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VAT Update

Federal Tax Authority Calls on Businesses to Benefit from Decision to Waive Late Registration Penalties Until April 30


• H.E. Al Bustani: The Authority adheres to highest standards of transparency and accuracy in procedures in order to encourage businesses to fully comply with tax regulations.
 

Abu Dhabi, March 5, 2018 – The Federal Tax Authority (FTA) urged businesses to benefit from the FTA decision to waive administrative penalties for businesses until April 30, clarifying that the decision only covers late registration penalties and that taxable businesses are still required to settle all the taxes due from January 1, 2018.

FTA Director General His Excellency Khalid Ali Al Bustani called on businesses to benefit from this extension granted by the Authority and approved by the Board of Directors’, which takes into account the lack of readiness among businesses when Value Added Tax (VAT) first went into effect. The decision reflects the Authority’s commitment to guiding taxable persons and ensuring their full compliance to avoid administrative penalties, H.E. explained, urging businesses to register immediately to avoid missing the deadline on April 30.

According to Federal Decree-Law No. (8) of 2017 on Value Added Tax, as well as its Executive Regulations, taxable persons are required to retroactively settle the taxes due since the law went into effect on January 1, 2018, the FTA Director General stressed.

H.E. Al Bustani highly praised the high level of commitment among businesses during the last few months since the launch of electronic registration process, stressing that the Authority is committed to adopting the highest standards of transparency and accuracy in implementing tax procedures; the FTA was keen to provide guides, infographics and publications through its website – where it also published the tax laws. Furthermore, the Authority has produced educational short videos and e-learning modules to explain tax procedures to taxable businesses and ensure compliance.

“Businesses have become highly aware of the importance of the tax system and the need to comply with tax procedures,” H.E. said, stressing that the success of the system is a joint responsibility that requires the cooperation of all parties, including the government, business sectors and the society at large. “The Federal Tax Authority is continuously communicating with all businesses to identify their views and discuss ways to overcome any obstacles they may face in order to ensure the effective and seamless implementation of the tax system, and avoid any disruption to their activities,” H.E. Al Bustani concluded.

In a press statement issued today (Monday, March 5, 2018), the Federal Tax Authority clarified that any natural or legal person conducting business in the UAE is required to register for VAT if their taxable supplies exceeded AED375,000 in the last12 months or are expected to exceed such threshold within the next 30 days. Taxable Supplies are identified as all supplies of goods and services made by a Person that are not exempt, in addition to imported goods and services.

The Authority pointed out that registration in the system is free of charge and available 24/7 through the FTA website. Taxable Persons are required to access the website: www.tax.gov.ae; go to the e-Services portal and set up an account by clicking on “Sign-up”. A verification email is then sent, following which the account is accessible through “Login” button.

The FTA has urged businesses to provide accurate information and make sure they enter it properly into the application form. To complete the registration process, scanned documents must be attached, including the business or trade license, passport/Emirates ID (for UAE residents) of the manager or owner of the business, and the authorized signatory (if the signatory is not the manager him/herself), as well as proof of authorization for the manager or signatory (e.g. articles of association, power of attorney attested by notary, etc.). The Authority noted that issuing a tax registration number (TRN) could take up to 20 business days, calling on businesses that haven’t registered yet to do so as soon as possible to avoid administrative penalties.

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