According to final VAT regulations that have been announced last month, VAT will be levied all across the GCC countries at a rate of 5% on a variety of products, with certain items/segments being exempt from VAT such as basic consumer goods, education and healthcare, etc.
The revised tax law assigns responsibilities to taxable persons in the UAE including investors and non-residents and their agents along with nominated representatives who will not only have to register but also ensure compliance with specific VAT regulations.
There are five important things that you should be aware of with regards to the revised VAT regulations:
1. All the taxable persons are required to register for VAT and excise in accordance with the VAT regulations applicable in their respective country. Each taxable person in the UAE will be required to register for VAT and apply for a Tax Registration Number (TRN) within a specified time period once the new tax laws gets published in the UAE.
2. The new tax regulations also require the registration and appointment of agents or a legal representative, who will be responsible for ensuring compliance with the VAT regulations and for paying tax to the Federal Tax Authority on behalf of their principals.
3. There are severe consequences for non-compliance which includes penalties and even jail term in specific cases for responsible and key management personnel of companies. The entity found in non-compliance with the new tax laws is expected to pay up to five times the tax due in fine to the tax authority.
4. Timelines and procedures for appeals and its proceedings have been defined clearly in the new tax laws. The time period for making an appeal is within 20 business days from the date of the appeal event or liability becoming due to be payable by the entity in default.
5. Other key provisions mentioned in the new tax laws include tax audits, inspections, appeals and their indemnity etc.