UAE is slowly but steadily entering the era of Federal taxation

By James Farn

Keen observers following the development of Federal tax laws in the UAE will have noticed the recent publication of the Federal Tax Procedures (FTP) Law which was announced in the press on 1 August. We await its publication in the Official Gazette, and it will come into force 30 days after that. The FTP Law is structured as a ‘framework’ law which, together with its supplemental regulations (when published), will be used by the Federal Tax Authority (FTA) to administer, collect and enforce the collection and payment of the Federal taxes for which the FTA is responsible. These taxes will include VAT and any other federal other tax allocated to FTA in the future, as well as any penalties or administrative surcharges which may be imposed by FTA on taxpayers. One thing is fairly certain at this stage: the UAE is slowly but steadily entering the era of Federal taxation.

The FTP Law sets out the principal tax obligations of tax payers in the UAE, relating to payment of such Federal taxes. Such obligations extend to, for example, registration requirements, the duty to preserve and provide records, preparation and submission of tax returns, payment of tax, refunds, tax audits and dispute resolution procedure.

It is important to understand that the FTP Law has no direct application to the implementation of the forthcoming VAT legislation for example, other than to regulate the basic procedures which will concern the administration and collection of such tax. The FTP Law can therefore be referred to with general application in the forthcoming VAT law (and any other forthcoming Federal tax laws) without the requirement to repeat certain procedural aspects in the relevant Federal tax laws themselves.

The separation of procedural aspects for the detailed application of VAT and other Federal tax laws is perceived to have a number of advantages. Embedding the procedural aspects in a single ‘overarching’ law, ensures consistency and certainty of approach across all future Federal tax laws. FTA staff can be trained by reference to the procedures and requirements set out in the FTP Law, so that the administration, collection and enforcement of Federal taxes will (or should) apply with equal force in relation to all such Federal taxes. Any taxable person will have recourse to the procedures set out in the FTP Law if, for example, he has a grievance, or seeks review of his particular tax position. Consistent and fair treatment of all tax payers is a key policy goal behind the implementation of FTP Law.

This article, including any advice, commentary or recommendation herein, is provided on a complimentary basis without consideration of any specific objectives, circumstances or facts. It reflects the views of the writer which may, in some cases, differ from those of the firm, especially in the developing jurisdiction of the UAE.

© Hadef & Partners 2017