FTA board approves procedure for refunding VAT on building new homes for UAE citizens

• The meeting was headed by His Highness Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, Minister of Finance, and Chairman of FTA’s Board of Directors. 

• H.H. Sheikh Hamdan bin Rashid: We can report a significant improvement in the Authority’s services, as well as an uptick in customer happiness. 

• The board reviewed the Authority’s budget for 2020, reaffirming its commitment to enabling Taxable Persons to self-comply with tax obligations. 

• The FTA is moving forward with procedures to expand Excise Tax, which went into effect on December 1, 2019. 

• Tourists eligible for a tax refund, who submitted requests but were unable to recover the VAT they incurred immediately upon exiting the UAE, can still collect the cash amount up to a year after their departure.

Dubai: – The Board of Directors of the Federal Tax Authority (FTA) held its 10^th meeting today at the FTA’s Dubai headquarters, headed by its Chairman His Highness Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, UAE Minister of Finance, where it presented a report on the FTA’s recent activities and accomplishments.

The report pointed to a significant increase in tax compliance rates in the UAE, where the number of Taxable Persons registered with the Authority exceeded 311,400 individuals, organisations, and tax groups. Records show that 754 businesses are now registered for Excise Tax, while the number of authorised Tax Agents reached 305.

The Board adopted a new procedure to facilitate refund requests for UAE nationals on the Value Added Tax (VAT) incurred on the construction of their new residences, in line with the leadership’s vision to develop a modern housing system, spread happiness among citizens, and provide a decent, stable life for them.

In coordination with housing finance authorities the FTA will minimise auditing requirements on applications approved by these authorities.

The Federal Tax Authority implements tax legislation that reflect the UAE Government’s commitment to ensure the wellbeing of its citizens. To that end, clear and transparent standards and procedures were set to facilitate the process of recovering VAT incurred on building new residences by Emirati nationals. The Authority streamlined and expedited tax refund procedures on its website for those who are legally eligible. This forms part of the UAE’s efforts to provide a high quality of life for its citizens, who are consistently placed at the core of all development plans, projects, and initiatives carried out by various institutions in the Emirates.

Furthermore, the Board adopted a Decision allowing tourists who meet all requirements and are legally eligible to recover the VAT they incurred on their purchases to collect the cash amounts up to a year from their departure from the UAE, in the event where they validated their tags but could not collect the cash immediately upon exiting.

Furthermore, attendees reviewed the Authority’s budget for 2020 and will be forwarding it to the Cabinet to be ratified; they also adopted a series of executive decisions regarding the FTA’s internal policies and operations.

H.H. Sheikh Hamdan bin Rashid Al Maktoum asserted that the reports presented during the meeting revealed tremendous progress in the Authority’s performance across all of its activities, as well as in the quality and speed of services offered to clients, which seek, first and foremost, to ensure their happiness – be they citizens, residents, visitors, or tourists.

“The Federal Tax Authority succeeded over the past period in establishing strong, successful partnerships with all entities required to implement the tax system in the public and private sectors,” H.H. said. “This has allowed the Authority to carry out its duties to help implement economic diversification policies by collecting federal taxes in accordance with international best practice. The FTA has intensified its efforts to offer support for all Taxable Persons to self-comply with its seamless, flexible, transparent, and accurate procedures.”

“The Authority is committed to continuously revising its procedures to execute tax laws, in an effort to optimise performance, streamline procedures for all clients, and meet the aspirations of citizens and residents alike,” H.H. Sheikh Hamdan bin Rashid added. “With that in mind, a new procedure was introduced to help UAE citizens recover the VAT they incurred on the construction of their new homes, which will soon be rolled out to the benefit of those who are legally eligible for such a refund. This, in turn, reflects the government’s efforts to maximise citizens’ wellbeing.”

“The FTA’s plans to develop tax systems have witnessed remarkable success across the board. One such plan saw the Authority develop an online registration system for Excise Tax, in accordance with the Cabinet Decision to expand the scope of Excise Tax to cover sweetened drinks, and electronic smoking devices and liquids. The objective was to make it easier for all businesses affected by this Decision to register in the system without obstacles. Furthermore, the electronic system for the Tax Refunds for Tourists Scheme is also reporting high success and satisfaction rates among tourists,” H.H. the UAE Minister of Finance concluded, asserting that the upcoming period will see additional developments and upgrades of tax procedures.

The FTA Board of Directors examined the procedures implemented by the Authority in preparation for expanding the list of products subject to Excise Tax, as per Cabinet Decision No. (52) of 2019 on Excise Goods, Excise Tax Rates, and the Methods of Calculating the Excise price. The Decision goes into effect on December 1, 2019, expanding the list of goods subject to Excise Tax to include sweetened drinks, electronic smoking devices and tools, and the liquids used in these devices, which will be added to the items that have carried the tax since it first went into effect on October 1, 2017, namely, tobacco and tobacco products, energy drinks, and carbonated beverages.

Statistics presented to the Board revealed that the FTA processed more than 1,100 refund requests from UAE citizens by November 2019. A sharp 116.33% rise was registered in the total amount of tax refunded in 2019, as well as a 95.38% increase in the number of applications submitted, which was reported at 563 in July. In the less than four months from the end of July to November, an additional 537 applications were processed with a total monetary value of AED29.35 million.

As for the Tax Refunds for Tourists Scheme, the data indicated that the number of retail outlets linked to the system exceeded 10,800 stores across the country, with the average daily number of applications processed by the FTA surpassing 3,740 requests per day, judging by the number of tax-refund stickers issued by the retail outlets digitally linked to the system. Meanwhile, the number of self-service kiosks for refunding VAT to tourists upon exiting the UAE rose to 45 kiosks placed at several exit ports – 33 of them are installed at various UAE airports, seven at maritime ports, and five at land border crossings. This marks a significant increase of 55.2% from the 29 kiosks that were deployed last July.

Planet, the company authorised by the FTA to operate the system, oversees operating these kiosks, where tax refund requests undergo a fully automated process. Nevertheless, Planet employees are present around the self-service kiosks to assist tourists if necessary.

The FTA Board of Directors also reviewed the executive procedures the Authority put in place as of August 1, 2019 to curb any attempts at sales or possession of cigarettes that do not carry the Red Digital Tax Stamps in local markets. The Stamps allow for digitally tracking the cigarette packets from the manufacturing facility and until they reach the end consumer, in an effort to protect the latter from counterfeit products, combat tax evasion, and ensure full compliance with Excise Tax regulations.

Furthermore, the Board explored ongoing preparations for implementing the Federal Tax Authority’s decision to expand the scope of the Marking Tobacco and Tobacco Products Scheme to include all types of waterpipe tobacco (known in Arabic as ‘Mu’assel’), as well as electrically heated cigarettes. The decision went into effect on November 1, 2019, whereby the Digital Tax Stamps were made available for purchase by producers and importers of waterpipe tobacco and electrically heated cigarettes.

As of March 1, 2020, it will be prohibited to import into the UAE any of the tobacco products outlined in FTA Decision No. (2) of 2019 on Marking Tobacco and Tobacco Products, if they do not bear the Stamps. Then starting from June 1, 2020, it will no longer be permissible to supply, transfer, store, or possess said Excise Goods in the UAE unless they have the Stamps.

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The Federal Tax Authority was established by Federal Decree-Law No. (13) of 2016 to help diversify the national economy and increase non-oil revenues in the UAE through the management and collection of federal taxes based on international best practices and standards, as well as to provide all means of support to enable taxpayers to comply with the tax laws and procedures. Since its inception in 2017, the FTA has been committed to cooperate with the competent authorities to establish a comprehensive and balanced system to make the UAE one of the first countries in the world to implement a fully electronic tax system that encourages voluntary compliance, with simple procedures based on the highest standards of transparency and accuracy – beginning from registration, to the submission of tax returns, to the payment of due taxes through the Authority’s website: www.tax.gov.ae 

© Press Release 2019