UAE tax authority holds VAT workshop for export, import firms
August, 23rd 2017The Abu Dhabi Chamber of Commerce and Industry organised an awareness workshop on VAT in cooperation with the Federal Tax Authority (FTA) on Sunday to spread awareness among import and export companies on the mechanism of applying value added tax in the UAE. “Up to 85 per cent of world countries apply VAT and in the UAE, it will impact all consumer staples, with only four services to be exempted: financial services, undeveloped land, local transport and houses, in order to prevent any price hikes,” said Saeda Al Qayoumi, FTA tax advisor. The tax will impact some medications that are not directly used for treatment, she said, adding that VAT on direct and indirect exports will be zero, while input tax can be fully recovered if it relates to a taxable supply made (five per cent or zero-rated supply). There will be special tax rules on commodities transported into the GCC, she added. The workshop was attended by Abdullah Ghurair Al Qubaisi, deputy director-general of the Abu Dhabi Chamber of Commerce and Industry, and top executives. “Tax rate on schools and kindergartens will be zero", added Al Qayoumi. Elaborating, she said the difference between the completely tax-exempt sectors and those subjected to zero-rated tax is the latter can recover the tax which they had paid for their supplies or production input as well as the services for which prices are paid, and are untaxable. Zero tax categories Categories which will be imposed a zero tax are commodities and service exports to outside the GCC, international transport and related supplies, supplies of some maritime, air and land means of transport (such as aircraft and ships) as well as certain investments in precious metals (like gold and silver of 99 per cent purity). Other categories which are subject to tax include residential real estate being constructed and supplied for the first time within three years of construction, specific basic services in education and health sectors and related commodities and services. Al Qayoumi said: ”VAT deserves adding of customs fees paid by product importers and cannot be deducted. The tax will be calculated on the total value of products, including customs charges." Declarations Whoever is subjected to the tax must deliver VAT declarations to the Federal Tax Authority on a periodic basis (every three months or in a shorter period if the Authority deems so) — within 28 days from the expiry of the tax period, according to the procedures defined in the tax laws. The tax declarations shall be submitted online by use of electronic services system. All businesses in the UAE must attest their financial transactions to ensure the accuracy of their financial records and always be updated. Businesses which exceeds the minimum revenues must register in the VAT system, while businesses which are not bound for registration in the VAT system must maintain their financial records regularly. Al Qayoumi said financial services for which fees will be paid shall be subjected to the tax, but the products which are approved on the margin will be exempted. She, however, said bank interest rates will not be subjected to the tax. According to the Federal Tax Authority, the products of Islamic finance are in compliance with Shariah rules, therefore they function in a different way from internationally known funding products.