03 Mar
Assessment of VAT impact to take 3-5 years: UAE minister
It will take around three to five years to collect the required data for the assessment of the impact of the Value Added Tax (VAT) on the UAE’s Gross Domestic Product (GDP), according to a UAE minister.
Hamid Obaid Al Tayer, the Minister of State for Financial Affairs and Chairman of the Board of Directors of the Federal Tax Authority (FTA) told members of the Federal National Council (FNC) on Tuesday that it was too early for the government to evaluate the impact of VAT to the country’s economy because of insufficient data.
“It requires a period of three to five years to study the impact of VAT on the impact of the country’s economy,” said Al Tayer. “We need ample time to compile sufficient data to evaluate the effects of the tax. The only study that was conducted in 2018 in just not enough. It’s therefore too early to rely on such data to assess the impact of VAT.”
The minister was responding to a question from Hamad Al Rahoumi, first deputy speaker of the FNC and a member representing Dubai about the effects of VAT on the economy, the consumers and traders two years after its implementation.
A five per cent VAT was introduced in UAE from January 2018 and the impact of the tax is yet to be known.
“There have been many challenges, including the low oil prices, geopolitical factors, sanctions imposed on certain nations and now the coronavirus outbreak. All these factors have to be taken into account when assessing the impact of VAT,” said Al Tayer.
He noted that there was no plan to increase the amount of VAT being charged on goods and services as the International Monetary Fund (IMF) recently recommended.
Last year, the IMF suggested that the VAT should be doubled from five per cent to 10 per cent in Saudi Arabia in consultation with the other Gulf countries.
Al Rahoomi told Khaleej Times on the sidelines of the FNC meeting that he raised the issue following mixed reactions from people about VAT and that it was necessary that the concerned body come up with a comprehensive survey on the effects of this tax and its benefits to the nation.
“VAT and other government fees has led to businesses increase prices of various goods and services thereby affecting consumers,” said Al Rahoomi.
UAE’s GDP to increase in 2020
The state minister also noted that the country’s GDP is expected to increase to Dh1.50 trillion in 2020 from Dh1.46 trillion in 2019, an increase of nearly Dh37 billion.
“Last year, the inflation rate was 1.5 per cent. The GDP in 2018 was Dh1.44 trillion and inflation was 3.69 per cent,” said Al Tayer, adding that the country’s GDP in 2017 was Dh1.41 trillion and the inflation was 1.97 per cent.
In 2016, the GDP was Dh1.41 trillion and the inflation rate was 1.61 per cent.
Al Tayer said the UAE is currently witnessing an increase in investment opportunities, which was reflected in the increase in the number of companies registered under the tax system, which is 312,000 companies.
Source:https://www.khaleejtimes.com/business/banking-finance/assessment-of-vat-impact-to-take-3-5-years-uae-minister
11 Feb
VAT in UAE: Now get refunds at shopping malls, hotels
Kiosks allow tourists to process their requests to recover VAT.
The Value Added Tax (VAT) Recovery Self-Service Kiosks for Tourists scheme has been expanded to be available at major shopping malls and hotels, in addition to the existing ones at air, land and maritime entry and exit ports across the UAE, announced the Federal Tax Authority (FTA).
The expansion aims to provide additional services to tourists, enhancing the UAE’s status as a leading destination on the international tourism map. Planet – the company authorised by the FTA to operate the electronic system for the Tax Refunds for Tourists Scheme – debuted nine self-service kiosks in stage one of implementing the plan, setting them up at multiple shopping malls and hotels. The kiosks are equipped with state-of-the-art technology allowing them to fully process VAT refund requests for tourists.
In a statement issued on Monday, the authority explained that the kiosks allow tourists to process their requests to recover VAT from the convenience of their hotel or at major malls in a matter of minutes.
Applicants can scan their boarding pass to prove they will be leaving the UAE in the next 24 hours, as well as their original passport (or identity card for GCC nationals), and then follow the simple instructions displayed at the self-service kiosks. The FTA revealed that up to 55 new self-service kiosks will be deployed by the end of 2020 – 25 of which would be stationed in malls and 30 in hotels.
Khalid Ali Al Bustani, director-general of the FTA, said: “Our objective from expanding the self-service kiosk is to provide further facilities and additional options for tourists looking to recover taxes. Eligible tourists who meet the necessary criteria for reclaiming the VAT they incurred on their purchases in the UAE can process the refund applications from the convenience of their own hotels or from a list of major shopping malls around the country.”
The number of digital transactions under the Tourists Refunds Scheme grew to 3.2 million in the period between its launch in November 2018 and the end of 2019.
Tourists can submit their requests to recover the taxes they incurred on purchases in the UAE when they are about to depart from the country. Applicants must submit the tax invoices on their purchases, marked with ‘Tax-Free’ stickers issued by retail outlets registered in the system, along with their passport and credit card. No limit is placed on the maximum amount that can be recovered if said amount is transferred to the tourist’s credit card, however, in the event that the applicant requests a cash refund, then the maximum amount is set at Dh7,000 per day. This process can be carried out at self-service kiosks, as well as at tax refund offices located at ports of exit across the UAE.
Source:https://www.khaleejtimes.com/business/vat-in-uae/vat-in-uae-now-get-refunds-at-shopping-malls-hotels
18 Dec
Facebook announces 5% VAT on ad services in UAE
The notice was issued this week.
Facebook announced a tax on one of their services in UAE this week.
In a notice issued to users in UAE, the social media giant said that it was implementing value-added tax (VAT) on the sale of ads in UAE:
Due to an implementation of a value-added tax (VAT) in the United Arab Emirates, Facebook is now required to charge VAT on the sale of ads in UAE. All advertisers with a ‘sold to’ of United Arab Emirates that have not provided a tax registration number will be charged VAT at 5% on advertising services.
If you haven’t already, here is how to update your account:
Go to Account settings
Add or confirm your state
Add your 15-digit tax registration number
It is important that you provide a valid tax registration number. We are legally required to verify this number with the UAE tax authority. Invalid tax registration numbers will be disregarded and as a result, you will be charged a 5% VAT on the purchase of ads.For additional information, please visit our help content.
Thank you,The Facebook Business Team
Source:https://www.khaleejtimes.com/business/vat-in-uae/now-pay-5-tax-for-this-facebook-service-in-uae
07 Apr
UAE-Saudi double tax avoidance agreement to lift trade, investment
The Avoidance of Double Taxation Agreement between the UAE and Saudi Arabia, which is expected to facilitate the two-way investment flow, boost bilateral trade and further bolster economic ties, has come into effect at the beginning of April after nearly a year the landmark pact was signed.
The two countries signed the double income tax treaty, the first such agreement between two members of the GCC, in May 2018. The agreement seeks to strengthen cooperation frameworks in tax matters and consolidate financial, economic and investment relations as well as encourage free movement of capital and service exchange between the two nations, tax experts.
Tax experts said the treaty would benefit individuals and corporates in the two countries. An international tax framework provides important protections and benefits for UAE companies and expatriates. For expatriates, the agreement come into play when they have a second residency outside the UAE. For companies, agreements can result in exemptions and reduced withholding tax rates on dividends, interest and royalties. If a UAE company has international shareholders, it is not subject to the tax of the jurisdiction of the shareholders, according to experts.
Double taxation avoidance agreements allocate taxing rights and ensure individuals and businesses are only taxed once. They clarify how certain types of income, such as dividends, property income and pensions, should be taxed, and lay out rules on non-discrimination to prevent different treatment based on factors such as nationality or residency, according to analysts.
Younis Haji Al Khoori, under-secretary of the Ministry of Finance, said the agreement is an important step in enhancing bilateral relations between the two countries, especially in financial and economic spheres. “This agreement will contribute to a more flexible investment climate that will underscore the country’s position as a key destination for Saudi investments. This agreement represents a qualitative leap forward in terms of the framework of financial, economic and tax cooperation between GCC countries,” he added.
The Ministry of Finance aims to expand the network of bilateral double taxation avoidance agreements with various countries around the world to fulfil the vision of the wise leadership of the state in diversifying sources of income and advancing the development objectives of the state, said Al Khoori.
“These agreements contribute to the elimination of double taxation, facilitate cross-border trade and investment flows, and provide protection to taxpayers from direct and indirect double taxation. This in turn enhances the country’s investment climate and makes it more attractive as a destination for foreign investment,” said Al Khoori.
Investments of Saudi citizens and banks in the UAE were valued at Dh17.08 billion in 2017, whereas the number of business licences issued to Saudi citizens in the UAE reached 12,451 by end of 2017.
Official data shows that the volume of trade between Saudi Arabia and the UAE reached Dh32.93 billion in 2017, and the number of Saudi shareholders in the UAE joint stock companies reached 118,8708.
The value of real estate transactions for Saudi nationals in the UAE was Dh59 billion in 2017, while the total number of property owners in the UAE was estimated at 4,989 by end of 2017.
Source:https://www.khaleejtimes.com/uae-saudi-double-tax-avoidance-agreement-to-lift-trade-investment
