5 key points of the new UAE tax procedures law
:: Companies in the United Arab Emirates will be required to keep accurate records of their businesses for a period of five years according to the Tax Procedures Law issued by President of the UAE, Sheikh Khalifa bin Zayed Al Nahyan, on Monday.
When the Tax Procedures Law goes into effect January 1 2018, all UAE-based businesses, whether eligible to be taxed or not, are to be required to keep accurate records for five years. The law also sets penalties for non-compliance, as well as clear processes for appeals to the Federal Tax Authority (FTA).
The new law determines Value Added Tax (VAT) guidelines and regulations for UAE companies according to the statement released by the UAE Ministry of Finance.
Tax Agents will also be required to register with the FTA and no one will be permitted to practice the profession if one is not enrolled in the register.
Tax audits according to the law may take place after a five day notice period provided to the business by the FTA.
During an audit Tax Auditors may ask for original records or take samples of the goods, equipment or other assets available at the person’s place of business.
“The UAE is committed to meeting the most stringent international standards,” said Sheikh Hamdan bin Rashid, UAE Minister of Finance and Industry, in a statement.
“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.”
- The Law requires any person conducting any type of business to keep accounting records and commercial books, as well as any tax-related information as determined by the Law. Tax returns, data, information, records and documents must be submitted to the Authority 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 and responsibility if so requested.
The Law mandates that a Register of Tax Agents be established at the Authority, which will hold files for each Agent documenting his/her conduct. It is not permitted for any person to practice the profession of a Tax Agent in the UAE unless he/she is enrolled in the Register. Procedures for registration, as well as the rights and obligations of the Tax Agent before the Authority and the person, is specified in the Executive Regulations of the Law.
he Authority 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 (or any other place where they conduct business, store goods or keep records), in which case, the person must be given prior notice of at least five business days.
The Authority may order a re-audit if new information surfaces that might impact the outcome of the Tax Audit. Any person subject to a Tax Audit, as well as his Tax Agent or legal representative, must offer all required assistance to the Tax Auditor to perform his/her duties. The audited person has the right to: request the Tax 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 Authority’s headquarters; and obtain copies of any original paper or digital documents removed or obtained by the FTA during the Tax Audit.
The Law addresses Conflict of Interest, prohibiting all Authority 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.