The UAE had announced its intention to the introduce value added tax (VAT) in the country starting January 1, 2018. The issuance of the final tax law has set the stage for implementation of VAT and meeting the implementation deadline.
The new law comes after the UAE, represented by the Ministry of Finance, ratified the Common Value Added Tax (VAT) Agreement of the States of the Gulf Cooperation Council and the Common Excise Tax Agreement of the States of the Gulf Cooperation Council, following Federal Decrees No. 31 and 32 of 2017, issued by President His Highness Shaikh Khalifa Bin Zayed Al Nahyan. It is a follow up step from Federal Decree-Law No. 13 of 2016 on the establishment of the Federal Tax Authority (FTA) tasked with executing tax laws in the UAE.
The Tax Procedures Law also establishes the register of tax agents who may interact with the FTA on behalf of taxpayers, specifies the basic requirements for appointing tax agents, and sets the standards for maintaining confidentiality by the authority as well as its officers.
Provisions of the law
The law requires any person conducting any type of business to keep accounting records and commercial books, as well as any tax-related information as determined by the Law.
Tax returns, data, information, records and documents must be submitted to the authority in Arabic. The FTA may, however, accept documents in any other language, as long as the person provides a translated copy in Arabic at their expense and responsibility, if so requested.
Furthermore, any person obliged to register for taxation must do so, as stipulated by the law.
Registrants must include their Tax Registration Number (TRN), in all correspondence and transactions with the authority or with others. They must also inform the authority by filling the form of any circumstance that might require the amendment of information related to their tax record within 20 working days of the occurrence of said circumstance.
Each taxable person must also prepare tax returns for each tax period and for each tax while being registered. They must then submit the tax returns to the authority and pay any payable tax as specified in the tax return or any tax assessment within the time limit. The authority reserves the right to turn down any incomplete return.
The law mandates that a register of tax agents be established at the authority, which will hold files for each agent documenting his/her conduct. It is not permitted for any person to practise the profession of a tax agent in the UAE unless he/she is enrolled in the register.
Procedures for registration, as well as the rights and obligations of the tax agent before the authority and the person, is specified in the executive regulations of the law.