New UAE Tax Procedures Executive Regulations
The New Tax Procedures, which were introduced in November 2022, have been accompanied by the release of the corresponding Executive Regulations by the FTA. These regulations are slated to come into effect as of 1 August 2023, unless stipulated otherwise. This blog will explore some of the key updates on the new Tax Procedure Executive Regulations.
Registration Amendment & Deregistration
It is now mandatory to notify the FTA for any change in e-mail address, trade license activities, legal status and partnership agreement for unincorporated partnerships. The FTA also now has the right to deregister taxable person in cases where the taxable person is filing nil tax returns or value of supplies or expenses does not cross the voluntary registration threshold or cessation of providing services or manufacturing of goods.
The FTA will be intimated by your licensing authorities as and when there is change in your license, hence it is suggested to amend your VAT registration as and when it is required.
Record Keeping Requirements
Taxable person will be required to retain additional documents supporting accounting records and commercial books for example - documents related to the accounting entries, contracts, email correspondences, calculation of input tax apportionment, related party transactions, etc.
Records need to be kept for a period of 5 years following the tax period to which they related in respect of taxable person. For real estate related records they need to be maintained for period of 7 years. Tax Payers submitting Voluntary Disclosure in the 5th year should retain records for an additional 1 year, starting from the date of submission of Voluntary Disclosure.
Voluntary Disclosure
In line with amendment for the Tax Procedure law introduced last year, the new Tax Procedure Executive Regulations requires taxpayers to submit voluntary disclosure to the FTA even when the error or omission does not result in tax payable. For example - if the taxpayer failed to report emirate-wise sales details or failed to report VAT under reverse charge mechanism where tax payers are eligible for full input VAT credit.
Currently, on the new Emaratax portal, we cannot file voluntary disclosure for reporting errors which does not have any tax impact. It is anticipated that the update will be made shortly on the website.
Taxable persons are required to review the changes and additions made to the New Executive Regulation to understand and assess the impact on their business and activities and to ensure implementation readiness by the effective date of 1 August 2023.
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