As the UAE and Saudi Arabia continue to lead the GCC VAT drive, this article compares the key features of the future value added tax (VAT) regime in these countries including the treatment of different industry sectors based on what is currently known.
The latest status
In line with the recent trend where Saudi is the first to circulate any laws agreed at the GCC level, the country has become the first in the GCC to issue its final VAT law - doing so on July 28 after making the draft available for public consultation on May 29.
Saudi Arabia has also published its VAT implementing regulations on July 19 for feedback which is required by August 19. Given the rapid pace at which the country is progressing its VAT related legislation, the regulations are expected to be finalised shortly after the feedback period is closed. The Saudi Arabia VAT law requires the regulations to be issued within 30 days of the issue of the law. No other GCC state has published its VAT law or regulations even in draft form.
The UAE is expected to issue its VAT law and the related executive regulations within weeks.
___________________
Read more:
Financial experts urge UAE businesses to prepare for VAT
VAT is coming to the UAE, time to study up
New tax law will help regulate informal economy
President Sheikh Khalifa appoints Director-General of Federal Tax Authority
Sheikh Khalifa issues landmark tax law for UAE
___________________
Implementation date
Saudi Arabia will be implementing VAT with effect from January 1 2018 and this has been confirmed by the final VAT law. The UAE is also fully committed to this date, however, the VAT legislation is yet to be issued.
Scope of VAT
The UAE and Saudi Arabia have adopted a broad tax base with limited exceptions. VAT will apply to the supply of goods and services in the UAE and Saudi and to imports into the countries respectively. Certain supplies of goods and services may be exempt or subject to zero rate. Unless the supply of goods and services falls within a category that is specifically exempt or is subject to the zero rate, VAT will apply at the standard rate. The standard VAT rate will be 5 per cent.
VAT registration
The Saudi tax authority had already started registering large businesses automatically based on existing information on taxpayers held by it. The country's VAT law requires all persons liable to register for VAT to register within 30 days from the issue of the law.
The UAE Ministry of Finance has indicated that electronic VAT registration will be open on a voluntary basis during the third quarter of 2017. VAT registration is expected to become compulsory from the final quarter of 2017.
In both countries, the mandatory registration threshold will be 375,000 dirhams and 375,000 Saudi riyals and the voluntary registration threshold will be 187,500 dirhams and 187,500 riyals. Businesses must register for VAT if their annual turnover exceeds the mandatory registration threshold while it is optional for them to register if the taxable supply and imports are below the mandatory registration threshold but exceed the voluntary registration threshold. In Saudi Arabia, small businesses with turnover of less than 1m will be given the opportunity to delay registration until January 1, 2019. Group registration will be available in both countries for related parties subject to certain conditions.
In the kingdom, it is interesting to note that businesses that make zero rated supplies are not liable to register whereas the UAE may require such businesses to register. Clearly it will be in the interest of businesses to register to recover any VAT paid on their purchases.
VAT treatment of industry sectors
In the light of the flexibility provided by the GCC VAT framework agreement, it is likely that industry sectors may be treated differently for VAT purposes in individual GCC countries. Even where the sector may have the same headline VAT treatment, the definitions may vary from country to country resulting in potentially different VAT outcomes for the same services.
The above can be seen in the case of the VAT treatment in the UAE and KSA for the education and healthcare sectors. Based on Saudi Arabia's draft VAT implementing regulations, where education and healthcare services are neither exempt or zero rated, education and healthcare providers will generally be subject to VAT at the standard rate (with public education and healthcare providers potentially not subject to VAT).
The UAE, however, has announced that certain education and healthcare services will be subject to VAT at the zero rate. It remains to be seen how the Emirates will define the type of education and healthcare services that be taxed at the zero rate and which education and healthcare services will be excluded from this definition. It is possible that the zero-rated VAT treatment is dependent on whether education provider is engaged in pre-school, primary, secondary or higher education and on whether the healthcare provider or educational institute is public or private.
Both nations are expected to treat financial services and insurance in the same way. It is expected that margin-based financial services will be exempt while fee-based products will be subject to the standard rate of VAT. General insurance services will be subject to the standard rate of VAT except life insurance, which will be exempt.
In terms of real estate, both will exempt the supply of residential real estate except that the Emirates will subject the first sale of residential real estate to VAT at zero rate. The UAE will also exempt the supply of bare land. The supply of commercial real estate will be subject to the tax at the standard rate in both countries. As noted above, the definition of "commercial" and "residential" real estate may differ between the two nations.
Subject to certain conditions, the supply of medicine and medical equipment will be zero rated in accordance with the GCC VAT framework agreement in both countries. Although there was a list of 100 items of foods which could have been zero rated under the GCC VAT framework agreement, both are expected to subject these items to VAT at the standard rate.
Another example of different VAT treatment is local passenger transport. The UAE has announced that this will be exempt whereas Saudi's implementing regulations indicate that this will be subject to VAT at the standard rate.
Government authorities that are performing a public function will not be considered to be carrying on an economic activity, as such supplies made by them will not be subject to VAT in both countries. However, where they are involved in the supply of goods and services in competition with the private sector, they will be regarded as carrying on a commercial activity and subject to VAT in the normal way.
VAT compliance
In the UAE, VAT returns will generally be required to be submitted on a quarterly basis depending on the returns and payments due within 28 days after the end of the period. In Saudi, companies with annual income in excess of 40m must file returns on a monthly basis while other companies must file their returns on a quarterly basis with payments required to be made within a month of the end of the relevant period.
Transitional provisions
Both nations will have special rules to protect businesses for contracts that straddle VAT implementation.
In the UAE, under normal circumstances, where the contract is silent on VAT, the price will be deemed to be inclusive of VAT. However, where the contract was concluded prior to the implementation date and a part of the supply is made after the implementation date, suppliers will be able to charge the tax to the customer where the latter is able to recover it.
In the kingdom, for contracts that were entered into before May 31 this year and are silent on VAT, the supply can be treated as zero rated until the end of the contract or December 31 2022 where the customer is entitled to deduct input VAT.
Are you ready for VAT?
As there are less than five months remaining before VAT is implemented, the concern is that there is insufficient time for businesses that have not yet taken any proactive measures to prepare and such businesses will find it very difficult to be ready in time.
It has therefore become critical for organisations to assess the impact of VAT on their businesses and implement any changes necessary to be compliant with the VAT law and minimise costs and cash flow impact.
Shiraz Khan is senior tax advisor at Al Tamimi & Company
Banned items
Dubai Police has also issued a list of banned items at the ground on Sunday. These include:
-
-
-
-
-
-
-
-
-
Political flags or banners
-
Bikes, skateboards or scooters
If you go
The flights
Emirates flies from Dubai to Funchal via Lisbon, with a connecting flight with Air Portugal. Economy class returns cost from Dh3,845 return including taxes.
The trip
The WalkMe app can be downloaded from the usual sources. If you don’t fancy doing the trip yourself, then Explore offers an eight-day levada trails tour from Dh3,050, not including flights.
The hotel
There isn’t another hotel anywhere in Madeira that matches the history and luxury of the Belmond Reid's Palace in Funchal. Doubles from Dh1,400 per night including taxes.
KILLING OF QASSEM SULEIMANI
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
Race%20card
%3Cp%3E6pm%3A%20Al%20Maktoum%20Challenge%20Round%201%20%E2%80%93%20Group%201%20(PA)%20%2450%2C000%20(Dirt)%201%2C600m%3Cbr%3E6.35pm%3A%20Dubai%20Racing%20Club%20Classic%20%E2%80%93%20Handicap%20(TB)%20%24100%2C000%20(D)%202%2C410m%3Cbr%3E7.10pm%3A%20Dubawi%20Stakes%20%E2%80%93%20Group%203%20(TB)%20%24150%2C000%20(D)%201%2C200m%3Cbr%3E7.45pm%3A%20Jumeirah%20Classic%20Trial%20%E2%80%93%20Conditions%20(TB)%20%24150%2C000%20(Turf)%201%2C400m%3Cbr%3E8.20pm%3A%20Al%20Maktoum%20Challenge%20Round%201%20%E2%80%93%20Group%202%20(TB)%20%24250%2C000%20(D)%201%2C600m%3Cbr%3E8.55pm%3A%20Al%20Fahidi%20Fort%20%E2%80%93%20Group%202%20(TB)%20%24180%2C000%20(T)%201%2C400m%3Cbr%3E9.30pm%3A%20Ertijaal%20Dubai%20Dash%20%E2%80%93%20Listed%20(TB)%20%24100%2C000%20(T)%201%2C000m%3C%2Fp%3E%0A
Dubai World Cup factbox
Most wins by a trainer: Godolphin’s Saeed bin Suroor(9)
Most wins by a jockey: Jerry Bailey(4)
Most wins by an owner: Godolphin(9)
Most wins by a horse: Godolphin’s Thunder Snow(2)
If%20you%20go
%3Cp%3EThere%20are%20regular%20flights%20from%20Dubai%20to%20Kathmandu.%20Fares%20with%20Air%20Arabia%20and%20flydubai%20start%20at%20Dh1%2C265.%3Cbr%3EIn%20Kathmandu%2C%20rooms%20at%20the%20Oasis%20Kathmandu%20Hotel%20start%20at%20Dh195%20and%20Dh120%20at%20Hotel%20Ganesh%20Himal.%3Cbr%3EThird%20Rock%20Adventures%20offers%20professionally%20run%20group%20and%20individual%20treks%20and%20tours%20using%20highly%20experienced%20guides%20throughout%20Nepal%2C%20Bhutan%20and%20other%20parts%20of%20the%20Himalayas.%3C%2Fp%3E%0A
The biog
Name: Capt Shadia Khasif
Position: Head of the Criminal Registration Department at Hatta police
Family: Five sons and three daughters
The first female investigator in Hatta.
Role Model: Father
She believes that there is a solution to every problem
The five stages of early child’s play
From Dubai-based clinical psychologist Daniella Salazar:
1. Solitary Play: This is where Infants and toddlers start to play on their own without seeming to notice the people around them. This is the beginning of play.
2. Onlooker play: This occurs where the toddler enjoys watching other people play. There doesn’t necessarily need to be any effort to begin play. They are learning how to imitate behaviours from others. This type of play may also appear in children who are more shy and introverted.
3. Parallel Play: This generally starts when children begin playing side-by-side without any interaction. Even though they aren’t physically interacting they are paying attention to each other. This is the beginning of the desire to be with other children.
4. Associative Play: At around age four or five, children become more interested in each other than in toys and begin to interact more. In this stage children start asking questions and talking about the different activities they are engaging in. They realise they have similar goals in play such as building a tower or playing with cars.
5. Social Play: In this stage children are starting to socialise more. They begin to share ideas and follow certain rules in a game. They slowly learn the definition of teamwork. They get to engage in basic social skills and interests begin to lead social interactions.
Tailors and retailers miss out on back-to-school rush
Tailors and retailers across the city said it was an ominous start to what is usually a busy season for sales.
With many parents opting to continue home learning for their children, the usual rush to buy school uniforms was muted this year.
“So far we have taken about 70 to 80 orders for items like shirts and trousers,” said Vikram Attrai, manager at Stallion Bespoke Tailors in Dubai.
“Last year in the same period we had about 200 orders and lots of demand.
“We custom fit uniform pieces and use materials such as cotton, wool and cashmere.
“Depending on size, a white shirt with logo is priced at about Dh100 to Dh150 and shorts, trousers, skirts and dresses cost between Dh150 to Dh250 a piece.”
A spokesman for Threads, a uniform shop based in Times Square Centre Dubai, said customer footfall had slowed down dramatically over the past few months.
“Now parents have the option to keep children doing online learning they don’t need uniforms so it has quietened down.”
Tips to keep your car cool
- Place a sun reflector in your windshield when not driving
- Park in shaded or covered areas
- Add tint to windows
- Wrap your car to change the exterior colour
- Pick light interiors - choose colours such as beige and cream for seats and dashboard furniture
- Avoid leather interiors as these absorb more heat
THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
Types of bank fraud
1) Phishing
Fraudsters send an unsolicited email that appears to be from a financial institution or online retailer. The hoax email requests that you provide sensitive information, often by clicking on to a link leading to a fake website.
2) Smishing
The SMS equivalent of phishing. Fraudsters falsify the telephone number through “text spoofing,” so that it appears to be a genuine text from the bank.
3) Vishing
The telephone equivalent of phishing and smishing. Fraudsters may pose as bank staff, police or government officials. They may persuade the consumer to transfer money or divulge personal information.
4) SIM swap
Fraudsters duplicate the SIM of your mobile number without your knowledge or authorisation, allowing them to conduct financial transactions with your bank.
5) Identity theft
Someone illegally obtains your confidential information, through various ways, such as theft of your wallet, bank and utility bill statements, computer intrusion and social networks.
6) Prize scams
Fraudsters claiming to be authorised representatives from well-known organisations (such as Etisalat, du, Dubai Shopping Festival, Expo2020, Lulu Hypermarket etc) contact victims to tell them they have won a cash prize and request them to share confidential banking details to transfer the prize money.
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Revibe%20%0D%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202022%0D%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Hamza%20Iraqui%20and%20Abdessamad%20Ben%20Zakour%20%0D%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20UAE%20%0D%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20Refurbished%20electronics%20%0D%3Cbr%3E%3Cstrong%3EFunds%20raised%20so%20far%3A%3C%2Fstrong%3E%20%2410m%20%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EFlat6Labs%2C%20Resonance%20and%20various%20others%0D%3C%2Fp%3E%0A
ASIAN%20RUGBY%20CHAMPIONSHIP%202024
%3Cp%3E%3Cstrong%3EResults%3C%2Fstrong%3E%3Cbr%3EHong%20Kong%2052-5%20UAE%3Cbr%3ESouth%20Korea%2055-5%20Malaysia%3Cbr%3EMalaysia%206-70%20Hong%20Kong%3Cbr%3EUAE%2036-32%20South%20Korea%3Cbr%3E%3Cbr%3E%3Cstrong%3EFixtures%3C%2Fstrong%3E%3Cbr%3EFriday%2C%20June%2021%2C%207.30pm%20kick-off%3A%20UAE%20v%20Malaysia%3Cbr%3EAt%20The%20Sevens%2C%20Dubai%20(admission%20is%20free).%3Cbr%3ESaturday%3A%20Hong%20Kong%20v%20South%20Korea%3Cbr%3E%3C%2Fp%3E%0A
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
TOURNAMENT INFO
Opening fixtures:
Friday, Oct 5
8pm: Kabul Zwanan v Paktia Panthers
Saturday, Oct 6
4pm: Nangarhar Leopards v Kandahar Knights
8pm: Kabul Zwanan v Balkh Legends
Tickets
Tickets can be bought online at https://www.q-tickets.com/apl/eventlist and at the ticket office at the stadium.
TV info
The tournament will be broadcast live in the UAE on OSN Sports.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
