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More relief as three UAE free zones are out of VAT scope

The UAE's Federal Tax Authority (FTA) has added three new free zones to the list of designated zones that will be out of the five per cent VAT scope imposed earlier this year. The new addition sees the total designated zones increasing to 23 across the UAE. Federal Decree Law No. (8) of 2017 on VAT specifies that any area meeting certain conditions and mentioned in the Cabinet decision is termed as designated zone for VAT purposes and should be treated as being outside the state for VAT purposes. According to the FTA, the newly-added free zones are Al Ain International Airport Free Zone, Al Bateen Executive Airport Free Zone in Abu Dhabi, and International Humanitarian City - Jebel Ali in Dubai. The treatment of these areas as designated zones was effective from June 18, 2018. For more information, please visit the link below: https://www.khaleejtimes.com/business/local/More-relief-as-three-UAE-free-zones-are-out-of-VAT-scope--

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All you need to know about VAT on gold and diamonds in UAE

The Federal Tax Authority (FTA) on Wednesday clarified that the new Cabinet decision issued about VAT reverse charge mechanism for the gold and diamond industry will only pertain to commercial transactions between registered dealers. As per the reverse charge mechanism, registered dealers shall not charge Value Added Tax (VAT) when supplying to another tax registered merchant with gold, diamonds or products where the principal component is of gold or diamonds, as long as the latter intends to resell such products, or use them to manufacture gold, diamonds or products where the principal component is of gold or diamonds. The registered recipient must include such supplies in his tax returns. For more information, please click the link below: https://www.khaleejtimes.com/business/vat-in-uae/all-you-need-to-know-about-vat-on-gold-and-diamonds-in-uae-

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7 Ways to Avoid VAT Penalties in UAE

The United Arab Emirates and the Kingdom of Saudi Arabia began the implementation of Value Added Tax (VAT) on January 1, 2018 at the rate of five per cent, while other GCC countries are expected to follow in the near future. As VAT is new to the region, it is imperative for business owners to be aware and comply with the new regulations in order to avoid stiff penalties which could be as high as AED 50,000. Here are some steps to keep in mind in order to avoid penalties on VAT: Register for VAT Record all transactions Collect VAT File VAT Return Understand zero rates and exempt suppliers Reverse Charge Get the basics right. For the entire article, please visit the link below: https://www.albawaba.com/business/7-ways-avoid-vat-penalties-uae-1148550

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Businesses must comply with VAT

Businesses across the UAE must comply with the value added tax (VAT) law by filing their returns on time, experts at a session on VAT returns and reporting stressed. Organised by the Institute of Chartered Accountants of India (ICAI) Dubai Chapter, the session provided clarity on the process of filing returns, as well as registration for businesses that have not done so yet. "In the beginning it was challenging for the businesses to register for VAT, as it was new for everyone," said Naveen Sharma, chairman, ICAI Dubai Chapter. "But, with time and clarifications from the Federal Tax Authority (FTA), the businesses started getting their doubts cleared which helped them in the registration process. I think, as of now, all big organisations have already registered for VAT, but some small businesses in the market are still struggling with registration process. In due time, I think they will also be able to register themselves." https://www.khaleejtimes.com/businesses-must-comply-with-vat

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No VAT in realty transactions in designated zones

Sale and lease of both commercial and residential properties in designated zones will be outside the scope of VAT, according to the latest clarification issued by the Federal Tax Authority (FTA) at a meeting with a group of tax consultants in the UAE. "Sale or lease of any real estate property - commercial or residential - will be considered as outside the scope of VAT. Hence, there will be no VAT applicable on sale or lease of commercial or residential real estate properties in designated zones. Furthermore, the payment of five per cent VAT on purchase of commercial property in non-designated zones can be made directly by the buyer to FTA and the commercial property will get legally transferred to the buyer's name once he has made VAT payment to FTA," said Mayank Sawhney, director, MaxGrowth Consulting. Earlier this month, the FTA announced 20 designated zones across the UAE with seven in Dubai; three each in Abu Dhabi and Ras Al Khaimah; two each in Sharjah, Fujairah and Umm Al Quwain and one in Ajman. Those designated zones are Jebel Ali Free Zone, Dubai Airport Free Zone, Dubai Aviation City, Dubai Textile City and Dubai Cars and Automotive Zone in Dubai; Abu Dhabi Airport Free Zone, Khalifa Industrial Zone and Free Trade Zone of Khalifa Port in Abu Dhabi; Hamriyah Free Zone and Sharjah Airport International Free Zone in Sharjah; Ajman Free Zone in Ajman; Umm Al Quwain Free Trade Zone in Umm Al Quwain; RAK Free Trade Zone, RAK Maritime City Free Zone and RAK Airport Free Zone in Ras Al Khaimah; and Fujairah Free Zone and Fujairah Oil Industry Zone in Fujairah.

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VAT to help lift UAE Industries

UAE businesses will be least affected by the imposition of value added tax (VAT) because it is one of the lowest rates in the world and the government will also be pumping back tax funds into the development projects which, in turn, will boost a number of industries in the country, says a new study. Conducted by the Alliance Business Centers Network (ABCN), the study noted that the UAE has the lowest VAT rate at five per cent - along with Taiwan - in the Arab world, and globally too. Singapore and Switzerland have levied VAT at seven per cent and eight per cent, respectively, while both Lebanon and Australia impose 10 per cent VAT. Hungary, meanwhile, has the highest rate at 27 per cent followed by both Denmark and Sweden at 25 per cent and Italy at 21 per cent, respectively. Among Arab countries, the study showed that Tunisia imposes the highest VAT at 18 per cent, Algeria at 17 per cent, Egypt at 14 per cent and Lebanon at 10 per cent. Sherif Kamel, regional president for Russia, the Middle East and Africa at the ABCN, said VAT would ultimately support the development of large public projects that contribute to business growth and sustainability. "The potential of business opportunities in the UAE is still high compared to regional countries, given the medium and long-term vision for development and the opening up of new investment fields, i.e. investments in artificial intelligence, ICT and other traditional investment sectors," the study said.

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