Sheikh Khalifa issues Tax Procedures Law for UAE

President His Highness Shaikh Khalifa Bin Zayed Al Nahyan has issued the landmark Federal Law No. 7 of 2017 for Tax Procedures, which sets the foundations for the planned UAE tax system, regulating the administration and collection of taxes and clearly defining the role of the Federal Tax Authority (FTA).

The Federal National Council (FNC) approved the draft law in March this year and with the presidential approval to the tax law, the country now has a legal framework for taxation, implementation and administration.

“The Tax Procedures Law is a significant milestone towards establishing the UAE’s tax system and diversifying the economy,” said Shaikh Hamdan Bin Rashid Al Maktoum, Deputy Ruler of Dubai, UAE Minister of Finance and FTA Chairman.

“The Law, issued by Shaikh Khalifa is an all-encompassing legislative framework that lays the groundwork for the UAE’s plan to implement taxes as a means to ensure sustainability and diversify the government’s revenue streams. The increased resources will enable the Government to maintain the momentum of its development and infrastructure for a better future.”

The Law defines a clear set of common procedures and rules to be applied to all tax laws in the UAE, namely, value added tax (VAT) and excise tax laws, and clearly states the respective rights and obligations of the FTA and the taxpayer.

The law covers tax procedures, audits, objections, refunds, collection, and obligations, which include tax registration, tax-return preparation, submissions, payment and voluntary disclosure rules – in addition to tax evasion and general provisions.

When the Tax Procedures Law goes into effect, all UAE-based businesses will be required to keep accurate records for five years.

The law also sets penalties for non-compliance, as well as clear processes for appeals which align with international best practices and establishes a fair and transparent environment for the FTA to carry out its mandate.

“The UAE is committed to meeting the most stringent international standards,” Shaikh Hamdan said.

“We are working to establish an optimal legislative and executive environment to ease the nation into the VAT and excise tax systems. Implementing these taxes gives the UAE further leverage when it comes to international competitiveness and brings us one step closer towards building the future envisioned by our wise leaders, who have called on all those in charge to innovate and strive to spread happiness among citizens and residents.”

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Qatar's Cabinet approves VAT draft law

Taking another step towards the implementation of value-added tax (VAT) in Qatar, the

Cabinet gave its nod to a draft law on the proposed new levy and its draft executive regulation.Though a firm date has not been set, policy makers in the six-nation Gulf Co-operation Council (GCC) are aiming to introduce a 5% VAT at the start of next year.

During its ordinary meeting held at the Emiri Diwan, the Cabinet also approved a draft law on income tax and its draft executive regulation, as well as a draft decision of the Council of Ministers to issue the executive regulation of the selective tax law, the official Qatar News Agency (QNA) reported.

The Ministry of Finance has prepared the draft law on VAT in accordance with the unified GCC agreement on it.The agreement obligates each member state to take the necessary steps domestically for issuance of the relevant local law and procedural policies in order to implement the tax with a view to executing the agreement's provisions.

The draft law is expected to provide details on how Qatar will interpret the GCC framework and deal with key matters where it has discretion.

In principle, VAT will be levied on the supply of goods and services at a standard rate of 5%. According to experts, the new indirect tax will represent an important new source of revenue for Qatar and will be another action to move away from the economy being oil dependent.

Meanwhile, the draft legislation on income tax is meant to replace the Income Tax Law promulgated by Law No 21 of 2009 and Law No 17 of 2014, “which exempt the share of non-Qatari investors in the profits of some companies and investment funds from income tax”, QNA said.

It also falls within the “development framework of tax legislation to ensure the enhancements of revenues in the tax sector, simplification of procedures and facilitation of examination, connection and collection procedures, which in turn will promote tax compliance”.

The draft executive regulation of the selective tax law includes provisions concerning tax entitlement, declaration of loss or damage of selective goods, inspection of damaged goods, registration, tax declaration, rules of payment of tax in the case of local production, maintenance of accounting systems, the language of accounting records, and control and inspection rules.

HE the Deputy Prime Minister and Minister of State for Cabinet Affairs Ahmed bin Abdullah bin Zaid al-Mahmoud said the Cabinet also approved a draft decision of the Council of Ministers to amend some provisions of Decision No 18 of 2011 to nominate the chairman and members of the Tax Exemption Committee, organise its work and determine its rewards.

The committee is “competent to receive and examine requests for exemption from taxation and study the cancellation of previous exemptions granted due to breach of legal obligations or deviation from their purposes, and prepare recommendations on them”.

HE the Prime Minister Sheikh Abdullah bin Nasser bin Khalifa al-Thani chaired the Cabinet’s weekly meeting.