RESULT OF VAT ON UAE AFTER ONE YEAR
The VAT was implemented in the UAE on January 1, 2018. Since then, the consumers have been paying an extra 5% on most of the goods and services thereby ending the era of a completely zero tax regime. Irrespective of the challenges which were expected at the beginning of the implementation, the UAE has successfully rolled out a seamless and a flexible tax system with a progressive legislative environment.
The article below depicts the result of VAT on UAE after one year.
EFFORTS BY THE FEDERAL TAX AUTHORITY FOR SUCCESSFUL IMPLEMENTATION
The FTA during this one year has taken a lot of efforts for its successful implementation. It, fortunately, combated attempts at profiteering by certain retailers, addressed any failures for issuing tax invoices and had also curbed the spread of false rumors.
- It had responded to more than 306,500 phone calls about the tax system and had also answered 147,000 by e-mail. It also answered more than 453,500 queries.
- As a part of its holistic awareness plan, it had also organized 90 seminars and training workshops which attracted approximately 28,000 experts from various sectors.
- For raising awareness and increasing auto compliance rates, the FTA has launched around 30 VAT guides, a series of e-learning programmes and short educational films. This also included launching 50 infographics and 136 public clarifications.
TAX REFUND SCHEME
- In November 2018, the FTA had launched the first phase of the Tax Refunds for Tourists Scheme and its electronic system. The system had covered 12 ports of entry into the UAE which included six airports, two seaports, and four land ports. Under its VAT Refund Scheme for Foreign Businesses, the authority collaborated with countries which refunded VAT for UAE businesses visiting its territories.
- In its refund scheme, the authority had also launched VAT refund procedures for UAE nationals building new residences and had also issued a guide providing an explanation of the mechanism through its websites.
MEETINGS WITH BUSINESS GROUPS
The Authority with all business groups and representatives of relevant sectors including
- Banking
- Insurance
- Financial markets
- Brokerage
- Importing
- Exporting
- Telecommunications
- Travel, and tourism
- Diplomatic missions
- Free Zones
- Shipping
- Accounting and auditing
- Maritime operations
- Real estate
- Charity
- Health
- Education
- Hotels
- Gold and diamond trade
- New and used cars
- Vegetables and fruits, fishermen’s associations, farmer’s association, and retailers
have held more than 35 meetings.
ISSUING OF CABINET DECISIONS AND VAT GUIDES
The authority through its state of the art website has provided comprehensive guidelines on tax laws, executive regulations and various tax procedures. In its several decisions that have been issued throughout the year, the most notable decisions have been the Cabinet Decision on the VAT treatment on Gold and Diamonds. This decision provided an adequate environment, infrastructure, and legislation for driving business growth in this sector. It also aided in maintaining cash flow among the registered gold and diamond investors, suppliers and traders. This helped in cementing the UAE’s status as a leading global hub and jewelry. The Cabinet Decision on Refunding VAT on services provided at Exhibitions and Conferences aided to establish UAE as a global destination for local, regional and international exhibitions and conferences.
CONCLUSION
Despite the challenges that were faced at the start, its implementation has been successful. The federal tax authority has set the foundations for a holistic and balanced tax system which has made the UAE one of the first countries in the world to implement a fully electronic paperless tax system. During the first year of implementation, the number of registered businesses reached at least 296,000 companies and tax groups and the tax returns exceeded 650,000. In 2019, the authority expects to witness a significant leap forward for the UAE tax system. The authority has been planning to further improve the tax compliance rates, promote registration among taxable businesses and combat tax evasion.
