The excise tax was introduced with effect from 1 October 2017 in the UAE. Excise Tax is an indirect tax levied on specific excise goods which are either imported into the UAE, produced within the UAE, released from a designated zone in the UAE, or stockpiled in the UAE.
VAT was introduced with effect from 1 January 2018 in the UAE. As a general consumption tax on the supply of goods and services, it applies to those supplies which take place within the territorial area of the UAE.
The introduction of these new taxes in the region also created a need for guidelines to govern the administration of taxes in the UAE, and in particular to introduce a governance framework for the interaction between taxable persons and the Federal Tax Authority (“FTA”). This framework is enshrined in the Federal Law No. 7 of 2017 on Tax Procedures (“the FTP Law”) and Cabinet Decision No. 36 of 2017 on the Executive Regulations of Federal Law No. 7 of 2017 on Tax Procedures (“the FTP Executive Regulations”).
The FTP Law defines the concept of a tax agent, a natural person is given authority to liaise with the FTA in relation to the tax affairs of another person. International best practice indicates that tax agents play an important role in the administration of a tax system – they are independent of the tax authority but serve a role in better facilitating the interactions between the tax authority and the taxpaying community. Tax agents work for and on behalf of their clients by representing them in their affairs with the FTA and assisting in easing the compliance burden of taxable persons by providing an option whereby certain compliance functions can be performed by the tax agent on the taxable person’s behalf. The FTA commits to work collaboratively with tax agents in order to encourage the ease of doing business in the UAE.
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