A new law detailing tax procedures in the UAE has been issued by the country’s President Shaikh Khalifa bin Zayed Al Nahyan.
The federal law for Tax Procedures sets the foundation for the planned UAE tax system, regulating the administration and collection of taxes and clearly defining the role of the Federal Tax Authority (FTA), official news agency WAM reported.
The law comes ahead of the implementation of excise taxes and value added tax (VAT) in the UAE from the start of 2018.
It is a follow-up step from a federal decree issued last year which established the FTA and tasked it with executing tax laws in the UAE.
The law defines a set of common procedures and rules to be applied to all tax laws in the UAE including VAT and excise tax laws, and also states the respective rights and obligations of the FTA and the taxpayer.
It covers tax procedures, audits, objections, refunds, collection, and obligations – which include tax registration, tax-return preparation, submissions, payment and voluntary disclosure rules – in addition to tax evasion and general provisions, WAM reported.
It also establishes the register of tax agents who are allowed to interact with the FTA on behalf of taxpayers, specifies the basic requirements for appointing the tax agents, and sets the standards for maintaining confidentiality by the FTA and its officers.
Once the law goes into effect, all UAE-based businesses will be required to keep accurate records for five years.
It also sets penalties for non-compliance, as well as processes for appeals, and establishes a fair and transparent environment for the FTA, the WAM report added.
The tax procedures law is a significant milestone towards establishing the UAE’s tax system and diversifying the economy,” said Shaikh Hamdan bin Rashid Al Maktoum, deputy ruler of Dubai, UAE Minister of Finance and FTA chairman.
It is an “all-encompassing legislative framework that lays the groundwork for the UAE’s plan to implement taxes as a means to ensure sustainability and diversify the government’s revenue streams,” he said.
“The increased resources will enable the government to maintain the momentum of its development and infrastructure for a better future,” he added.
Shaikh Hamdan also asserted that the UAE is committed to meeting the “most stringent international standards”.
“We are working to establish an optimal legislative and executive environment to ease the nation into the VAT and excise tax systems. Implementing these taxes gives the UAE further leverage when it comes to international competitiveness,” he said.