Insights January , 2020

Two Years of VAT in the UAE

The UAE has just marked two years of Value-Added Taxes in the United Arab Emirates, and the Federal Tax Authority (“FTA”) has highlighted some key metrics:

  • Over 300,000 businesses registered for VAT;
  • Over 1,000 businesses registered for Excise Tax;
  • Number of tax agents have reached 454;
  • VAT refunds for tourists processed over 3.2 million applications in H2 of 2019, recording a 110.5% growth;
  • AED 28.7million is the value of 105 applications received through the VAT Refund Scheme for Foreign Businesses, which aims to enhance investment attractiveness;
  • Number of tax-related clarifications increased to 445 – an annual growth of 271%;
  • FTA website launches AI virtual assistant to answer tax-related inquiries; &
  • 35,000 specialists benefited from the 120 seminars and workshops organized by the FTA

The FTA showcased the highlights of its tax system two years since the implementation of VAT, which came into force on 1 January 2018, at a rate of 5% applied on most supplied goods and services.

The FTA Director General, H.E. Al Bustani said: “The continuous development of the FTA’s systems aims to further enhance our services, and in turn, create a comprehensive legislative environment backed up by the best tax system in the world. These legislations clearly stipulate all mutual obligations between the FTA and tax-payers ensuring higher standards of governance and transparency.”

H.E. Al Bustani said: “Over the past two years, the FTA recorded a growth in the number of voluntary declarations in 2019 compared to 2018, after many taxpayers reported mistakes made on their part relating to tax invoices, evaluations or tax refund applications. This indicates an increase in awareness levels among businesses, and their keenness to correct the errors recorded on their part at the beginning of the application”.

Disclaimer on Use

The information presented is intended for general information only and is not meant to be a substitute for professional advice or to be used for decision-making.

Professional advice relies on an assessment and understanding of the specific situation for each person and, therefore, the application of changing laws and regulations in the UAE, will vary widely from case to case.

The information contained herein is based on facts available from sources we believe to be credible at the time of publication and is subject to change.