BIZ hosted VAT workshop on the latest FTA updates

The Value Added Tax (VAT) has been fully implemented by the Federal Tax Authority (FTA) in the United Arab Emirates (UAE) at the beginning of 2018, and the fundamental objective of the government is to introduce a new dynamism on the country’s revenue diversification.

Primarily, it is a company’s responsibility to collect VAT charges on taxable products and services supplied to the end consumer on behalf of the government. These VAT charges must be documented and reported on a regular basis. Therefore, all VAT-registered businesses must maintain a book of all their accounts and records. While all companies are expected to have a thorough understanding of VAT and its governing laws and regulations, there is still confusion with many SME’s.

To shed light on the recent and important VAT updates applicable to businesses and traders, Business Incorporation Zone (BIZ)—the official Dubai representative of Fujairah Creative City Zone—organised a VAT Workshop for clients who are relatively new to VAT or on the verge of VAT registration.

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The workshop tackled the most recent VAT updates by FTA such as:

  1. VAT Refunds – Bank account details must be provided on the registration form. Refund requests which do not provide these details will be rejected.
  2. Public Clarification on the use of exchange rates – The Public Clarification by FTA addresses how the rates should be applied to invoices issued between 1 January 2018 and 16 May 2018.
  3. FTA expands list of VAT Designated Zones – Designated zones are areas within the UAE which are treated as being outside the state for certain transactions for the purposes of VAT. The FTA has expanded its list of designated zones for the purposes of VAT. The following Free Zones have been granted Designated Zone status effective from 18 June 2018:
  • Al Ain International Airport Free Zone
  • Al Butain International Airport Free Zone
  • International Humanitarian City
  1. Voluntary Disclosures – A voluntary disclosure should be made by a taxable person to notify the FTA of an error or omission in their tax return, tax assessment, or tax refund application.
  2. Data Security – Due to some recent incidents, the FTA has warned VAT-registered businesses to be cautious and to maintain security of personal and corporate financial or accounting data.
  3. Refund of VAT Paid on Services Provided in Exhibition and Conferences – Under the Cabinet Decision No. (26) of 2018, the supplier of exhibition and conference services shall, in certain cases, not be required to collect the VAT from the customer and will instead declare the output tax charged on its VAT return and receive an immediate refund for that amount. This VAT treatment only applies where the recipient of the exhibition and conference services is not established in the UAE and is not registered (or obliged to be registered) for VAT. As a result, this Decision effectively alleviates the burden of UAE VAT on businesses, which are only in the UAE for a very short time in order to attend exhibitions and conferences.
  4. VAT for building new residences by UAE nationals –The FTA has published a guide on the process for requesting a refund of VAT by UAE nationals who have built a new residence. The refund covers VAT incurred on eligible expenses relating to newly constructed buildings which are to be used solely as a residence of the applicant and/or the applicant’s family.
  5. FTA releases guide on Director’s Services – The guide discusses the VAT treatment of fees received by directors for their services to companies.
  • That both executive and non-executive directorship may qualify as a supply of services for VAT purposes where their services are not an outcome of a standard employment contract;
  • Directors will be liable to VAT register if the value of their supplies in UAE exceeds AED 375,000 in the preceding 12 months and;
  • Input tax attributable to taxable supplies would be recoverable.

After the VAT workshop, attendees expressed their satisfaction with the session delivery and content.

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Business Incorporation Zone

BIZ hosts regular business support workshops for its clients on various areas concerning their businesses. These workshops provide a network of like-minded people whom clients can connect to, and can become potential leads to their business growth. More importantly, the workshop is an opportunity to exchange knowledge and information with a group of entrepreneurs in the UAE. BIZ is well-committed to provide its clients with relevant UAE laws and regulations updates on a regular basis so that both ends are knowledgeable and well-informed. Workshops and networking events are part of the BIZ business setup package, which are beneficial for budding entrepreneurs.

Contact BIZ at +971 4 387 3401 or register online to receive notice of our future events.