The Federal National Council (FNC) of UAE, on Tuesday, affirmed changes to a draft law that is required for issuing tax-related laws and for the smoother implementation of the upcoming VAT taxation system in the country.
The Federal National Council bill required final approval of the President His Highness Shaikh Khalifa Bin Zayed Al Nahyan.
The UAE is likely to see two taxes enacted over the next few years. Obaid Humaid Al Tayer, State Minister for Financial Affair, has said the VAT tax would come into effect anytime between 2018 and 2019.
The Tax Procedure Bill is aimed at evaluating, collecting and controlling public revenue it applies to, in addition to setting out the rights and commitments of taxpayers, enrollment of taxpayers, and tax offenses and infringement. This draft law will also apply to fines, interest on the basis of due but unpaid tax and the expenses of the enforced collection.
Al Tayer said that The GCC members and particularly the countries that have common borders should coordinate with each other concerning the implementation of VAT tax, so that no country hurts the economy of the other. He also said the tax could shave off 0.04 per cent of the UAE’s GDP growth when implemented.
The current changes have made the decision of the dispute resolution committee as final for all value that does not exceed Dh100,000. They additionally stipulate that government courts will have jurisdiction to settle in other cases.
The Federal Tax Authority (FTA) as of late reported a specific tax of 100 percent on tobacco and caffeinated beverages and 50 percent on carbonated refreshments. The charges will be implied from the final quarter of this current year. The FTA declaration was made amid the authorities first meeting led by Shaikh Hamdan Bin Rashid Al Maktoum, Deputy Ruler of Dubai and Minister of Finance.
The Value Added Tax (VAT) rate has been set at 5 percent and has been implemented from January 1, 2018. Shaikh Hamdan said that the VAT control has been introduced by the authority to accomplish economic diversification and to prepare for the post-oil period. He also said that the procedure of the law is in its final stage and will soon be issued and published. The VAT law is as of now being highly debated by the technical legislative committee in planning for its submission before Cabinet for endorsement, while the selective tax draft law will soon be debated by the committee, Shaikh Hamdan said.
It must be noted that under the upcoming Tax law, the International transportation, commodities and exports, health and education services, and gold imported for investment purposes are exempted from taxes. Additionally exempted are residential building available for sale or rent amid the initial three years in which the building is completed, some financial services and empty plots of land.
All business that has the yearly income of Dh375,000, as affirmed by their financial records, are required to enroll with the VAT framework. The due date for enrollment will begin in the third quarter of 2017, however, will befall in the final quarter only. Organizations with a yearly pay of Dh187,500 or more have the alternative of registering with the system.
It’s interesting that at the moment there are about 450,000 privately-owned companies in the UAE, and the number is anticipated to soon reach around 600,000.