HAVING A CLEAR IDEA OF WHERE YOU ARE AND WHERE YOU WANT TO GO FINANCIALLY IS AN IMPORTANT FIRST STEP.

Have you put your First Step in tuning with the Tax Laws of the UAE? Excise Tax and Value Added Tax is already on the verge of its implementation.The authorities had legalized FEDERAL LAW NO (7) OF 2017 on EXCISE TAX AND FEDERAL LAW NO (8) OF 2017 on VALUE ADDED TAX. The excise tax has begun to be applicable in the State from 1 st October 2017 and that of VAT from 1 st January 2018.

Value added tax is an indirect tax. It is imposed to most of the supply of goods and services that are bought and sold in the country unless specifically exempted by law. The aim of the Federal Government of initiating the Tax Law in the Country is to promulgate more source of income which shall energize the public sectors in future. The country oversees its marginal revenue and income source as Tax law in UAE in the upcoming future.

The authority has schemed to introduce VAT at a standard rate of 5% which shall be applicable from the 1 st of January 2018. The businesses shall be drawn more attention in book keeping and other financial record keeping. It is better to keep the financial record of every 5 years. They can impose tax from their customers and must have pay VAT for their suppliers. The difference of these tax amounts shall be paid to or be reclaimed by the Government.

As a result of implementing tax law in the land, it is presumed that the books of record and other financial transaction documents shall be kept legally in the organizations which will definitely ensure the strength of financial stability of both the organization and thereby of the Government. However, the cost of living may be increased to a certain limit.

It is discussed in the legislation that every business must register for VAT if their taxable supplies and imports exceed the mandatory registration threshold of AED 375,000/. Further any business may choose voluntary registration if the threshold is above AED 187,500 and below AED 375,000/, also if less than the voluntarily threshold.

It is highly recommended that any running businesses in the UAE shall register with VAT before the implementation date of 1 st January 2018. The tax returns can be filed on short term periods like quarterly through the e services of the Federal Tax Authority. There is a tax grouping system available, in which a certain group of companies of similar activity can be grouped together for filing tax returns. It shall simplify accounting.

It is also to be noticed that certain goods and supplies are exempted from VAT by the law such as export of goods and services to outside GCC, international and local transportation, newly constructed residential properties that are supplied for the first time within 3 years of their construction, supply of certain education and health services etc.

There must be penalties imposed on those who violate tax laws, such as failure to register for VAT, failure to file returns, failure of keeping records, and tax evasion offences and /or violating any provisions of the tax law.

Any disputes arising out of this Tax Law shall initially be brought before the Federal Tax Authority. If the decision of the Authority is unsatisfactory, there shall be a Tax Dispute Resolution Committee, which shall look into the matter in detail. The decision of the TDRC can also be challenged before the Civil Courts of UAE according to the Civil Procedures Law of the State.