Federal Law 7 of 2017 on Tax Procedures applies to Federal Tax Authority tax procedures related to the administration, collection and enforcement of federal taxes. Executive Regulations will follow giving detailed procedures on a number of issues described in the Law.
The team at Gulf Tax Consultants has compiled, for information purposes, a list of the most important points for the business community.
Should you require to learn more about VAT in U.A.E and the G.C.C, please contact our team.
Main points addressed by the Law, impacting U.A.E businesses to be registered for VAT and excise taxes are:
Accounting Records and Commercial Books
Submission of Tax Returns, information, records and documents to FTA must be in Arabic. In case they are in any other language a translation might be needed at the expense of the taxpayer.
- Taxable Persons must apply for Registration.
- Use of Tax Registration Number (TRN) in all communications with FTA
- Changes in taxable person’s information affecting its Tax record must be communicated within 20 business days
- Appointment of Legal Representative must be communicated to FTA within 20 business days from appointment
- Incomplete Tax Returns are considered will be treated as not having been received.
- Taxable Person is responsible for the accuracy of the Tax Return data.
- Payment less than the Payable Tax amount, will trigger the issue of a Tax Assessment by the FTA and the relevant penalties.
In the Law is allowed to provide voluntary disclosure correcting errors in Tax Returns and Tax Refund Applications.
- Tax Agents are persons appointed to act on behalf of a Taxable Person with regard to its Tax affairs with the FTA.
- Tax Agents must meet certain conditions and be registered with the Authority.
- Tax Audit can be performed at FTA office or at the place of business of the Taxable Person.
- In case of an audit at the place of Business, FTA has to inform the business 5 business days in advance.
- In certain cases, FTA can shut for 72 hours any place where the Business carries its business, stores its goods or keeps its records subject to a prior written consent of Director General.
- Audited Person has the right to:
- request the Tax Auditors show their job identification cards.
- obtain a copy of the Tax Audit Notification
- attend the Tax Audit which takes place outside the Authority
- obtain copies of any original paper or digital documents seized or obtained by FTA
A number of violations is prescribed in the Law, where an Administrative penalty will be issued. The amount and the procedure will be issued by the Cabinet, but it will not be less than AED 500 and more than 3 times the amount of Tax in respect of which the Administrative penalty was levied.
Tax Evasion Penalties
Tax evasion carries penalties of monetary penalty not exceeding five times the amount of evaded tax and/or imprisonment. More severe penalties applicable under any other law (e.g criminal) might also apply.
In the Law is set the framework for resolving disputes between the Taxable Person and the FTA. The steps are:
- Apply to FTA to reconsider. If rejected or reconsideration is not satisfactory than appeal to:
- Tax Disputes Resolution Committee.
- For total Tax and Administrative penalties up to AED 100.000, its decision are considered final.
- Court. Committee’s decisions can be challenged at the competent court.
Refund and Collection of Tax
The Law sets some procedures relevant to application for Tax Refund and collection of payable taxes.
- 5 years from the end of the relevant Tax Period, for cases where there is no tax evasion.
- 15 years in case tax evasion is proven.
- 15 years in case of non-registration for Tax purposes.
For a more detailed reading and a download of the English text of the Law, you can access it in our Knowledge Base, following the below link: