Contributed by Emirates Chartered Accountants Group, Dubai, UAE
The Federal Tax Authority in the month of April 2021 amended the Executive Regulation for the second time since inception of VAT in 2018.
The main update includes a change made in Article 31(2) on the Export of Services rules. The Article now reads:
“For the purpose of paragraph (a) of Clause 1 of this Article, a Person shall be considered as being “outside the State” if they only have a short-term presence in the State of less than a month and the presence is not effectively connected with the supply”.
In the updated article above, the word “AND” replaces the word “OR” and thus requires both conditions included in this Article to be met in order for a supply of services made to non-resident persons to be zero-rated for VAT purposes.
Business Bulletin for VAT impact on Automotive Sector issued
The Federal Tax Authority issued a Business Bulletin shedding light on the taxability of transactions involving the Automobile sector. The Bulletin clearly identified the areas that needs special attention from registrants including applicability of Profit Margin Scheme, Gifts & Giveaways that are subject to VAT and the cases where the service center reclaims costs of supplies made under warranty from a manufacturer based outside the UAE.
Extension in the Temporary Zero Rating of Medical Equipment
The Federal Tax Authority during April 2021 issued Clarification-VATP025 which specifies the medical equipment that are zero-rated in accordance with the Cabinet Decision, shall be considered zero rated until 31 December 2021.
Dubai Customs extends “grace period” for submitting Customs Declarations
Dubai Customs has extended a “grace period” for submitting customs declarations and required documents until 30 September 2021—relief offered in response to the coronavirus (COVID-19) pandemic.
The extended grace period applies for customs declarations filed between 1 February and 30 June 2021.
In general, customs declarations and related documents must be submitted within a 14-day period. Customs Notice 5/2021 extends a grace period from this 14-day period to exclude declarations processed during the period from 1 February to 30 June 2021.
With this relief, companies importing and exporting to and from the UAE via Dubai can take advantage of the suspension to re-organize their internal processes to comply with Dubai Customs requirements by no later than September 2021.
UAE to stiffen the AML Regulations and Reporting
The UAE is fully committed to combating money laundering and terrorism financing and detecting and deterring them in accordance with established legislation. The competent authorities in the country have put in place an institutional system to oversee, control, and collect information on all practices that may lead to financial crimes.
UAE has launched the goAML portal, an integrated platform used to file Suspicious Transaction Reports (STRs) and/or Suspicious Activity Reports (SAR) and made it mandatory for all Designated Non-Financial Businesses and Professions (“DNFBP’s) to register on a “goAML portal” before 30 April 2021.
It is obligatory duty of DNFBPs, under the Federal Decree Law 20 of 2018 and Article 20(2) of Cabinet Decision No. (10) of 2019, to have procedures in place to report Suspicious Transactions to manage anti-money laundering (“AML) and counter terrorist financing (“CFT”).
Strick guidelines and stiff penalties have been introduced to ensure compliance under the Regulations.Dated: [bxcode.pagedata.date]