UAE: Compliance with VAT Regulations Rises During Q1 2022

The UAE Federal Tax Authority (FTA), in an official report dated 21 April 2022, revealed that the number of VAT registrants had increased to 367,157 in the first quarter of 2022, compared to 358,468 in Q1 of 2021, an increase of 2.42%.

In its second yearly meeting chaired by Sheikh Mohammed bin Rashid Al Maktoum, the Deputy Prime Minister and Ruler of Dubai; the FTA Board of Directors adopted the tax authority’s financial statements for 2021.

The meeting held at the FTA headquarters in Dubai reviewed a report on the FTA’s plans to develop and improve the procedures of UAE’s existing tax system in line with the best international standards and practices. Implementing systems and procedures for improved customer services through fast, accurate, and user-friendly digital platforms were also discussed in the meeting. The status of progress on developing the draft corporate tax law was also reviewed by the FTA board.

Upgradation of FTA Services

Directives were issued by the FTA Board Chairman, Sheikh Maktoum on maintaining the pace of upgrades made to the services of the tax authority, complying with international best practices and adhering to the digital transformation plans, specifically developed to boost the country’s competitive edge in terms of services provided to the taxpayers and help realize the country’s vision to become one of the world’s highest-ranking governments based on trust and performance.

The government of Dubai Media Office in a statement noted, “The directives aim at focusing on the customer and enhancing competencies to become a world leader in government services, drawing on the UAE’s ‘Principles of the 50’ and the terms of the new methodology for government action”.

Enhanced Customers Satisfaction

The reports which were presented in the meeting highlighted the efforts of FTA to maintain high scores in the service performance across all areas and activities. Sheikh Maktoum reviewed the plans of the tax authority to enhance services for ensuring satisfaction for all clients and representing all segments of society.

The FTA Chairman added, “The Federal Tax Authority is committed to strengthening its relations with all entities involved in implementing the tax system in the government and private sectors, and to fulfilling its role in driving nationwide economic diversification policies through the administration and collection of federal taxes, in line with best practices.”

“The authority is constantly reviewing the executive regulations it issues for each tax legislation to ensure top-level performance and streamlined procedures. The stages ahead will witness sweeping developments and upgrades to tax systems and procedures to enhance the quality of the FTA’s services,” Sheikh Maktoum highlighted.

Report

The report detailed the accomplishments of the tax authority over the last year and the first quarter of 2022, documented the status of progress made on existing projects and provided all statistics regarding Value Added Tax (VAT), Excise Tax, Tax Returns, tax payments, and all refund requests already processed.

The report revealed that compliance with tax regulations continued to grow in all the emirates across the UAE. The number of Excise Tax registrants has also grown, registering 1,398 numbers compared to 1,357 last year with an increase of 3.02%. Besides, the number of Tax Agents has also increased to 446 nos compared to 433 with a net increase of 3%.

New applications from UAE citizens for VAT refunds on expenses incurred on building new residences were promptly approved by the tax authority and the value of refunds totalled AED185,038,134 during the first quarter of 2022 compared to AED118,503,245 in the first quarter of 2021, registering a huge growth of 56.15%.

This staggering increase in refunds reflects the FTA’s commitment to streamlining online procedures of VAT refunds for UAE citizens building their new houses. This also highlights the country’s vision to develop a modern society with an affordable housing system for citizens and ensure their wellbeing. Enhanced customer satisfaction, as a policy and objective form the core of functionalities of all the government institutions including the FTA.

The report also highlighted the results of the implementation of two phases of the ‘Marking Tobacco and Tobacco Products Scheme’, aimed at preventing the sale or possession of all types of cigarettes including waterpipe tobacco (Mu’assel), and electrically heated cigarettes, not carrying the Digital Tax Stamps in local markets for tax evasion.