D 21. What are transfer pricing rules?

Transfer pricing rules seek to ensure that transactions between Related Parties are carried out on arm’s length terms, as if the transaction was carried out between independent parties. To prevent the manipulation of taxable income, various articles in the Corporate Tax Law require that the consideration of transactions with Related Parties and Connected Persons needs to be determined by reference to their “Market Value”.

B31) I paid on time, but forgot to file my return. Can I avoid late fees?

The mistake means a Dh1,000 fee plus interest is owed to the Federal Tax Authority.

The quarterly VAT return process has two parts. First, you must complete and submit the VAT return online in the Federal Tax Authority’s Portal and secondly make the required VAT payment, which can be done through various channels, including e-dirham, visa or debit cards, bank transfer or through UAE Exchange. 

The FTA legislation explains that making a payment is not recognised until the corresponding VAT return has been filed. Therefore, despite making the payment in full and the funds reflected on your FTA account, the FTA don’t recognise that payment against your missing VAT return. Read more...

Federal Tax Authority convenes ‘Customer Council’ to discuss bolstering tax culture and meeting customer expectations

The Federal Tax Authority (FTA) convened the ‘Customer Council’ to discuss ways to bolster tax culture and meet customers’ expectations, as part of the ‘Customer Councils’ initiative, launched by the UAE Government to enhance the quality of government services by engaging customers in the process of designing innoVATive experiences around their own ideas and suggestions.

The Authority stated that the Customer Council, which was held at Majlis Umm Suqiem in Dubai, brought together representatives of various business sectors and stakeholders from the tax sector. The session included an overview of the Customer Councils initiative, as well as a presentation by a team of FTA experts about the UAE tax system and its advanced procedures that encourage voluntary compliance among businesses with easy and quick processes that are in accordance with best practices. Read more..

UAE PASS digital signature feature introduced to EmaraTax

The Federal Tax Authority (FTA) announced that the single sign-on feature of UAE PASS – the first national digital identity– has been introduced to the EmaraTax platform, which tax system registrants can use in all procedures and services on the platform, available through the official FTA website, further advancing the sweeping digital transformation taking place across the UAE.

The Authority stated that the new feature was launched in collaboration with relevant authorities, and designed to meet the highest standards of security, confidentiality, and accuracy of information and procedures, in an effort to to speed up processes, improve user experience, and meet customers’ aspirations.

Mr Abdulla Al Bastaki, Executive Director of the Information Technology Sector at the Federal Tax Authority, called on all FTA customers to take advantage of the new feature and actiVATe their UAE PASS accounts, and then use them to access the Authority’s services quickly, easily, and from the convenience of their devices and smartphones with no need to set a new username and password. Read more..

Federal Tax Authority opens pre- registration for corporate tax through the EmaraTax platform starting in January 2023

The Federal Tax Authority (FTA) has launched early registration for corporate tax through the EmaraTax platform for digital tax services, in line with Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (the “Corporate Tax Law”), which stipulates that Taxable Persons will become subject to Corporate Tax from the beginning of their first financial year that starts on or after 1 June 2023.

The Authority explained that the early registration period is available from January 2023 to May 2023 for certain categories of companies operating in the UAE. These selected companies will be receiving invitations from the FTA by email and SMS, allowing them to register via the EmaraTax platform.

Following this phase, the FTA will announce at a later date when registration will be open for other companies and businesses. The FTA will make sure to give ample time for companies and businesses to apply for registration and meet their legal obligations. When registration opens, priority will be given to companies and businesses that have a financial year starting on 1 June 2023. Read more..

As per Decree-Law, all businesses in the UAE need to record their financial transactions and ensure that their financial records are accurate and up to date. The final responsibility and accountability to comply with VAT is on the business.

Accounting Records and Commercial Books

As per Executive Regulations of Federal Law No. (7) on Tax procedures, Accounting Records and Commercial Books shall include the following:

• Accounting books in relation to that Business, which include records of payments and receipts, purchases and sales, revenues and expenditures, as required under any Tax Law or any other applicable law, including:
  • Balance sheet and profit and loss accounts.
  • Records of wages and salaries.
  • Records of fixed assets.
  • Inventory records and statements (including quantities and values) at the end of any relevant Tax Period and all records of stock-counts related to Inventory statements.

Businesses that do not think that they should be VAT registered should maintain their financial records in any event, in case the authorities need to establish whether they should be registered.

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