Complex Made Simple

Federal Tax Authority highlights success of 2-year VAT implementation journey

During the last financial period, the FTA collaborated with competent authorities in the UAE to establish the first-of-its-kind integrated electronic tax system in the region, in line with the leadership’s forward-looking vision

The increase in the number of tax-compliant persons is the result of growing awareness in the business community, as well as the seamless tax procedures available through the FTA’s official website, developed in 2019 Over the past two years, the FTA recorded a growth in the number of voluntary declarations in 2019 compared to 2018 During the past six months (the second half of 2019), 935 new applications valued at about AED 60.33 million were approved

The year 2020 will see further evolution in the development of the FTA’s electronic systems as part of its efforts to provide clear and simple procedures for managing, collecting and implementing federal taxes, ensuring higher rates of customer satisfaction, said H.E. Khalid Ali Al Bustani, Director General of the Federal Tax Authority (FTA) in UAE.

H.E. Al Bustani explained that continuous development efforts are being made to maintain the highest levels of quality in providing FTA services. During the last period, the FTA collaborated with competent authorities in the UAE to establish the first-of-its-kind integrated electronic tax system in the region, in line with the leadership’s forward-looking vision. Al Bustani also said that the number of VAT-registered businesses increased to around 312,000 through individual registration or as tax groups. 

Read: VAT implementation may need 30,000 qualified professionals in UAE

The FTA showcased the highlights of its tax system two years since the implementation of VAT, which came into force on 1 January 2018, at a rate of 5% applied on most supplied goods and services.

H.E. Al Bustani said that in two years, the tax system has achieved several of its main objectives, starting with the diversification of national income to providing future generations with top-notch public services, while maintaining a sustainable environment and integrated infrastructure. He also asserted the importance of the private sector’s contribution to the strides made since the system’s launch.

Al Bustani asserted that the increase in the number of tax-compliant persons is the result of growing awareness in the business community, as well as the seamless tax procedures available through the FTA’s official website, which was developed in 2019 based on the latest technology. The website offers a wide array of awareness and educational materials and top-quality services that are focused on providing user-specific experiences and integrates the latest solutions to ensure round-the-clock communication between the FTA and all business sectors.

Read: The FTA announces results of the 1st year of VAT implementation

The FTA Director General added that the FTA, through its updated website, launched a virtual assistant feature – an AI assistant that automatically answers website visitors’ queries regarding tax procedures and legislation, offering taxable persons a wider range of educational options. The AI assistant is named ‘TARA,’ the abbreviation of ‘Tax Aware Robot Assistant’.

H.E. Al Bustani said: “Over the past two years, the FTA recorded a growth in the number of voluntary declarations in 2019 compared to 2018, after many taxpayers reported mistakes made on their part relating to tax invoices, evaluations or tax refund applications. This indicates an increase in awareness levels among businesses, and their keenness to correct the errors recorded on their part at the beginning of the application, His Excellency pointed out that these mistakes witnessed a noticeable decline in the past period.

The FTA statistics revealed that the total number of applications it received through tax refund mechanism was 2,366 until December 2019. Of these, 1,474 applications were approved for citizens who were refunded the tax they paid for building their homes with a total value of AED 84.07 million, while legal procedures are being taken for other requests submitted to the Authority. This is compared to 539 applications valued at about AED 23.74 million which were approved until the end of June 2019 with a record half-yearly growth of 254.18% in the value of refunded tax and 173.5% in the number of approved applications.

During the past six months (the second half of 2019), 935 new applications valued at about AED 60.33 million were approved. The monthly average number of approved applications is about 154, while the average value of refunded tax paid to citizens for building their new homes was about AED 10.1 million. 

His Excellency indicated that the tourists qualified to claim refund for the VAT they paid can receive it within a year from the date of leaving UAE if they are not able to receive an immediate refund before departure, provided they have completed the refund procedures before departure.

The FTA’s statistics also showed that the total number of electronic tax refund applications for tourists increased to 3.2 million since the implementation of the system until the end of 2019, compared to about 1.52 million applications by the end of last June – a rise of 1.68 million application with a growth of 110.53% in the second half of 2019. The daily average number of tax refund applications for tourists increased 2.64 times, from 372,000 applications in the first month of application to 983,000 per day in December 2019.

Read: VAT gives 5% boost to UAE government revenue as compliance reaches 97%

The number of retail outlets connected electronically to the system has also risen to 12,310 all around the UAE, while the number of self-service kiosks to recover VAT by tourists before leaving the country grew by 79.3% from 29 last July to 52 kiosks today.