The Board looked into the performance of the FTA’s various systems, which facilitate registration, the submission of Tax Returns, and refunding tax to legally eligible groups through multiple Schemes, including the VAT refunds for nationals building new residences in the UAE, the Tax Refunds for Tourists Scheme, and the VAT Refunds for Business Visitors.
The FTA Board of Directors ratified the Authority’s financial statements for 2017 and 2018, and approved several executive decisions regarding the FTA’s internal regulatory and administrative policies and operations. Attendees at the meeting then went on to showcase the Authority’s recent accomplishments, where the various tax schemes have exhibited improved performance, and the number of businesses and tax groups registered for VAT surpassed 307,000, while the number of those that registered for Excise Tax totalled 724.
Furthermore, the figures revealed that the user base for the tax system is expanding rapidly, which compelled the Authority to authorise more than 123 clearing and forwarding companies, increase the number of accredited Tax Agents to 395, and commission 28 accredited tax accounting software vendors.
H.H. Sheikh Hamdan bin Rashid Al Maktoum applauded the FTA’s performance and achievements, which were also lauded by experts, as well as local and international institutions. H.H. went on to highlight the Authority’s efforts to achieve the tax system’s stated developmental, economic, and social objectives, citing the strategic partnerships the FTA has forged with government and private entities, which catalysed the drastic increase in self-compliance rates and in tax awareness among taxpayers and the public.
“The tax system has begun achieving many of its main objectives, most notably the diversification of the UAE’s resources,” H.H. added. “This allows us to continue providing high-quality services for future generations, in line with the UAE Vision 2021 and its objectives to build a sustainable ecosystem and integrated infrastructure.”
The data presented during the meeting of the Board of Directors attests to the success of the Authority’s activities and services, launched to ensure the happiness of the UAE’s citizens, residents, visitors, and tourists, H.H. Sheikh Hamdan bin Rashid asserted, adding: “VAT refunds for nationals building new residences in the UAE has achieved positive results, reflecting our commitment to implementing the leadership’s vision to develop a modern housing system for Emirati citizens that ensures their wellbeing and living conditions. UAE Nationals are at the heart of all development plans and are the main objective of all initiatives and projects carried out by government institutions.”
On another note, H.H. noted: “The Tax Refunds for Tourists Scheme has been a great success since it went into effect, contributing to an increased flow of tourists at the UAE’s entry ports. The number of retail stores connected to the Scheme’s electronic system has grown steadily, and tourists from around the world have praised the system.”
“Meanwhile, the VAT Refunds for Business Visitors has been implemented to great success,” H.H. added. “Eligible applicants were able to refund the Value Added Tax they incurred, which helps strengthen the economic sectors that visiting businesses to the UAE are typically involved in. This, in turn, further establishes the UAE as an attractive environment for investments.”
The FTA Board of Directors explored the figures of the VAT refunds for nationals building new residences in the UAE, which revealed a significant increase in the rate of refunds and the speed of processing applications submitted by UAE citizens through clear and accurate online procedures. This adheres to the wise leadership’s directives to ensure housing stability for Emirati nationals.
The figures went on to show that 563 applications were adopted by July 2019, where applicants refunded the tax they incurred on the construction of their residences. The total refunded value was AED25.23 million, up from 235 applications worth AED9.76 million recovered in the first quarter of 2019. This amounts to a staggering increase of 158.5% in the value of recovered tax and 139.6% in the number of applications adopted. The last three months alone (in addition to the first half of July) saw the adoption of 328 new applications worth AED15.5 million.
Meanwhile, data about the Tax Refunds for Tourists Scheme indicated that the number of retail outlets linked to the system has exceeded 10,000 stores across the country, and the number of tax refund applications processed per day has doubled to more than 7,500, judging by the number of ‘tax refund’ stickers issued by participating retail outlets. This is a significant increase from the 3,800 transactions per day reported in the early days of implementing the system, which went into effect in November 2018.
The FTA installed 29 self-service machines at airports, land, and sea ports covered by the Scheme, allowing tourists to request refunds on VAT while exiting the UAE. the self service machines are operated by Planet – the company authorised by the FTA to run the system – and equipped with the necessary technology to enable a fully automated tax refund procedure. Employees from Planet will be stationed near all self-service machines to assist tourists if needed.
Furthermore, the Board of Directors looked into the measures the Authority has taken to implement the ban on the sale and possession of any type of cigarettes not bearing the Red Digital Tax Stamps across all local markets as of August 1, 2019. The Stamps allow the FTA to digitally track cigarette packets from the production facility and until they reach the end consumer, in an effort to protect the market from low-quality products; combat tax evasion; and ensure compliance with Excise Tax regulations.
Phase one of the ‘Marking Tobacco and Tobacco Products Scheme’ went into effect on January 1, 2019, affecting all types of imported and locally produced and distributed cigarettes, and making it possible for producers and importers of cigarettes to place their orders for purchasing Digital Tax Stamps from the international company hired to operate the system. As of May 1, 2019, the import of any type of cigarettes into the UAE not bearing the Digital Tax Stamps has been prohibited.
Also on the meeting’s agenda were the preparations ahead of implementing the FTA’s decision to expand the scope of the ‘Marking Tobacco and Tobacco Products Scheme’ to include water pipe tobacco (known in Arabic as ‘Mu’assel’) and electrically heated cigarettes, which goes into effect on November 1, 2019. The Decision stipulated that as of March 1, 2020, it will be prohibited to import Designated Excise Goods not bearing the digital tax Stamps into the UAE, then starting in June 1, 2020, it will no longer be permissible to supply, transfer, store, or possess unmarked Designated Excise Goods in the UAE.
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