Clarity on new levies
There will soon be more clarity on the rules governing the Excise Tax and Value Added Tax in the UAE. Also, businesses can start registering themselves online for the taxes by next month.
abu dhabi — Laws governing the tax system in the UAE, including the value-added tax (VAT) and excise tax, will be issued shortly this year, tax authorities have announced.
Federal Tax Authority (FTA), a body that was formulated for tax management in the UAE, said on Tuesday that the Tax Procedures Law that will govern the relations between the FTA and those who are subject to taxes, has already been issued by the Ministry of Finance.
The UAE announced last year that it will start implementing a VAT rate of five per cent from January 1, 2018, but laws regulating the tax system in the country have not been issued yet.
“We expect the laws regarding Excise Tax and VAT to be issued in the third quarter of this year, and the regulations for both are expected to be issued in the fourth quarter of 2017,” said Khalid Ali Al Bustani, director-general of the FTA, during a media briefing on Tuesday, the first since the establishment of the Federal Tax Authority.
“We have an integrated tax management system that forms the electronic platform for dealing with taxable persons through registration and submission of tax returns and tax payable,” he said.
“We have developed innovative systems and integrated them with concerned departments or entities in the UAE government such as customs’ departments for purpose of managing and collecting taxes and imports.”
The tax policies and systems have been developed to encourage self-assessment and voluntary compliance and underline the role of businesses in the procedures that facilitate self-compliance. The Tax Procedures Law is a legislative framework that defines the Federal Tax Authority’s system of work in terms of management, collection and implementation of federal taxes, according to authorities.
The law aims to regulate the mutual rights and obligations between the FTA and the taxable person as well as third parties (any entities
The application of the tax system will not affect the UAE’s competitiveness because it’s among the lowest in the world Khalid Ali Al Bustani, Director-general, Federal Tax Authority
dealing with them), and to regulate the procedures and rules that apply to all tax laws in the country. “Tax procedures in the UAE are easy and simple to comply with and were developed after in-depth studies of all options as well as reviewing them against various international experiences and best practices,” Al Bustani added.
“The application of the tax system will not affect the UAE’s competitiveness because it’s among the lowest in the world.”
He noted that the UAE tax system is marked by the voluntary and self-compliance model that the FTA is promoting, which is facilitated by easy and automated registration process of the taxable persons, in addition to the requirements of complying with tax procedures and laws that are designated in accordance with the highest international standards.
The tax procedures will strengthen the UAE’s economic development and enable it to be a real competitor among the world’s advanced economies by providing resources to support the expansion and development of key sectors that are related to the community, and provide the best services, especially in the fields of healthcare, education and infrastructure, according to authorities.
Whereas the laws on VAT will be implemented starting from January 2018, laws regulating the Excise Tax will come into effect in the last quarter of 2017, said the FTA.
According to the FTA, 100 per cent Excise Tax will be imposed on tobacco products and energy drinks, while a 50 per cent excise tax will be levied on soft drinks except sparkling water.
— ismail@khaleejtimes.com