Question

Topic: VAT tax in UAE
1. Introduction
2. Literature review
3. Methodology
4. Findings
5. Conclusion
6. Recommendation

.
Do The research and make a research report

Answer 1

A project on the topic: VAT in UAE

Introduction:-

The UAE is a federation of seven emirates, with autonomous emirate and local governments. The United Arab Emirates doesn't have any federal income tax. An income tax decree is enacted by each Emirate. the enforcement of these decrees is restricted to foreign banks and the oil companies.

The UAE government implemented value added tax (VAT) in the country from January 1, 2018 with a standard rate of 5%.

Registration Criteria

Any business must register for VAT if their taxable supplies and imports exceed the compulsory registration threshold of AED 375,000. Also, a business may choose to register for VAT on their own if their supplies and imports are below the mandatory registration threshold, but exceed the voluntary registration threshold of AED 187,500. Similarly, a business may register voluntarily if their total expenses exceed the voluntary registration threshold.

Zero-Rated Items

VAT will be charged at 0% in respect of the following main categories of supplies:

• Exports of goods and services to outside the GCC;
• International transportation, and related supplies;
• Supplies through certain sea, air and land means of transportation;
• Certain investment grade precious metals (e.g. gold, silver, of 99% purity);
• Newly built residential properties, that are supplied for the first time within 3 years of their construction;
• Supply of certain education services, and supply of similar goods and services;
• Supply of certain Healthcare services, and supply of similar goods and services

Exemptions of VAT Tax

The following categories of supplies will be exempt from VAT:

• The supply of some financial services (clarified in VAT legislation);
• Residential properties;
• Bare land; and Local passenger transport

VAT Audit and methodology

According to the federal law, it is quite important for the FTA to conduct regular VAT audits ascertain the compliance of various businesses to the tax laws. These audits are often conducted at the workplace, as per the selection of the FTA. The notice of a similar should be issued to the person/business by the FTA a minimum of 5 days before.

Elaborated procedure of VAT Audit.

The involved party/business/person can file their tax returns on the FTA portal as per the schedule.

The FTA authorities can go through the returns and alternative details. There needn't be a selected reason for the FTA to conduct an audit of a business/taxpayer. they will conduct it for any reason or whenever they require for regular checks

A notice is going to be issued to the involved party, a minimum of 5 days before the audit date. it'll contain details, like the audit schedule, place, concerned parties, particular reason, etc.

The auditor(s) and also the taxpayer can meet at the scheduled place and time for initiating work. The auditor may ask for business records, in original and/or copies, and take samples of products and alternative assets as obtainable at the place at the time.

Note: The audited party has the right to ask for the credentials, like professional ID cards, from the tax auditors so as to check their authority.

The tax audit is needed to be conducted during the official FTA operating hours, unless the Director-General decides to conduct the audit of a business outside regular hours, in any kind of exceptional case.

The taxpayer in conjunction with his legal representatives and tax agents, is needed to supply full help to the auditors performing their task.

If something suspicious is found within the results of the audit which may impact the tax return, the authority has the full power to order a re-audit for more analysis.

The audited person has the right to ask for the notification copy and related documents and be present throughout the auditing procedures that are carried on outside of the official places.

Conclusion for why UAE bringing VAT now

The UAE, along with the other five Arabian Gulf states, agreed to slap VAT and excise taxes GCC-wide as part of measures aimed at increasing the government income, diversifying government revenues as economies adjust to lower the oil prices and to ensure the increased efficiency in the economy. The IMF declared in October 2015 that the Gulf states would have a combined fiscal deficit of between the year 2015 and 2019 that would exceed US$700 billion if they did not undertake reforms regarding its financial structure.

Arguments from people(against)

The most common arguments against the introduction of VAT are consumers worried about the rise in their expenses. The consumers voiced their concerns over already-high living expenses in the UAE.