© 2018 by Hansuke Consulting Limited

 

Hansuke Consulting Limited is registered in England and Wales number 10136213 with its registered office at: 71-75 Shelton Street, London WC2H 9JQ. Hansuke Consulting Limited is an accredited and regulated member firm of the Institute of Chartered Accountants in England and Wales (ICAEW).

 

In accordance with the disclosure requirements of the Provision of Services Regulations 2009, our professional indemnity insurer is International General Insurance Co (UK) Limited, of 133 Houndsditch London EC3A 7AH. The territorial coverage is worldwide excluding professional business carried out from an office in the United States of America or Canada and excludes any action for a claim brought in any court in the United States of America or Canada.

Alerts

UAE and Oman takes early lead in the introduction of Value Added Tax

15 November 2016

Earlier in the year the members of the Gulf Cooperation Council (“GCC”) namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE agreed to introduce Value Added Tax (VAT).

 

UAE

 

On 24 October 2016, His Highness Sheikh Khalifa bin Zayed Al Nahyan (president of the UAE), issued federal law 13 of 2016 establishing a Federal Tax Authority (“FTA”) in the UAE to govern federal taxes which will include VAT. The decree is to be published in the official Gazette and should come into effect 90 days following its publication.

 

The creation of the FTA enforces the intention of the federal government to implement VAT by January 2018. Furthermore, it will bring UAE laws in line with international tax developments such as tax treaties, global tax information exchange programs (such as FATCA, CDOT and CRS).

 

The introduction of VAT in UAE will affect both businesses, which will have to adapt their systems and processes to enable them to collect, record, report and pay VAT to the FTA, and individual consumers, who will (indirectly) bear the burden of the increase in the prices of goods and services.

 

In terms of the specifics of the implementation, little has yet been confirmed by the federal government. However, it is expected that certain categories of goods and services, such as basic foodstuffs, healthcare and education will be exempt from VAT or carry a “zero-rate” in order not to overburden individual consumers.

 

The UAE Ministry of Finance has produced a Frequently Asked Questions on the introduction of VAT which are reproduced in Appendix 1 below.

Oman

 

Oman has recently announced that it will introduce VAT by the beginning of 2018 in a move to increase its revenues amid the drop-in oil prices.

 

The proposed tax law has been drafted and will be submitted to the legislative authorities. It is likely to be officially approved in the coming weeks and will be formally implemented in 2017.

 

Whilst VAT is ultimately a tax on the supply of goods and services to the final consumer, the charge of VAT will mean that businesses will become unpaid tax collectors for the federal government. Consequently, this will increase the administration and IT related costs. In these circumstances, it is imperative for businesses to start planning their VAT strategy and implementation road map immediately to minimise these costs.

 

 

In respect of the other GCC states we await formal confirmation of an implementation date for VAT. Please contact mohsintalati@hansuke.co.uk if you have any queries about the introduction of VAT in the Gulf states.

Contact us

Ali Kazimi

Managing Director

alikazimi@hansuke.co.uk

Tel: +44 (0) 203 865 0626

Mohsin Talati

Senior Manager mohsintalati@hansuke.co.uk Tel: +44 (0) 203 865 0625

This publication has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication. Hansuke Consulting Limited would be pleased to advise readers on how to apply the principles set out in this publication to their specific circumstances. Hansuke Consulting Limited accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.