VAT 2018 in the UAE: Results in Number
The Federal Tax Authority (FTA) issued a press release on 5th January 2019 announcing the achievements and results during the first year of VAT implementation.
His Excellency Khalid Ali Al Bustani, Director General of the FTA, announced that the UAE has successfully rolled out a seamless and flexible tax system, complete with a progressive legislative environment that meets the highest standards in the field.
In collaboration with all concerned entities, the FTA set the foundations for a holistic and balanced tax system, making the UAE one of the first countries in the world to implement a fully electronic (paperless) tax system.
The FTA Director General revealed that the number of businesses that registered in the tax system during the first year of implementation exceeded 296,000 companies and tax groups.
Statistics show that the total number of periodic Tax Returns received by the FTA from registered businesses exceeded 650,000 in 2018. H.E revealed that this high compliance rate was due to the easy procedures set for submitting Tax Returns and paying due taxes, available 24/7 via the e-Services portal on the FTA official website: www.tax.gov.ae
The FTA Director also stated that the FTA was among the 8 most searched names in the UAE on global search engine Google in 2018, demonstrating that in a short period of time it successfully became the centre of attention among large segments of society and across various sectors. The FTA website was also among the most viewed and most interactive websites in the UAE.
It was specified that due to the FTA’S close cooperation with partners in the business sectors and different groups, the FTA’s contact centre answered more than 306,500 phone enquiries about the tax system, while another 147,000 were answered by e-mail. The total number of queries responded by the FTA exceeded 453,500 during the first year of applying the tax system.
The system’s user base is expanding exponentially, whereby 122 freight forwarding companies were commissioned, the number of accredited Tax Agents increased to 176 and 12 Tax Accounting Software Vendors were contracted.
As part of the awareness program, the FTA organized 90 seminars and training workshops, attended by approximately 28,000 experts from various sectors. It has also launched around 30 VAT guides, a series of e-learning programmes and short educational films, as well as 50 infographics and 136 ‘Public Clarifications’ – 16 of which were general clarifications and 120 consisted of specific case studies to raise awareness and increase auto-compliance rate.
The FTA held more than 35 meetings with all business groups and representatives of relevant sectors; including banking and finance, importing, exporting, telecommunications, travel and tourism, diplomatic missions, free zones, shipping, accounting and auditing, maritime operations, real estate, charity, health, education, hotels, gold and diamond trade, car dealers, vegetables and fruits, fishermen’s associations, farmers’ associations, and retailers.
The FTA Director General acknowledged that they have forged strategic partnerships with all concerned federal and local government authorities, as well as with the private sector, noting that these partnerships played a key role in the successful implementation of the tax system. The coordination with the Ministry of Finance and the UAE Central Bank also played an important part in facilitating payment of due taxes and refunds.
The FTA is intensifying its efforts to raise tax awareness and is currently working to launch new campaigns, most notably the Tax Invoice Campaign, which is set to take place during the first quarter of 2019. The campaign aims to ensure the use of tax invoices for all business operations, H.E. Al Bustani said “This campaign will run in parallel with the Tax Clinic, launched in August 2018 to ensure direct and constant communication with business sectors. The Clinic is still underway across all seven Emirates, raising awareness among businesses, identifying the obstacles they may face, and developing solutions to address them immediately.”
The FTA Director General said: “It is always our priority to ensure that consumers are aware of their rights and obligations and to protect them from any attempt to exploit tax laws.”
The authority will continue to develop its electronic systems, designed to meet the highest international standards and will be launching new campaigns to raise tax awareness.
He further added that he expected 2019 to witness a significant leap forward for the UAE tax system, as the FTA set comprehensive plans to further improve tax compliance rates, promote registration among taxable businesses, and combat tax evasion.
The aim of implementation of taxes in the UAE was to bring a significant new revenue stream to the Government. The increased resources will help the Government to stabilize the economy and improve the country’s infrastructure, making it easier to do business in UAE.
Possibly, many business owners in the UAE have come across additional expenses when administering and implementing the tax compliance system in their organization, however there are many long-term benefits to be gained from replacing outdated accounting systems.
The requirements of the newly implemented VAT regime can be daunting given the ambiguity in tax provisions, interpretational issues and latest developments ongoing in the UAE.Our team at SENAT MEA shall be glad to guide and assist you on the VAT implications which might affect your current or future business plans.
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