Sheikh Hamdan bin Rashid Al Maktoum heads first FTA Board of Directors’ meeting

DUBAI — H.H. Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance, headed the first meeting of the Federal Tax Authority, FTA, Board of Directors, at the Ministry of Finance, MoF, in Dubai. The meeting marked the FTA’s first step in developing its strategic and operational plan to support the UAE’s economic diversification.

During the meeting, Obaid bin Humaid Al Tayer, Minister of State for Financial Affairs, was elected as the Deputy Chairman of the FTA Board of Directors.

H.H. Sheikh Hamdan bin Rashid said during the meeting, “The establishment of the FTA comes under Federal Law Decree No. 13 of 2016, issued on 26th September. The authority will provide the necessary support for tax-payers to commit to the tax laws and procedures which will govern the process between the authority and tax-payers.”

H.H. Sheikh Hamdan highlighted the UAE’s adoption of best practices in implementing taxes and collecting them electronically. He also emphasised the UAE’s efforts in facilitating the FTA registration channels for tax purposes, as well as working to the highest levels of transparency with tax-payers, and generating standards of auditing and assessing tax returns.

Sheikh Hamdan clarified the tax laws and regulations, which include tax procedures, Value-Added Tax, VAT, and Selective Tax, prepared in line with the UAE government’s vision to maintain the country’s competitiveness in business practices. This will be achieved through facilitating the procedures for tax payers, communicating with the FTA for technical assistance and FTA efficiency in delivering tax returns, processing taxes online and implementing the necessary auditing procedures.

He also reviewed the developments of the draft tax laws at the UAE and GCC level, clarifying that following the agreement of the two unified VAT and selective tax agreements amongst GCC Ministers of Finance, two Federal Decrees have been issued for approval by the GCC General Secretariat.

His Highness said that the draft law of tax procedures is in its final stages of the legislative process and is soon being issued and published. The VAT draft law is being discussed by the Legislation Technical Committee to be approved by the UAE Cabinet, followed by the Selective Tax draft law which will be discussed in the future by the committee.

Sheikh Hamdan also highlighted that the MoF launched the first phase of the awareness campaign for taxes in the UAE on 21st March 2017. This phase concluded with 23 workshops for the business community to clarify tax laws and obligations, such as registering at the authority for tax purposes, calculating and imposing taxes, submitting tax returns, and paying taxes in line with the specified deadlines.

VAT will be levied on the sale of all goods and services unless they are subject to a zero rate or tax exemption such as food, commercial property, hotel services, etc. VAT will either be the basic 5 percent tax or zero-rate tax, which is tax-free. Businesses will be able to recover VAT on the purchase of goods and services used for business purposes. Businesses exempt from VAT will not be able to recover the tax incurred on the cost of a good or service that is not exempt.

Zero-rated supplies include local transportation, imports and exports, majority of healthcare and education services, investment gold, and sales and leasing of residential properties. Some financial services, residential buildings, and vacant land will also be exempted.

Businesses with taxable goods over the threshold of AED375,000 will be required to register, while businesses with taxable supplies below AED375,000 but over AED187,500 will also have the option to register. Businesses not required to register have non-taxable goods and services that are subject to zero-rate or exempted from taxation.

The FTA will open registration for businesses with taxable income exceeding the yearly threshold in the third quarter of 2017. Registration will be compulsory during the fourth quarter of 2017.

VAT will be applied with effect from the 1st January 2018.

Selective Tax will be imposed on specific commodities which are harmful to human health, including tobacco and energy drinks, which will be subject to 100 percent tax, while 50 percent tax will be imposed on carbonated soft drinks. This tax will be charged as a percentage of the pre-tax retail price, and will have to be paid at the time they are imported, or once they leave the factory if locally manufactured.

The payment of taxes is suspended when excisable goods are placed in a tax warehouse. In these cases, the Selective Tax will be imposed once the excisable goods are released for consumption.

The FTA will also open registration for businesses that import, produce or store selective goods during the third quarter of 2017 with registration becoming compulsory during the fourth quarter.

Selective tax will be implemented in the last quarter of 2017.

The FTA Board of Directors’ meeting was attended by Younis Haji Al Khoori, Under-Secretary of the MoF, and members of the Board of Directors, which included Sultan Ahmed bin Sulayem, DP World Group CEO and Chairman, Chairman of Ports, Customs and Free Zone Corporation, Sheikh Mohammed bin Abdullah Al Nuaimi, Chairman of Ajman Ports and Customs Department, Mohammed Sultan Al Hameli, Director-General of the Department of Finance � Abu Dhabi, Mohamed Khadem Al Hameli, Director-General of the General Administration of Customs � Abu Dhabi, Abdulrahman Saleh Al Saleh, Director-General of DoF � Dubai, Waleed Ibrahim Al Sayegh, Director-General of the Central Finance Department of Sharjah, Khalifa Saeed Ghanim, Director-General of the Department of Finance and Administration of Umm Al Qaiwain, Yousuf Ali Al Blooshi, Acting Director-General of DoF – Ras al-Khaimah, Ali Murshed Al Marar, Executive Vice President for Administrative Affairs at Abu Dhabi National Oil Company, Youssef Abdullah Al Awadi, Deputy Director of DoF in Fujairah, Saeed Rashid Al Yateem, Assistant Under-Secretary of Resources and Budget Sector at MoF, Ms. Azza Mohammed Al Suwaidi, Director of Revenue Development at MoF, Ms. Alia Mohammed Al-Marmoum, Director of Policy and Customs Affairs at the Federal Customs Authority, and Ali Khalfan Al Dhahiri, Deputy Director of the Legal Affairs Department at the Ministry of Presidential Affairs.

Source: Emirates News Agency

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