VAT in the UAE: First tax returns must be submitted before February 28th

The Federal Tax Authority (FTA) has told businesses, whose first tax period ended on January 31, to file their VAT returns before February 28.Khalid Ali Al Bustani, director-general, FTA, reminded registered businesses to submit their tax returns on a monthly or quarterly basis, as determined by the FTA based on their annual revenue.

Earlier, the FTA had made some adjustments to the first tax periods for VAT in order to afford more flexibility to businesses following requests from a large number of businesses subject to VAT.

These exceptional adjustments included extending tax periods from one to three months for some businesses at the beginning of implementation in 2018, with tax periods returning to a monthly basis later on.

According to FTA, the first quarterly tax period - which was meant to expire by the end of January or February 2018 - was extended by merging it with the following period, making the first tax period four months for some businesses and five for others. These mainly included small and medium enterprises.

Meanwhile, businesses whose first tax period was three months ending in March 2018 were not included in these adjustments.

According to Federal Decree-Law No. (8) of 2017 on the VAT, the standard tax period applicable to a taxable person shall be a period of three months ending on the date that the authority determines.

Al Bustani noted that taxable persons must submit tax returns, pay their due taxes within the specified timeframes, and keep records as required in tax legislation in order to avoid penalties.

Tax returns must include

> The value of standard-rated supplies made in the tax period and the output tax charged

> The value of zero-rated supplies made in the tax period

> The value of exempt supplies made in the tax period

> The value of any reverse-charged supplies received in the tax period

> The value of expenses incurred in the tax period (if the business in question is looking to recover input tax and the amount of recoverable tax)

> The total amount of tax due and recoverable input tax for the tax period

> The payable tax (or repayable) for the tax period+

Free zones in UAE Exempted from VAT

The Federal Tax Authority on Wednesday posted an unofficial translation of Cabinet Decision No. (59) of 2017 on Designated Zones for the purposes of the Federal Decree-Law No. (8) of 2017 on Value Added Tax [VAT].

The post states that the UAE’s Cabinet, under its authority, has added the following free zones to the FTA’s list of Designated Zones. These Designated Zones are outside the UAE for VAT purposes and therefore are not subject to VAT in the UAE for products and services.

Here's the complete list of Designated Zones as per the Annex to the Cabinet Decision No (59) of 2017 No. Designated Zones.

Abu Dhabi

1. Free Trade Zone of Khalifa Port

2. Abu Dhabi Airport Free Zone

3. Khalifa Industrial Zone

Dubai

4. Jebel Ali Free Zone (North-South)

5. Dubai Cars and Automotive Zone (DUCAMZ)

6. Dubai Textile City

7. Free Zone Area in Al Quoz

8. Free Zone Area in Al Qusais

9. Dubai Aviation City

10. Dubai Airport Free Zone

Sharjah

11. Hamriyah Free Zone

12. Sharjah Airport International Free Zone

Ajman

13. Ajman Free Zone

No. Designated Zones (Umm Al Quwain)

14. Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port

15. Umm Al Quwain Free Trade Zone on Shaikh Mohammad Bin Zayed Road

Ras Al Khaimah

16. RAK Free Trade Zone

17. RAK Maritime City Free Zone

18. RAK Airport Free Zone

Fujairah

19. Fujairah Free Zone

20. FOIZ (Fujairah Oil Industry Zone)

Online registration for excise tax starts on September 17

The Federal Tax Authority, FTA, has announced that it will open online registration for excise tax for businesses on September 17, providing an integrated system to serve the business sectors as per the highest international standards.This marks a major step underlining the UAE’s leading position in the application of a world-class tax system.

The 24/7 registration will be via FTA's website, which provides businesses and consumers with a wealth of information on the upcoming introduction of an excise tax, due on 1st October.

The FTA website, www.tax.gov.ae, includes information about the Authority itself, as well as an introduction to the different types of indirect taxes in the country, the legislation regulating them, and the objectives and benefits of the UAE economy.

The UAE last month published the law on excise taxes relating to tobacco as well as energy and fizzy drinks, ahead of the introduction of the new tariffs.

The law will impose an excise tariff of 100 per cent on tobacco and energy drinks and 50 per cent on sugary drinks. The FTA estimates that around 250 companies in the UAE will be impacted by the excise tax.

The UAE is expected to be the second country in the Arabian Gulf to introduce excise taxes after Saudi Arabia began implementing the tax at the same rates in June this year.

Legislation relating to the introduction of VAT at 5 per cent in the UAE has recently been published. Implementing regulations, which will provide more detail on taxable goods, are due before the end of the year.

The introduction of VAT and excise taxes are expected to boost the inflation rate by a one-off 1.4 per cent, Khalid Al Bustani, the FTA’s director general, said last month.

The International Monetary Fund meanwhile expects the introduction of VAT across the GCC to boost the region's GDP by about 1.5 per cent.