Abu Dhabi: President His Highness Shaikh Khalifa Bin Zayed Al Nahyan has issued the landmark Federal Law No. 7 of 2017 for Tax Procedures, which sets the foundations for the planned UAE tax system , regulating the administration and collection of taxes and clearly defining the role of the Federal Tax Authority (FTA).
The Federal National Council (FNC) approved the draft law in March this year and with the presidential approval to the tax law, the country now has a legal framework for taxation, implementation and administration.
The Tax Procedures Law is a significant milestone towards establishing the UAE’s tax system and diversifying the economy,” said Shaikh Hamdan Bin Rashid Al Maktoum, Deputy Ruler of Dubai, UAE Minister of Finance and FTA Chairman.
The Law, issued by Shaikh Khalifa is an all-encompassing legislative framework that lays the groundwork for the UAE’s plan to implement taxes as a means to ensure sustainability and diversify the government’s revenue streams. The increased resources will enable the Government to maintain the momentum of its development and infrastructure for a better future.”
The Law defines a clear set of common procedures and rules to be applied to all tax laws in the UAE, namely, value added tax (VAT) and excise tax laws, and clearly states the respective rights and obligations of the FTA and the taxpayer.
The law covers tax procedures, audits, objections, refunds, collection, and obligations, which include tax registration, tax-return preparation, submissions, payment and voluntary disclosure rules – in addition to tax evasion and general provisions.
When the Tax Procedures Law goes into effect, all UAE-based businesses will be required to keep accurate records for five years.
The law also sets penalties for non-compliance, as well as clear processes for appeals which align with international best practices, and establishes a fair and transparent environment for the FTA to carry out its mandate.
“The UAE is committed to meeting the most stringent international standards,” Shaikh Hamdan said.
“We are working to establish an optimal legislative and executive environment to ease the nation into the VAT and excise tax systems. Implementing these taxes gives the UAE further leverage when it comes to international competitiveness and brings us one step closer towards building the future envisioned by our wise leaders, who have called on all those in charge to innovate and strive to spread happiness among citizens and residents.”
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Business leaders in Dubai are more upbeat about their expectations of business conditions and business confidence in the third quarter of 2017, according to a new survey conducted by the Dubai Chamber of Commerce and Industry.
The Business Leaders' Outlook Survey revealed that 39 per cent of respondents expect to see business conditions improve in the third quarter while 43 per cent expect no change in business conditions and 18 per cent expected conditions to worsen over the same period.
Expectations for access to financing, manpower quality, and access to facilities and infrastructure all saw quarter-on-quarter improvements in third quarter.
Survey respondents identified high commercial rents and licensing fees, as key challenges for which government action is needed. They also called for more government support on regulatory matters such as settling late payments, while they also suggested the introduction of long-term residency visas to reduce the cost of doing business.
The chamber survey revealed that 45 per cent of business leaders expected business confidence to strengthen in the third quarter of this year, compared to the 37 per cent who predicted no change and 18 per cent who expected confidence to weaken during the quarter.
Sheikh Ahmed bin Saeed Al Maktoum, Second Deputy Chairman of the Executive Council, President of the Dubai Civil Aviation Auhtority, Chairman of Emirates airline and Chief Executive of the Emirates Group, said recently that Dubai's economy is poised to expand further over the next two years, driven by major investments as well as tourism, real estate and manufacturing sectors.
The survey found that small and medium-sized enterprises were more optimistic than large companies in their expectations about business confidence and business conditions in Dubai during the quarter. While 49 per cent of SME respondents said they expected business conditions to improve in the third quarter of this year compared to 25 per cent of large companies, nearly half of those expected business confidence to strengthen in third quarter, compared to 38 per cent from large companies.
Price competition, debt collection, payment defaults, and high employment costs were cited as the key limiting factors impacting businesses' third quarter operations, in addition to the high costs of capital, bank services, and raw materials.
Starting next month, the kingdom is set to start collecting a new monthly fee of 100 riyals (Dh97.93) for every expat dependent, with plans to increase the fee gradually next year until 2020.
The newly introduced fee will apply to foreigners who have families in Saudi Arabia and will be collected on top of the existing monthly tax that some companies are already paying for expat workers.
It is not clear who will shoulder the new levy, but there have been reports that some employers have already decided to charge the fees to staff’s monthly pay. “I suppose in most cases it will be borne by expats,” M. R. Raghu, executive vice president for Kuwait Financial Centre “Markaz,” told to news channels.
Companies that have more foreigners than locals on their payroll are currently spending 200 riyals every month for every expatriate. The fee is applicable only to foreign workers that exceed the number of Saudi staff. Between next year and 2020, the tax will gradually increase. The fee will also be collected across the board, and will not just apply to employers heavily dependent on foreigners.
“For expatriate employees not exceeding the number [of] Saudi employees, the fee will no longer be waived but will be levied at a discounted rate,” PwC said in its briefing paper.
Saudi Arabia has considered collecting taxes, including the value-added tax (VAT) and excise tax on tobacco and drinks, to boost its revenues amid weak oil prices. The excise tax took effect on Sunday, causing some of the retail products to cost double.
It is estimated that the expat fees alone will generate 65 billion Saudi riyals for the kingdom by 2020. Abdullah Al-Maghlouth, member of the Riyadh Chamber of Commerce and Industry, had earlier warned that the new tax will negatively impact the private sector.
“The fees will have an adverse effect on the private sector including the contractors, the building material, the food and consumer products will increase prices. The citizen will be harmed. This will also harm the attractiveness of the work environment in the kingdom,” Saudi Gazette quoted Al-Maghlouth as saying.
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The six countries in the Gulf Cooperation Council (GCC) region have agreed to implement VAT, which will generate $25 billion (Dh91.8 billion) in tax proceeds every year.
The new tax policy’s go-live date is only less than a year away, yet many questions still hang in the air.
If the initial date for the VAT roll-out is followed, businesses can probably start registering for VAT from 1st October 2017. As announced recently, the registration will be open three months before the go-live date. Companies will have the option to register online.
What should businesses do to prepare for VAT?
According to the Ministry of Finance, businesses may need to change their core operations, financial management and book-keeping, technology and human resource mix in order to prepare for VAT. “It is essential that businesses try to understand the implications of VAT now and once the legislation is issued, make every effort to align their business model to government reporting and compliance requirements.” Businesses are also strongly advised to ensure that in all the commercial contracts they enter into, they include a clause that spells out that the VAT burden can be passed on to the consumer.Contents taken from Gulfnews.
Abu Dhabi: The Ministry of Finance (MoF) has announced that the UAE has signed an agreement on mutual administrative assistance in tax matters (MAC) at the headquarters of the Organisation for Economic Cooperation and Development (OECD) last week in Paris. The MAC follows the UAE’s commitment to implement international standards and requirements of the exchange of information for tax purposes, and its membership of the Global Forum on Transparency and Exchange of Information.
The MAC was signed by Maadhad Hareb Mughair Al Khaili, UAE Ambassador to the Republic of France, in the presence of Rintaro Tamaki, Deputy Secretary-General of the OECD, and representatives from MoF and OECD, a statement from Ministry of Finance said.
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Ras Al Khaimah : The government of Ras Al Khaimah on Monday announced the launch of Ras Al Khaimah Economic Zone (RAKEZ) to offer best services to attract investors into the emirate.
The new world-class authority was established to oversee, regulate and consolidate the services, facilities and zones of Ras Al Khaimah Free Trade Zone (RAK FTZ) and RAK Investment Authority (Rakia). The new economic zone is now one of the largest economic zones in the region, covering about 33 million square metres of land and housing over 13,000 companies, currently served by RAK FTZ and Rakia.
The launch took place during a gala event in Ras Al Khaimah, and was attended by His Highness Sheikh Saud bin Saqr Al Qasimi, Member of the Supreme Council and Ruler of Ras Al Khaimah, in addition to many high profile dignitaries, policymakers, businessmen, media members, and clients of RAK FTZ and Rakia.
The two leading free zones started their collaboration last year by combining their boards and management teams, led by Sheikh Ahmed bin Saqr Al Qasimi as Chairman and Ramy Jallad as Group CEO. This was followed by the unification of the back-office functions of both entities in order to streamline their activities and boost service delivery to clients. RAKEZ combines the best of RAK FTZ and Rakia. It offers both existing clients and prospective investors an exceptional platform in Ras Al Khaimah, from which they can access local, regional and global markets. As a comprehensive investment destination, the new entity presents a wide range of premium customisable facilities, enhanced levels of service and five diversified and strategically located zones for all types of business setups, including startups, entrepreneurs, SMEs and manufacturers, all within the unique and cost-effective environment of Ras Al Khaimah.
Sheikh Ahmed bin Saqr Al Qasimi, Chairman of RAKEZ, RAK FTZ and Rakia, said the formation of RAKEZ marks an important milestone for the free zone landscape in Ras Al Khaimah.
Ramy Jallad, group CEO of RAKEZ, RAK FTZ and RAKIA, said: "Bringing together RAK FTZ and RAKIA under the umbrella of RAKEZ is the first step towards taking our customer experience to the next level. It underlines our commitment to provide exceptional service delivery, simplified processes and cost-effective solutions."
"We are confident that all RAKEZ has to offer will have a significant impact on existing clients, potential investors and the economy at large. We look forward to continuously meeting our clients' and investors' needs and empowering their growth every step of the way," Jallad said.
RAKEZ is fully committed to supporting the vision of Ras Al Khaimah of being a leading investment destination for investors from all over the world and significantly contributing to the economic growth of the emirate.
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Inaugurating the seventh edition of the Annual Investment Meeting (AIM), the world's largest annual gathering on foreign direct investment, the minister said economic openness and free markets have been an incentive for the growth of economies. "Trade protectionism policies have always served short-term objectives, but their long-term implications are negative."
Protectionist policies would only undermine the growth of investments and negatively impact the prosperity of the global economy, Sultan bin Saeed Al Mansouri, UAE Minister of Economy, said on Sunday. "Today, we meet to emphasise that FDI has always been a contributing factor in the development of the economies of receiving and exporting countries," he said.
He said in line with the 2021 Vision, the UAE has not only become a regional and global centre for investment and business but also a source of huge investment flows to several countries in the world.
Al Mansouri said the UAE, ranked 16th in the Global Competitiveness Report in 2016-2017, has the most competitive position in the region, he said.
"This competitive position has not been achieved by chance, but instead through determination and hard work. Achieving it also required a clear vision of leadership, strategies, teams, performance indicators, continuous follow-up, learning and benefiting from the experiences of other countries, and through interaction and cooperation of the private sector in building sustainable partnerships. This is what makes the UAE the second largest Arab economy and the most diversified economy in the region," he said.
"Today, the world is highly interconnected and affected by any changes, therefore, causing some societies to stand still and feel unable to cope with these rapid changes. Thus, collective and collaborative efforts between governments and private sectors are essential to overcome the challenges and to build a secure, stable and prosperous future for the citizens of the world to live in," he said.
Khalifa bin Salem Al Mansouri, acting undersecretary of the Abu Dhabi Economic Development department, said "A key objective of the UAE Vision 2021 is to increase the volume of foreign investments in the country, by building strong and sustainable relations of mutual benefits between our wise government and the friendly governments and companies from around the world," he said.
Dubai's success in maintaining its advanced position among the cities of the world in terms of capital inflow and the number of new foreign direct investment (FDI) projects is a major achievement on its own, said Sami Al Qamzi, Director-General of Dubai Economy, today.
It reaffirms investor confidence in Dubai, while also underlining its role as a major hub of the global economy and its resilience despite global and regional economic changes and challenges, he added.
Earlier today, the Crown Prince of Dubai said the emirate had attracted AED25.5 billion in FDI inflows in 2016 and succeeded in maintaining its position among the top 10 global cities in attracting foreign investment, ranking seventh worldwide.
Al Qamzi added that FDI inflows and diversified investment projects are critical to achieving the objectives of the Dubai Plan 2021 and the Dubai Industrial Strategy, both of which focus on expanding the base of high value-added economic activities, enhancing competitiveness and sustainability of the local economy, and establishing Dubai as a preferred destination for foreign direct investment.
The economy in Dubai has continued to grow at a rate higher than that of the Gulf region and the world, Al Qamzi said. Dubai grew 2.7 percent in 2016 while the growth expected in 2017 and 2018 is 3.2 percent and 3.7 percent, respectively.
Dubai’s focus on sustainable development has created opportunities for investment in renewables, which in turn will pave the way for the regional and global expansion of this sector through Dubai, he added.
Crown Prince of Dubai and Chairman of Dubai Executive Council, looks at Dubai as a modern city, strategically integrated in all sectors and occupies first place for the ease of doing business.
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Value Added Tax (VAT) is set to make its debut in the six-nation GCC block in 2018. But what is VAT? How does it affect the common man? We attempt to answer some of the most commonly asked questions in this primer below.
What Is VAT?
VAT will be another source of raising revenues for governments in the Gulf Cooperation Council (GCC). It is estimated that the UAE will generate more than Dh12 billion additional revenues in the first year after implementation of this new tax. GCC countries have decided to implement taxation as part of the governments' efforts to diversify revenues in the context of sharp decline in oil prices.
When will VAT be implemented?
VAT will be introduced in the UAE, along with other Gulf countries, from the beginning of 2018 at 5 per cent.
How does it work?
Companies in the UAE that report annual revenues of over Dh3.75 million will be obliged to be registered under the GCC VAT system, the Undersecretary of the UAE Ministry of Finance, Younis Al Khoury, said. Al Khoury also confirmed that companies whose revenues fall between Dh1.87 million and Dh3.75 million will have the option to register for VAT during the first phase of the VAT implementation.
Will everything be taxed?
The UAE will remain tax-free in many ways even after the implementation of VAT as there is no income tax on salaries in the country. Free zones in the country also offers tax free environment including 100 per cent foreign ownership in free zones, ease of doing business.
What will be taxed? exempt from the tax?
The UAE government has already announced that 100 food items, health, education, bicycles, and social services would be exempted from VAT. and taxed for Electronics, smart phones, cars, jewellery, watches, eating out, and entertainment will fall under the taxed category. GCC countries are also expected to introduce excise duties on certain beverages that are deemed to be harmful to health, including those with high sugar content.
Will it affect prices/margins?
VAT is a tax on consumption and is levied on the price charged to the customer. Therefore it is expected that prices will increase by the amount of VAT. However, it is ultimately a matter for suppliers to determine the price of their goods/services. The price will need to take account of VAT, i.e. whether you charge Dh100 or Dh105, the amount will be deemed to include VAT.
Do I need to start preparing for VAT? What should I be doing now?
There is a relatively short time to consider the implications of the introduction of VAT and to make the necessary changes. The amount of work required will depend on the size and complexity of your business and it is essential you consider the impact now and determine how best to deal with it.
Why is VAT being considered by the GCC?
Governments have been considering the need to diversify income sources and this is even more the case given the developments negatively affecting government revenues in the region such as reduced income from oil revenues.
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Expo 2020 Dubai, organisers of the global trade expo, will award 47 construction contracts worth Dh11 billion this year, on top of 98 non-construction contracts worth Dh360 million in 2017.
After a decelerated growth in 2016, the UAE growth will pick up in 2017 to reach 2.5 per cent up from 2.3 per cent in 2016 because of its diversified economy, said Massimo Falcioni, CEO of Middle East Countries at Coface, a worldwide leader in credit insurance. UAE's recovery is more or less in line with an upturn in global economy that is expected to record a 2.7 per cent growth after a tumultuous 2016, Falcioni told media. After GCC countries except Kuwait had seen economic contraction, growth is expected to improve in 2017 across the region, except in Oman and Bahrain, Coface said in its global and regional economic outlook report.
"The UAE has remained relatively resilient in the face of lower hydrocarbon prices because of its economic diversity, but the lower oil revenues left government spending constrained and this had a spillover effect on all economic activities. The slight rise in oil prices now should give a corresponding impetus to the UAE economy," said Falcioni.Dubai should be more resilient but some non-oil economic activities could still falter. Overall, the country's growth will be driven by the tourism and financial sectors, while difficulties in the construction sector will remain, he said.
The UAE Vision 2021 National Agenda aims for the UAE to be at its heart of the global economy in the coming years. The agenda focuses on the UAE becoming the economic, touristic and commercial capital for more than two billion people by transitioning to a knowledge-based economy, promoting innovation and research and development, strengthening the regulatory framework for key sectors, and encouraging high value-adding sectors.
According to the Ministry of Economy, the UAE's GDP tripled in the past 10 years, climbing from almost Dh511 billion in 2006 to an estimated Dh1.8 trillion in 2016. Economists expect higher oil revenues with the expected average oil price increase to $55 per barrel would boost the growth prospects.
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Dubai: December data highlighted a robust improvement in business conditions across Dubai's private sector economy, underpinned by faster rates of output and new order growth. The seasonally adjusted Emirates NBD Dubai Economy Tracker Index registered 55.9, up from 55.2 in November and the highest reading since July. The index has now posted above the 50.0 no-change mark for ten months running and the latest upturn was broad-based across the three key sectors monitored by the survey.
The headline Emirates NBD Dubai Economy Tracker Index is derived from individual diffusion indices which measure changes in output, new orders, employment, suppliers' delivery times and stocks of purchased goods. The survey covers the Dubai non-oil private sector economy, with additional sector data published for travel & tourism, wholesale & retail and construction.
Head of MENA Research at Emirates NBD, said: "The rebound in construction sector activity in December is particularly encouraging after relatively sluggish performance for most of H2 2016. We expect construction will be a key driver of growth in Dubai in 2017 as preparations for Expo 2020 move up a gear."
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Dubai International Financial Centre, DIFC, the financial hub of the Middle East, Africa and South Asia (MEASA) region, announced on Tuesday the launch of the region’s first fintech accelerator in Dubai.
the FinTech Hive at DIFC will introduce cutting-edge financial services technologies to the MEASA markets while providing a platform that brings financial and technology firms together. Its goal is to increase access to this space and improve customer experience, thus driving operational efficiency in the financial services sector.
Globally, the fintech sector has attracted more than US$50 billion in investments since 2010. The DIFC accelerator aims to bridge the gap by creating a platform that drives innovation and showcases success. It will identify leading technology entrepreneurs and companies through a competitive process and offer them the opportunity to develop, test and modify their innovations in collaboration with top executives from DIFC and regional financial institutions.
Commenting on the launch of FinTech Hive at DIFC, Essa Kazim, Governor of DIFC and Chairman of the DIFC Authority Board of Directors, said, "We are proud to be launching FinTech Hive at DIFC following the recent announcement of the world’s first government accelerator programmes by Vice President and Prime Minister and Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum. The UAE National Innovation Strategy and Dubai Plan 2021 steer us to be among the smartest cities in the world. With our founding membership at the Global Blockchain Council and today’s launch announcement, DIFC is pioneering innovative developments in the MEASA region’s financial services sector while taking our economies to new horizons.
The accelerator programme will identify the best entrepreneurs within the financial services industry and grant them invaluable access to and feedback from potential customers and funders.
The accelerator further demonstrates DIFC’s commitment to providing an internationally oriented fintech ecosystem that meets the specific requirements of the Middle East, Africa and South Asia, in line with Dubai Plan 2021 and the DIFC 2024 Strategy.
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HSBC sent a circular to clients on Thursday alerting them to the new measures that are being ordered by the Organisation for Economic Co-Operation and Development (OECD), a 35-member grouping of mostly European nations. The measures will make it more difficult for people to avoid paying taxes and will start taking effect next month.
"These local laws will mean that from the beginning of January 2017, governments will start requiring all banks and other financial institutions to ask customers for information with a view to determining where they are resident for tax purposes," HSBC said.
The issue is urgent here because the UAE is among the fastest growing bastions of private wealth among Arabian nations. Private wealth in the UAE has grown at the fastest pace among Arabian Gulf states in recent years, according to a study last year by the consultants Strategy&.
UAE-based financial advisors say that the vast majority of citizens and subjects of OECD nations have little to worry about as expats from most of these countries have few if any tax obligations while working abroad. Instead, the measures are being rolled out in order that banks may help governments locate willful offenders.
the Dubai-based chief executive of AES International, Mr Instone said that most people shouldn’t be worried about sharing information with their banks but if they are that they should seek professional advisors to help them to legitimately organise their affairs to ensure for instance that they don’t need to pay unnecessary tax.
ARC Associates is pleased to announce that the fir has been listed with RERA and thus join the list of approved auditors who have been recognized by RERA.
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ARC associates is a professional firm of accounts based in Dubai, Partners have more than 35+ years of experience. ARC now gets listed with RERA, and provide best class audit services to clients.