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.

Source:https://www.khaleejtimes.com/business/vat-in-uae/fta-outlines-new-procedure-for-submitting-tax-returns

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.

Source:https://www.zawya.com/mena/en/story/UAE_optimistic_for_2018_despite_expecting_VAT_to_be_a_challenge_one_month_in-SNG_109211425/

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.

Source:http://www.gdnonline.com/Details/316754/VAT-impact-on-UAE-workforce-seen-minimal

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.

Source:http://gulfnews.com/business/property/dubai-s-estate-agents-push-the-envelope-with-vat-absorption-1.2169837

UAE to grow faster at 3.8% on higher oil prices and reforms

Increases in oil prices coupled with easier fiscal consolidation and reforms will help the UAE, the most diversified economy in the GCC, to register a higher growth of 3.8 per cent in 2018, world-leading trade credit management company said on Tuesday.

While economic diversity has made the second largest Arab economy an outperformer in the region by averting a fall into recession in the current era of lower energy prices, the UAE stands to benefit from big international events such as the Dubai Expo 2020 and the Qatar 2022 World Cup as they will spur tourist traffic to the region, analysts at Coface said as they forecast global economy to peak at 3.2 per cent in 2018.

The UAE growth projection by Coface is among the most upbeat compared to forecasts made by the International Monetary Fund and other organisations while close to the 3.9 per cent predicted by the Central Bank.

The Washington-based fund has projected UAE’s real GDP to surge to 3.4 per cent in 2018 from a 1.3 per cent in 2017. A joint report by the Institute of Chartered Accountants in England and Wales and Oxford Economics said the UAE would record 3.6 per cent growth in 2018 from 1.7 per cent in 2017.

In its annual “Country and Sector Risks Analysis 2018,” Coface said Saudi Arabia, Arab world’s largest economy, would grow at 1.2 per cent in 2018, Bahrain two per cent, Oman 3.8 per cent, and Kuwait 3.1 per cent.

“In the UAE, private consumption will likely remain among the main growth driver in 2018, sustained by household consumption and higher international tourism,” said the report.

The introduction of VAT from January 2018 is not expected to represent a significant drag on UAE’s growth. “However, subdued oil prices will likely prevent the economy from recording growth rates as high as pre-2014 levels,” it said.

With the slow recovery in oil prices since early 2017, the budget deficit will start to narrow. This is set to result in higher spending on infrastructure, construction, and investment, world’s leading credit insurer said.

Globally, Coface forecasts a growth of 3.2 per cent in 2018. In emerging countries, the recovery is expected to be stronger (with growth of 4.6% according to Coface) and above all more synchronized. In advanced countries, the downward trend in insolvencies continues but is beginning to run out of steam (the forecast decline is only 1.8 per cent in 2018, after a six per cent drop in 2017) as many countries have already returned to their pre-crisis levels.

In 2018, the upturn is expected to continue but corporates risk is overheating. Having begun with the threat of protectionism and punctuated by numerous elections and political crises, 2017 held some pleasant economic surprises. Only thirteen countries ended the year in recession, compared with twenty-five in 2016, Coface said.

Global trade made a spectacular leap, growing 4.4 per cent in after 1.5 per cent in 2016, while the risks associated with protectionism did not materialize: the net number of protectionist measures worldwide reached 283 in 2017 (against 374 in 2016), despite increasing in the United States. Business was stronger than expected in the United States, Europe and several emerging countries where it was supported by the gradual rise in price of several commodities.

Source:https://www.khaleejtimes.com/uae-to-grow-faster-at-38-on-higher-oil-prices-and-reforms

UAE Optimistic For 2018 Despite Expecting VAT To Be A Challenge

New YouGov Omnibus research has found that despite expecting VAT to be a challenge in the UAE, residents are largely optimistic for the year to come.

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.

The results found that 50% of residents have positive sentiment towards the UAE for 2018, while 34% are neutral and 15% are negative. This positive attitude is prevalent despite the fact that 62% 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%) feel it will have a positive impact, 40% neither agree or disagree with the statement, while 22% disagree.

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

To that end, the majority of residents (46%) 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%) and groceries (48%).

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 regularize bank lending to SMEs, the largest majority, (55%) neither agree or disagree with the statement, whilst 28% agree it will and 17% disagree.

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

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

Interestingly, when it comes to handling VAT in everyday life, 45% 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%) said the introduction of the new law has made them question whether income tax will be enforced in the UAE in the future.

Commenting on the findings, Head of Omnibus Research, Kerry McLaren said, “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 don’t conclude a trend in favor 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.”

Source:http://www.dubaichronicle.com/2018/02/06/uae-optimistic-2018-despite-expecting-vat-challenge/

VAT clouds UAE’s commercial real estate market in 2018, says JLL

The introduction of VAT in the UAE may impact parts of the real estate market in 2018, in particular the retail and office segments as softer conditions force landlords to absorb extra costs, said property consultancy JLL.

“It can’t be a positive [market influencer] so if anything it’s going to be a negative, but not a big negative,” Craig Plumb, head of research at JLL Mena (Middle East and North Africa), told reporters on Tuesday.

“Because the markets are soft it means the owners can’t pass on the VAT to tenants. Office and retail rents should all go up by 5 per cent but that’s not possible so the owners are going to have to absorb some of that increase.”

However, he added the rate of VAT set by the government was low by international standards and would be “more of a disruption than anything else”.

VAT took effect in the UAE on January 1. Residential buildings are ‘zero-rated’, or largely exempt, from the tax, but the supply of commercial real estate, including offices and retail units, is subject to the country-wide 5 per cent tax.

The UAE property market decelerated over the past two years, with sales and rental prices across many sub-sectors falling throughout 2016 and 2017 and are forecast to keep declining this year.

The UAE has become a tenant’s market, analysts have noted, with landlords increasingly willing to negotiate with occupiers on rents and lease terms instead of being saddled with an empty unit.

Mr Plumb said the retail sector, in which rents have declined and new supply has been introduced to the market, will see the “biggest negative impact” from VAT.

“VAT is going to add about 2 per cent to consumer prices this year, so that’s a negative for retailers,” he said.

“Retail is one sector that is significantly oversupplied, and VAT is one of the things that will slow down future growth of retail. There probably is too much retail space being developed at the moment – which is great if you are a retailer, not so good if you are a [shopping] centre owner.”

Another issue the market faces regarding VAT is cashflow, as businesses have to pay out before they can reclaim it. Mr Plumb said JLL had noticed an uptick in real estate selling and leasing activity in December as people sought to tie up deals before the tax came into effect.

“I think a lot of it was people bringing forward transactions to avoid the VAT, and January has been definitely a quieter month because of that,” he said.

Source:https://www.thenational.ae/business/vat-clouds-uae-s-commercial-real-estate-market-in-2018-says-jll-1.702306

Despite pre-VAT buying rush, UAE jewellery demand hits 20-year low

Despite a decent surge in sales ahead of VAT, gold jewellery demand in the UAE fell for the fourth consecutive year in 2017, falling two per cent to 20-year low, according to World Gold Council data.

“Demand in the UAE received a small boost in December as consumers rushed to make their purchases before a five per cent value-added tax (VAT) was imposed in January. But the 16 per cent year-on-year gain in Q4 demand failed to rescue the market from a fourth consecutive annual decline as 2017 demand was down two per cent to a 20-year low of 42.8 tonnes,” the Council said in a report released on Tuesday.

In 2016, the UAE saw gold jewellery demand reached 43.4 tonnes. In Q4 2017, UAE gold jewellery demand reached 10.6 tonnes as against 6.9 tonnes in the same quarter last year.

The gold sales glittered during Dubai Shopping Festival and the last weeks of last year as residents and tourists rushed to buy gold jewellery. Some of the major gold jewellery retailers in Dubai registered record sales during these days as the marriage and festival seasons kicked in. On January 1, the UAE levied five per cent VAT on gold jewellery but spared metals with more than 99 per cent purity from taxation.

Bal Krishen, CEO, Century Financial Brokers, blamed consistent decline in gold jewellery sales to its lacklustre performance as an investment asset.

“Gold needs to continue to outperform as an investment for the sales to grow, as millennials do not see gold to be the best star of value,” Krishen said.

Gold started the year on a very bullish note and this trend would be expected to continue given the volatility seen in world equities, he said, adding that the yellow metal “has a strong resistance at $1,530 an ounce and we expect gold to hit these prices during the course of 2018.”

Total bar and coin demand in the UAE dropped 8 per cent to 5.5 tonnes in 2017 from 6 tonnes in the previous year. Demand in Q4 2017 also dropped 10 per cent to one tonne as compared to Q4 2016.

According to World Gold Council data, average consumer demand per capita in the UAE dropped to 4.8 grammes in 2017 from 5 grammes in the previous year.

Middle Eastern demand recovered in Q4 but H1 losses dominated annual demand was down 1.1 per cent year-on-year. Iran was the strongest performer in 2017: Q4 was its tenth consecutive quarter of y-o-y growth. Annual demand gained 12 per cent to 45.4 tonnes, the highest since 2013.

Globally

Globally, gold demand rallied in the closing months of 2017, gaining six per cent year-on-year to 1,095.8 tonnes in Q4. But it was too little, too late as full year demand fell by seven per cent to 4,071.7 tonnes.

According to World Gold Council, full-year gold jewellery demand increased by four per cent to 2,135.5 tonnes – the first year of growth since 2013.

India and China led a four per cent recovery in jewellery, although demand remains below historical averages. Increased use of gold in smartphones and vehicles sparked the first year of growth in technology demand since 2010.

India’s 12 per cent year-on-year improvement was partly due to a very weak 2016. Demand fluctuated on changes in tax and regulation.

Source:https://www.khaleejtimes.com/business/retail/despite-pre-vat-buying-rush-uae-jewellery-demand-hits-20-year-low

Saudi shops accused of increasing prices due to change shortage

Shops in Saudi Arabia are reportedly increasing prices to avoid having to handover small change to consumers following the introduction of value added tax.

The 5 per cent tax rate has caused problems for shop owners in both the UAE and Saudi Arabia since it was implemented on January 1 due to an apparent lack of small coins in circulation.

Abu Dhabi’s Department of Economic Development initially gave shop owners permission to round up prices by up to Dhs0.20 last month before reversing the decision following assurances of sufficient coins from the central bank.

The Saudi Arabian Monetary Authority (SAMA) has similarly assured that there are enough coins distributed in the market and available at banks.

It has asked shop owners to sue banks if they refuse to hand over the coins asked for.

Despite this, Arabic newspaper Makkah reported on Sunday that shops are instead choosing to raise prices so when VAT is calculated there is no need for small coins.

The publication cited the example of a well known bakery in Makkah city, which has increased the price of pastries from SAR1.5 ($0.40) to SAR1.9 so the additional 5 per cent VAT brings the total to SAR2 ($0.53).

Similarly, a fast food restaurant has increased the price of a meal from SAR12 ($3.20) to SAR12.4 so customers pay SAR13 ($3.47) after VAT, it said.

A shop owner told the publication that prices were fixed to round numbers, as small coins were not always available.

However, the kingdom’s Consumer Protection Society said any such increases were not justified and urged customers to inform the Ministry of Commerce and Investment of any unnecessary price increases.

Source:http://gulfbusiness.com/saudi-shops-accused-increasing-prices-due-change-shortage/

UAE’s gold jewellery demand falls to 20-year low

Even a late December surge in buying was not enough to add sparkle to the UAE’s gold jewellery sales during 2017. In fact, overall jewellery volumes dropped for a fourth straight year, totalling 42.8 tonnes as against the 43.4 tonnes gold retailers managed to sell in 2016. This is the lowest retail volumes for jewellery in the UAE over the last 20 years.

Saudi Arabia remained the biggest market for gold jewellery in the Gulf, accounting for 45.7 tonnes (down from 49.4 tonnes), according to the latest figures from London-based World Gold Council (WGC). Among Middle East markets, only Iran came out with a strong demand, up 12 per cent to 45.4 tonnes.

 In fact, much of the demand spike in the UAE happened during a six-day stretch from December 26, when DSF 2018 opened and shoppers used the opportunity to buy up gold ahead of the January 1 deadline for VAT to come into effect. As for the rest of 2017, there were phases when demand picked up but was not able to sustain the run beyond a few days. The firming up in bullion prices too had a role in shading gold’s glitter among shoppers. To put matters in context, the overall 2017 tally for UAE jewellery demand could have been much worse if not for the 16 per cent year-on-year gain during the final three months.

Overall global demand for jewellery weighed in at 2, 135.5 tonnes (up from 2016’s 2,053.6 tonnes), helped along by improved offtake in India (up 12 per cent to 562.7 tonnes) and China (at 646.9 tonnes and a gain of 3 per cent), based on WGC estimates. India’s jewellery offtake seems to be getting back into some shape after an exceptionally difficult run from November 2016, when demonetization vaporized demand for a couple of months, and then immediately after GST (goods and service tax) became effective from July 1, 2017.

On the whole, global jewellery demand ended 2017 in positive territory. Interestingly, this was the first time since 2013 that sales recorded a year-on-year gain.

But overall demand for the yellow metal took a bit of a dent in 2017, coming in at 4,071.7 tonnes and lower by 7 per cent from a year before. The main cause for the dip was the lack of buying support from ETFs (exchange traded funds) in the US, with investors there intent on topping up their exposures to already over-valued stocks rather than spread their risks. “They were willing to overlook valuations that were at historic high and stock prices that were pretty frothy,” said John Mulligan, Head of Member and Market Relations at the WGC, to ‘Gulf News’. “The P/E levels seem to be at a point only seen preceding crash.”

But even then, investors were unwilling to look beyond equity. As against the sizable ETF support for gold all through 2016, last year saw those in the US cutting down their exposures. Overall global ETF pick up of the metal was 202.8 tonnes, a sizable 63 per cent cut from the 546.8 tonnes in 2016. Only the backing of Europe-based ETFs – who collectively picked up 148.9 tonnes for a 73 per cent share – helped… and that too only to an extent.

There was subdued buying from central banks, with the notable exception of Turkey’s, which had been picking up 11 tonnes a month. The official gold reserves worldwide came to 371 tonnes in 2017, 5 per cent down on 2016.

And what of the immediate future for gold? US stocks – and even elsewhere – have been under strain for the last week. If these sell-offs pick up further momentum, gold could see an upswing. “We expect the (gold) prices to trade under pressure but recover by the end of the week amidst uncertainty in the equity markets,” says an update from Century Financial Brokers. “The solid uptick in average (US) hourly earnings and consistent growth in the global commodities index hints towards inflation rising, which could help counter the slump gold prices as well.”

None of which will be of any comfort for UAE’s gold consumers and its retailers. Market sources are worried that prices in the $1,300 an ounce plus range will make for subdued demand. And with the 5 per cent VAT add on, shoppers will take time to adjust this to when and how much they buy into gold.

Source:http://gulfnews.com/business/data/commodities/uae-s-gold-jewellery-demand-falls-to-20-year-low-1.2169020