The UAE Ministry of Finance has release the Executive Regulation of The Federal Decree-Law No (7) of 2017 on Tax Procedures, approved by the cabinet during its meeting on September 13, 2017, chaired by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, Ruler of Dubai.
The published regulations cover, among other things, the responsibilities of persons liable to pay tax and the procedures followed by the Federal Tax Authority (FTA) in order to implement the tax system in accordance with the highest international standards.
“The Cabinet’s approval for the Executive Regulations of Federal Decree-Law No (7) of 2017 on Tax Procedures takes the tax system in the UAE one step forward,” said His Excellency Obaid bin Humaid Al Tayer, Minister of State for Financial Affairs. “It is a crucial step towards building effective partnerships between the Federal Tax Authority – as the official body tasked with managing and collecting federal taxes – and all its stakeholders. This, in turn, helps achieve the objectives of the tax system and enhances the UAE’s global competitiveness, as it continuously improves our government services and greenlights future-conscious infrastructure projects.”
“The Executive Regulations reflect the UAE Government’s commitment to transparency,” H.E. Al Tayer added, “which is essential for an efficient, sustainable and sound financial system. The Regulations provide a clear image of the procedures to be implemented by the Federal Tax Authority, as well as the provisions governing its relationship with clients.”
Accounting Records and Commercial Books
Cabinet Decision No. (36) of 2017 on the Executive Regulations of Federal Law No. (7) of 2017 on Tax Procedures specifies the required accounting records to be kept by every business: commercial books detailing payments, receipts, purchases, sales, revenues and expenditures, as well as balance sheets.
Accounting records and business books would also include records of wages and salaries, fixed assets and inventory (including quantities and values) at the end of any relevant tax period and all records of stock-counts related to inventory statements. The Authority may require more information in order to confirm, through an audit trail, the person’s tax obligations, including any liability to register for tax purposes.
Accounting records are to be kept in a format that enables the Authority to verify that person’s tax obligations for a period of five years after the end of the tax period. In the case of a non-taxable person, the records are to be kept for a period of five years from the end of the calendar year in which the concerned document was created.
The legislation goes on to cover the following key points (note: this is not comprehensive; please refer to the full legislation for the complete Articles):
The Use of A Language Other Than Arabic
While Clause 1 of Article 5 specifies Arabic as the language to submit all data, an exception is made in Clause 2, allowing records and other information to be submitted in English, at the FTA’s discretion.
Registration and De-Registration for Tax Purposes
The law explains the process for applying to register or de-register for tax purposes, or amend details of registration.
Tax Obligations
This section looks at how the government will allocate unidentified payments, such as those missing information as to which tax and which tax period relate to a payment, to settle debts or liabilities.
Voluntary Disclosure
This section explains the time period in which a taxpayer can voluntarily disclose any errors made in a tax return, based on certain thresholds, and the subsequent procedures.
Tax Agents
This section details the procedures for listing a tax agent in the register and rights and obligations of tax agents. It includes education and qualification requirements, insurance indemnity requirements, and the process for submitting applications.
Tax Audits
This section looks at tax audits, the right of the FTA to conduct a tax audit and notice of tax audit, and details the circumstances under which the FTA will audit or re-audit a taxpayer. It also details the FTA’s power to seize documents, mark assets, and its obligations to store and provide access to retained documents. It details how results of an audit will be notified; and the steps to comply with notifications.
Tax Assessment and the Administrative Penalties Assessment
Where an amount of tax or an administrative penalty has been assessed, it shall be deemed to be a debt to the Authority, and may be collected accordingly. This section describes the procedures.
Tax Refunds
This details the process for applying for a tax refund; and the subsequent approvals and payment process.
Bankruptcy Cases
This section explains the responsibilities of the appointed trustee of a business that is subject to bankruptcy proceedings, and how they shall be treated as representing and carrying out the business.
Disclosure of Information
This section outlines the circumstances under which an FTA employee, or former employee, can disclose information that would otherwise be kept confidential.
Reduction in or Exemption from Administrative Penalties
This explains the circumstances under which any administrative penalties imposed by the FTA can be reduced or waived; i.e., justifiable excuses with evidence to back up the claim.
The full text of the Cabinet Decision No. (36) on the Executive Regulation of the Federal Law No. (7) of 2017 on Tax Procedures is available on the MoF website on www.mof.gov.ae and the FTA website on www.tax.gov.ae.
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