UAE property firms must keep financial records for 15 years
Other sectors are required to keep their financial book records for five years
The Federal Tax Authority on Tuesday issued Executive Regulations for value-added tax (VAT), which stated that real estate firms would have to maintain their books for 15 years.
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, on Monday approved the Executive Regulations for VAT, which offered more clarity on tax matters pertaining to free zones.
"Any records related to a real estate required to be kept shall be held for a period of 15 years after the end of the tax period to which they relate," state the Executive Regulations issued by the Federal Tax Authority (FTA).
Meanwhile, other sectors are required to keep their financial book records for five years.
With regard to refunds for tourists and business visitors, the FTA may come out with rules in due course. "Schemes and conditions to claim such refunds are yet to be finalised," said Nirav Shah, director, Fame Advisory.
Shah said only the purchase and sale of goods within designated free zones will not be subject to VAT, but all services provided by companies in designated zones will be subject to VAT. All taxable persons based in a designated zone will be considered to be located within the UAE.
Designated zones are categorised as those free zones which have a specific fenced geographic area and security measures and customs controls in place to monitor the entry and exit of individuals and movements of goods to and from the area.
"Thus, all free zones which do not have such facility will not be regarded as designated zones, e.g. DMCC, Tecom, Internet City, Silicon Oasis, etc.," he added.
He noted that any pharmaceutical products and medical equipment supplied even by intermediaries or traders to hospitals will be zero-rated. Cosmetic treatments will be subject to a standard five per cent rate of VAT.
The Executive Regulations specify that healthcare services would be zero-rated if they relate to the well-being of a human being, according to resident partner Pratik Shah and principal Sunny Kachalia from WTS Dhruva Consultants.
They noted that as per the Executive Regulations, fee-based financial services, which are provided in return for an explicit fee, discount, commission, rebate, etc., would be subject to VAT.
Thomas Vanhee, founding partner, Aurifer Middle East Tax, said that a missing piece of the puzzle is VAT returns. VAT return is an important document for the set up of tax codes to automate reporting. Without knowing where to report certain transactions, businesses cannot finish the set up of their ERP systems.
He said one of the important elements in the law is the requirement to mention the VAT number of the local business customer on the invoice. This requires a lot of businesses to update their customer master database and can be a lengthy administrative process, especially since very few companies are registered at the moment.
Surandar Jesrani, partner and CEO, Morison MJS, said only a handful of goods and services would be exempt under the UAE VAT regime.
"One such service is the supply of local passenger transport. Upon the release of the final Executive Regulations, we understand that any local passenger transportation service provided in a motor vehicle like taxi or bus shall qualify for the aforesaid exemption. Taxis in the UAE would, therefore, charge no VAT to its passengers. We need to see what will happen to the VAT on cars which automotive companies will sell to taxi business."
Mayank Sawhney, director, MaxGrowth Consulting, said the long wait of all UAE businesses and residents on getting some clarifications on a number of grey areas of the VAT Decree Law seems to be over. However, there are still a number of areas which need further clarification. Guidance is expected from the Ministry of Finance and FTA over the coming days.
Earlier on Friday, Bloomberg reported that a panel of ministers had... READ MORE
The million-to-1 change intended to ease cash transactions and... READ MORE
Weighing 40 grams, the coin features Expo 2020's official mascots READ MORE
Panel of ministers accept proposal from officials recommending the... READ MORE
Chennai amassed 192-3 with opener Faf du Plessis anchoring their... READ MORE
He was previously the health minister. READ MORE
The International White Cane Day is observed worldwide on Oct 15 to... READ MORE
'David was a man who believed passionately in this country and in its ... READ MORE