Latecomers get provisional VAT number in UAE

The UAE’s Federal Tax Authority (FTA) has started to issue provisional tax registration numbers (TRNs) to businesses that commenced registration after the December 4 deadline, in order to help achieve tax compliance ahead of VAT implementation on January 1. Businesses that fail to register with the FTA will face a penalty of Dh20,000.

The FTA said it had already issued provisional TRNs for tax groups and will provide the same for individual businesses shortly.  “Having a tax registration number is a mandatory requirement to mention on invoices as it would enable businesses to claim credits. Having obtained the TRN, businesses can now configure their IT system to mention it on all tax documents from January 1,” said Nirav Shah, director, Fame Advisory.

“Businesses can now communicate the same to their suppliers, vendors and customers so when they raise invoices it would include the TRN on all tax documents and thus allow businesses to claim credit of taxes paid,” he said.

According to Shah, the first step towards compliance is having a TRN number and hence its issuance even on a provisional basis is a step in the right direction.

According to Naveen Sharma, chairman of the Institute of Chartered Accountants of India, VAT is being implemented in UAE from January 1, 2018, but not all businesses have received the TRN.

“Moreover, a lot of businesses have not submitted correct documents for registration. As hardly 8 days are left, FTA has come out with provisional tax registration, which will ensure the continuity of business from January 1, 2018. The main reason behind FTA’s move is to ensure that there is no interruption in business,” said Sharma.

He noted that this business-friendly move by the FTA will boost the confidence of the business community, because some are worried about not receiving TRN numbers and some others are worried about the fact that they could not provide correct documents at the time of initial registration.

“As registration opened in the last quarter of this year, almost all have applied for registration for the first time because VAT is new to everyone in the UAE. Some businesses made genuine mistakes because of their ignorance. FTA’s move to provide provisional tax registration numbers will give them another opportunity to complete their registration without any fear,” he concluded.

The Federal Tax Authority also called on businesses to verify the data that is entered in the application form, carefully review the form and ensure its flawlessness before submitting, as faulty data could lead to the rejection of the application.


Will UAE banks increase their fees due to VAT? Find out

The UAE Central Bank has asked local banks not to increase the existing fees for customers due to upcoming Value-Added Tax (VAT).”Banks and finance companies will not be permitted to exceed the fees structure for individual customers because of VAT,” reads the notice sent by the apex bank to local banks in the UAE on Thursday.It also asked the banks not to increase their existing fees structure and levels for non-individual customers as a result of VAT.

As part of the GCC framework agreed among the regional bloc, the UAE will levy five per cent VAT from January 1, 2018 on a host of goods and services. Saudi Arabia will also join the UAE in implementing VAT. Other regional countries will implement VAT at a later stage.Mayank Sawhney, director, MaxGrowth Consulting, earlier told Khaleej Times that Processing Fee, File Opening Fee, Assessment Fee, Evaluation Fee, Account Management Fee etc. charged by the banks will be subject to 5 per cent VAT in the UAE.

In case of credit cards, fees such as Annual Credit Card Fee, Late Payment Fee, Processing Fee for transferring outstanding payment from one credit card to another etc. will attract five per cent VAT, Sawhney adds.

The UAE Central Bank told banks and financial companies that they will absorb the applicable VAT until further instructions from the apex bank.Moreover, any applicable VAT on the services provided by the Central Bank will be absorbed by the Central Bank, said the notification.


Don’t hike fees due to VAT, UAE banks told

The Central Bank of the UAE has asked local banks not to increase the existing fees for customers due to the upcoming value added tax (VAT).

“Banks and finance companies will not be permitted to exceed the fees structure for individual customers because of VAT,” reads the notice sent by the apex bank to local banks in the UAE on Thursday.

It also asked the banks not to increase their existing fees structure and levels for non-individual customers as a result of VAT.

As part of the GCC framework agreed among the regional bloc, the UAE will levy five per cent VAT from January 1, 2018, on a host of goods and services. Saudi Arabia will also join the UAE in implementing VAT. Other regional countries will implement the new tax at a later stage.

Mayank Sawhney, director of MaxGrowth Consulting, earlier told Khaleej Timesthat fees for processing, file opening, assessment, evaluation, account management, etc, charged by banks will be subject to five per cent VAT in the UAE. In case of credit cards, fees such as those for annual credit card fees, late payment, processing for transferring outstanding payment from one credit card to another, etc, will attract five per cent VAT, Sawhney added.

The central bank told banks and financial companies that they will absorb the applicable VAT until further instructions from the apex bank. Moreover, any applicable VAT on the services provided by the central bank will be absorbed by the apex lender, it added.

Diplomatic missions and int’l organisations VAT-exempt, unless…

Meanwhile, The Federal Tax Authority (FTA) stressed that diplomatic missions and international organisations that do not conduct business will be registered in a system that doesn’t require a tax registration number (TRN). However, international organisations that conduct business, import and export on regular basis should register for VAT like all businesses.

According to the FTA, businesses with a turnover below Dh375,000 are not required to register for VAT. If their turnover exceeds Dh187,500 and below Dh375,000 they may register voluntarily.

The FTA has noticed that some of the above-mentioned have submitted applications to obtain TRNs, and that some entities have requested them to present these numbers to continue their business transactions starting 2018. The FTA has urged businesses in the UAE that have not yet registered to register for VAT to avoid the risk of missing the January 1, 2018, deadline. This applies to businesses with taxable supplies and imports of goods and services that exceeded Dh375,000 over the previous 12 months. Taxable supplies are identified as all supplies of goods and services made, which are not exempt.

Recently, the FTA announced that businesses that commenced their registration after the timeframe specified by the authority were provided with provisional TRNs while they complete their tax registration requirements including the submission of any additional documents and information or amending any errors in their applications if needed.

The FTA has also called on businesses to verify the data entered in the application form, carefully review it and ensure its flawlessness before submitting, as faulty data could lead to the rejection of the application.


VAT Watch List in UAE after 1 January 2018

The VAT in UAE is just around the corner. The next 3 days will mark the start of the new season of VAT era in the Emirates after months of extensive deliberation and anticipation in the business community about the new law. The long wait is over. The business owners are geared towards full compliance to avoid getting penalized.Here are some of the basic things to remember after 1 January 2018: VAT registration for qualifying tax persons Those who did not register for VAT as they fall below the revenue threshold of AED 375,000 over the last 12 months, shall register after 30 days of becoming qualified to register. This means that as soon as revenues reach AED 375,000 over 12 months prior, the entity has 30 days to register as a VAT taxpayer. If the state has reason to believe that a tax person is required to register but did not do so during the prescribed period, the state will register him automatically with penalties.

VAT filing and payment
The Federal Tax Authority (FTA) stipulates the frequency of filing of VAT returns and payment of VAT for each taxpayer. Each tax payer is required to comply into one of the 3 filing methods: quarterly, (standard for most entities), monthly (for large taxpayers), and annually (for small players). The due date for filing and payment is every 28th following the end of the stipulated period.

Tax invoice
The FTA requires invoices for taxable supplies shall contain the name “tax Invoice”. Basically there are 2 types of tax Invoices under articles 59.1 to 59.12 of the VAT Regulations, namely: Simplified Tax Invoice and (standard) Tax Invoice. Simplified Tax Invoice is issued on 2 occasions: 1) sales of taxable supplies in the amount not exceeding AED 10,000 and 2) the taxable supplies are sold to non-registered buyers. The contents of the simplified tax invoice and (standards) tax invoice are included under article 59.2 and 59.1 respectively. A variation of the tax invoice is called Summary Tax Invoice. It covers all the supplies made for the same customer during the calendar month. It’s important to note that the FTA does not allow issuance of separate tax invoices for supplies made numerous times to the same customer during the calendar month. One Summary Tax Invoice is required. FTA has given Relief to issue tax invoice where the supplies are fully zero-rated.

The tax person shall keep a record of real estate transactions for 15 years. In addition, the tax person shall keep a detailed record of goods and services supplied.

Transition measures
Payments received and invoice issued in 2017 for supplies to be made starting 1 January 2018 are subject to VAT. It’s important to note that the reckoning point here is the date of supplies, despite that the invoice was issued in the preceding year. However, an advance payment received prior to 2018 will not be taxed if the intention of the buyer is not to incur VAT on supplies and paid an advance payment to secure the pre-VAT price.

Contracts entered prior to 1 January 2018 which do not include provision for VAT, and are to be fully or partially executed in 2018, can be considered as VAT exclusive if the recipient is VAT registered person and can show ability to recover VAT expenses. It means that standard VAT will be applied on supplies even if the contract is silent on VAT, so long as the recipient is able to recover the VAT charged to him.

Designated Zones
Designated zones are commonly referred to as “free zones”. They are deemed to be established in UAE for VAT purposes, hence subject to VAT regulations, except for the following instance: 1) imported goods in a designated zone from outside of UAE will not be treated as imported within UAE for VAT purposes; and 2) transfer of goods between designated zones is not subject to VAT provided that 2.1) goods are not released, used or altered during the transfer, and 2.2) the transfer is done in accordance with the rules applicable for customs suspension. Except for the mentioned exceptions, free-zone companies are obligated to abide by the VAT law and required to register for VAT.


Numaish from January 1: Blame GST for hiked ticket price

The 78th All India Industrial Exhibition (AIIE), popularly known as ‘Numaish’ will begin from January 1 and continue up to February 15 at the exhibition grounds at Nampally, officials said. Owing to the implementation of the Goods and Services Tax (GST), organisers have raised the entry ticket fee from Rs 25 to Rs 30 per person. Entry will be free for children below five years, senior citizens and differently-abled persons.


AIIE society secretary, NVN Charyulu said the hike was necessary to meet salaries of teaching staff working in 18 educational Institutions run by the AIIE Society in Telangana. “There is a proposal under active consideration to open corpus fund with Rs 2 crore to pay the salaries of our teaching staff and for emergency purposes,” he said.

This year, AIIE Society will be strictly litter-free, under ‘swatchh exhibition’ programme. “We are motivating shopkeepers to put up as many as dustbins and insist visitors use them. Another proposal was also moved to use cloth bags instead of plastic carry bags,” added the secretary.

Every year, nearly 25 lakh visitors visit Numaish, which is said to be one of the oldest exhibitions in the country. “This year, we are expecting 30 lakh visitors. The society has been permitted to open 2,500 stalls to display their produce,”he added.Earlier, minister for Finance Etela Rajender said the government is keen to allot exhibition land for 99 years lease, adding that a G O pertaining to this will be issued.


GoI releases Rs 24,500 cr to compensate states after GST implementation

The revenue loss to states on account of GST implementation was Rs 24,500 crore between July-October and the Centre has released compensation to make up for it, Parliament was informed on Friday.As per the details of GST compensation released to states as on November 30, Karnataka got maximum compensation from the Centre at Rs 3,271 crore, followed by Gujarat (Rs 2,282 crore) and Punjab (Rs 2,098 crore).
“…the revenue loss due to implementation of GST to the states for month of July to October has been estimated Rs 24,500 crore and the same amount has been released to the states as compensation to make up for the loss of revenue on bi-monthly basis for the month of July-August, 2017, and September-October, 2017,” Minister of State for Finance Shiv Pratap Shukla said in a written reply in the Lok Sabha.Under the Goods and Services Tax (GST) regime, a cess is levied on luxury, demerit and sin goods to make good the loss suffered by the states on account of roll out of the new indirect tax regime. This is levied on top of the highest tax rate of 28 per cent on this goods.“Since the rate of cess shall be such so as to maintain the pre-GST tax incidence on such goods therefore there may not be much difference in total tax incidence (tax plus cess) on these goods between the pre-GST and post-GST regime,” Shukla said.
The other states that required hefty compensation include Rajasthan (Rs 1,911 crore), Bihar (Rs 1,746 crore), Uttar Pradesh (Rs 1,520 crore), West Bengal (Rs 1,008 crore) and Odisha (Rs 1,020 crore).In a seprate reply, Shukla said the GST anti-profiteering authority has till December 26 received 169 complaints alleging suppliers of goods have not passed on benefit of cost reduction to customers.


Markets end 2017 with a bang, Sensex reaches a record high

The markets maintained 2017’s celebratory mood through to the year’s last day of trading, with the Sensex closing at a record 34,056.83 amid robust equity shopping by both domestic and foreign institutional investors (FIIs). The Sensex rose 0.62% with Tata Motors, Axis Bank and Tata Consultancy ServicesBSE 2.72 % logging gains of about 3% each. The BSE Sensex ended 2017 with a gain of 29.58% while the NSE Nifty rose 30.28%. India was the third best emerging market in the world this year after Argentina and Turkey, according to Bloomberg. Smaller Indian stocks did even better—the BSE midcap index rose 48% while the small cap surged 60% in 2017. FIIs invested Rs 51,000 crore in 2017 while mutual funds pumped a record Rs 1.16 lakh crore into equities, reflecting a transformation in the country’s savings culture that was triggered by demonetisation in November last year. Investors have shifted from physical savings to financial savings, leading to a sharp inflow into equity mutual fund schemes. The continuation of that trend should mean more money flooding into the markets in 2018.


To be sure, after clocking substantial returns in 2017, equity investors enter the new year with a number of macro challenges and worries on earnings growth weighing on their minds. They will be keeping a close watch on rising oil prices, lower goods and services tax (GST) collections and a burgeoning fiscal deficit. In addition, in the second half of the year, the gaze of the market will begin shifting toward the 2019 Lok Sabha election.
‘To be a Stock Picker’s Market’
“We will go through a challenging macro environment in the coming year as crude oil prices are going up, inflation is rising and the current account deficit is deteriorating,” said Kotak Mutual Fund MD Nilesh Shah. “It will be a stock picker’s market and there will be moderation in returns with volatility.” Analysts expect earnings growth will perk up in the next few quarters because of the lowbase effect on account of demonetisation and its disruptive effects. They expect real earnings growth to have picked up pace from the June quarter next year, as reforms and the implementation of GST, which was rolled out July 1, start yielding returns. “We have seen corporate earnings reverse its trend from the second quarter onwards and the second half of the year is expected to continue the direction amidst improving consumption-led demand on the back of a good monsoon in 2017,” said Axis Securities CEO Arun Thukral.

“While 2017 was an exceptional year, going ahead, returns from equities are likely to track earnings growth,” said Gopal Agrawal, chief investment officer, equities, Tata Mutual Fund. Analysts expect benefits of GST to be visible in 12-18 months as companies become comfortable with the new tax regime, revenues improve and consumption rises following a drop in prices for end users. Among the reasons for the slump in GST revenue was a steep cut in rates in November.


Filing of final GST returns deadline extended till Jan 10

The government has extended by 10 days the last date for filing of final sales return GSTR-1 till January 10 under the Goods and Services Tax, sources said.Businesses with turnover of up to Rs. 1.5 crore will have to file GSTR-1 for July-September by January 10, 2018, as against December 31, 2017 earlier. For businesses with turnover of more than Rs. 1.5 crore GSTR-1 has to be filed for the period July-November by January 10.

Earlier these businesses were required to file GSTR-1 return for July-October by December 31 and that for November by January 10. For the month of December, GSTR-1 is to be filed by February 10 and for subsequent months, it would be 10th day of the succeeding month.

The GST Council had in November allowed businesses with turnover of up to Rs. 1.5 crore to file final returns GSTR-1 quarterly. Businesses with turnover of up to Rs. 1.5 crore will have to file returns by February 15 for the period October- December and that for January-March by April 30.


E-way bills may boost GST revenue

The government expects goods and servicestax (GST) collections to rise by 20-25% after the introduction of electronic way (e-way) bills, which will track the movement of consignments across trucks and help check revenue leakage.Tax officials believe some businesses are on a tax holiday since the introduction of GST. That’s because under GST, partial evasion is almost impossible. You pay either 0% or 100%. “We know of businesses that have found a way to stay out of the 100% tax net. E-way bill is one way to get them into the system. States that have moved to e-way bill for VAT had seen 20-25% increase in annual tax collections for several years. We expect same to happen with national e-way implementation,” said a senior government official.


Already, 17 states have e-way bills in some form, which includes Uttar Pradesh, Uttarakhand and several eastern states. But there are 14, including Maharashtra and Madhya Pradesh, which will move to the new regime from February. Some of the states that already have e-way bills track movement of goods within as well as outside the state. While e-way bill was to kick in with the launch of GST in July, the government had deferred the rollout till the system was in place.The new nationwide e-way bill system will be ready from January 1 and companies can start generating the electronic tracking tool from January 15 and it will be compulsory from February 1 with the intra-state bills becoming mandatory from June. This will do away with the state-to-state variations in e-way bills.Currently, a trial run is underway in Karnataka and officials said that the system is working perfectly with the state generating 1.1 lakh e-way bills daily. Following a national rollout, the government expects around 40 lakh e-way bills to be generated every day, of which 15-16 lakh, or around 40%, is meant for inter-state movement.

 Officials said that nearly 50% of the goods that make up the consumer price index will be exempted as and only goods with a value of Rs 50,000 need to generate it. In addition, transport of goods in non-motorised vehicles such as handcarts also do not have to comply with the requirement.Officials said, initially, trucks will be physically inspected for carrying e-way bill at least once during their journey. “Eventually, we would like to do away with the system of physical check. We could build e-way bill details in RFID tags. If businessmen fill their e-way bills properly, their GSTR-1 will get filled automatically. A buyer, seller or transporter can prepare the e-way bill,” said an officer.

Extends the due dates for quarterly furnishing of FORM GSTR-1 for taxpayers with aggregate turnover of upto Rs.1.5 crore.

[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)]

Government of India
Ministry of Finance
(Department of Revenue)
[Central Board of Excise and Customs]
Notification No. 71/2017 – Central Tax

New Delhi, the 29th December, 2017

G.S.R.          (E):— In exercise of the powers conferred by section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017), and in supersession of notification No. 57/2017 – Central Tax dated the 15th November, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1413 (E), dated the 15th November, 2017, except as respects things done or omitted to be done before such supersession, the Central Government, on the recommendations of the Council, notifies the registered persons having aggregate turnover of upto 1.5 crore rupees in the preceding financial year or the current financial year, as the class of registered persons who may follow the special procedure as detailed below for furnishing the details of outward supply of goods or services or both.

  1. The said persons may furnish the details of outward supply of goods or services or both in FORM GSTR-1 effected during the quarter as specified in column (2) of the Table below till the time period as specified in the corresponding entry in column (3) of the said Table, namely:-
Sl No. Quarter for which the details in Time period for furnishing the details in FORM
FORM GSTR-1 are furnished GSTR-1
(1) (2) (3)
1 July – September, 2017 10th January, 2018
2 October – December, 2017 15th February, 2018
3 January – March, 2018 30th April, 2018
  1. The special procedure or extension of the time limit for furnishing the details or return, as the case may be, under sub-section (2) of section 38 and sub-section (1) of section 39 of the Act, for the months of July, 2017 to March, 2018 shall be subsequently notified in the Official Gazette.

[F. No. 349/58/2017-GST(Pt.)]

(Ruchi Bisht)

Under Secretary to the Government of India