U.A.E Ministry sets minimum turnover requirement for VAT registration

Those that offer services or sell goods that are non-taxable will also not need to get bothered by the extensive paperwork and repor...

U.A.E Ministry sets minimum turnover requirement for VAT registration


Those that offer services or sell goods that are non-taxable will also not need to get bothered by the extensive paperwork and reporting that the new tax system will require.The Ministry of Finance issued an announcement on Tuesday that effectively sets Dh375,000 as the minimum annual turnover requirement for companies that are required to register for value-added tax (VAT) which will be implemented in the UAE on January 1st, 2018.

Businesses in the UAE that barely make money every year - be they a streetside eatery, a shawarma vendor or a barber shop - may not need to go through the tedious process of registering for the value-added tax.

“Businesses with taxable suppliers over Dh375,000 will be required to register for VAT,” the announcement on Twitter reads. Those with net sales “below Dh375,000 but over Dh187,500,” will have the option to register starting October this year.There were no further details issued regarding the new policy, but one tax expert said that small businesses who may opt out of tax registration don’t have to charge VAT to their customers.

“The ministry has announced that those with revenue below 375K but over 187K will have an option to register. Which means that they may if they like, register under VAT. But if they don't then they do not have to collect VAT from their customers,” said Rakesh Pardasani, partner at audit and tax advisory firm RSM.

The ministry had earlier said that not all businesses, especially small companies, will need to register for the new tax policy. “In simple terms, only businesses that meet a certain minimum annual turnover requirement will have to register for VAT,” it said.

“We have made this decision to safeguard small businesses from the extensive documentation and reporting that a system like VAT requires.”
Pardasani, however, said that the revenue requirement set by the Ministry of Finance would mean that many small business owners will still be obliged to collect VAT.

“This number, however, if it is an annual number, appears to be very small and it may bring a lot of small businesses within the scope of VAT.”

He also pointed out that companies who make less turnover are still given an option to register for the new tax system. “Some may prefer [to register even if they are exempt] because if they don’t, they may not be able to claim back the VAT paid on their purchases.”

Starting next year, a 5 per cent levy will be charged on all supplies of goods and services, unless specifically exempted or zero-rated, in the UAE.  The levy will be implemented across the Gulf Cooperation Council (GCC) region, with some states given an option to join in on January 1st, 2019.

The ministry had earlier announced the start of its country-wide awareness campaign to educate various stakeholders on the collection of VAT. A VAT law has yet to be enacted, but the Federal National Council on Wednesday passed a draft legislation, the Tax Procedure Bill, that will pave the way for the collection of taxes.

Several briefings for entrepreneurs – from small and medium-sized enterprises (SMEs) to huge multinational organisations – will be held on different dates between April and May this year.

The sessions will explain to companies the rules of the new VAT system and cover the general application of the new VAT rules.

New Traffic Rules and Fines in U.A.E

The UAE government on Tuesday introduced new amendments to federal traffic laws, in a bid to make the country's roads safer.

According to these amendments, passengers will be fined for not wearing seat belts, while children up to four years of age must sit in special child seats.

Children aged 10 and above can now sit on the front seat, but they must be at least 145 cm tall.

Here are the salient features of the decree on the new rules:

  • Children up to 4 years of age must be seated in special child seats
  • Children aged 10 and above can sit in the front seat, but they must be at least 145 cm tall. Earlier, children under 10 years old were not allowed to sit in the front seat of a vehicle and the offense would draw a fine of Dh400 along with 4 black points.
  • Illegally carrying/transporting passengers now draws a fine of Dh3,000 (up from Dh200), 24 black points instead of 4 black points, and the vehicle will be impounded for one-month instead of seven days.
  •  Along with drivers, now even passengers will face fines for failing to wear seat belts.

Until today, drivers were fined Dh400 and got 4 black points for failing to fastening seat belts.

UAE plans to assure rights of domestic workers

A weekly day off, 30 days of annual paid leave, the right to retain personal documents including passport, ID card and work permit, besides daily rest of at least 12 hours — including at least eight consecutive hours — are among rights that the UAE plans to assure domestic workers.

In a bid to ensure decent working and living conditions for domestic workers, who outnumber family members in nearly a quarter of Emirati families, changes outlined in a new draft law that seeks to amend a law passed by the Federal National Council in 2012, seeks to regulate the domestic worker industry in line with international standards.

The new proposals align the UAE’s laws with the International Labour Organisation’s Convention 189 and Recommendation 201 on Decent Work for Domestic Workers.

The rules, which have been approved by the UAE Cabinet, must now be passed by the Federal National Council and signed into law by President His Highness Shaikh Khalifa Bin Zayed Al Nahyan.

According to a copy of the draft law obtained by Gulf News, domestic workers must be extended rights to equality and non-discrimination based on race, colour, sex, religion, political opinion or national or social sect.
The rules also extend safeguards to domestic workers against physical and verbal sexual abuse, human trafficking and forced labour in keeping with UAE’s laws and international conventions ratified by the country.

There are around 750,000 domestic workers in the UAE, making up nearly 20 per cent of the expatriate workforce, according to official statistics. As many as 65 per cent of them are based in Abu Dhabi, Dubai and Sharjah. They outnumber family members in 22 per cent of Emirati families.

The law promotes decent work conditions for domestic workers, including social protection and access to specialised tribunals at the Ministry of Human Resources and Emiratisation and courts. It sets 18 years as a minimum age for a domestic worker, which is consistent with international rules on elimination of child labour.

Placement agencies have to ensure that domestic workers are informed of terms and conditions of their employment such as the nature of work, the workplace, the remuneration and the period of daily and weekly rest as set out by the executive regulations before they have crossed their national borders.

Employment agency obligations

The new draft law says: “A model contract accredited by the Ministry of Human Resources will be signed by the employer and the employment agency, setting out job description and qualifications of the worker as well as obligations of the employer. This contract will also provide for financial obligations towards the worker travelling to the UAE, fees of the agent and the period required to bring in the employee.”

If the agent fails to honour the obligations set out in the contract, the employer shall have the right to decide against offering the job to the worker. The agent will then bear the cost of sending the worker to his/her home country.

The employer also has the right to claim compensation for any inconvenience caused by the agent’s failure to meet the contract’s terms.

The employer has to sign a model contract accredited by the Ministry of Human Resources with the domestic worker, with copies being delivered to the worker, the employer, the placement agency and the Ministry of Human Resources.

Arabic shall be the language of the contract. Where a foreign language is used in addition to Arabic, the Arabic version shall be regarded as authoritative.

Contract clarity

“The contract, which can extend to no more than two years and is renewable for similar periods, shall more particularly specify the date of its conclusion, the date on which work is to begin, type of the work and workplace, duration of the contract, the remuneration and how it is paid, leaves, probation period and rest times, as well as any other terms required by the nature of the work. The law sets six months from the date of ending the contract as the time limit for different lawsuits within which an aggrieved person can approach the court for redress or justice,” it further adds.

A domestic worker, the draft law states, may be engaged on probation for three months, which can be extended to six months, during which his or her service may be terminated by the employer with the placement agency bearing the cost of sending the worker home if necessary.

The placement agent has to repay all fees if the contract is revoked of the worker’s own will, because of the worker or because agreed terms of the employment contract are not honoured.

But a worker shall not be put on probation more than once in the service of any employer, unless the two parties agree to engage the worker in a different job.

To address abusive practices in respect of payment of wages, the law lays down a number of principles with regard to the protection of remuneration.

Wage protection

Remuneration, which has to be communicated to the worker and agreed by him or her before travelling to the UAE, has to be paid no later than the 10th of the following month and a receipt is signed upon every payment. The Ministry of Human Resources may set any more suitable wage protection system.

No amount of money may be deducted from a worker’s salary or end-of-service gratuity except for a debt payable in execution of a court ruling or repair of any damage caused by the worker, provided that the deduction shall not exceed a quarter of the worker’s salary. If a dispute arises, it has to be settled by the special tribunals at the Ministry of Human resources or be referred to the court.
Highlights of new draft law

Violators will face full force of the law

Violators of the law will receive tough penalties including prison terms and hefty fines.

A worker who fails to keep in confidence secrets of his employer even after the term of employment shall receive a prison term of up to six months, a fine of up to Dh100,000, or both.

Those who encourage a domestic worker to quit his job or offer shelter to him or her or stop law enforcement officers from doing their jobs shall receive the same penalty and the court may also order deportation after the prison term is served.

Placement agencies which break the law shall be punished with a fine of up to Dh100,000 and recurrence of the offence will see the fine multiply.

An employer who asks a domestic worker to do a job that is not within the scope of duties indicated to perform in the contract shall receive a fine of up to Dh10,000, which will also be applicable to the worker and the employer who fail to report the employee’s absence from work to the police within 48 hours.

Cases filed by workers under this law shall be exempt from court fees at all stages of litigation and shall be heard in an expeditious manner.

Placement agencies of domestic workers have to adjust their legal status within a year from the date the new law takes effect.

Categories of domestic workers

The new professions under the domestic helpers’ category (only for households, not companies) are: housemaid, private sailor, watchman and security guard, household shepherd, family chauffeur, household horse groomer, household falcon carer and trainer, domestic labourer, housekeeper, private coach, private teacher, babysitter, household farmer, private nurse, private PRO, private agriculture engineer.

The existing professions under the domestic helpers category are: maid, household farmer and family chauffeur.

Legal assurance: Rights and responsibilities

Once the law takes effect, a domestic worker will be entitled to the following benefits in terms of leave:

• A weekly day off with full pay. Where circumstances require an employee to work on this day, he or she will be granted a day in lieu or receive its payment. The regulations will set out working hours and rest breaks for every type of job.

• A paid annual leave of 30 days. If a worker’s service is less than a year but more than six months, the leave will be counted on the basis of two days for every month. The employer can set the date of the annual leave and, if necessary, divide it into not more than two leave periods. The annual leave can be carried forward to the following year and the employer has to grant a return ticket to the worker to travel home every two years. Payment for the annual leave and the travel allowance can be paid in cash to the worker who opts not to travel home.

• A domestic worker shall enjoy sick leave of up to 30 days a year and such leave shall be calculated as follows: the first 15 days with full pay, while the next 15 days will be without pay.

Employment conditions

• Effective protection against all forms of abuse, harassment and violence, and workers should also be provided with decent living conditions that respect their privacy.

• The right to revoke the contract on one’s own if the employer fails to honour his or her obligations.

• Obligations of the employer shall include all terms and conditions as set out in the contract in addition to ensuring the work environment, tools and equipment are safe for the workers, who shall also be provided with proper accommodation, clothing and food, medical care, good treatment, respect and dignity, and physical safety.

• An employer may not engage a domestic worker in any work with a third party unless legal terms are met and consent of the Ministry of Human Resources is obtained. The employer has to pay compensation for any occupational injuries or diseases the worker may contract.

Worker’s duties

• A domestic worker shall honour all obligations set out in the contract, in addition to performing duties in person and in keeping with instructions of the employer. The employee has to exercise due care in performing his or her duties and may not be absent from work without a valid reason. The worker has to respect customs and traditions of the society and public norms.

• Orders of employers have to be met unless these orders are not within the scope of the duties the worker had undertaken to perform in the job contract, are in violation of the law or public order, endanger the worker’s safety or hold him or her accountable.

• The worker has to exercise due care to preserve the employer’s private properties, tools and equipment and must not use these equipment outside the workplace, unless the employer’s consent is obtained.

• The employee shall also keep in confidence the employer’s secrets during and after the term of employment.

Mutually binding rules

• Both employers and employees are bound to report a worker’s absence from work to the Ministry of Human Resources and any other authorities as required by the executive statutes of this law within 48 hours of it coming to light.

• The law makes it mandatory for both the employer and the employee to follow occupational health and safety regulations at all times.

Legal issues and disputes

• Inspectors may not enter the workplace or the worker’s accommodation without permission or warrant from the prosecutor and unless a complaint is filed against the worker or the employer or in the event there is reasonable evidence that the law and executive regulations have been breached.

• The Minister of Interior will grant powers to law enforcement officers, who will ensure law and regulations are enforced effectively, arrest violators, inspect placement agencies and workplaces and accommodations in keeping with the law.

• If a dispute arises between the worker and the employer, they must refer it to the Ministry of Interior’s specialised tribunals, which will exercise due care to help settle it amicably or refer it to the court.

Entitlements

• At the end of the contract, the employer has to settle all the worker’s dues within ten days and, in the case of the worker’s death, the employer has to repatriate the body to the worker’s home country.

• A worker who completes at least a year of service will be entitled to an end-of-service gratuity amounting to one month’s salary for each year of service.

• The employee shall forfeit entitlement to severance pay if he or she is absent from work for more than 30 consecutive days.

Contract violations

• Either the worker or the employer may revoke a contract of their own will if the other party fails to meet his or her obligations as set out in the contract and the law.

• If the contract is terminated by the employer, he shall provide the worker with an air ticket to travel home, a month’s remuneration as a compensation and any other dues, while the worker will bear the cost of travelling home if the contract is ended because of the worker or of his own will.

• A worker will have his or her salary suspended if he or she is detained after a complaint is filed by the employer but, once investigation is completed or a final ruling is issued acquitting the worker, the wage of the entire period has to be paid. However, if the worker is incriminated, the worker will forfeit his remuneration for that period.

• If a complaint is filed against the worker by a third party and the worker is acquitted, that party will have to pay the remuneration of the worker during the detention.

UAE to implement 5 per cent VAT from January 2018 to Business and Landlords




Business owners and landlords must pay a five per cent value-added tax (VAT) starting January 2018, announced the Federal National Council (FNC) on Wednesday in the UAE capital.

The FNC approved the draft law, which serves as a legal framework and organises all the regulations of taxes, which aims to generate revenue for the federal government and enabling a sustainable economic growth.
Private businesses making Dh370,000 and more a year will have to pay VAT. The tax is binding on landlords renting out properties as well, which could mean a rise in rents for tenants across the UAE.

There are currently more than 450,000 private owned companies in the UAE, and the number is expected to soon reach 600,000, which will see a growth in the annual GDP, said Obaid Humaid Al Tayer, the Minister of State for Financial Affairs.

Last year, the GCC countries, including the UAE, Saudi Arabia, Qatar, Bahrain and Oman, signed an agreement to implement a VAT of five per cent.
Al Tayer said the law will be implemented in the UAE on January 1, 2018. However, all GCC members have until January 1, 2019, to implement the rule.

"VAT is the only law that is currently on the legislative committee, as well as the selective items tax on tobacco, fizzy drinks and energy drinks."

The minister said the effect of the VAT on people in general, including residents and consumers, will start with 1.3 percent and will drop with time, whereas businesses will face 0.06 percent, and 0.04 on gross domestic product (GDP) growth when implemented.The law will also provide the authority measures to address procedures for tax collectors, tax auditing, tax avoidance, violations and the penalties.

The passed draft law also stipulates that fines for those avoiding the pay their taxes should not exceed five times the value of the evaded tax.

The minister said that by 2021 the aim is to generate 80 per cent of UAE's economy by non-oil sectors, while the remaining 20 percent generated by oil, as opposed to the current 80 percent GDP.
Selective items tax

The GCC countries also agreed to introduce 'selective items tax', including on tobacco, soft drinks and energy drinks.

The cap for the 'selected items tax' is 100 per cent, in which Saudi Arabia has already drafted its law and placed a 100 percent tax on tobacco while placing 35 percent on soft drinks.

Although the UAE's Ministry of Finance has yet to confirm the amount of tax implemented on its selected items, Al Tayer said it is expected to be applied this year.

"The cap is 100 percent, it could be less depending on each country," said Al Tayer.

"Once the law is issued, it will say when it will be implemented," he added.

The revenue generated from tobacco products alone is expected to reach Dh2 billion a year.

Get Dubai Residence Visa for your family

If you are a Dubai resident visa holder and want to bring your family members, wife and children to UAE, you must first apply for an entry residence visa and after they arrive, you have up to 30 days to stamp resident visa.
(New residence visas or Renewal of existing visa linked to medical insurance in Dubai
With effect from August 1, 2015, no new residence visas or renewal of existing visa applications will be processed without mandatory health insurance coverage in Dubai.)

Criteria for Residence visa
 
Your monthly salary should not be less than AED 4000 or AED 3000 + accommodation. If you want to sponsor a residence visa for your parents, your minimum monthly salary should be AED 10,000. See residence visa for parents separately.

Documents Required:

• Typed Application form
• Salary certificate for government employee or attested work contract of employee
• 3 months bank statement for long-time residents. New residents can submit the 1-month bank statement or bank letter confirming salary transfer.
• Attested tenancy contract, Emirates ID card and labour card
• Marriage certificate that has been attested by UAE authorities (for UAE marriages) or in your home country for spouse sponsorship
• Passports (original) and copies of both sponsor and family member/s
• Medical check-up report of spouse or children over 15 years of age from authorised hospital/clinic
• 3 passport photos of family member
 Fees:
• AED 310 Application fee + typing fees per family member
• AED 15 Empost label (Optional)

Procedure:
1. Ensure that you take your spouse/child over 15 for a health check-up and obtain a Medical Certificate.
2. Go to any authorised typing office & get application form typed and pay the fees.
3. Go to GDRFA and submit the application form, along with supporting documents to receive the residence visa stamp on your family member's passport.

Please Note: For your family member's residence visa to remain valid, he/she must not be out of the UAE for more than 6 months. In case a Muslim expatriate has married more than one wife, he can only obtain one residency visa.