Over the last decade, the UAE’s attempts to diversify its economy and move away from reliance on oil has been largely successful. The most recent evidence of this is the announcement in 2016 regarding the introduction of VAT across not only the UAE but the wider GCC region.
To further back this up and allow for the orderly transition, new tax legislation has been issued by UAE President, Sheikh Khalifa.
Federal Law No. 7 of 2017 (the “Tax Procedures Law”) lays the foundations for an enhanced UAE tax system, which will regulate the administration and collection of taxes, starting with VAT in 2018, and defines the role of the Federal Tax Authority (FTA).
The law sets out the rights and obligations of the FTA and the taxpayer and covers tax procedures, obligations, audits, refunds, collections and objections.
Key provisions of the Law:
– requires businesses to keep accurate accounting records
– requires any business or individual to register with the FTA
– requires any taxable business or person to prepare a tax return
– mandates that all tax agents must be registered
– allows the authorities to perform tax audits
The establishment of the FTA and The Tax Procedures Law seeks to ensure a smooth transition into tax paying nation. At this moment in time, there has been no indication that other taxes (such as tax on personal income) is something that will also be introduced. The UAE government is keen to ensure a sustainable and successful economy into the future; diversifying and increasing revenue streams through taxation is the next obvious step in this process. They have also stressed that the additional resources will be used to further advance development and infrastructure in the country.
The full text of the new Tax Procedures Law can be found on the Ministry of Finance’s website – www.mof.gov.ae
Based in Dubai, Davidson & Co can assist with any legal queries relating to this new legislation, as well as any corporate law or company formation requirements in the UAE. We’re here to help, so please get in touch.