The value-added tax (VAT) system in the UAE has led to a 5 per cent increase in government revenue more than a year after it was implemented to diversify the country’s sources of income away from oil, according to Al Dhaheri Jones and Clark (ADJC), citing the latest government figures.
The Dubai-based consultancy firm, a registered tax agent in the UAE as approved by the Federal Tax Authority (FTA), attributed the growth recorded from the first day of the VAT roll out on January 1, 2018 to early May 2019 to a remarkable 97% compliance in tax filing among registered taxpayers in the country.
Mohammed Fathy, general manager of ADJC, said: “More and more taxpayers have been teaming up with accredited tax agencies in the Emirates to ensure their correct and timely compliance with VAT law. This is a welcome development. We also take this opportunity to reiterate our reminder that they should deal with authorized tax firms only to avoid the risk of non-compliance and, hence, payment of administrative penalties and fines.”
Fathy made the call as FTA began its tax audits and tax assessments across all emirates in the UAE. He advised all registered corporations to keep and retain all VAT-related records and information for easy retrieval and presentation to tax authorities during inspection. According to him, they can either assign an employee for record keeping or seek the assistance of their tax agencies.
The UAE, along with Saudi Arabia, was the first in the GCC region to impose a 5 per cent VAT on good and services. Since the deployment of VAT in 2018, ADJC has been extending support to the FTA’s major initiatives to ensure proper VAT compliance. It has, for example, been actively conducting tax awareness campaigns across the country to educate UAE citizens and residents as well as businesses about VAT and its impact. Its tax awareness drive forms part of its move to support the UAE Government’s economic diversification policy through efficient tax collection.
ADJC, which is accredited to represent UAE taxpayers in all their transactions with the FTA, has already assisted more than 150 companies in the country in managing their financial records and properly filing their VAT returns.