Al Bustani to head the Federal Tax Authority
President Sheikh Khalifa has appointed Khalid Al Bustani director general of the Federal Tax Authority, with the rank of undersecretary in the Ministry of Finance. The former assistant undersecretary for international financial relations will be responsible for managing the authority and developing policies to achieve its objectives, which include providing the economy with new income sources. Sheikh Hamdan bin Rashid, Deputy Ruler of Dubai and Minister of Finance, and the authority’s chairman, said Mr Al Bustani’s appointment would ensure the new tax structure would be implemented efficiently.
A new tax law in the UAE is expected to be followed by excise and value added tax (VAT) laws that will help regulate the informal economy where cash-based businesses have to adhere to book keeping, according to lawyers.
The UAE published on Monday the Tax Procedures Law, which sets the foundations for the planned UAE tax system, regulating the administration and collection of taxes and defining the role of the Federal Tax Authority (FTA), which was established last year.
The law is focused on the collection of taxes, mainly VAT, which will be introduced at a rate of 5 per cent on January 1, 2018 and excise taxes, which will be implemented in the fourth quarter of this year.
Excise taxes would be at a rate of 100 per cent for tobacco and energy drinks and 50 per cent for sugary fizzy drinks.
The UAE, along with the other five Arabian Gulf states, have agreed to slap VAT and excise taxes GCC-wide as part of measures aimed at shoring up government income, which has dropped as a result of low oil prices and widened fiscal deficits.
The Tax Procedures Law sets out the rights and obligations of the FTA and the taxpayer. It 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.
This law is expected to be followed by other supplementary regulations, which could be issued in the next six months, said Shiraz Khan, a senior tax advisor at UAE law firm Al Tamimi & Company.
“With the establishment of a Federal Tax Authority at the end of last year, the issue of the Tax Procedures Law will facilitate the implementation of future taxes including VAT,” said Mr Khan.