New TAX & VAT Procedures Law In UAE
VAT procedures law in UAE: The UAE President Sheikh Khalifa bin Zayed Al Nahyan issued the new law describing the TAX & VAT procedures. The Federal law for Tax Procedures put downs the foundation for the tax system in UAE, administration regulations, tax collections and describes the role of FTA (Federal Tax Authority).
The draft law was already approved by FNC (Federal National Council) and with the approval to the tax law by the President the UAE is now all set for taxation, implementation and administration. The law includes legislative framework which sets the base for the plan to implement taxes in UAE to diversify revenue stream of the government.
The law issued by Shaikh Khalifa states a set of rules and procedures applicable to all UAE tax laws such as VAT (Value Added Tax) and excise tax laws. The rights and duties of both the taxpayers and FTA are also defined by the law. The law covers tax procedures, objections, audits, collection, refunds, and obligations – which include registration of tax, preparation for tax-return, submissions, payment and voluntary disclosure rules – in addition to tax evasion and general provisions.
The law also has described the register of tax agents to interact with the FTA on behalf of taxpayers. It also specifies the basic criteria for appointing tax agents and also sets the standards for conserving confidentiality by the authority as well as its officers.
The UAE businesses need to maintain the accurate records for five years when the Tax Procedure law comes into effect. The law also has described the penalties for non-compliance and processes for appeals. It also establishes a fair and transparent atmosphere for the FTA to take away its obligations.
Provisions of the Tax Procedures Law (http://gulfbusiness.com/uae-issues-new-tax-procedures-law-ahead-vat/)
* The law requires any person conducting any type of business to keep accounting records and commercial books. Tax returns, data, information, records and documents must be submitted to the FTA in Arabic. The FTA may, however, accept documents in any other language, as long as the person provides a translated copy into Arabic at their expense.
* Any person obliged/eligible to register for the tax must do so, as stipulated by the law. Registrants must include their Tax Registration Number (TRN), in all correspondence and transactions with the FTA. They must also inform the authority – by filling a form – of any circumstance that might require the amendment of information related to their tax record within 20 working days.
* Each taxable person must prepare the tax return for each tax period and for each tax while being registered. They must then submit the documents to the FTA and pay the amount as specified in the tax return or any tax assessment within the time limit. The FTA reserves the right to turn down any incomplete return.
* The law mandates that a register of tax agents be established at the FTA, which will hold files for each agent documenting his/her conduct. Every tax agent in the UAE will have to be registered to practice. Procedures for registration, and the rights and obligations of the tax agent are specified in the executive regulations of the law.
* The FTA may perform a tax audit on any person to determine their compliance with the provisions of the relevant laws. The FTA may perform the audit at its office or the place of business of the person, in which case, the person must be given a prior notice of at least five business days.
* While conducting an audit, the tax auditor may ask for original records or copies, or take samples of the goods, equipment or other assets available at the person’s place of business. The audit will be conducted during the official working hours of the FTA, however, the director general may issue a decision to conduct it outside regular hours if necessary.
* The FTA may order a re-audit if new information surfaces that might impact the outcome of the audit. Any person subject to a tax audit, his tax agent or legal representative must offer all required assistance to the auditor. The audited person has the right to: request the auditors to show their professional identification cards; obtain a copy of the tax audit notification; attend the auditing procedures that take place outside of the FTA’s headquarters; and obtain copies of any original paper or digital documents removed or obtained by the FTA during the audit.
* The FTA must issue a tax assessment to determine the value of payable tax and present it to the taxable person within five working days of its issuance in any of the following cases:
– If the taxable person fails to apply for registration within the time frame specified by the law
– If they fail to submit a tax return within that time frame
– If they fail to pay the tax stated as payable on the submitted tax return before the deadline
– If the taxable person submits an incorrect tax return
– If the registrant fails to calculate tax on behalf of another person when they are obligated to do so by the law
* The law also addresses issues concerning conflict of interest. It prohibits all FTA staff members from performing or participating in any tax procedures related to any person in the following cases: if the staff member and that person are related up to the fourth degree; if there is a common interest between the staff member and person or between any of their relatives up to the third degree; and if the director general decides that the staff member should not perform any tax procedures related to that person owing to a case of conflict of interest.
* Employees of the FTA are bound by non-disclosure clauses and are prohibited from disclosing information that they obtained or to which they had access to. FTA employees are also required to maintain professional confidentiality after the cessation of their services, and are prohibited from disclosing any information.