed to be registered. The business in question is also obliged to pay an administrative penalty for the delay in submitting registration request, and late submission of tax returns.
His Excellency said that under the terms of the Resolution, a taxable person is entitled to object in accordance with the procedures stipulated in Federal Law No. (7) of 2017 on Tax Procedures. The person can submit an online request to the Review Committee, which in turn examines the application. If the Committee finds that the delay in registering for tax or submitting the returns is due to technical reasons related to the Authority’s system and after examining the application and making sure that the taxable person is not responsible for the delay, the Commission refunds the penalty.
H.E. Al Bustani said that since VAT went into effect on 1 January 2018, the FTA has introduced various tax periods to file tax returns on a monthly basis for large businesses, and quarterly basis for other businesses. All business sectors were informed of the dates for their tax periods, adding that all registered businesses in the VAT system must submit their tax returns on a monthly or quarterly basis as determined by the Authority, based on the amount of their annual revenues. These returns shall be submitted within the time limits prescribed by the Authority, as per Federal Law No. 8 of 2017 on Value Added Tax and its Executive Regulations.
H.E. Al Bustani noted that next November, a new biannual tax period will be introduced for some small businesses, commercial real estate owners, and board members, and they will be informed of the procedures for their new tax periods. H.E. stressed Authority’s commitment to providing mechanisms that help taxpayers comply with the required procedures. During the meeting, H.E. said that the Authority is considering, in coordination with the concerned authorities, the development of an electronic link system to facilitate the procedures of paying taxes related to the real estate sector.
H.E. Al Bustani said these steps are part of the Authority’s ongoing efforts to strengthen its partnership with business sectors by providing all means that help them to comply fully with the tax system and offering all possible facilities for them. H.E. added that the Authority is in constant contact with all business sectors to understand their insights and utilise them in a manner that ensures the implementation of the UAE tax regulations in line with the desired objectives, taking into consideration not to adversely affect their activities.
In accordance with the UAE Cabinet Decision No. (52) of 2017 on the Executive Regulations of the Federal Decree Law No. (8) of 2017 on Value Added Tax, the tax returns and payment of due tax to the Authority must be submitted not later than the 28th day after the end of the relevant tax period, H.E. noted, urging all businesses registered for VAT to submit the tax returns and pay the taxes due within a sufficient time before the deadline to be received by the Authority, cautioning them against waiting till the last day to make their payment, as it may cause a delay in receiving the funds after the determined date.
His Excellency urged registered businesses to submit their periodic returns on the dates set for them even if the value of their supplies during the tax period is equal to zero.
The Authority was committed to opening registration through its website several months before introducing VAT. It had also exempted business sectors that were required to register for VAT from the beginning of 2018 but were late in registration procedures from administrative fines until the end of April 2018. This was to encourage them to comply with the tax system, and after taking into consideration the lack of readiness of some businesses during the first phase of implementation.
The Authority also conducted an SMS campaign prior to the implementation of the Tax Law in cooperation with the local telecommunications companies and sent e-mails to registered businesses to remind them of the due dates of their tax returns.
H.E. Al Bustani said that the Ministry of Finance and the Federal Tax Authority have organised proactive awareness campaigns, seminars and workshops for the business sectors several months prior to the implementation of the tax system, with more than 80 introductory seminars and workshops being held to date, which were attended by over 32,000 specialists from different business sectors.
H.E. pointed out that the Authority made frequent calls asking all business sectors to implement the procedure and adopt the accounting, financial and technical systems necessary for the implementation of the tax system. The FTA also conducted awareness tours across the UAE in collaboration with the Departments of Economic Development and Chambers of Commerce and Industry in all seven emirates to address businesses queries related to registration, submission of tax returns and payment of due taxes, such as the “Tax Clinic” campaign for enhancing direct and continuous communication with business sectors, held over a period of 3 months across all emirates.
H.E. Al Bustani said that the Authority – as a part of its comprehensive awareness plan aimed at all segments of society – has issued more than 60 guides, 12 e-learning programmes, and 22 factsheets, as well as a variety of short awareness films for all taxable categories. If required, taxpayers can use the authorised tax agents who are registered on the official website of the Authority to help them in tax compliance.
The participants praised the efforts of the Authority for enhancing awareness of the implementation of the tax system, expressing their desire to have more similar seminars and workshops in the coming period to ensure the greatest possible communication and dialogue.
