VAT-Registered UAE Firms Must Submit Returns, Pay Tax by Feb-End

Federal Tax Authority(FTA) has said that due by February 28 the all UAE business have to must pay the First VAT Returns that is already registered.

The Value Added Tax(VAT) is already launched in UAE and VAT Rates is 5 percent. The first tax period for Registration is ended on 31st Jan 2018.That type of company who will not pay the VAT on the deadline those will pay the administrative penalties. that will not pay the VAT those people pay the

penalty tax and no less than Dhs500($136) but no more than triple value of the tax on the transaction. A first incorrect VAT filing will in penalties of Dhs3,000($817) after error will then result is Dhs5,000($1,361) fine.

The FTA director general, Khalid Al Bustani, said the authority has provided the "simple process" to submit the VAT return and urged businesses to pay due to taxes or use the online system to complete the procedures.Taxable persons can submit their returns and process the payments 24/7 online.

The FTA director general, Al Bustani also confirmed that various channels and mechanisms have been activated to facilitate paying tax fees through a wide network of banks or through the offices and finance companies in the country.

VAT Register user also can pay the taxes through the UAE Funds Transfer System (UAEFTS), which offers direct linkage between the Central Bank of the UAE and the FTA.This will enable immediate transactions of tax payments to entities covered by the system through bank accounts and from 77 bank branches, exchange offices, and finance companies around the UAE.

The FTA has provided seven different payment methods for a user to process any payable tax through the E-Dirham platform in the e-services portal on its website.

Inflation To Rise 3.3 Percent In The UAE as VAT, Impact Oil Prices Economy

BMI said that the inflation is possible to increase 3.3 percent of the 5 percent value-added tax (VAT) since January in the UAE after that the higher oil prices will down for the goods and services dearer.

The newly prediction from the Fitch subsidiary is a revision of its earlier estimate for 2018 from $57 previously of 3.1 percent pricing is to $65 per barrel after BMI updated Brent.

The UAE VAT Report said that This will lead to an increase in transportation prices - 10 percent of the consumer price index basket that given fuel prices have been deregulated since 2015.The putting pressure on inflation so that higher oil prices will also support domestic demand.

The region's biggest economies Saudi Arabia and the UAE - introduced VAT in January to narrow damages that had to broaden over the last couple of years as oil prices fell from $115 per barrel in 2014 to just under $30 at the beginning of 2016.

The shortening of the oil market has also pushed through a more grumpy diversification programme in these economies, with Saudi Arabia, the world's biggest oil exporter looking at privatization initiatives that including the planned sale of a 10 percent stake in cash-cow Saudi Aramco this year.

 The BMI expected the UAE central bank to follow a tighter monetary policy, which is expected to increase interest rates this year.

The UAE calculation report said."The higher rates will help contain inflationary pressures, but will do little to reduce price stemming from fiscal measures and higher commodity prices,".

The UAE government is also expected to maintain it to the dollar -this year value against other currencies which has lost two and a half percent  - include the price of commodities including crude and gold.

UAE Residents Shedding Cash Payments

The UAE is growing slowly and create cashlessly society with our residents.UAE provide the facility with no cash carrying and using the plastic money for an order to pay their regular basic like bills, airfares, hotel and flight booking or any restaurant.

The government of UAE has more preference cards rather than the cash because the uses of the card are increased by 14.8 percent in 2017 as against 7.1 percent in the previous year on the growth. The UAE banks have the increment on spending witnessed on the card issued rather than another service.

The data compiled by the network international, UAE bank increase spending on 15.9 percent by the issued cards year-on-year and accounted for 79.3 percent of total point of sale (POS) transactions.

This time The growth in residents spending money, depletes has more than doubled in 2017 although some of this increase region could be the VAT. Now the UAE banker service is improved and its regularly work on the provided card issued service.

The Non-UAE banks by Foreign spending- issued cards also increased 10.5 percent compared with the 10.1 percent decline in 2016, suggesting that the feebler US dollar is having a positive impact on visitors' spending,"Thanos Tsetsonis, sector economist at Emirates NBD, said in a report quoting Network International and Emirates NBD Research data.

"After launching the VAT in UAE it could be possible that results are higher than the nominal value of card spending.while we know the household consumption don't expect to be a key driver of growth this year. Thanos said that Travel and tourism spending is likely to remain robust given the importance of the UAE as a global air-hub, and the expansion of domestic airlines".

Where do UAE people spend?

Launching the VAT in UAE know the impact on depleting by different sector, The Network International Emirates NBD Research's report we know that restaurants enjoyed twofold-pay spending growth for a third consecutive year in 2017 while accounting for 15.9 percent of total card spending.

After the launching the VAT the UAE Residents increased spending on restaurants nearly 20 percent year-on-year after the launching the VAT while foreign spending on restaurants was also up 19.4 percent annually for the same period.

4-Step FTA Outlines New Procedure for Submitting Tax Returns

The Federal Tax Authority (FTA) has provided the e-services portal on the FTA website. FTA has to gave outlined a simple four-step online procedure via a web portal to allow businesses to easily submit their tax returns.

UAE FTA Outlines Simple 4-Step Procedure for Submitting Tax Returns Online

The FTA has covered social, digital and other media channels launched comprehensive awareness campaign titled 'Filing Returns in 4 Steps'.The campaign main goal is registered for businesses in value-added tax (VAT)while introducing them to the online system that the FTA had launched.

The starting of February 2018, the online portal has been open to receiving tax returns for the first tax period ending on January 31, 2018, for some businesses which are required to submit their vat returns 28, February  2018.

Khalid Al Bustani, FTA director general,  provided the facility to the tax returns that can be submitted 24/7 through the e-services online portal on the FTA website. it is an easy process to fill the tax returns to help registrants submit because which was designed based on international best practices and the distribution of awareness on raise tax among the public and the success of the UAE tax online portal system is a shared responsibility.

Al Bustani effectively said the FTA works Concurrently with all relevant authorities to provide taxable businesses with the best services.The FTA explains in own campaign, that businesses registered on a monthly or quarterly basis, as specified by the authority to required submit their returns in the VAT system.

 The FTA website provides Information about tax periods, where suitability is all registered businesses can check their allocated tax periods and while their first tax period already finishes on January 31, 2018.

The FTA providing a number of methods to process the payment of any tax via the e-dirham platform for the 28th day the end of the tax period.

How is VAT Impacting Consumer Budget?

VAT has been implemented by the Govt. of UAE in last month. Since then, we are researching about it and getting feedback from the consumers. VAT is very important in terms of contribution in country economy.

As per sources, GCC countries are expecting to get 1.5 to 2.0 per cent additional revenue in the first year.

UAE has taken the step to implement VAT along with Saudi Arabia across the GCC countries. However, the decision will impact the consumer lifestyle positively. To make it successful for this, govt. have to keep the low rate on daily consumer goods.

Therefore, UAE Govt. has included a large number of goods in zero-rated or exempted list which is consumed by the general public. Even so, it will reduce the buying power of UAE citizen. By this decision, they want to control the inflation in the country. However, 5 percent tax has been applied to taxable goods.

Go through quoted text that is said by Garbis Iradian (Chief Economist of MENA):

“We expect a one-off inflationary impact from VAT. In the UAE, authorities estimate that excise taxes and VAT will add one percentage point to headline inflation, lower than our estimates,”

Recently, the fuel prices are increased in UAE due to the thriving of crude oil prices in the International market.

VAT in UAE Makes Residents To Expect Pay Raise For Cost-of-Living in 2018

On 1st Jan 2018 when VAT was launched in UAE, it introduced a challenge for UAE residents because of its major impact on the UAE economy and on the rising cost of living. The majority of UAE resident expects pay raise as after the vat introduction, cost of living is increased.

According to a report by YouGov, when VAT was launched an online survey of 1,022 residents revealed tension regarding the cost of living increase and believed new taxes on the horizon.

After the online survey, the effective conclusion generated was disproportionate, as many 38 percent residents felt that the VAT will result in positive, while other 40 percent neither agreed or disagreed upon the results and finally 22 percent totally disagreeing.

After the implementation of  VAT, it is expected that there will be a salary hike of common people in order to make their living standard to be continuous and in line. Only 1.5 months have elapsed from the implementation of VAT, and still, there is a lot more to see in coming future regarding the effects of this new tax scheme and its impact on lives of common man.


Out of ten respondents, four of them stated that their monthly expenses will increase significantly due to applicable taxes. While the other respondents mentioned that their disposable income will be get reduced.

The residents also said that the expenditure is bound to increase in comparison with the last year. According to the statistics, 49 percent citizens are expecting extra expenditure on the fuel, while 48 percent believe groceries would require extra money now. As of now, a total of half respondents expects a pay rise in order to counterbalance the tax effects.

The majority of the public almost 55 percent neither agreed or disagreed that the tax would adjust lending to SMEs but 28 percent agreed and 17 percent disagreed.
and the other is related to law 4 out of 10  about 39 percent considering the law would bring transparency to company accounts but there were only 42 percent unsure and 19 percent disagreed.

In the previous month, media highlighted that 45 percent of the citizens stated that they saw lowe denominations exchange lesser with remaining speculating that the VAT could further bring income tax in provision.

No coming to the tourism sector, it is believed by the 35 percent of citizens that tourism sector will get troubled due to the VAT in which 35 percent said that the tourist would not prefer to come while other 37 percent were unsure of the results.

YouGov head of Omnibus research Kerry McLaren said “As the UAE is getting to around with VAT, this research reveals a society still generally uncertain of its future impact.

It’s very clear there are reservations over the scale of improve expense and the impression the law will have on outsiders, but the results don’t aspect a trend in favor or against it”

“it's a possibility that sentiment for 2018 is largely positive shows the UAE to be in a solid position, with a public yet to reserve strong judgment on VAT as we start the new year.”

You Gov head of Omnibus research Kerry McLaren clearly mentioned that it is still unknown that what will be the effects of VAT on the country and its economic growth but we have to wait and watch. Up Till now the speculations and sentiments are positive.

UAE VAT Rates May Get Increased After 5 Years

VAT has been officially announced in the UAE on 1st Jan 2018 on the consumption of goods and services in UAE. The starting rates in UAE is 5%, which is the lowest in the world.

The tax authorities decided to launch the VAT that came into effect in two GCC countries from the starting of 2018  which is also considered "one of the lowest rates in the world". After the launch, VAT which is now been very successful in UAE, the tax authority official announced that International Monetary Fund that would increase to 10 percent after five years.The IMF mission chief to Saudi Arabia, Tim Callen, said GCC stated that they might have to increase the tax rate above the five percent, but it depends on the needs of each country, but not before upcoming 5 years.

It will be a new source of income for the government, which will provide better and more advanced public services.VAT applies some rules and regulations on food, public transport, and some health care service are exempt from the Vat, while some other service will be levied with zero percent.

"our extension is, we don't consider any types of increment of the vat from the 5 % for the next 5 year.however, we all know that within one month the vat has given a good result so we all are suggested that once the VAT is successfully implemented and the people are now  easy to follow it, after that, we will think for any VAT increment in the future but it depends on the revenue needs of the individual country" said callen.

The IMF official said Some other important angles are that we all know that the UAE of the vat is 5 percent is extremely low in the world. We would increasing VAT if needed at some point of time in future. The all Six GCC member countries had to decide VAT launch date in 2016 to introduce the levy, but as we know only Saudi Arabia and the UAE have implemented it from January 1, 2018. In case if any changes in the VAT rate applies it would necessitate to modification in the GCC-wide agreement.

The IMF and World Bank have been demanding the GCC states to introduce taxes. VAT has been implemented in UAE with the aim to reduce the country’s dependency on oil resources for revenue. The conclusion is that the introduction of VAT could generate new non-oil GDP of 1.5 to 3 percent.
The government of Saudi Arabia and the UAE have to provide all types of introduction to the people related to the VAT. It gives a full effort to know the information and it is very useful to the citizen involving all the business in the right way.

The UAE is expected to increment around $3.3 billion from the VAT, by which Saudi Arabia, have to show the biggest budget in its history. It is possible to spend $261 billion this economic year as the government forecasts a boost in revenue from the VAT. As part of economic assortment efforts, the kingdom is broadening its investor base and boosting other non-oil income.