President His Highness Sheikh Khalifa bin Zayed Al Nahyan has issued the landmark Federal Law No. 7 of 2017 for Tax Procedures, which sets the foundations for the planned UAE tax system, regulating the administration and collection of taxes and clearly defining the role of the Federal Tax Authority, FTA.
The Tax Procedures Law 's provisions and obligations run as follows: -The Law requires any Person conducting any type of business to keep accounting records and commercial books, as well as any tax-related information as determined by the Law.
Tax returns, data, information, records and documents must be submitted to the Authority in Arabic.
The FTA may, however, accept documents in any other language, as long as the Person provides a translated copy into Arabic at their expense and responsibility if so requested.
-Furthermore, any Person obliged to register or any other Person eligible for registration must do so, as stipulated by the Law.
Registrants must include their Tax Registration Number TRN, in all correspondences and transactions with the Authority or with others. They must also inform the Authority – by filling the form – of any circumstance that might require the amendment of information related to their Tax record within 20 working days of the occurrence of said circumstance.
-Each Taxable Person must also prepare the Tax Return for each Tax Period and for each Tax while being registered. They must then submit the Tax Return to the Authority and pay any Payable Tax as specified in the Tax Return or any Tax Assessment within the time limit. The Authority reserves the right to turn down any incomplete Return – i.e. if it does not include the basic information determined by the Tax Law.
-The Law mandates that a Register of Tax Agents be established at the Authority, which will hold files for each Agent documenting his/her conduct. It is not permitted for any Person to practise the profession of a Tax Agent in the UAE unless he/she is enrolled in the Register. Procedures for registration, as well as the rights and obligations of the Tax Agent before the Authority and the Person, is specified in the Executive Regulations of the Law.
-The Authority may perform a Tax Audit on any Person to determine their compliance with the provisions of the relevant Laws. The FTA may perform the Audit at its office or the place of business of the Person (or any other place where they conduct business, store goods or keep records), in which case, the Person must be given a prior notice of at least five business days.
-While conducting a Tax Audit, the Tax Auditor may ask for original records or copies thereof, or take samples of the goods, equipment or other assets available at the Person’s place of business. The Tax Audit will be conducted during the official working hours of the Authority. The Director General may, by way of exception, issue a decision to conduct the Audit outside regular hours if necessary.
-The Authority may order a re-audit if new information surfaces that might impact the outcome of the Tax Audit. Any Person subject to a Tax Audit, as well as his Tax Agent or legal representative, must offer all required assistance to the Tax Auditor to perform his/her duties.
The audited Person has the right to: request the Tax Auditors to show their professional identification cards; obtain a copy of the Tax Audit Notification; attend the auditing procedures that take place outside of the Authority’s headquarters; and obtain copies of any original paper or digital documents removed or obtained by the FTA during the Tax Audit.
-The Authority must issue a Tax Assessment to determine the value of Payable Tax and serve it on the Taxable Person within five working days of its issuance in any of the following cases: if the Taxable Person fails to apply for registration within the timeframe specified by the Tax Law; if they fail to submit a Tax Return within that timeframe; if they fail to pay the Tax stated as Payable on the submitted Tax Return before the deadline; if the Taxable Person submits an incorrect Tax Return; and if the Registrant fails to calculate Tax on behalf of another Person when they are obligated to do so by the Tax Law.
-The Law addresses Conflict of Interest, prohibiting all Authority staff members from performing or participating in any tax procedures related to any Person in the following cases: if the staff member and that Person are related up to the fourth degree; if there is a common interest between the staff member and Person or between any of their relatives up to the third degree; and if the Director General decides that the staff member should not perform any tax procedures related to that Person owing to a case of conflict of interest.
-Employees of the Authority are bound by Non-Disclosure clauses and are prohibited from disclosing information that they obtained or to which they had access in their capacity as employees (save as specified or defined in accordance with the Executive Regulations). FTA employees are required to maintain professional confidentiality after cessation of their services, and are prohibited from disclosing information that they obtained or to which they had access in their capacity as employees, unless otherwise requested by the judicial authorities and in accordance with the Executive Regulations. Any person who has obtained information pursuant to the provisions of the Law is not to disclose or use said information for any purposes other than those for which the information was obtained.
The full text of the Tax Procedures Law is available on the Ministry of Finance’s website: www.mof.gov.ae