ON THE ROAD TO VAT: THE ESTABLISHMENT OF THE FEDERAL TAX AUTHORITY
The President of the UAE, His Highness Sheikh Khalifa Bin Zayed Al Nahyan issued Emiri Decree 13 for year 2016 setting up The Federal Tax Authority (FTA). The new Law was published in the latest Official Gazette on the 29th of September 2016. It consists of 6 Chapters and 20 Articles. The law will be applicable after 90 days of its publication date.
The establishment of the new Authority comes in line with preparations for the introduction of the Value-Added Tax, anticipated to start on 1st January 2018.
The FTA whose headquarters shall be in Abu Dhabi will be responsible for the collection and management of federal taxes. It will issue guidelines and directives to taxpayers on matters relating to the anticipated VAT and other taxes that may be imposed in the future. It has been assigned many related functions to Tax as fully provided in Article 4 of the Decree.
Federal tax revenues and associated fines collected by the FTA will be deposited in special separate accounts one for each type of federal tax pending distribution to the federal government and the local governments of the UAE in accordance with the legislation issued in this regard.
The FTA will be managed by a Board of Directors, chaired by the Finance Minister. The Board will nominate a Director General of the rank of Ministry Undersecretary who will be appointed by a federal decree.
The FTA will represent the UAE in international meetings and conferences concerning taxes, exchanging information and experiences related to tax with countries, organizations, federal and international bodies.
It is in the FTA’s jurisdiction to work with the relevant authorities, within and outside the state, to combat tax evasion and avoid double taxation.
In relation to combating Tax Evasion and Tax Avoidance, the FTA shall have the power to request access to any data and any third party available information relating to a person who is subject to tax audits.
The FTA will also decide on applications for registration in the tax systems and shall keep records and collect data and statistics of taxpayers.
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