FTA outlines new procedure for submitting tax returns

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

The FTA launched a comprehensive awareness campaign titled ‘Filing Returns in 4 Steps’, covering social, digital and other media channels. The campaign targets businesses registered for value-added tax (VAT), introducing them to the online system that the FTA had launched. From the beginning of February 2018, the system 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 returns no later than February 28, 2018.

Khalid Al Bustani, FTA director general, said that tax returns can be submitted 24/7 through the e-services portal on the FTA website, which was designed based on international best practices to help registrants submit their tax returns and raise tax awareness among the public. The success of the UAE tax system is a shared responsibility requiring continuous strategic collaboration between the public and private sectors, Al Bustani stressed, noting that the FTA works hand in hand with all relevant authorities to provide taxable businesses with the best services.

In its campaign, the FTA explains that businesses registered in the VAT system are required to submit their returns on a monthly or quarterly basis, as specified by the authority. Information about tax periods is available on the FTA website, where registered businesses can check their allocated tax periods and whether their first tax period ended on January 31, 2018. The authority mandates that tax returns must be received no later than the 28th day following the end of the tax period concerned, providing a number of methods to process the payment of any tax via the e-dirham platform.

The FTA stressed that taxable persons should prepare all tax return requirements before starting the online submission. The first step to submitting tax returns is to enter the e-services portal on the authority’s website, then choose the ‘VAT’ tab and scroll to the company’s dedicated ‘VAT returns’ page and initiate a new VAT return. Step two is to enter the data in the return, including sales and other outputs, and expenses and other input, writing the net amount excluding VAT, as well as the VAT amount. And the system will calculate the tax payable or repayable.

The third step is to submit the tax return after thoroughly reviewing it, while the fourth and final step is to pay the due tax through the ‘My Payments’ tab, ensuring payment deadlines are met.


UAE optimistic for 2018 despite expecting VAT to be a challenge in one month

In the first month after the introduction of Value Added Tax, YouGov surveyed over 1,000 UAE residents to understand their sentiment towards the country, and the immediate impact the new law is having on the community at large.

Despite expecting VAT to be a challenge in the UAE, residents are largely optimistic for the year to come, according to New YouGov Omnibus research.

“As the UAE is getting to grips with VAT, this research reveals a community still largely uncertain of its future impact. It’s clear there are reservations over the scale of increased expenditure and the impression the law will have on outsiders, but the results do not conclude a trend in favour or against it. The fact that sentiment for 2018 is largely positive shows the country to be in a solid position, with a community yet to reserve strong judgement on VAT as we start the new year,” said Kerry McLaren, Head of Omnibus Research.

The results found that 50 per cent of residents have positive sentiment towards the UAE for 2018, while 34 per cent are neutral and 15 per cent are negative. This positive attitude is prevalent despite the fact that 62 per cent of residents feel the introduction of VAT will be a challenge for the country.

The study indicates residents are, for the most part, undecided over its impact on the economy. Whilst over a third of the population (38 per cent) feel it will have a positive impact, 40 per cent neither agree or disagree with the statement, while 22 per cent disagree.

The results suggest this perception, in part, is born out of the levels of increased expenditure expected, with 44 per cent of residents claiming their spending will increase significantly as a result of the tax, and the same proportion (44 per cent) feel it will reduce their disposable income.

To that end, the majority of residents (46 per cent) believe people will expect a relative pay rise to compensate for their increase in expenditure as a result of VAT.

Generally, over half of residents expect to spend more money in 2018, with most claiming they’ll need to find the most extra cash for utility bills and their daily commute/fuel (both 49 per cent) and groceries (48 per cent).

Whilst they are more certain of the impact of VAT on their personal expenditure, residents are less sure about the impact of the tax on financial dealings among companies. When asked if they think the new law will regularise bank lending to SMEs, the largest majority, (55 per cent) neither agree or disagree with the statement, whilst 28 per cent agree it will and 17 per cent disagree.

Slightly more believe the law will bring transparency to company accounts and financial dealings (39 per cent), however, most are still unsure (42 per cent), whilst 19 per cent disagree with the statement.

When asked about the impact of VAT on visitors to the country, 35 per cent of residents say it will discourage tourists, yet the largest proportion are unsure (37 per cent) and 28 per cent say it will not.  However, a little more believe it is more likely to discourage expats (42 per cent), while 38 per cent do not know and 21 per cent say it will not.

Interestingly, when it comes to handling VAT in everyday life, 45 per cent of residents believe the need for low denomination change will complicate simple cash transactions for consumers.

The tax has also got residents thinking about what else is next. Over half (54 per cent) said the introduction of the new law has made them question whether income tax will be enforced in the UAE in the future.


VAT impact on UAE workforce seen minimal

While most companies in the UAE will not take any specific measures to compensate against the introduction of VAT, a new study shows that VAT will only have a minimal effect on people’s buying power.

Mercer, a global consulting leader in advancing health, wealth and careers, and a wholly owned subsidiary of Marsh & McLennan Companies has released its latest research on the impact of VAT on the purchasing power of the UAE workforce.

“While VAT is applied to most items that are purchased on a daily basis, such as food, clothing and personal care, the so-called ‘additional spend’, which is made up of items such as financial services, education and flights are non-taxable,” said Rob Thissen, Talent Mobility leader for Mercer in the Middle East.

“Along with housing, these are accounting for a large proportion of employees spending power which will not be impacted by VAT. However, VAT will not affect everyone in the same way. Different individuals and households will have different spending patterns.”

Mercer research shows that income level and family size can cause the impact of VAT to vary considerably. For example, lower salary households living on an income of Dh100,000 would typically spend 48.5 per cent of their income on taxable goods and services, meaning a 2.4 per cent loss in purchasing power, while higher salaried single individuals with an income of Dh500,000 would only spend 37.7 per cent of their pay on taxable goods and services, decreasing the impact of VAT on their purchasing power to only 1.5 per cent.

At the same time, Mercer’s study forecasts that VAT will be offset by the expected salary increases.

Ted Raffoul, Career Products leader at Mercer in the Middle East said: “While the VAT implementation will have a measurable impact on purchasing power, we forecast the average salary increase in the UAE to be 4.3 per cent across all industries, which is considerably higher than the expected level of inflation.

According to the IMF, inflation for 2018 is forecasted at 2.9 per cent. Inflation statistics already account for the expected consumer price increases, and most companies incorporate this figure while budgeting for salary increases. Therefore, most companies feel no need for any extraordinary measures, but will likely monitor the situation closely as it evolves.”

Industries such as life sciences and technology expect an even higher increase close to 5 per cent, while the energy and financial services sectors project salary increases closer to 3.5 per cent.


Dubai’s estate agents push the envelope with VAT absorption

A property brokerage firm in Dubai is absorbing all value-added tax (VAT)-related charges on commissions. This will apply to all residential leases it makes on a building at City Walk, the high-end mixed-use destination on Al Wasl Road, for a limited period — from February 15 to March 15.

In addition, fäm Properties will bear the costs of the 4 per cent Dubai Land Department registration fees for Building 18B — which it has taken on for leasing — for the same period. “While we have welcomed the introduction of VAT to real estate transactions in the UAE to bring much needed transparency to the market, we do understand that such changes are often met with a phase of resistance,” said Firas Al Msaddi, CEO of fäm.

“Our decision to absorb VAT costs on the commission of all transactions in City Walk, as well as waiving the DLD registration fees for 18B, will offer major financial incentives to buyers who are considering investment opportunities at a time when current conditions can yield strong medium to long-term gains.”

Building 18B is a six-storey residential and retail property, comprising one-, two-, three-bedroom apartments and a four-bedroom penthouse on the top floor, with retail space on the ground floor.

To date, fäm Properties has topped Dh1.5 billion in residential property sales at City Walk.

It will be interesting to see whether VAT waiver/absorption will become a more common incentive estate agents start offering in the local property market. If it becomes the case, it will be joint with the other add-ons that they are already deploying, such as waiver of registration fees.


Notification No. 24/2018-Customs

Seeks to increase import duty on all types of sugar under tariff head 1701, [Raw sugar, Refined or White sugar, Raw sugar if imported by bulk consumer] from the present 50% to 100% (Tariff rate) with immediate effect and without an end date

(Department of Revenue)
Notification No. 24/2018-Customs

New Delhi, the 6th, February, 2018

G.S.R. (E). – In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962) and sub-section (12) of section 3 of Customs Tariff Act, 1975 (51 of 1975), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 50/2017- Customs, dated the 30th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 785(E), dated the 30th June, 2017, namely:-

In the said notification,

(A) in the Table,-

(i) S.No. 84 and the entries relating thereto shall be omitted;

(ii) S.No. 85 and the entries relating thereto shall be omitted;

(iii) S.No. 86 and the entries relating thereto shall be omitted;

(iv) S.No. 87 and the entries relating thereto shall be omitted;

(v) S.No. 88 and the entries relating thereto shall be omitted;

(B) in the ANNEXURE, condition numbers 4, 5, 6 and 7 shall be omitted.

[F.No.354/78/2009-TRU (Pt.)]

(Mohit Tewari)

Under Secretary to the Government of India

Note: The principal notification No. 50/2017-Customs, dated the 30th June, 2017 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 785(E), dated the 30th June, 2017 and last amended vide notification No. 6/2018-Customs, dated the 2nd, February 2018, published vide number G.S.R. 109 (E), dated the 2nd, February 2018.

Extending eSANCHIT application on all EDI locations

Instruction No. 02/2018-Customs
Government of India
Ministry of Finance

Central Board of Excise and Customs

New Delhi, dated 7th February. 2018


All Pr. Chief Commissioners of Customs / Chief Commissioners of Customs/ Customs (Preventive)/ Customs and Central Excise.
All Pr. Commissioners/ Commissioners of Customs / Customs (Preventive)/ Customs and central Excise

Madam/ Sir,

Subject: Extending eSANCHIT application on all EDI locations: reg.

Kind attention is invited to circular 40/2017-Customs dated 13th October, 2017 on pilot implementation of application for uploading of supporting documents electronically i.e. eSANCHIT at ACC, New Delhi and Chennai Customs House. Subsequently, eSANCHIT was further extended to 1CD Tughlaqabad, ACC Sahar, JNCH, Nhava Sheva. Mumbai and other major Customs Houses across the country.

2. Now, based on the reports and feedback received so far, it has been decided to extend eSANCHIT to all EDI locations on a voluntary basis. Though this facility would be provided to trade on a voluntary basis, it must be ensured, in preparation for making this facility mandatory, that every Customs broker and self-filer (all ICEGATE users) develops the capability to use eSANCHIT as envisaged in Customs circular 40/2017. Outreach programs may be carried out for Customs Brokers who have not yet started using eSANCHIT, keeping in view that such brokers may not be able to file Bills of Entry on ICEGATE once the facility is made mandatory. All Chief Commissioners are requested to regularly monitor the levels of usage of eSANCHIT.

3. Therefore, you are requested to issue Public Notices by 9th February, 2018, notifying the availability of this facility to trade on a voluntary basis. Step by step procedure to upload supporting documents with digital signatures at eSANCHIT and a list of FAQs is already published at haps://www.icegate.gov.in/eSANCHIT.html on ICEGATE website.

4. Further, problems/queries, if any, faced during the functioning of this facility may be addressed by email to gaurav.dhanda@icegate.gov.in and nsm.ices@gov.in. References in hard copy may be sent to Commissioner (Single Window), 5th Floor, Hudco Vishala Building, B–Wing, Bhikaji Cama Place. R.K Puram, New Delhi– 110066.

Yours sincerely,

OSD (Cus-IV)


RBI lowers economic forecast to 6.6% for FY18

The Reserve Bank today lowered the economic growth projection for 2017-18 to 6.6 per cent, but said that it will accelerate to 7.2 per cent in the next financial year as the roll-out of GST stabilises and credit offtake improves.

The statement issued after the 2-day meeting of the 6-member Monetary Policy Committee (MPC) of the Reserve Bank of India also said that recapitalisation of public sector banks along with resolution of stressed assets under the Insolvency and Bankruptcy Code (IBC) will create demand for fresh investments.

“GVA (Gross Value Added) growth for 2017-18 is projected at 6.6 per cent,” it said.

In the December policy review, MPC had forecast that the GVA would expand by 6.7 per cent.

For the next fiscal, 2018-19, the central bank said that the implementation of the Goods and Services Tax (GST), rolled out on July 1 last year, is stabilising and augurs well for economic activity.

“There are early signs of revival in investment activity as reflected in improving credit offtake, large resource mobilisation from the primary capital market, and improving capital goods production and imports,” it said. Furhter, the process of recapitalisation of public sector banks has gotten underway and large distressed borrowers are being referenced for resolution under the IBC, it said.

“This should improve credit flows further and create demand for fresh investment,” the RBI said, adding that export growth is expected to improve further on account of improving global demand.

RBI said that GVA expansion in 2018-19 is projected at 7.2 per cent overall “in the range of 7.3-7.4 per cent in H1 and 7.1-7.2 per cent in H2” with risks evenly balanced.

The MPC noted that the economy is on a recovery path, including early signs of a revival of investment activity, the RBI said. Also, global demand is improving, which should help strengthen domestic investment activity.

“The focus of the Union Budget on the rural and infrastructure sectors is also a welcome development as it would support rural incomes and investment, and in turn provide a further push to aggregate demand and economic activity,” it said.

The MPC has flagged the deterioration in public finances risk crowding out private financing and investment as a “downside” to the growth outlook.


Government changing definition of MSMEs to be in sync with GST

The government is changing the criteria to define micro, small and medium enterprises (MSMEs), to make these in sync with the goods and services tax (GST) regime, by making the norms common for good and services.The announcement came on a day when the Reserve Bank of India announced some relief to the sector. But the change would be effective when the proposed amendments to the Micro, Small and Medium Enterprises Development Act, 2006, come into effect.The decision, taken at the Cabinet meeting on Wednesday, classified MSMEs on the basis of their annual turnover. The current classification was based on investment in plant and machinery for goods companies and in equipment for services firms.Micro enterprises would now be those with annual turnover of Rs 50 million. The earlier criteria for goods companies was investment of up to Rs 2.5 million in plant and machinery.

For services companies, it was investment of Rs 1 million in equipment.Those having annual turnover of Rs 50 million to Rs 750 million would be termed small enterprises. Earlier, goods companies were those with investment of Rs 250 million to Rs 500 million in plant and machinery. For services companies, the yardstick was investment of Rs 1 million to Rs 20 million in equipment.Companies with annual turnover of Rs 750 million and up to Rs 2.5 billion would be classified as medium enterprises.Earlier, goods enterprises were classified as medium if investments in plant and machinery were Rs 50 million to Rs 100 million. Investment beyond Rs 20 million and up to Rs 50 million was the criteria for the services sector.The government said the decision would align the definition of MSMEs with the regime revolving around the GST, besides encouraging ease of doing business and making norms of classification growth oriented.


FM, GST Council announce major relief for J&K traders post-GST

 In a significant decision on assessment of Goods and Services Tax (GST), the Union Finance Ministry and the GST Council have enhanced the powers of assessment and audit of Jammu and Kashmir, giving big relief to the businessmen and traders as they would be assessed by the State tax administration in majority of cases.
A proposal to this effect was mooted by Finance Minister Dr Haseeb A Drabu before the GST Council as well as the Union Finance Ministry, which has been agreed upon.
Dr Drabu told the Excelsior that the decision was conveyed to the State Government today.
“As per the new decision, Jammu and Kashmir will have complete assessment and audit powers for assessing the businesses, which have turnover up to Rs 1.5 crore. For businesses having turnover of more than Rs 1.5 crore, the assessment powers would be in the ratio of 80:20 i.e. Jammu and Kashmir will have the powers of 80 per cent while remaining 20 per cent will be assessed by the Central authorities,’’ he said.
Dr Drabu said this has silenced the Opposition, which had charged the State Government with surrendering fiscal autonomy of the State after implementation of GST .
“Today, we have got powers, which were even more than what we had been enjoying prior to implementation of the GST,’’ the Finance Minister said and described the decision of Union Finance Ministry and GST Council as “historic’’.
He said these powers have been extended to Jammu and Kashmir only and for all other States of the country, the powers of assessment and audit have been fixed in the ratio of 50:50 i.e. their businesses would be assessed 50 per cent by the State administration and 50 per cent by the Central authorities.
“Other States don’t have even exemption up to Rs 1.5 crore turnover, which we got,’’ Dr Drabu said, adding this would benefit the businessmen and traders all over the State and their concerns over implementation of the GST have also been addressed.
He said it was major relief for all the local businesses as each assesse in Jammu and Kashmir would be assessed only by one Authority and they won’t have to jump from one Authority to another. This would save a lot of time of the traders in the State and will also put to rest the fears over dual administration by the State and the Centre, he added.
“In case of other States, there will be a dual mechanism of assessment with the Central Tax administration and the State Government sharing the assesses with a turnover of even Rs 1.5 crore,’’ he said, adding the dual mechanism of assessment would have created administrative hassles for the tax administration and businesses in Jammu and Kashmir.
Meanwhile, according to sources, the Centre Government and the GST Council took up the issue projected before them by the Jammu and Kashmir Government repeatedly on the ground that business and trade in the State was already suffering because of militancy and other adverse conditions and the traders here deserved some relaxations.
“The issues was debated at the level of Union Finance Ministry and the GST Council, which agreed to the demands put forth by the Jammu and Kashmir Government and announced their decision,’’ sources added.


Government considering tax benefits for scrapping 15-year old vehicles

The government is finalising a policy to scrap commercial vehicles that are more than 15 years old, and is proposing tax incentives from both the Centre and the states. This proposal, however, requires the approval of the Goods and Services Tax (GST) Council.The policy, likely to be called the Voluntary Vehicle Fleet Modernisation Programme, is expected to push 28 million vehicles off the roads.For this, a three-layer incentive system is being worked out. Old vehicles will have a scrap value that will accrue to the owner. The Union and state governments will also give incentives, including a tax benefit.“When you go to buy a new vehicle with the certificate (for your old vehicle being scrapped), the car seller will give a rebate,” said Roads Minister Nitin Gadkari.He added, “To give this rebate as a component of the GST, the finance minister (Arun Jaitley) will have to approach the GST Council.”Gadkari said the scrapping policy, to be finalised soon, would help in recycling and bringing down the cost of components. “If 15-year-old commercial vehicles are scrapped, industry will grow at 22 per cent and pollution will be reduced,” he said.About 65 per cent pollution is caused by heavy vehicles that are 15 years old or older.In September last year, the National Green Tribunal (NGT) ordered all diesel vehicles more than a decade old off the roads of Delhi and the National Capital Region (Delhi-NCR).The Union Ministry of Heavy Industries and Public Enterprises had appealed against the order but the tribunal rejected it.

Referring to a report published by the Central Pollution Control Board, the NGT had said the use of diesel in vehicles was highly toxic. The Supreme Court had also rejected similar appeals challenging the ban.All commercial vehicles are likely to be covered by the Centre’s policy, but the Delhi government is also planning on a policy of its own to scrap old cars that are routinely abandoned on the streets.Old vehicles plying on the roads do not comply with the new BS IV (Euro IV) emission norms, implemented from April 1, 2017, across the country. Both fuel and automobiles have to be compliant in order to cut emissions. From April 2020, the industry is required to leapfrog to BS VI (Euro VI) norms.