Winter is coming, and so is VAT. As the UAE and its businesses gear up for the introduction of indirect taxation, here at Dubai Eye we’re looking at everything you need to know to make sure your company is tax compliant. These interviews will be updated regularly, so check back in to make sure you’re on top of the latest regulations and disclosures.
For all the latest in VAT news, keep up to date here:
Businesses expect VAT to drive digital upgrades
Only one-fifth of GCC organisations say they have initiated preparations for the upcoming Value-Added Tax (VAT).
That’s according to a new survey from Oracle and Harvard Business Review that studied 450 senior executives across the Gulf.
Organisations cited insufficient information and a lack of internal tax expertise as primary obstacles, with almost half of respondents saying they are awaiting further government guidance.
But Si-Mohamed Said, Oracle’s regional head of marketing, warned of the urgent need for action, explaining that the automation of VAT compliance cuts across all aspects of business operations.
VAT in UAE will open more jobs in finance
The demand for accountants has gone up in the UAE – as companies prepare for the introduction of Value Added Tax (VAT) from January.
But there are still questions about what falls under the VAT system and who should be making changes – especially in free zones.
Annika Schauman Papriwal, Founder of VAP Consulting, a financial services firm, spoke to ARN and she says this should not be used as an excuse to be under prepared and adds that more jobs are being created in the accounting sector.
Plans to introduce Excise Tax and VAT finalised in the UAE
Proposed fees and fines for the upcoming Value Added Tax (VAT) have been approved by the Board of Directors of the Federal Tax Authority.
That’s after the Board finalized plans for introducing Excise Tax next month and VAT early next year.
The Authority has also confirmed that it’s working on issuing Executive Regulations for each law – in order to educate individuals and organizations about their rights and responsibilities.
Annika Papriwal of SME advisory firm VAP Consulting told ARN that the upcoming regulations, which are expected to be announced imminently, will provide greater detail on the implementation of VAT.
VAT to drive up cost of after-school activities
Parents in the UAE will have to pay more for their children’s extracurricular activities once Value Added Tax (VAT) is implemented from January next year.
That’s according to companies that run such programmes in the UAE.
The law surrounding VAT was issued earlier this week and it clarified that activities like sports classes, music lessons or school transport will be subject to tax.
UAE President issues decree-law on VAT
UAE President His Highness Sheikh Khalifa bin Zayed Al Nahyan has issued a decree-law on value added tax (VAT) months ahead of its implementation.
Federal Decree-Law No.8 of 2017 states that all supplies of goods and services are subject to VAT at a rate of 5 per cent.
It also defines terms, clarifies exemptions, specifies which companies need to register and outlines the process of submitting a tax return.
VAT is scheduled to take effect in the UAE in January 2018, and in the rest of the GCC over the next two years.
The UAE’s Federal Tax Authority (FTA) recently launched a website called tax.gov.ae to help businesses prepare for the introduction of both VAT and excise tax.
Last month, His Highness Sheikh Khalifa issued the landmark Federal Law No. 7 of 2017 for Tax Procedures, which sets the foundations for the planned UAE tax system.
350,000 UAE businesses to register for VAT by end of 2017
A total of 350,000 businesses in the UAE are expected to register for VAT by the end of the year.
Companies with an annual turnover of AED 375,000 a year need to register for the indirect tax regime, with online registration opening next month.
Federal Tax Authority Director General Khalid Al Bustani says the revenue collected will help develop key community sectors such as healthcare, education and infrastructure.
Large UAE companies must register for VAT in September
Large companies in the UAE must start registering for VAT from the middle of next month, according to a new directive from the Federal Tax Authority.
His Excellency Khalid Ali Al Bustani, Director General of the Authority, told reporters that a new online registration system will be launched in the coming days.
He said there will be consequences for those who fail to register.
Al Bustani added that Tax and Excise laws will be passed by the end of September, as the UAE ramps up to the launch of VAT on the 1st on January next year.
Earlier this year, it was announced that excise duty will be applied on tobacco and soft drinks, with more details to be announced before the end of this year.
VAT to create up to 2,000 new jobs in the UAE
The introduction of value added tax (VAT) will create up to 2,000 new jobs in the UAE.
That’s according to recruitment experts, who say that there will be a rise in the demand for specialized accounting and digital platforms once the taxation system is rolled out.
Cooper Fitch’s second UAE Salary Guide for 2017 predicts that wages will increase across the board by 2-3 per cent with the digital industry leading the way.
Their CEO Trefor Murphy explains how the implementation of VAT will have a positive impact on both the technology and finance sector.
Significant increase in amount of people in UAE ready for VAT
There’s been a significant increase in the amount of people saying they’re ready for the introduction of Value Added Tax (VAT) in January 2018.
A new report by Deloitte says nearly 60% of GCC businesses feel very well informed compared to the 69% of companies they polled in April who admitted they weren’t ready for VAT.
The survey suggests the increase is likely to be the result of efforts by the UAE government to communicate with taxpayers over the last few months.
Haroon Juma, Managing Director of Tax Worx UAE, says he feels it’s one particular part of the market that’s less prepared.
Residential properties, certain financial services exempt from VAT
Authorities have confirmed that residential properties, certain financial services, bare land and local transport will all be exempt from value added tax (VAT).
However the UAE Ministry of Finance said that supplies of commercial properties will be taxable at the standard rate of five per cent.
According to the IMF, the implementation of the GCC-wide tax is expected to boost GDP by about 1.5 per cent.
The Emirates is set to implement VAT from January 1, 2018.