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Archives for Tax

Economic Substance Regulations in the UAE

Economic substance regulations were introduced in the UAE in April 2019 under Cabinet Resolution no. 31/2019. The UAE introduced the Economic Substance Regulations to honor its commitment as a member of the Organization for Economic Co-operation and Development (OECD) on harmful tax practices, an all-inclusive framework of OECD on Base Erosion and Profit Shifting (BEPS).

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Non-Recoverable Input Tax (Entertainment Services)

There are a number of circumstances in which businesses have sought clarity over the definition of ‘entertainment’ for the purposes of the input tax restriction, and in particular what should constitute entertainment of staff or business contacts as opposed to incidental business-related expenses which would be recoverable under normal VAT rules.

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VAT Impact of Export of Services

VAT Impact for Export of Services

Whether to apply zero-rating to the export of services and how to do so, has been a recurring concern amongst businesses in the UAE, especially to those providing consultancy services.  Federal Law no. 8 of 2017 on Value Added Tax (“VAT Law”) and Cabinet Decision No. 52 of 2017 on the Executive Regulations of the Federal Decree-Law no. 8 of 2017 on Value Added Tax (“Executive Regulations”) have clearly defined the services which are zero-rated and those that are exempt.

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UAE has no plans to hike VAT rate

UAE has no plans to hike VAT rate

Saudi Arabia recently increased Value-added Tax (VAT) to 15% which is three times its initial rate of 5%, which will come into effect from July 1st. The Kingdom has also suspended the cost of living allowances as of 1st June as a measure to support the country’s economy and increase the revenues amid the COVID-19 the pandemic. An unprecedented Sharp Decline in oil prices and non-oil revenues caused the kingdom to make the surprising decision. This decision of Saudi Arabia will prompt a discussion in the UAE and other neighboring GCC countries to increase the VAT rate in their respective countries.

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Differentiating Zero Rated & Exempt sales - UAE VAT

Differentiating Zero Rated & Exempt sales – UAE VAT

In UAE, VAT is applicable at the rate of 5% on supplies of goods and services (if eligible under standard supplies). It is important to understand that products and services offered by suppliers will be under the category of standard 5%, zero-rated and exempt supplies. Failing to understand these compliances might result in the non-filing or late filing of VAT return in UAE, thereby attracting penalties. There are two types of supplies under the provisions of VAT law in UAE, viz, taxable (5% & zero-rated) and non-taxable (exempt) supplies.

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FTA extends tax period for Excise Tax

The World Health Organization (WHO) declared the Coronavirus (COVID-19) a pandemic on 11th March 2020. The UAE Government announced advisories and restrictions to limit the spread of the Coronavirus after which most companies are adapting to the process of work from home. In order to support the Companies, an announcement followed that FTA extends the tax period for Excise Tax.

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Update on De-Registration From VAT in UAE

Update on De-Registration From VAT in UAE

The FTA (Federal Tax Authority) has recently cleared concerns about the conditions and procedures regarding de-registration from VAT, since it’s implementation in 2018. This is especially important for smaller businesses that are nearer to the tax threshold, as an administrative fine is liable to the firm is this law is not complied with.

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