UAE residents should check credit history before applying for a loan

As more banks rely on a customers’ credit history to make decisions on loan applications, it will become extremely important to pay special attention to credit history and reports. Credit scoring, common in mature markets, is a three-digit number assigned to each borrower – in the UAE’s case between 300 and 900 – that represents their creditworthiness and future risk of default. The higher the number, the lower the risk.  

Your credit history combines records of your existing debts, including credit cards, personal, car and home loans and any missed loan/credit card repayments or bounced cheques will appear as well. All your current credit cards whether used or not will also appear on your credit report. These records (of the past two years) are provided by the banks to the Al Etihad Credit Bureau – the UAE’s official credit bureau.

Al Etihad Credit Bureau is a Federal Government organization that collects credit data, information and financial commitments from banks and financial institutions in order to provide accurate Credit Reports to individuals, financial institutions and companies in the UAE as allowed by the laws and regulations of the UAE

There is a law which says one’s debt repayments cannot be more than 50 percent of their income and your credit report will show how much of that 50 percent you have already used up. When you apply for a loan, your bank will go to the credit bureau to get your credit history details before it makes a decision on your application. The bank will have access to the information that all the other banks have provided, for example, the number of credit cards you have and their limit, the number of loans you have and any missed repayments in the past. This will allow the bank to check whether you have reached your debt burden ratio and check your repayment behaviour. Depending on the bank’s credit criteria of who it will lend to, your credit report will help it make a decision on whether to approve your loan and help it fix a rate.

Therefore before applying, it is a good idea to find out what is in your own report. This is possible by purchasing a copy from the Al Etihad Credit Bureau. The report takes 10 to 15 minutes to issue.

How do I get  Credit Score from Al Etihad Credit Bureau

Visit one of our Customer Service Centers and provide an original valid Emirates ID Card, Passport(s) Copy and a valid Email Address. You can pay with credit, debit or e-dirham cards.

How Much does the Credit Score Cost

Credit Report - Individual or Establishment -----------------AED100

Credit Report - Individual or Establishment with Score --AED150

Credit Report - Commercial  ----------------------------------  AED 180

Credit Report - Commercial with Score --------------------- AED 220

Credit Score  --------------------------------------------------------AED 60

Federal Tax Authority clarifies registration procedure for VAT in the UAE

The Federal Tax Authority, FTA, has called on natural and legal persons exercising business in the UAE to expedite their registration process for the Value Added Tax, VAT, to avoid the risk of missing the deadline, on 1st January 2018.

This applies to businesses whose taxable supplies and imports of goods and services exceed AED375,000 over the previous 12 months. Taxable supplies are identified as all supplies of goods and services made by a person who is not exempt.

Registration is available on a 24/7 basis through the VAT website. Businesses are required to visit the website, select the e-Services portal, sign up and create an account. Once the email has been verified, they can log in and register.

The FTA has urged businesses to provide accurate information and make sure they enter it properly into the application form. To complete the registration process, scanned documents must be attached,

•  The business or trade license
•  Passport Copy
•  Emirates ID, for UAE residents, of the manager or owner of the business.
• The Authorized signatory, if the signatory is not the manager him/herself, as well as proof of authorization for the manager or signatory for example articles of association, power of attorney attested by notary.

 Issuing a Tax Registration Number, TRN, may require up to 20 working days or less. Therefore, and in order to ensure that the application is processed, and the TRN issued before 1st January, 2018, the FTA urged businesses to complete their registration to avoid the administrative penalty of AED20,000, as well as additional penalties related to late payment of tax, according to the Cabinet Decision No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE Two or more legal persons conducting business in partnership may apply for Tax Registration as a Tax Group if each of them has a place of establishment or fixed establishment in the UAE; if the persons are related parties, thus not separated in economic, financial or regulatory aspects; or if one or more of the Persons in the group control the others.

Persons intending to register as a Tax Group need to nominate a representative member who shall apply to register them. The representative member applies first by completing a VAT registration application stating that the intention is to be part of a Tax Group.

After the representative member is issued with a Tax Identification Number, TIN, the additional members of the group may be added through Tax Group Registration. Members can be added whether they have registered separately or not. After the process is complete and the application to add members has been submitted, a TRN will be issued for the whole Group.

More information can be found in theLegislation and Guides section, on the FTA website.

Residential Buildings Subject to the Zero Rate VAT in the UAE

His Highness Shaikh Mohammad Bin Rashid Al Maktoum, the Vice-President and Prime Minister of the UAE and Ruler of Dubai, has approved the executive regulations of Federal Law No.8 of 2017 on Value Added Tax (VAT). The bylaws govern the implementation of the VAT, which will come into effect from January 2018.

The regulations define VAT as the 5 percent tax imposed on the import and supply of goods and services at each stage of production and distribution, including what is a deemed supply, with the exception of specific supplies subject to the zero rate and what is exempted as specified in the law

.Article (37) Residential buildings

1. The phrase “residential building” means a building intended and designed for human occupation, including:

a. Any building or part of a building that the person occupies, or that it can be foreseen that a person will occupy, as their principal place of residence.

b. Residential accommodation for students or school pupils.

c. Residential accommodation for armed forces and police.

d. Orphanages, nursing homes, and rest homes.

2. A “Residential building” does not include any of the following:

a. Any place that is not a building fixed to the ground and can be moved without being damaged.

b. Any building that is used as a hotel, motel, bed and breakfast establishment, or hospital or the like.

c. A serviced apartment for which services in addition to the supply of accommodation are provided.

d. Any building constructed or converted without lawful authority.

3. A building shall be considered as a residential building if a small proportion of it is used as an office or workspace by the occupants if it includes garages and gardens used in conjunction with it, or it includes any other features that may be said to comprise part of the residential building.

Article (38) Zero-rating of Buildings Specifically Designed to be Used by Charities

1. The first sale or a lease of a building, or any part of a building, shall be zero-rated if the building was specifically designed to be used by a Charity and solely for a relevant charitable activity.

2. In Clause (1) of this Article, “relevant charitable activity” means an activity for the purpose other than for the purpose of profit or benefit to any proprietor, member, or shareholder of the Charity, and one which is undertaken by the Charity in the course or furtherance of its charitable purpose or objectives to carry out a charitable activity in the State as approved by the Ministry of Community Development, or under the conditions of its establishment as a charity under Federal or Emirate Decree, or as otherwise licensed to operate as a Charity by an agency of the Federal or Emirate Governments authorised to grant such licences.

Such charitable purposes and objectives include, for instance, advancing health, education, public welfare, religion, culture, science and similar activities.

Article (39) Zero-rating Converted Residential Building

1. The first supply of a building or any part of a building, which is converted to a residential building shall be subject to the zero rate provided that the supply takes place within 3 years of the completion of the conversion and the original building, or any part of it, was not used as a residential building and did not comprise part of a residential building within (5) five years prior to the conversion work commencing.

2. The presence of shared or common facilities, or dividing walls or similar features in a residential building should not cause the residential building to be considered or any part thereon as part of a pre-existing residential building.

RTA proposed no driving license for select expat categories in UAE

Regulating the registration permits of old vehicles, and linking registration and licence fees of vehicles to engine capacity are among other ideas.

The Roads and Transport Authority (RTA), in an attempt to further reduce congestion on roads in Dubai, is mulling several proposals, including regulating the issuance of driving licences to select categories of expats.

In a letter by the authority to an Arabic newspaper, the RTA said it has identified means that could help alleviate the traffic problem in the emirate, especially during office hours.

Regulating issuance of driving licences, regulating the registration permits of old vehicles, linking registration and licence fees of vehicles to engine capacity and annual consumption of fuel and annual distance travelled, modifying registration fees for environment friendly vehicles, and incentives to e-vehicles are the ideas on the table that may be implemented after consultation with at the federal level, the RTA letter stated.

Among sustainable solutions that may be implemented within the emirate include encouraging the public to use public transport, improving the vehicle rental market, adjusting start times of schools and offices to reduce the burden on the roads, the letter further added.