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Presenter: Yaser Darwish
Certified Da Gate
Tax Agent Lecturer at
Public Hmc
TAAN # AUS and at
Accountant Founder –
20010898 UoS
– USA (CPA) Since 2013
Accounting
Specialized International
Expert (MoJ &
Training Tax Companies
Abu Dhabi
and Counting Experience –
Courts)
Courses Over 25 Years
)544 (قيد
Goals & Objectives
The course will introduce the students to UAE VAT laws and procedures. It
is designed to provide the students with a thorough understanding of the
fundamental VAT concepts and principles of UAE tax laws and regulations.
The course will cover all VAT elements from registration to filing tax return
focusing on how to assist organizations to be tax compliant.
The Goals of the course of “UAE VAT Laws and Procedures” is to:
• Provide fundamentals of the UAE Tax Laws and
• Analyze the impact of VAT in the business functions
• Importance of Tax compliance for businesses
Source: OECD,
Consumption
1969 1974 1979 1984 1989 1994 1999
2004 2009 2014 2015+ Tax Trends
2014; WNT
164 166 Research
9 18 23 31 44 89 119 137 153
Countries
5
GCC Countries VAT Coordination
“The Economic
Agreement Between “The GCC
the GCC States” Customs Union”
GCC VAT Framework
GCC Unified Agreement VAT (UAVAT)
Quarterly VAT Return Filing in general; Monthly VAT Return Filing for some Resolution adopted by the GCC
Supreme Council in the 36th
session held in Riyadh during the
period 9–10 December 2015 to
Net VAT payment (Output VAT- Input VAT) to be made periodically to Government
implement VAT in all GCC
member states
Maintain Proper Books of Accounts, Records, Tax Invoices and Supporting Documents
GCC Countries VAT Implementation Dates
الكويت TBA
KUW
01/01/2019
البحرين
قطر
السعودية الامارات
01/01/2018
عمان
Why UAE Implementing VAT?
VAT is intended to help improve the
economic base of the country
Parks الحدائق
Continue provide
high quality services
Waste النفايات
تمواصلة تقديم خدمات عالية
الجودة
Police الشرطة
Measures to Control Price Increases
+
1.5%
Cost of living is Lifestyle and
projected to spending behavior
increase Adjustment
Timeline of VAT in UAE
F Federal Tax Authority (FTA) established and takes charge from Jan 2017
VAT was implemented in
VAT Decree Law (Law No. 8 of 2017) issued on 23 Aug 2017
the UAE with effect from
January 1 2018 and the
VAT Executive Regulation (Cabinet Decision No. 52 of 2017) issued on 26 Nov VAT Decree Law,
2017
Executive Regulation,
FTA opens its portal for VAT Registration in Sep 2017; Option for Tax Group
Cabinet Decisions and
Registration
many guides also issued
V VAT Registration Deadline 31 Dec 2017 (Later extended to 30 Apr 2018 with no on VAT by FTA which
penalty)
needs to be referred to as
VAT implemented in UAE w.e.f. 1 Jan 2018; A few Clarification Guides issued post well.
implementation
Concept of VAT
• Value Added Tax (VAT) is an Indirect Tax, and one of the most
common types of consumption tax found around the world.
VAT is a multistage indirect tax levied on each transaction of the supply of goods and services
where each supplier in the supply chain is required to charge VAT if they are registered for VAT
and they are entitled to recover the VAT on the cost of goods or services that they acquire for
purposes of making taxable supplies.
The consumer generally A business pays the Government the tax that it collects
bears the VAT cost while from the customers while it may also receive a input tax
Businesses collect and
account for the tax, on
credit or refund from the Government on tax that it has
behalf of the Government paid to its suppliers
What is Tax?
Examples Income Tax, Corporate Tax, Sales Tax, Per Unit Tax, Value
Inherit Tax, Social Security, Added Tax (VAT), Goods and
etc. Services Tax (GST)
VAT Framework in UAE
Impact of VAT on UAE economic activity
disadvantage Advantage
Increase business costs Diversify income sources for
countries
Changes in corporate structure Improving the infrastructure of the
economy
Increase in business responsibilities Increased work efficiency
Why VAT in UAE?
• Provide a new source of income for the Government and Local
governments to continue providing high quality public services.
• Reduce dependence on oil and other hydrocarbons as a source of
revenue
• Strengthen Fiscal Sustainability for UAE.
• Government investment and expenditures will mitigate any negative
impact of taxation.
Federal Tax
Authority Value
Added Tax
Federal Degree-Law No. (13) of
2016 On the Establishment of
the Federal Tax Authority
Excise Tax
Tax Laws In UAE
VAT
Compliance
الالتزام الضريبى
VAT
3Cs
Compliance Computation
الالتزام الاحتساب
Accounting Environment in UAE
Not Just the Rules that Have Changed
The Game Itself Changed
قبل بعد
BEFORE AFTER
1 Concepts المفاهيم
2 Computation الاحتساب
3 Compliance الالتزام
1 Concepts
Understanding
what is VAT via
right channels
2 Computation
Calculate and Report
VAT and its impact on
business Financial
Statements
Compliance
Business to continuously
comply with VAT
regulations and laws
What is VAT?
VAT charged at each stage in the supply of goods and services
Value VAT registered business that makes business use of the supply
Added Tax could reclaima VAT input (conditions apply)
is a
consumption
VAT is ultimately borne by the final consumer
tax and is
applicable on
business Tax Collected by the registered person for and on behalf of
transactions the Government
and imports
Due VAT is calculated after adjusting deductible input tax credit, at time of
filing V A T Return
Value-Added Tax
(VAT)
It is a consumption tax
on goods or services
imposed at the point of
sale by companies
registered in the value-
added tax in UAE
VAT Attributes
The illustration is
based on 5% VAT
rate
The multistage
nature of VAT is
well
demonstrated in
this illustration
where at each
stage tax is
levied on the
consideration and
input tax credit on
purchases can be
recovered
Concept of VAT – Illustration 3
Laws and
Definitions
Tax Laws In UAE
• Cabinet Decision No. (56) of 2017 on Medications and Medical
Equipment Subject to Tax at Zero Rate
• Designated Zones for the purposes of the Federal Decree-Law No.
Value
(8) of 2017 on Value Added Tax
• List of Charities That May Recover Input Tax
Added Tax
• Cabinet Decision No. (25) of 2018 on the Mechanism of Applying
Value Added Tax on Gold and Diamonds between Registrants in the
State
• Cabinet Decision No. (26) of 2018 on the Refund of Value Added Tax
Paid on Services Provided in Exhibitions and Conferences
• Decision No. (3) of 2018 on Tax Invoices
• Cabinet Decision No. (41) of 2018 On Introducing the Tax Refunds
for Tourist Scheme
• Federal Tax Authority Decision No. (1) of 2018 On the Requirements
for Retailers to Participate in the Value Added Tax Refunds for Tourist
Scheme
• Federal Tax Authority Decision No. (2) of 2018 On Tax Refunds for
Tourists Scheme
Tax Laws In UAE
Excise
• Federal Decree-Law No. (7) of 2017 on Excise Tax
• Common Excise Tax Agreement of the States of the Gulf
Tax
Cooperation Council (GCC)
• Cabinet Decision No. (37) of 2017 on the Executive Regulation
of The Federal Decree-Law No (7) of 2017 on Excise Tax
• Cabinet Decision No. (38) of 2017 on Excise Goods, Excise Tax
Rates and the Method of Calculating the Excise Price
• Cabinet Decision No. (42) of 2018 On Marking Tobacco and
Tobacco Products
• Federal Tax Authority Decision No. (3) of 2018 on
Implementing the Marking Tobacco and Tobacco Products
Scheme
UAE Legislation
Value Added Tax: a tax imposed on the import and supply of Goods and Services at each stage of
production and distribution, including the Deemed Supply.
Person: a natural or legal person.
Taxable Person: a Person who is subject to Tax under the provisions of the relevant Tax Law.
Taxpayer: any Person who is obligated to pay Tax in the State under the Tax Law whether a
Taxable Person or an end consumer.
Tax Registration: a procedure by which a Taxable Person or his Legal Representative registers for Tax
purposes with the Authority.
Tax Registration No.
(TRN): a unique number issued by the Authority for each Person registered for Tax purposes.
Business: any activity conducted regularly, on an ongoing basis and independently by any Person,
in any location, such as industrial, commercial, agricultural, professional, service or
excavation activities or anything related to the use of tangible or intangible properties.
Exempt Supply: A supply of Goods or Services for Consideration while conducting Business in the State,
where no Tax is due and no Input Tax may be recovered, except according to the
provisions of this Decree-Law.
Important Definitions
Taxable Supply: A supply of Goods or Services for a Consideration by a Person conducting Business in
the State, and does not include Exempt Supply.
Deemed Supply: Anything considered as a supply and treated as a Taxable Supply according to the
instances stipulated in this Decree-Law. (Deemed Supply is a transaction or event on
which you have to pay output tax, even if you haven't actually sold any goods or services.
The transaction or event is regarded as a taxable supply).
Input Tax: Tax paid by a Person or due from him when Goods or Services are supplied to him, or
when conducting an Import.
Output Tax: Tax charged on a Taxable Supply and any supply considered to be a Taxable Supply.
Recoverable Tax: Amounts that were paid and can be repaid by the Authority to the Taxpayer pursuant to
the provisions of the Decree-Law.
Due Tax: Tax that is calculated and charged pursuant to the Decree-Law.
Payable Tax: Tax that is due for payment to the Authority.
Tax Period: The specified timeframe, for which Payable Tax shall be calculated and paid.
Tax Invoice: A written or electronic document in which the occurrence of a Taxable Supply is recorded
with details pertaining to it.
VAT Scope
To apply VAT on any transaction,
ALL the following conditions are met
3 In UAE
4 By a Taxable Person
VAT Concepts
* Conditions apply
VAT Concept Input & Output
Note: VAT input tax refund can be claimed only on the
amount paid or intended to be paid before the
expiration of 6 months after the agreed date for the
payment of the supply.
@Purchase @Sale
Input Output
(VAT Payment) VAT (VAT Collection)
Account
VAT Payable = Output VAT – Input VAT
Basic VAT Process
Output tax
VAT collected from customers
Less
Equals
Net VAT
Input tax can be claimed on supplies received in the course of an economic activity. This include:
There are limits within which input tax can be claimed such as:
Where input tax has been claimed In exceptional cases, input VAT
but the consideration for the can not be claimed such as
• entertainment
supply is not paid within a period
• vehicles used for private purpose
established by tax regulations, the • input tax that is not fully relating to
input tax must be paid back to taxable supplies made by the tax
FTA. person.
VAT Rates
VAT VAT
Exempted Out of
Scope
النسبة الأساسية 5% النسبة 0% المعفى من الضريبة خارج نطاق الضريبى
VAT Rates
النسبة الأساسية النسبة صفر المعفى خارج النطاق
5% Out of
0% Exempt
Scope
Standard
Zero Rate Exempt Out of Scope
Rate
Rate 5% 0% No VAT Outside
Charging VAT
Reclaim Input
Tax Return
Example Most goods and Health care, Local passenger Supply of goods to other
transport, Residential, GCC, Payroll, statutory
services education, etc charges, Intra-VAT group
some specific financial
reg. Sales of going concern
services etc. business, vouchers sales at
value
Exempt Supplies
When a taxable person makes both taxable supplies and exempt supplies,
then the taxable supplies is partially exempt.
GOODS apply)
• Zero-rated: The supply of goods to
other countries other than GCC
countries.
The VAT Law makes provisions for Supplies made to another GCC Country.
Goods
➢is Out of Scope of VAT law if the supply of goods is made to a VAT registered
customer in the other GCC country.
Services
➢are treated as taking place at the place where the recipient is resident in another
GCC Country, provided the recipient is registered for VAT in its GCC Country.
• Competent Court
• After the committee decision and the tax dispute
exceeds AED 100,000 (in tax and penalties), the
decision can be appealed to a competent court.
Source of Material
- Tax Laws as issued by Federal Tax Authority website (https://www.tax.gov.ae/legislation.aspx)
- Federal Law No. (7) of 2017 on Tax Procedures
- Cabinet Decision No. (36) of 2017 on the Executive Regulation of Federal Law No. (7) of 2017 on Tax
Procedures
- Federal Decree-Law No. (8) of 2017 on Value Added Tax
- Common VAT Agreement of the States of the Gulf Cooperation Council (GCC)
- Cabinet Decision No. (52) of 2017 on the Executive Regulations of the Federal Decree-Law No (8) of 2017 on
Value Added Tax
- Other Laws and Regulations
- Tax Guides and Forms as issued by Federal Tax Authority website (https://www.tax.gov.ae/help_guides.aspx)
- Public Clarification as issued by Federal Tax Authority website (https://www.tax.gov.ae/public-clarification.aspx)
- Awareness session material as issued by Federal Tax Authority website
(https://www.tax.gov.ae/awareness_session_material.aspx)
- VAT Filing Returns as issued by Federal Tax Authority website https://www.tax.gov.ae/vat-filing-returns.aspx)
- Quick References as issued by Federal Tax Authority website (https://www.tax.gov.ae/quick-references.aspx)
- e-learning as issued by Federal Tax Authority website (https://www.tax.gov.ae/e-learning.aspx)