Following the introduction of value-added tax (VAT) on January 1, 2018 in UAE, The Federal Tax Authority has clarified the import procedures that the non-VAT registered businesses should follow.

Non-registered businesses seeking to import into the UAE must follow standard customs procedures, and must either complete a declaration and pay through the e-Dirham system or through the e-Services portal on the FTA website; via a clearing company approved by the FTA at the port of entry; via a freight forwarder approved by the FTA; or via a courier company where the goods are delivered to the importer.

In addition to following standard procedures when importing for re-export, transit, or temporary admission, non-registered businesses must provide a guarantee for the tax due on the imported goods in question, either by entering a previously obtained e-Guarantee reference number on the e-Services portal; via a clearing company approved by the FTA at the port of entry; or via a freight forwarder approved by the FTA.

Source:https://www.taxnews.com/news/UAE_Explains_VAT_Procedures_For_NonRegistered_Firms____76241.html

Abu Dhabi’s Department of Economic Development has reversed previous instructions for rounding-up prices.

Abu Dhabi’s Department of Economic Development has changed instructions which allows the retailers to round up prices with the introduction of VAT in the UAE.

On January 4, the department said that the shops had been given permission to round up the cost of items by up to Dhs0.20 if payment is made in cash due to a lack of coins in lower denominations than Dhs0.25 in circulation.

This meant a customer buying an item for Dhs1 could potentially pay Dhs1.25 instead of the Dhs1.05 after VAT was added.

The new instructions issued on Saturday mean shops have instead been instructed to round up to the smallest available coin or Dhs0.25.

This followed assurances from the UAE central bank that enough small coins were in circulation and it would issue more if needed.

Under the change, customers should see more change returned to them amid rising complaints from consumers of being overcharged.

The previous rules meant a Dhs0.70 bill could be rounded up to Dhs90 as there are few Dhs0.05 or Dhs0.10 coins in circulation.

Khalifa Bin Salem Al Mansouri, acting undersecretary of Abu Dhabi’s Department of Economic Development, said inspectors would continue to monitor outlets in Abu Dhabi for compliance with tax procedures.

Shops that fail to give correct change after calculating VAT will be fined.

VAT is being applied to most products and services including food and beverage products, utility bills and fuel.

Source: gulfbusiness.com/uae-shops-told-give-correct-change-vat

The Federal Tax Authority has listed free zones across the seven emirates.

The Federal Tax Authority on Wednesday announced 20 designated zones which would be exempt from the recently-implemented five per cent VAT in the country, bringing a major relief and clarity for the companies operating in the free zones.

“The designated zones are special zones for VAT purposes, which are generally considered outside of the UAE in terms of value-added taxation. While VAT applies throughout the UAE, in the designated zones VAT generally does not apply. Only fenced free zones with special controls on goods and services going in and out could benefit from this status. As expected, important free zones such as Jafza, Dafza and Kizad are on the list,” said Thomas Vanhee, founding partner, Aurifer Middle East Tax.

“Although the UAE VAT law foresees this special regime, businesses that had transactions with these free zones were in the dark until January 9, 2018. Although the FTA had announced that the designated zones for VAT would be somewhat similar to those for excise taxes, in absence of any published cabinet decision, there was no legal basis not to apply VAT on imports into the free zones,” said Vanhee.

The wait for these decisions has caused a lot of confusion among importers, exporters, clearing agents and forwarders, he said.

Mayank Sawhney, director, MaxGrowth Consulting, said there are a few surprises in this list of notified designated zones such as the Free Zone Area in Al Quoz and Free Zone Area in Al Qusais in Dubai. It has not been clearly defined in the Cabinet decision as to which exact places in these two locations are free zone areas.

He said any supply of goods within the notified designated zone or from one notified designated zone to another notified designated zone – subject to necessary controls and procedures being followed and conditions of providing financial guarantee, etc., if required being met – shall not be subject to VAT.

Girish Chand, director, MCA Management Consultants, said the announcement would bring a lot of clarity to businesses, especially in the healthcare industry and companies operating within freezones.

The other long-awaited Cabinet decision is on medical supplies as certain supplies of medication and medical equipment which are registered with the Ministry of Health (MoH) can benefit from a zero rate, Vanhee said.

“This, however, does not extend to services related to medical equipment although hospitals often rent equipment. The practical issues with registering goods with MoH shall now also have a tax impact,” he said.

Both decisions work retroactively from January 1, 2018. This means quite a large number of invoices need to be corrected as VAT will have been applied on certain imports and sales in the designated zones and on medical supplies. Unduly invoiced VAT is not deductible, Vanhee concluded.

Below is the list of the designed zones:

Abu Dhabi: Free Trade Zone of Khalifa Port; Abu Dhabi Airport Free Zone; and Khalifa Industrial Zone

Dubai: Jebel Ali Free Zone (North-South); Dubai Cars and Automotive Zone (Ducamz); Dubai Textile City; Free Zone Area in Al Quoz; Free Zone Area in Al Qusais; Dubai Aviation City; and Dubai Airport Free Zone

Sharjah: Hamriyah Free Zone; Sharjah Airport International Free Zone

Ajman: Ajman Free Zone

Umm Al Quwain: Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port; Umm Al Quwain Free Trade Zone on Sheikh Monhammed Bin Zayed Road

Ras Al Khaimah: RAK Free Trade Zone; RAK Maritime City Free Zone; RAK Airport Free Zone

Fujairah: Fujairah Free Zone; Fujairah Oil Industry Zone (FOIZ)

Source:www.khaleejtimes.com/business/vat-in-uae/these-20-areas-in-uae-are-exempt-from-vat