Posted on Nov 24, 2017
VAT is all set to be implemented in UAE from 1st January 2017. A warning was given earlier this month by the director-general of the new Federal Tax Authority (FTA) of the UAE that businesses eligible for the new value-added tax registration are required to register before December 3 to avoid any fines or penalties.
Conveying the difficulties faced by bankers a statement was given by the UAE banker that the financial institutions in the UAE are not yet ready for the implementation of value-added tax, which is set to come into effect within weeks.
Also AbdulAziz Al Ghurair, Chairman of the UAE Banks Federation told reporters at the banking event held in Abu Dhabi that “We call to postpone VAT implementation to give time to all the sectors to implement it correctly, whether in banking, insurance, or other sectors.” He further added, “Neither banks, nor insurance companies are ready, we need at least six months from the time we receive all the detailed implementing regulations to be ready, along with details for each sector, and how to calculate the tax for each product.”
Pinpointing the shortcomings in VAT implementation Al Ghurair the CEO of Mashreq Bank said “The UAE’s VAT law was published in August, but the Implementing Regulations have not yet been issued. While all of the VAT-related workshops that have been conducted by the FTA provide general guidelines, more detailed regulations need to be available and on electronic systems, not just on paper. Emphasizing on the fact that they support AT he added that “We support VAT, but we need the rules and regulations to be very clear so we have time to implement it on our platforms and technology”. While some have called for an 18-month postponement, any extension between 6-18 would be welcomed.
He also appraised the VAT regime and said “Our SME customers used to inflate their turnover but with VAT coming, there will be more accurate financial reporting done by the SMEs and we can base our lending to them on accurate figures.”
According to the tax experts in UAE 5% VAT will not be levied on amount withdrawn from ATMs of banks other than their own bank - but only on the Dh2 fee will be charged by the banks.
Declining the news of the delay in implementation of VAT in UAE Khalid Ali Al Bustani, director general of the Federal Tax Authority, says VAT will start as planned on Jan 1 2018.
Executive Regulations for the Federal Decree-Law No. (8) of 2017 on Value Added Tax, VAT were signed and approved by the Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE.