Ministry of Finance has initiated a series of VAT workshops and key points from the first session conducted are as follows:

The effective date is 1st January 2018 as:-

• Anticipated. 5% is the standard rate
• Confirmed by the ministry. Established
• “Federal Tax Authority” and two tax laws
  1. Tax Procedure Law (for Governance)
  2. VAT Law (For Application)
• A Blanket treaty for GCC Countries Known as “GCC VAT Treaty/Agreement”
• Turnover Registration threshold
  1. Mandatory AED 375,000/- and above.
  2. Voluntary AED 187,500/- to AED 375,000/-
  3. Not allowed for Less than AED 187,500/-
• The VAT registration starts from Q3 of 2017.
• The VAT law is expected be released in 2 months’ time. The detailed regulations will be issued later in the year.
• The filing of returns and tax payment will be through the online portal. Most likely the return submission will be on a quarterly basis. The timeline to submit will be a month after the expiry of the period.
• VAT return format will include a summary of transactions during the period with the breakup of supplies in each of the 7 Emirates in UAE.
• VAT Invoices
  1. Rounded to the nearest fills
  2. Issued within 14 days
  3. Accounting records to be kept for 5 years
  4. Mention “TAX Invoice”
  5. Time of supply
  6. TRN of supplier
  7. Accounting of Invoices by Emirate wise in the system
• Applicability of VAT in free zones are yet to be clarified.
• Exemptions/Zero/Standard Rate supplier: (Subject to changes/guidelines)
  1. Health – 0%
  2. Education – 0%
  3. Financial Services – Exempted
  4. Export of goods and services-0%
  5. Real Estate
     1. New residential units – 0%
     2. Used residential units – Exempted
     3. Commercial Units – Standard rate
  6. Life insurance – Exempted
  7. Long term rental – Exempted
  8. Short term rental (Hotel Stay) – 0%
  9. Land – Exempted
• Exceptions
  1. Government bodies
  2. Charity organizations
  3. International Event Hosting Bodies
  4. Self-constructions
  5. Fisherman and farmers
• VAT refund for tourist will most likely be not there considering the low rate of 5%.
• The system of ‘VAT Groups’ will be available in UAE where the companies under common control can file a single VAT return and make a single tax payment. This will be helpful in case of companies with several subsidiaries.
• Escalations
  1. Reconsiderations ( If errors are happened on filing)
  2. Appeals (3 Stage system)
  3. Litigations

With the announcement by the Ministry of Finance that VAT will be implemented in the UAE by 1^st  January, 2018, companies are on a limited timeline to prepare for the first phase of VAT implementation in their business. HLB Hamt tax department have already made substantial progress on preparing their tax administration systems and focusing its clients to develop their business in preparation for VAT.

As such, HLB Hamt hosted a full day training to its staff on 1^st April, 2017. VAT specialist & tax expert Mr. Prashanth KL, Partner Guru & Jana (HLB India) took us through the session. The programme demonstrated how VAT works and its implementation throughout the GCC, Latest updates from Ministry of Finance, the mechanics of VAT calculations, VAT registration and who should register for VAT, the goods and services VAT is likely to be taxable and the VAT treatment applicable to different types of supplies etc.

SAGE Middle East joined the training session with Mr. Manas Das, Channel Manger, SAGE ME, explaining the vital inputs on the technological impact of VAT on business and its implications on IT systems & how to adapt to the new VAT rules.

Dubai Multi Commodities Centre (DMCC) Free Zone Authority, one of the most popular and prestigious Free ZoneAuthority of UAE has held “DMCC Consultant Awards 2017” in appreciation of the consultants support to DMCC and to recognize the top performing consultants during 2016.

HLB Hamt take great pride to be recognised from DMCC as the “Best Consultant for the Year Award”.

HLB Hamt training on VAT “Preparing for VAT implementation in UAE ” with tax expert Mr. Jozef Galea from HLB Malta held at Dubai on 7th February 2017, attended by 70 finance professionals across UAE to understand its impact on the region and industry and to know the critical considerations for its successful implementation in the business.