The Federal Tax Authority upgrades three key Services in line with UAE’s Government Services 2.0 Framework

In a strategic move towards advancing customer service excellence, the Federal Tax Authority (FTA) has upgraded three key services to align with the UAE's pioneering ‘Government Services 2.0’ framework. This initiative falls under the Government Services Quality Charter, designed to eleVATe the efficiency and effectiveness of public services, guaranteeing a seamless and user-friendly experience for all customers.

In a press release today, the FTA revealed the successful implementation of three transformative strategies aimed at improving services for "Tax Refund for UAE Nationals Building New Residences", "Issuance of Tax Certificates" and " Excise Goods Registration Inquiry Response."

H.E. Khalid Ali Al Bustani, the Director General of the Federal Tax Authority, emphasised that this initiative reflects the FTA's commitment to eleVATing service standards to meet the highest global benchmarks and practices set forth in the Government Services Quality Charter.

Al Bustani explained, "The FTA has significantly ramped up its efforts to execute a comprehensive plan in line with the Government Services Quality Charter. It has implemented effective transformation measures to expedite the completion of three priority services, minimising required documentation to deliver tangible outcomes swiftly and enhance customer experience. Read more..

 

New tax in UAE? What you need to know about global minimum tax

The UAE’s Ministry of Finance (MoF) is seeking corporate feedback on the implementation of a global minimum tax in the country. The consultation is open to all stakeholders, but the MoF is “particularly keen” to hear from the “global community” of multinational groups operating in the UAE, along with their advisors, service providers and investors.

According to the ministry, submissions will help inform it on aspects such as domestic implementation issues, including interactions with the UAE’s Corporate Tax (CT) system; ways to minimise compliance costs, while exploring the policy options for potential implementation of the income inclusion rule (IIR), undertaxed profits rule (UTPR) and a domestic minimum top-up tax (DMTT).

Relevant stakeholders must submit their responses by April 10 via the ministry’s website. Read more..

 

AED10,000 Penalty for Late Corporate Tax Registration

The Ministry of Finance today announced the issuance of Cabinet Decision No. 10 of 2024, amending the schedule of violations and administrative penalties of Cabinet Decision No. 75 of 2023 on the administrative penalties for violations related to the application of Federal Decree-Law No. 47 of 2022 on the taxation of corporations and businesses. Cabinet Decision No.10 of 2024 will come into effect on March 1, 2024.

The Ministry stated that an administrative penalty of AED10,000 for late registration of UAE Corporate Tax will be imposed on businesses that do not submit their Corporate Tax registration applications within the timelines specified by the Federal Tax Authority. Read more..

 

Dubai’s new tax law on foreign banks expected to help lenders avoid double taxation

Dubai's new law mandating a 20 per cent annual tax on foreign banks operating in the emirate, is expected to be positive for lenders and help them avoid paying double taxes, according to experts.

Under a law announced last week, foreign banks are subject to the tax on their annual taxable income. However, if they pay corporate tax, that rate will be deducted from the annual 20 per cent tax.

The law applies to all foreign banks operating in Dubai, including in special development zones and free zones, except for lenders licensed to operate in the Dubai International Financial Centre.

“There is a lot of misconception in the market around the announcement and, more specifically, whether foreign banks now need to bear an ‘additional’ 20 per cent emirate level corporate tax cost in addition to the recently introduced 9 per cent federal level corporate tax regime,” Vishal Sharma, managing director with Alvarez & Marsal Tax, Dubai told The National. Read more..

 

Dubai: Sheikh Mohammed announces new 20% annual tax on foreign banks

A new law has been issued regarding the tax on foreign banks operating in Dubai. The provisions of the law apply to all foreign banks operating in the emirate, including special development zones and free zones. Those in the Dubai Financial Centre are excluded.

The law stipulates that an annual tax of 20 per cent shall be imposed on foreign banks on taxable income, and the corporate tax rate shall be deducted from this percentage, if the foreign bank pays the tax under the Corporate Tax Law.

The law regulates the rules for calculating taxable income, the controls for submitting the tax return and paying the tax, the procedures for auditing the tax return and voluntary declaration, and the duties and procedures related to the tax audit process. The law also specifies the rights of the person subject to tax audit, which is the foreign bank and its branches licensed by the Central Bank of the United Arab Emirates to operate in Dubai. Read more..

 

UAE corporate tax: New Dh10,000 fine announced for late registration

The Ministry of Finance on Tuesday announced a new Dh10,000 fine for those who register for corporate tax late.

The penalty was introduced to encourage taxpayers to comply with tax regulations, and register in a timely fashion. The penalty amount for late tax registration is aligned with the penalty associated with late registration for excise tax and value added tax.

The Cabinet Decision No. 10 of 2024, which was announced today, amends the schedule of violations and administrative penalties of Cabinet Decision No. 75 of 2023.

The latter specified administrative penalties that would be imposed by the Federal Tax Authority (FTA) for violations related to the application of the Corporate Tax Law. Those penalties came into effect from August 1, 2023. The Cabinet decision will come into effect on March 1, 2024. Read more..

 

After reforms, UAE officially exits FATF 'grey' list in win for nation

The United Arab Emirates, home to the financial hub of Dubai, has been dropped from a global watchdog's list of countries at risk of illicit money flows, a win for the nation that could bolster its international standing.

The Financial Action Task Force (FATF), a body that groups countries from the United States to China to tackle financial crime, on Friday dropped the UAE from its 'grey list' of around two-dozen nations considered risky.

The Gulf country, a magnet for millionaires, bankers and hedge funds, was placed under closer scrutiny in 2022, when the FATF highlighted the risk of money laundering and terrorist financing involving banks, precious metals and stones as well as property.

The delisting is a coup for the one-time regional pearl and fish trading hub which is now one of the world's wealthiest nations after the discovery of oil in Abu Dhabi in the late 1950s. Read more..

 

UAE signs agreements with Arab countries on double taxation avoidance

The UAE Ministry of Finance signed agreements related to the encouragement and protection of investments and double taxation avoidance, with Kuwait and Bahrain, and other agreements with Egypt and the World Bank.

The signings took place on the sidelines of the World Governments Summit (WGS) 2024 in Dubai under the theme of "Shaping Future Governments".

The agreements aim to boost developmental goals, diversify the national income sources for the UAE, and avoid double taxation, additional taxes, indirect taxes, tax evasion, and address the challenges of cross-border trade and investment flows. The agreements also account for tax challenges and keep pace with global changes in the economy and financial sectors, new financial instruments, transfer pricing mechanisms, and encourage the exchange of goods and services and the movement of capital. Read more..

 

Saudi Arabia offers 30-year tax relief for companies moving headquarters to the kingdom

Saudi Arabia will offer a 30-year tax break as an incentive for global companies that move their regional headquarters to the kingdom as it seeks to attract more multinationals amid a diversification push.

The package includes a zero per cent rate for both corporate income tax as well as withholding tax related to the “approved regional headquarters activities”, the Ministry of Investment, Ministry of Finance and the Zakat, Tax and Customs Authority said in a statement on Tuesday.

The kingdom currently imposes corporate tax of 20 per cent, along with charging withholding tax (the amount deducted from an employee's gross salary that is paid by the employer to the government) on various services ranging from 5 per cent to 20 per cent.

Global companies will benefit from the tax relief from the day they obtain their regional headquarters licence, the statement said. Read more..

 

UAE to set up bankruptcy courts to rule on disputes

The UAE will set up specialised courts to handle bankruptcy cases as the government seeks to overhaul the restructuring and insolvency legal framework, streamlining the process to enhance investor trust further.

A federal law on financial restructuring and bankruptcy was published in the UAE Gazette on October 31 and will come into effect from May 1, 2024, according to legal experts.

Currently, a dedicated section of the Courts is led by a Court of Appeal judge responsible for overseeing bankruptcy and restructuring matters. The new law protects and streamlines the process and avoids separate enforcement proceedings for creditors. Read more..

 

UAE: All gold refineries need to submit audited reports by Q1 2024

All gold refiners in the UAE are required to bring third-party auditors on board from January 2024 and submit audited reports until March next year, a senior Ministry of Economy official on Tuesday.

“All refineries should hire external approved auditors. By Q1 2024, we are expecting to receive auditing reports from those refineries,” Safeya Al Safi, director of the Anti-Money Laundering Department at the UAE’s Ministry of Economy, said while at the Dubai Precious Metals Conference on Tuesday.

She added that the external auditors will evaluate the risk management of the refiners and it would be mentioned in the report and submitted to the Ministry of Economy.

While delivering a welcome address at the conference, Ahmed Bin Sulayem, executive chairman and CEO of Dubai Multi-Commodities Centre (DMCC), said two more gold refineries are expected to have a presence in the free zone. Read more..

 

UAE: Fines announced for owners, managers of unlicensed virtual asset service providers

The anti-money laundering branch of the Central Bank of the UAE on Monday issued guidelines to deal with unlicensed virtual asset service providers (VASPs).

The National Anti-Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organisations Committee (NAMLCFTC) says VASPs operating in the UAE without a valid licence will be subject to civil and criminal penalties including, but not limited to, fines against the entity, owners, and senior managers.

The anti-money laundering branch of the Central Bank of the UAE on Monday issued guidelines to deal with unlicensed virtual asset service providers (VASPs).

The National Anti-Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organisations Committee (NAMLCFTC) says VASPs operating in the UAE without a valid licence will be subject to civil and criminal penalties including, but not limited to, fines against the entity, owners, and senior managers. Read more..

 

UAE warns of visa ban over job loss insurance fines

Some employees who failed to meet an October 1 deadline to sign up to the UAE's job loss insurance scheme will not be able to renew work visas until they pay off fines, authorities said on Wednesday.

The Ministry of Human Resources and Emiratisation said financial penalties would be deducted from salaries or end-of-service gratuities as part of “administrative measures” in place.

Workers were previously told they would face fines of Dh400 if they did not register by the deadline.

An additional Dh200 penalty is imposed on those who don't pay insurance premiums within three months of the due date.

Subscribers to the unemployment insurance scheme can make a single payment to cover the year's subscription or quarterly or monthly payments.

The ministry issued the warning as it announced that more than 6.6 million people have registered with the flagship social security scheme, which was launched in January. Read more..

 

New corporate tax decisions seek to provide clarity on tax benefits for free zone firms

The new UAE corporate tax decisions unveiled last week seek to provide more clarity for free zone companies regarding activities that are eligible and not eligible for tax benefits.

The UAE Ministry of Finance announced on Friday the issuance of Cabinet Decision No. 100 of 2023 on “determining qualifying income,” as well as Ministerial Decision No.265 of 2023 on “qualifying activities and excluded activities.”

The purpose of these decisions, according to tax experts, is to provide clarity and transparency for free zone companies, allowing them to understand whether they qualify for tax exemptions or not. “This clarity helps companies plan their finances more effectively and potentially reduce their tax liabilities.”

Younis Haji Al Khoori, Undersecretary of the Ministry of Finance, said the new decisions reflect the continued significant role of free zones in the UAE’s economic diversification strategies and commitment to aligning with international taxation standards. Read more...

 

UAE: Federal Tax Authority to implement Reverse Charge Mechanism on electronic devices

From October 30, the liability for Value Added Tax (VAT) on supplies of electronic devices – such as mobile phones, smart phones, computer devices, tablets, and their parts and pieces – will be transferred from the registered supplier to the registered recipient provided they are supplied to a registered recipient for the purpose of being resold or used in manufacturing of electronic devices.

The registered recipient will then be responsible for calculating VAT on those supplies, including it in their Tax Return, and meeting specific tax obligations related to these supplies.

The Federal Tax Authority (FTA), in a statement on Wednesday, announced the decision on applying the Reverse Charge Mechanism (RCM) on supplies of electronic devices among tax registrants.

The FTA confirmed that the new amendments are part of an ongoing endeavour to update legislation and tax procedures to keep pace with developments, improve the efficiency of the tax system, strengthen trust and cooperation between the Authority and taxpayers, and support taxpayers to meet their tax obligations. Read more..

 

Now, UAE tourists can claim VAT refunds through app

The Federal Tax Authority (FTA) has launched a new app that makes claiming VAT refunds a lot easier. Tourists no longer have to keep all of their printed purchase receipts to get a refund — as everything is done digitally.

The new app Tourist Refund has been launched at the ongoing Gitex Global exhibition in Dubai.

“Tourists can download the app through FTA services provider firm Planet. When a tourist buys any item from the UAE store, the merchant scans the invoice and it will be recorded in the app. The newly launched application will have information on each transaction he bought as well the amount of VAT he can claim upon exiting the country,” said Zahra Al Dahmani, director of the Taxpayer Services Department at FTA.

“When exiting the UAE, the tourist will go to designated places at the airport and show the invoices in the app to claim his/her refund either in cash or transfer in credit card. This new app will save the hassle of standing in the queue as it is completely automated,” Al Dahmani told Khaleej Times on the sidelines of the Gitex Global, the world’s largest technology exhibition. Read more..

 

UAE: Full list of fines for violations of corporate tax rules revealed

The UAE’s Ministry of Finance has announced the issuance of Cabinet Decision No. (75) of 2023 regarding administrative penalties for violations related to the Federal Decree-Law No. 47 of 2022 on the taxation of corporations and businesses.

The decision specifies administrative penalties that will be imposed by the Federal Tax Authority (FTA) for violations related to the application of the Corporate Tax Law. The penalties will come into effect from tomorrow (August 1, 2023).

Question: What is fine for failure for conducting a business or business activity or having a tax obligation under the Tax Procedures Law or the Corporate Tax Law to keep the required records and other information?

Answer: One of the following penalties shall apply for the violation: Dh10,000 for each violation; Dh20,000 in each case of repeated violation within 24 months from the date of the last violation. Read more..

 

The Federal Tax Authority stresses the need for accurate emirate-specific VAT reporting in relation to e-Commerce

The Federal Tax Authority (FTA) has stressed the need for taxpayers to abide by accurate, emirate-specific Value Added Tax (VAT) reporting requirements in relation to e-Commerce.

The Authority noted that recent updates to the VAT legislation in the UAE, specifically around the reporting in the VAT returns of e-commerce supplies, result in additional obligations for a number of persons when preparing their VAT returns. The FTA emphasised that businesses must carefully assess whether they fall under the new reporting obligations, noting that failure to comply – or compliance with the updated reporting when not required – may result in mistakes and expose companies to potential penalties.

The FTA explained that starting from 1 July 2023, and in the VAT return for the first tax period starting on or after that date, “qualifying registrants” are required to report supplies made through e-commerce in box 1 of their VAT Return, based on the Emirate in which the supply of goods or services is received by the customer. They are also required to retain the relevant supporting evidence. If a taxpayer is not a qualifying registrant or if a supply is not an e-commerce supply, then, generally, the taxable business must report its supplies in the Emirate where its fixed establishment related to the supplies made is located. Read more..

 

UAE corporate tax: Ministry clarifies tax on real estate, immovable property

The UAE’s Ministry of Finance on Monday issued a clarification under which foreign companies and other non-resident juridical persons will be subject to nine per cent corporate tax on income earned from real estate and other immovable property in the UAE.

The ministry added that this law applies to both immovable property that is held or used in a business and immovable property that is held for investment purposes in the country. Real estate is one of the most important sectors of the UAE economy and a major contributor to the country’s GDP.

The UAE introduced corporate tax from June 1, 2023, and has asked all local and foreign companies to register within one year in order to avoid penalties.

The clarification comes following the issuance of Cabinet Decision No. 56 of 2023 on a non-resident Person's Nexus in the UAE for the purposes of Federal Decree-Law No 47 of 2022.

“The corporate tax treatment of income derived from UAE real estate and other immovable property by foreign juridical persons is in line with international best practice which stipulates that income derived from immovable property is taxable in the country in which such property is located,” said Younis Haji Al Khoori, undersecretary of the Ministry of Finance. Read more..

 

UAE's Finance Ministry issues corporate tax exemptions for free zones

The UAE's Ministry of Finance has given new details of corporate tax for businesses operating within the country's free zones after the Gulf nation introduced the tariff on June 1.

Companies operating in free zones can pay zero per cent tax on income from certain qualifying activities and transactions, officials from the Ministry of Finance said in Abu Dhabi.

A qualifying company can benefit from zero per cent corporate tax rate on qualifying income provided it is incorporated, established or registered in a free zone.

It can also benefit from a tax exemption on income earned from transactions with mainland UAE businesses or those in a foreign jurisdiction.

Qualifying activities include fund, wealth and investment management services, the manufacture and processing of goods or materials, reinsurance services, the holding of shares and other securities and the ownership, management and operation of ships. Read more..

UAE: Will 9% corporate tax apply to personal income, investments? Ministry clarifies

The Ministry of Finance on Wednesday clarified that individuals conducting business activities in the UAE will be subject to corporate tax only if their combined turnover exceeds Dh1 million a year.

A statement issued by the ministry added that personal income earned from employment, investments, and real estate without licensing requirements is not subject to corporate tax.

The issuance of UAE Cabinet Decision No. 49 of 2023 avoids bringing the non-business income of individuals into the scope of corporate tax, including wages or personal investment income, among others.

The UAE issued Federal Decree-Law No. 47 of 2022 on Taxation of Corporations and Businesses. This means businesses will be subject to nine per cent corporate tax from the beginning of their first financial year that starts on or after June 1, 2023.

Under the law, companies whose profits exceed Dh375,000 will be subject to corporate tax. Profits of up to and including that threshold will be taxed at a 0 per cent rate to support small businesses and start-ups. Read more..

 

UAE business owners to be subject to corporate tax only if their turnover exceeds Dh1m

The UAE's Ministry of Finance has confirmed that business owners in the country will be subject to corporate tax only if their turnover in a calendar year exceeds Dh1 million ($272,294).

The Cabinet Decision No. (49) of 2023 aims to clarify the application of the corporate tax regime for residents and non-residents and “ensure that only business or business-related activity income is taxed”, the ministry said on Wednesday.

It also confirmed that personal income, notably from employment, investments and real estate (without licensing requirements) is not subject to corporate tax.

For example, if a UAE resident operates an online business and the combined annual turnover from the business exceeds Dh1 million, under the new decision, that income would be subject to corporate tax.

However, if the resident also earns income from a rental property and personal investments, these sources of income would not be subject to the tax, as they fall under the out-of-scope categories, the ministry said.

“The new Cabinet Decision demonstrates the UAE's commitment to maintaining a clear and competitive tax framework for both local and foreign individual investors,” said Younis Al Khouri, undersecretary at the Ministry of Finance. Read more..

 

UAE corporate tax: Ministry issues decision on exemptions

The UAE Ministry of Finance has issued a new ministerial decision on corporate tax, clarifying conditions under which a company may continue or cease to be deemed exempt, before the implementation of the tax on June 1.

The decision clarifies rules to "ensure that businesses remain eligible for a corporate tax exemption if they fail to meet the relevant exemption conditions under certain circumstances", the ministry said in a statement on Wednesday.

These include a business undergoing liquidation or termination provided that a notification has been submitted to the Federal Tax Authority within 20 business days from the date of the beginning of the liquidation or termination procedure.

"The new ministerial decision clarifies the conditions under which a person may continue or cease to be an exempt person from a different date as a result of an event or situation that goes beyond the person’s control and could not have been reasonably foreseen or prevented," said Younis Al Khouri, undersecretary of the Ministry of Finance.

In such situations, the company must submit an application to the FTA within 20 business days from the date it fails to meet the conditions to be exempt. Read more..

 

UAE's mandatory job loss insurance scheme: 2 new employee categories added

The number of categories of employees who can subscribe to the UAE’s job loss scheme has been expanded, with the addition of two new classes by the Ministry of Human Resources and Emiratisation (MoHRE).

Employees working in free zones and semi-government entities can also register for the involuntary loss of employment (ILoE) scheme introduced by the MoHRE.

Starting January 1, 2023, the Ministry made it mandatory for employees working in the private sector and federal government to subscribe to job loss insurance.

Failure to subscribe by June 30 will result in a penalty of Dh400 to employees. Also, a Dh200 fine will be imposed for failing to pay premiums for more than three months from the due date.

Under the ILoE insurance scheme, employees with a basic salary of less than Dh16,000 are required to pay Dh5 per month or Dh60 per annum plus VAT as a premium. They will be compensated with 60 per cent of the average basic salary for the job loss for three consecutive months. While employees with a basic salary of over Dh16,000 are required to pay Dh10 a month or Dh120 annual premium under this scheme. Read more..

 

UAE announces corporate tax exemption for public and community welfare entities

The Ministry of Finance on Sunday announced that entities contributing to the public and community welfare are exempt from the corporate tax, which is set to come into effect this year.

A statement issued by the Ministry said companies involved and focused on public welfare, philanthropy, community services or corporate and social responsibility will be exempt from corporate tax.

This decision is designed to reflect these entities' important role in the UAE, which often includes religious, charitable, scientific, educational, or cultural values, among others.

The UAE last year announced that it would levy a nine per cent corporate tax on companies and freelancers earning Dh375,000 and above, hence, requiring them to enrol for tax registration. The UAE’s corporate tax will be one of the lowest in the world.

To be eligible for exemption, these entities must meet the conditions under Article (9) of the Corporate Tax Law and they must continue to comply with all relevant federal and local laws and notify the Ministry of Finance of any changes occurring to these entities that impact their status as a Qualifying Public Benefit Entity. Read more..

 

UAE corporate tax: Ministry clarifies organisations exempt from registration

The UAE Ministry of Finance on Monday released details of public and private sector organisations that are exempted from tax registration for new corporate tax that will be introduced in June this year.

The ministry has issued Ministerial Decision No 43 of 2023, which explains who will be excluded from corporate tax registration.

A “non-resident” company will not be required to register for corporate tax if it earns UAE-sourced income but does not have a “permanent establishment in the country”, the ministry said.

Government and government-controlled organisations as well as extractive businesses and non-extractive natural resource businesses that meet the set conditions are not required to register under the UAE Corporate Tax Law, the ministry said.

Other exemptions are available to organisations such as pension or investment funds and public benefit organisations.

Existing free zone entities are also exempted from corporate tax because they are among the drivers of the UAE's economic growth, the ministry said in December.

Last year, the UAE introduced the federal corporate tax with a standard statutory rate of 9 per cent, which will come into effect for businesses whose financial year starts on or after June 1 this year. Read more..

 

UAE to offer corporate tax relief to small businesses earning $816,880 or less

Small businesses in the UAE with revenue of Dh3 million ($816,880) or less can benefit from a new corporate tax relief programme, the UAE's Ministry of Finance said on Thursday.

The ministerial decision on Small Business Relief is issued in accordance with Article 21 of the corporate tax law, "which treats the taxable person as not having derived any taxable income in a given tax period where the revenue did not exceed a certain threshold", the ministry said in a statement.

Last year, the UAE introduced the federal corporate tax with a standard statutory rate of 9 per cent, which will come into effect for businesses whose financial year starts on or after June 1 this year.

In December, the country issued the federal corporate tax law, bringing the income of companies exceeding Dh375,000 ($102,000) into the corporate tax bracket.

"Small Business Relief is intended to support start-ups and other small or micro businesses by reducing their corporate tax burden and compliance costs," the ministry said.

It specifies the revenue threshold and conditions for a taxable person to be eligible for the programme. Read more..

 

Finance Ministry clarifies UAE tax residency rules

The UAE Ministry of Finance has clarified rules to certain provisions under Cabinet Decision No 85 of 2022 on the Determination of Tax Residency, bringing the Emirates in line with other countries that have similar legislation.

The rules, which came into effect on Wednesday, are designed to clarify the domestic definitions for determining whether a person or a legal entity may be considered a tax resident of the UAE.

“The ministerial decision on implementing domestic tax residency rules is important as it gives additional clarity to individuals in respect of when they are considered as tax residents under UAE taxation laws,” Younis Haji Al Khouri, Undersecretary in the Ministry of Finance, said on Wednesday.

In 2020, it was announced that tax residency and commercial activities certificates would be issued through the Federal Tax Authority of the UAE.

Tax residency certificates are issued to eligible government entities, companies and people looking to benefit from double taxation agreements signed between the UAE and other countries. Read more..

 

Ministry of Finance Confirms Applicable Taxable Income Threshold for Corporate Tax

The Ministry of Finance (MoF) has published the approved Cabinet Decision 116 of 2022 on the Applicable Taxable Income Threshold for Corporate Tax.

The Decision follows the issuance of Federal Decree Law on the Taxation of Corporations and Business (the “Corporate Tax Law”) in December 2022. Businesses will become subject to UAE Corporate Tax from the beginning of their first financial year that starts on or after 1 June 2023. The rate has been set at 9% and is applicable to taxable income above AED 375,000, in alignment with what the Ministry announced earlier, ensuring that the UAE's Corporate Tax regime is amongst the most competitive in the world and strengthening the country's position as a global financial and business hub.

Based on the Decision, a 0% rate will apply to taxable income that does not exceed AED375,000 during the same tax period regardless of the number of businesses or business activities the taxable person is engaged in during that period.

A 9% rate will apply to taxable income exceeding AED 375,000 during the relevant tax period. Read more..

 

UAE: New law revises legal age for starting business

The age limit for running a business in the UAE has been revised under the new Commercial Transactions Law, according to the Ministry of Economy (MoE).

In a recent media briefing, Abdullah Al Saleh, undersecretary of the MoE, reviewed the new law, which seeks to support and develop the country's business environment.

Among the most prominent features of the new Commercial Transactions Law are:

- It reduces the age of legal capacity to practice business to 18 years
- The law establishes a legal reference for commercial transactions for banking institutions to stimulate investment and give businesses wider scope for growth and competition
- It offers support to Islamic banking in the country and establishes it as one of the main drivers of growth... Read more..

 

UAE Central Bank issues new anti-money laundering guidelines for insurance sector

The UAE Central Bank has issued new guidelines for the licensed financial institutions (LFIs) operating in the insurance sector as it continues to take measures to combat money laundering and the financing of terrorism.

The guidelines, effective immediately, will help financial institutions enforce their statutory AML/CFT [anti-money laundering and countering the financing of terrorism] obligations, thebanking regulator said on Thursday.

Insurance and reinsurance companies, agents and brokers have been given one month time to comply with the new regulations.

“Anti-money laundering and combating the financing of terrorism is our top priority, as we work with the LFIs and the relevant authorities to prevent and mitigate these types of financial crime activities,” said Khaled Balama, governor of the UAE Central Bank.

“We expect the LFIs of the insurance sector, to comply with this guidance and enhance their measures and efforts to maintain the soundness of the sector.” Read more..

UAE issues corporate tax law, paving way for implementation in 2023

The UAE issued its federal corporate tax law on Friday that will levy a headline 9 per cent rate on taxable income exceeding Dh375,000 ($102,000).

Taxable profits below the aforementioned threshold will be subject to a 0 per cent rate of corporate tax. No corporate tax will apply on salaries or other personal income from employment — be it in the government, semi-governmental, or private sector, the Ministry of Finance said in a statement accompanying the 56-page law that was published on its website on Friday.

Businesses will become subject to the UAE corporate tax from the beginning of their first financial year that starts on or after June 1, 2023, as previously announced at the start this year.

The Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses provides the legislative basis for the introduction and implementation of a federal corporate tax in the UAE and is effective for financial years starting on or after June 1, 2023, the ministry said. Read more..

UAE announces new VAT exemption from January 1

The UAE’s Ministry of Finance (MOF) on Thursday said director services undertaken by natural persons serving as members of boards at entities and institutions across the UAE will not be subject to value-added tax (VAT) from January 1, 2023.

Meanwhile, VAT will still apply to the director services for legal persons serving as board members that delegate a natural person to act in the name of the legal persons as a member of the board of directors.

Younis Haji Al Khoori, Undersecretary of the Ministry of Finance, noted that as per the Cabinet Decision amending the Executive Regulation of the Federal Decree-Law on VAT, which will go into effect on January 1, 2023, performing the duties of a member of a board of directors at a government entity or private establishment in exchange for a reward (monetary or benefits in kind) will not be considered as a supply of services for the purposes of VAT. Read more..

UAE introduces paperless tax refund system for tourists

The UAE has introduced a paperless tax refund system for tourists visiting the country, doing away with the need to retain receipts.

Under the initiative, registered retail merchant tills in the Emirates will generate electronic invoices that will allow visitors to claim VAT refunds.

The system is integrated for purchases at a variety of hotels, shopping centres, malls and other retail locations.

Tourists will not be required to carry paper invoices to claim the refund, which they can collect in cash or have it transferred to a credit card on departure through one of Planet Tax Free's 100 self-service kiosks available at 13 airports or ports in the UAE.

“The new solution is integrated electronically between retail outlets and the tax refund scheme, ensuring a seamless digital process of issuing, sending, modifying and saving invoices for tourists,” said Khalid Al Bustani, director general of the Federal Tax Authority.

“The system achieves high satisfaction rates by users for its simple, effective and smooth tax-refund process for eligible tourists.” Read more..

VAT Public Clarification on Gold Making Charge

The FTA has issued a Public Clarification that provides guidance on the application of the VAT legislation with regards to making charges received by gold jewellers.
In some instances, taxable persons supplying gold jewellery reflect the gold price and making charge separately on the tax invoice issued for the supply, and in other cases both are reflected as a total price.

If the supplier charges separate considerations for the gold and the making service, or reflects the price of these components separately, the supplier is required to impose VAT on the service component.

To read the full Public Clarification click here…

Sweeping new regulations for auditors to practice in UAE

The UAE’s Ministry of Economy has announced new regulations for auditors to practice in the country.

The regulation of Federal Law No (12) of 2014 regarding Reorganisation of Accounts Auditors Profession will be implemented from September 13 this year, top officials said during a media briefing held in Abu Dhabi.

The new regulations include adopting the ‘financial reporting ecosystem’ model, which makes the UAE one of the first countries globally to adopt such an advanced model. Also, the UAE Fellowship Programme will become a requirement for practicing the profession in the country. And there will be different eligibility criteria based on their years of experience for non-Emiratis to practice auditing.

Abdulaziz Al Nuaimi, assistant undersecretary for Commercial Affairs at the Ministry of Economy, noted the new measures will make life easier for auditors to practice in the country. Read more..

New UAE app lets you know if a cheque is likely to bounce

A new app launched in the UAE on Tuesday allows both businesses and individuals to instantly know if a cheque issued through a UAE-based bank is likely to bounce.

Launched by Al Etihad Credit Bureau (AECB), Marwan Ahmed Lutfi, CEO of AECB, stressed that it has now become highly important that people in the assess the risks when they receive the cheques.

Once users have downloaded and registered, they can scan the cheque image or enter the details manually. The app is available for both iOS and Android devices.

The service will cost Dh10 and a five per cent value-added tax (VAT).

The ChequeScore calculates using the AECB’s Credit Score, another product provided by it, taking into consideration the user’s cheque issuance and clearance history, on-time payment patterns, and other factors that support the predictive nature of this score. Read more..

UAE: 4 types of taxes currently imposed, explained

The UAE’s Ministry of Finance had on Monday announced a federal corporate tax on business profits from June 1, 2023.

With a standard statutory tax rate of 9 per cent, the UAE corporate tax regime will be among the most competitive in the world.

A 0 per cent tax rate is applicable for taxable profits up to Dh375,000 to support small businesses and startups. No corporate tax will apply on personal income from employment, real estate and other investments, or on any other income earned by individuals that does not arise from a business or other form of commercial activity licensed or otherwise permitted to be undertaken in the UAE.

The UAE does not levy income tax on individuals, but it does have other types of taxes. According to the official UAE Government website, the following taxes are applicable in the country:

Excise tax
It is levied on specific goods which are typically harmful to human health or the environment. Consumers need to pay more to buy such goods. The aim is to “reduce consumption of unhealthy and harmful commodities while also raising revenues for the government that can be spent on beneficial public services”. Read more..

UAE's wage protection system: Employee rights, fines for violators explained

The UAE is home to expatriates from over 200 countries, which contribute to economic development and the young nation's progress.

The UAE government's Wage Protection System (WPS), which has made payments and wage distribution easier and transparent, is extended to domestic workers, starting today.

Initially, the mechanism was launched in 2009 and later further strengthened in 2016.

The pioneering policy was developed by the UAE's Central Bank and the Minister of Human Resources and Emiratisation (MoHRE).

The policy reflects the UAE's pioneering role in safeguarding the worker's wage and enhancing transparency and competitiveness to strengthen the work relationships in the country. Read more..

UAE Central Bank issues guidance for licensed exchange houses to combat money laundering

The UAE Central Bank issued guidelines to help licensed exchange houses to combat money laundering and the financing of terrorism.

The rules will assist in the effective enforcement of the statutory Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) obligations for licensed exchange houses and also help them to understand the risks associated with the same, the regulator said on Wednesday.

The guidance, which also takes Financial Action Task Force standards into account, came into effect on Wednesday. Licensed exchange houses have been given a month to comply.

“We want to ensure that all licensed exchange houses in the UAE understand their AML/CFT responsibilities, have adequate programmes to identify and mitigate AML/CFT risks in their operations and comply fully with their statutory obligations,” Central Bank Governor Khaled Balama said. Read more..

FTA to issue tax residency certificates

Tax residency and commercial activities certificates will now be issued through the Federal Tax Authority of the UAE, the FTA said on Wednesday.

Applications for the certificates can be made through the FTA's e-services portal from November 14, the authority added.

Tax residency certificates are issued to eligible government entities, companies and individuals looking to benefit from double taxation avoidance agreements signed between the UAE and other countries, while the commercial activities certificate enables applicants to refund VAT paid in advance outside of the UAE.

The certificates were previously issued by the Ministry of Finance. The move, in coordination with the Ministry of Finance, is in line with Cabinet Decision No. 65 of 2020 on Fees for Services provided by the FTA issued in October 2020.

“Both tax residency and commercial activities certificates allow investors in the UAE, including companies and individuals, to benefit from double taxation avoidance agreements to which the state is a party, with the aim of preventing duplication, in addition to recovering VAT imposed on Emirati businesses in various countries in the event they were registered with the authority,” Khalid Ali Al Bustani, director-general of the FTA, said. Read more..

UAE to set out new law regulating charity giving and fundraising

A new law to tackle money laundering and terrorist financing is being developed by the UAE.

The legislation will govern how charitable donations are made and the way non-profit organisations operate, a senior official has said.

Nasser Ismail, assistant undersecretary at the Ministry of Community Development and a member of the National Committee for Countering Money Laundering, told state news agency Wam that non-profit organisations operating in the UAE “must exercise due diligence to avoid any wrongdoings related to money laundering”.

Mr Ismail referred to the “new federal law being formulated by the ministry, named the Fundraising Regulatory Law, which will stipulate a set of conditions and regulations for licensed charitable and humanitarian authorities within the UAE”.

There are already strict measures in place relating to fundraising. This means the public can donate only to charities that are licensed by the government. Read more..

UAE Central Bank issues new anti-money laundering guidelines

The Central Bank of the UAE has issued new guidance to help financial institutions combat money laundering and terrorism financing.

It says licensed financial institutions (LFIs) including lenders are obliged to develop internal policies, controls and procedures to manage risks linked to money laundering and the financing of terrorism.

LFIs must also put in place indicators to identify suspicious transactions and activities and file reports to the UAE’s Financial Intelligence Unit, the banking regulator said in a statement on Monday.

“As we continue to enhance the effectiveness of AML/CFT measures to safeguard the UAE financial system, we expect licensed financial institutions to fulfill their duties as well,” Khaled Balama, governor of the CBUAE, said.

“This guidance serves as a key point of reference for licensed financial institutions to ensure their compliance with AML/CFT requirements.” Read more..

New guidance to registered hawala providers and licenced financial institutions

The Central Bank of the UAE (CBUAE) has issued a new guidance on anti-money laundering and combatting the financing of terrorism (AML/CFT) to registered hawala providers (RHP) and licenced financial institutions (LFIs) providing services to RHP.

The new guidance, which came into effect on August 18, 2021, will assist in the understanding and effective implementation of the statutory AML/CFT obligations for RHPs and LFIs, as outlined in Federal Decree-Law No. (20) of 2018 on AML/CFT and Cabinet Decision No. (10) of 2019. This guidance also takes Financial Action Task Force (FATF) standards and guidance into account.

The Central Bank of the UAE permits legitimate hawala activity, being considered an important element in its continuous efforts to boost financial inclusion and bring the unbanked segment of the population into the regulated financial system.

Hawala is regulated by the Registered Hawala Providers Regulation issued by the CBUAE in 2019. All providers undertaking hawala activity in the UAE must hold a hawala provider certificate issued by the Central Bank. Read more..

Why companies must comply with AML regulations right now

To combat money laundering and adhere to international regulations, the UAE last month issued new guidelines on anti-money laundering (AML) and combating the financing of terrorism (CFT). This is in addition to the strict laws and numerous measures the emirates already had in place to fight financial crimes.

What necessitated these additional guidelines?

Too many companies have not been taking compliance seriously and do not implement compliance processes internally because they believe they do not fall within the category of regulated financial institutions. A few have been taking advantage of confidentiality policies offered by free zone entities while others have been benefitting from being in non-financial or professional sectors. But now it is set to change as regulations have broadened its footprint with new focus on non-financial businesses and professional sectors such as real estate agents, gold dealers, auditors and corporate service providers. Read more..

UAE tax rules relaxed, penalties reduced

The UAE cabinet has amended the Executive Regulation of Federal Law on Tax Procedures.

The amendment extends the tax notification from 10 to 40 working days. The amendment also covers the time limit for issuing the decision of the Federal Tax Authority to reduce or exempt administrative penalties from 20 to 40 working days from the date of receiving the application.

This came as the Cabinet met on Wednesday. Chaired by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, it approved several strategies. Read more..

UAE's importers need a VAT re-check to take goods out of free zones for GCC shipments

UAE businesses bringing out goods from free zones for shipment to other Gulf states have to tick another box on their VAT checklist. In specific terms, they have to be sure where they stand on ‘VAT 301’ to make sure they don’t face delays in clearing goods from the free zones.

To avoid all such delays, they will need to take an 'exception approval' from the Federal Tax Authority to clear the goods. The FTA (Federal Tax Authority) had restricted the use of VAT 301 from February 23.

For normal imports destined for the UAE itself, VAT-registered importers should link their custom code with their TRN (Tax Registration Number). In such cases, the import VAT liability is automatically processed into the importer’s periodic VAT returns. There is no additional cost for this category. Read more..

UAE: Full list of fines for money laundering, terror financing

The UAE's Ministry of Economy has announced the list of violations and fines for money laundering and terrorism financing. The minisry has issued a list of 26 penalties.

The violations pertain to the designated non-financial businesses and professions (DNFBPs) that the ministry supervises. The businesses include four main categories: Brokers and real estate agents; dealers of precious metals and gemstones; auditors; and corporate service providers.

Grace period extended

The grace period for companies to register in two systems to combat money laundering has been extended till March 31. Companies that fail to register will be subject to penalties, including suspension of licences and closure. Read more..

UAE businesses that must register in anti-money laundering systems

The Ministry of Economy (MoE) has listed the businesses that need to register in the anti-money laundering systems before March 31.

These include real estate agents, gold dealers, auditors, and service providers for companies.

Referred to as designated non-financial businesses and professions (DNFBPs), they have been asked to register in the Financial Intelligence Unit (goAML) and the Committee for Commodities Subject to Import and Export Control system (Automatic Reporting System for Sanctions Lists).

Such businesses were given an extended grace period till March 31 to register, in order to avoid penalties, which include licence cancellation and closure. Read more..

VAT in the UAE: The process, calculations and exemptions explained

Value Added Tax (VAT) was introduced in the UAE from January 1, 2018. If you are new to the UAE and unaware about the type of tax it is, how you would get affected by it and whether you can receive a refund on VAT, read on to find out all you need to know.

What is VAT?

VAT is a tax on the transactions of goods and services, applied at each stage of the supply chain and is based on the value added at each stage. Read more..

FTA makes it easier for Emiratis to recover VAT on homes

The Federal Tax Authority, FTA, announced on Tuesday that it has launched a new platform on its website to streamline the process of recovering Value Added Tax, VAT, incurred by UAE citizens on the building of new homes.

Citizens who qualify for VAT recovery on newly-built homes will receive an email with a request to submit the necessary documents to complete the processing. After verification of the documents, the citizen is notified of his/her entitlement. If the refund amount matches the tax invoices provided, then — following final approval the refund amount is transferred to the applicant’s bank account. Read more..

UAE Federal Tax Authority: Bank Interest and Dividends Outside the Scope of VAT

The Federal Tax Authority (FTA) asserted that passively earned interest income from bank deposits and dividend income are outside the scope of Value Added Tax (VAT), and there is no requirement to report them in the VAT return.

VAT is a tax imposed on the import and supply of goods and services at each stage of production and distribution, therefore, VAT implications arise only when there is a supply – if there is no supply, there is no VAT implication.

The FTA explained that the Federal Decree-Law No. (8) of 2017 on VAT and its Executive Regulations have included specific provisions on what would constitute a supply of goods and a supply of services and also included a definition for taxable supplies. Read more...