Sheikh Hamdan bin Rashid Al Maktoum, deputy Ruler of Dubai, and Minister of Finance has called on all businesses to comply with the executive regulations of the law on VAT.
He urged businesses to register online via the Federal Tax Authority’s website to receive a tax identification number, and to avoid any administrative penalties for violation of tax laws in the UAE.
He said qualifying companies must ensure full preparedness and compliance with the new 5 percent tax as it will come into effect on January 1, 2018, adding: “Applying VAT plays a key role in building a sustainable knowledge economy, contributing to the infrastructure for the future development, strengthening public services, and enhances the global competitiveness of the UAE.”
He said the UAE had ensured "an easy application process for the all VAT related tax procedures" to avoid imposing fines due to non-compliance.
VAT will be applied in accordance with the unified VAT Agreement for the Cooperation Council of the Arab States of the Gulf, which clarifies provisions relating to commercial transactions between GCC states.
It also provides a common agreement on certain provisions such as the basic rate of value added tax and the registration limit, and gives countries discretion to choose treatment in certain sectors where it does not affect intra GCC trade.
Both the Ministry of Finance and the Federal Tax Authority have held a series of workshops aimed at raising awareness on the tax system.
Earlier this month, the Federal Tax Authority announced the supplies that will be subject to VAT, revealing selected sectors that will be assigned zero-rated tax, such as education, healthcare, oil and gas, transportation and real estate.
Selected supplies in sectors such as transportation, real estate, financial services will be completely exempt from VAT, whereas certain government activities will be outside the scope of the tax system (and, therefore, not subject to tax).
These include activities that are solely carried out by the government with no competition with the private sector, activities carried out by non-profit organisations.
The UAE Cabinet is expected to issue a decision to identify the government bodies and non-profit organisations that are not subject to VAT.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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