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

Almost half of all UAE residents are concerned they will not be able to afford the prices rises brought about by the introduction of VAT, according to a new survey.

The poll of 200 UAE residents was conducted by comparison site yallacompare in December 2017. It found that 44.6 percent of participants are “worried” about not being able to afford the increased cost of living resulting from VAT being added to products. Over half (51.8 percent) said they were “slightly worried” about the increased costs, but are confident they won’t feel many effects.

This uncertainty over prices rises was offset by yallacompare’s other findings. The survey found that 62.5 percent of residents expect a salary raise in 2018.

This suggests increased confidence in the UAE economy in 2018. According to the survey, 32.1 percent of residents delayed a big purchase – such as a car or a house – in 2017. But 39 percent intend to make a big purchase this year – despite the fact that VAT may now apply.

In a further boon, over 80 percent of respondents said they are confident of keeping their job in 2018.

Jonathan Rawling, CFO of yallacompare, commented on the findings: “The introduction of VAT is clearly a positive step for the UAE to take as it continues to diversify its economy away from oil. However, it appears that large numbers of UAE residents are simply considering VAT as an additional expense to be dealt with in the short term.

“The fact that the introduction of VAT should result in a more stable economy overall has perhaps been lost on many people. But once the initial shock of consumer prices rising has worn off, we believe that the other benefits of VAT – such as improved government services and greater business confidence – should be clear to the majority of residents.”

Source:www.arabianbusiness.com/politics-economics/387114-vat-almost-half-of-uae-residents-are-worried-about-prices-rises

The remaining 30 per cent would go into the federal budget, Sheikh Mohammed said.

Chairing the cabinet meeting on Sunday, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, approved the distribution of revenue from value-added tax (VAT) and said local government would receive 70 per cent of the revenue.

This would be used to improve local services, community development, and wider support of UAE residents.

The remaining 30 per cent would go into the federal budget, Sheikh Mohammed said.

The Dubai Ruler also announced the appointment of the administrative board of the Federal Authority for Nuclear Regulation (FANR).

He said on his Twitter account that the UAE is proud to be the first Arab country to produce energy from nuclear reactors, adding that the first reactor will get into service in 2018.

“Our target is to establish many great developing and services projects for our citizens, and the government would be transparent about the nature of those projects, and will strictly monitor the markets to prevent raising the prices, and it will keep consulting the people to improve all what provides them and their families with good living.”

Source:www.khaleejtimes.com/business/vat-in-uae/70-of-uaes-vat-revenue-to-be-used-by-local-governments