VAT is coming to the UAE, time to study up


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Benjamin Franklin famously wrote “nothing is certain but death and taxes”.  Many will regard tax procedures as a combination of both certainties: concerned with taxes, and deadly dull.

I urge you, however, to persevere because tax is coming to an Emirate near you. Soon.

Federal Law No 7 of 2017, issued by the president aims to regulate rights and obligations between the Federal Tax Authority (FTA) and taxpayers through “common procedures and rules applicable to all Tax Laws in the State” (“the Tax Procedures Law”, or “the Law”).  It is evident that the Law is capable of broader application than just to VAT.

The law will come into force 30 days after publication in the Official Gazette. The UAE Ministry of Finance has put an unofficial translation of the law on its website.

This “landmark” Law is an important piece in the jigsaw of federal tax legislation, but other pieces still need to be put in place. The draft UAE VAT Law is yet to be published, together with the Executive Regulations which will almost certainly accompany it. The Tax Procedures Law will also have its own Executive Regulations, to be issued by the UAE Cabinet within six months of the issuance of the Law.

So, given that there is more to come, what does the Tax Procedures Law hold? A lot.

Take record keeping: any person conducting any business must keep accounting records and commercial books of his business.  The Law gives catch-all – yes, catch all - definitions to “Person” and “Business”.  This affects all – and I do mean “all” - business-people.  Executive Regulations will provide further details.

Take language: material relating to Tax (i.e., any Federal tax) must be submitted to the FTA "in Arabic".  The FTA may accept such material in any other language, but with a translation into Arabic if so requested.  Again, the executive regulations will provide more detail.

The Tax Procedures Law also sets out compliance obligations for “taxable persons”; again, a broadly defined term, on whom specific requirements are imposed by the law.

The law also envisages (and defines) Legal Representatives and Tax Agents. The latter must be listed in a Register and licensed for the purpose. The Law sets out conditions for registration. Again, the Executive Regulations will shed more light, but tax Agents are likely to be in great demand.

The Law also empowers the FTA to perform a Tax Audit on any Person (i.e., not just a Taxable Person) to ascertain the extent of that Person's compliance with the Federal tax legislation.  Again, the net is cast wide, and more detail will be provided in the Executive Regulations. The FTA has roving powers (and the subject of the audit has correlative rights), but any Person subject to an audit is required to "facilitate and offer assistance" to the auditor.

The Tax Procedures Law sets out circumstances in which the FTA may raise a tax assessment, and provides for administrative penalties to be imposed.  Tax evasion – i.e., the use of illegal means resulting in less tax being paid than due, non-payment of due tax, or an unentitled refund of tax – is rightly viewed very seriously.  Expect a prison sentence and a monetary penalty not exceeding 5 times the amount of tax evaded.

What about challenging a decision of the FTA?  The first step will be to ask for an internal FTA administrative review.

If, on review, you are still dis-satisfied, the next step will be to take the matter to a Tax Disputes Resolution Committee (which will have one judicial and two expert members).  To reach the Committee, there is a “pay first, argue later” requirement: the Committee cannot accept an objection “if the Tax and Penalties subject of the objection have not been settled”.

If the sum in dispute is not more than Dh100,000, the committee's decision is final. If the amount in dispute is above that sum, either party may challenge the committee's decision before the competent court, i.e., the federal court within whose jurisdiction the FTA's head office or relevant branch is located.

Final decisions are executory instruments, enforceable through the execution judge in accordance with the Federal Civil Procedures Law.  There are strict time-limits for taking the steps described.

Non-payers will fare no better. If a formal notice to pay fails to achieve payment, the FTA Director General will issue a decision, obligating the taxable person to pay the sum due. The Director General’s decision is also an executory instrument, enforceable under the Civil Procedures Law.

The Tax Procedures Law is wide-ranging but, in important respects, will be supplemented by the Executive Regulations.  Some instances have already been given.  Another is the FTA’s discretion to reduce or exempt a Person from an Administrative Penalty.  That discretion depends on non-compliance being justified within the relevant provisions of the Executive Regulations.

And, yes – the Tax Procedures Law even contains express provision for the payment of tax “in cases of death”. Can the flicker of a posthumous smile from Benjamin Franklin be detected?

The admonition "be afraid; be very afraid" may be too apocalyptic – but, when it comes to tax, be aware; be very aware.

'Worse than a prison sentence'

Marie Byrne, a counsellor who volunteers at the UAE government's mental health crisis helpline, said the ordeal the crew had been through would take time to overcome.

“It was worse than a prison sentence, where at least someone can deal with a set amount of time incarcerated," she said.

“They were living in perpetual mystery as to how their futures would pan out, and what that would be.

“Because of coronavirus, the world is very different now to the one they left, that will also have an impact.

“It will not fully register until they are on dry land. Some have not seen their young children grow up while others will have to rebuild relationships.

“It will be a challenge mentally, and to find other work to support their families as they have been out of circulation for so long. Hopefully they will get the care they need when they get home.”

Key facilities
  • Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
  • Premier League-standard football pitch
  • 400m Olympic running track
  • NBA-spec basketball court with auditorium
  • 600-seat auditorium
  • Spaces for historical and cultural exploration
  • An elevated football field that doubles as a helipad
  • Specialist robotics and science laboratories
  • AR and VR-enabled learning centres
  • Disruption Lab and Research Centre for developing entrepreneurial skills
The%20specs
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23-man shortlist for next six Hall of Fame inductees

Tony Adams, David Beckham, Dennis Bergkamp, Sol Campbell, Eric Cantona, Andrew Cole, Ashley Cole, Didier Drogba, Les Ferdinand, Rio Ferdinand, Robbie Fowler, Steven Gerrard, Roy Keane, Frank Lampard, Matt Le Tissier, Michael Owen, Peter Schmeichel, Paul Scholes, John Terry, Robin van Persie, Nemanja Vidic, Patrick Viera, Ian Wright.

The biog

Birthday: February 22, 1956

Born: Madahha near Chittagong, Bangladesh

Arrived in UAE: 1978

Exercise: At least one hour a day on the Corniche, from 5.30-6am and 7pm to 8pm.

Favourite place in Abu Dhabi? “Everywhere. Wherever you go, you can relax.”

The distance learning plan

Spring break will be from March 8 - 19

Public school pupils will undergo distance learning from March 22 - April 2. School hours will be 8.30am to 1.30pm

Staff will be trained in distance learning programmes from March 15 - 19

Teaching hours will be 8am to 2pm during distance learning

Pupils will return to school for normal lessons from April 5

COMPANY PROFILE

Name: Xpanceo

Started: 2018

Founders: Roman Axelrod, Valentyn Volkov

Based: Dubai, UAE

Industry: Smart contact lenses, augmented/virtual reality

Funding: $40 million

Investor: Opportunity Venture (Asia)

TCL INFO

Teams:
Punjabi Legends 
Owners: Inzamam-ul-Haq and Intizar-ul-Haq; Key player: Misbah-ul-Haq
Pakhtoons Owners: Habib Khan and Tajuddin Khan; Key player: Shahid Afridi
Maratha Arabians Owners: Sohail Khan, Ali Tumbi, Parvez Khan; Key player: Virender Sehwag
Bangla Tigers Owners: Shirajuddin Alam, Yasin Choudhary, Neelesh Bhatnager, Anis and Rizwan Sajan; Key player: TBC
Colombo Lions Owners: Sri Lanka Cricket; Key player: TBC
Kerala Kings Owners: Hussain Adam Ali and Shafi Ul Mulk; Key player: Eoin Morgan

Venue Sharjah Cricket Stadium
Format 10 overs per side, matches last for 90 minutes
Timeline October 25: Around 120 players to be entered into a draft, to be held in Dubai; December 21: Matches start; December 24: Finals