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Newsletter

Recent Major Changes in India Tax Law

May 19, 2017

Introduction

The High Net Individuals, and Multinational enterprises and corporate are aggressively doing tax planning by engaging in complicated tax structuring to have less payout. Although the structure is legally acceptable, however the object of evading tax via them is not considered moral and is a question for discussion by various countries. In this regard, India has also been taking many steps for enforcement of General Anti Avoidance Rules (‘GAAR’), including amendments to the various bilateral tax treaties with various countries Mauritius, Singapore, Cyprus etc.

General Anti Avoidance Rules (‘GAAR’): Evolution

The General Anti Avoidance Rules (‘GAAR’) were originally proposed along with Direct tax code 2009, with the objective of targeting the transactions made to avoid or evade taxes. And was introduced by the Pranab Mukherjee, in Budget Session on 16 March 2012. GAAR was considered controversial as was containing provisions to seek tax with retrospectively from past overseas deal involving local assets. Therefore, due to negative publicity, including pressure from the group, its implementation was postponed for implementation over 3 years that is to 2016-17.

In year 2015 the tax proposal, postponed the implementation of GAAR for further two years to 2017-18 financial year, and with clarification that the same will not Apply to the investment made prior to March 31, 2017. With this background, thus, applicability and enforcement of the provisions of GAAR began from 1 April, 2017 in Financial Year 2017-18.

Chapter X – A of Income Tax Act, 1961:

The Chapter X-A of the Income Tax Act, 1961 (‘Act’), contains the provisions in relation to GAAR.

The said provisions follow the doctrine of “substance over form”as primary test that is irrespective of the legal structure to take into consideration following points for determining the taxes:

the effect of transactions
the intention of the parties, and
purpose of arrangement.

The tax authorities are empowered by the act to deny any tax benefit, if the transactions or arrangements are for deriving the tax benefits and not having any commercial substance or consideration.

Also, the Section 96 of the Act provides for Secondary Tests:

Creating rights, or obligations, which are not ordinarily created between persons dealing at arm’s length;
the misuse, or abuse, of the provisions of this Act – directly or indirectly;
lacks commercial substance or is deemed to lack commercial substance, in whole or in part; or
is entered into, or carried out, by means, or in a manner, which are not ordinarily employed for bonafide purposes.

The Section 97 further defines the condition of lack of commercial substances – the substance or effect of the arrangement as a whole, is inconsistent and include the location of an asset or of a transaction and have no significant effect upon the business risks or net cash flows without any substantial commercial purpose.

The Rule 10UB of the Income Tax Rules, 1962 lay down the process for invoking the provisions of the GAAR in relation to any arrangement or transaction. The assessing officer provides an opportunity to the assesse for providing objection as to the applicability of the provisions of the GAAR. Thereafter, the tax officer is required to make a reference to the Commissioner of Income Tax in all the cases. And thereafter if the Commissioner considers on the facts and circumstance of the case, that the provisions of GAAR is applicable, a reference shall be made to the Approving Panel regarding the applicability of the provisions of GAAR. In other case if GAAR provisions are not warranted and the Commissioner shall issue direction to the Assessing Officer accordingly.

Thus, the section puts burden on the tax payer to the transaction or arrangement or part thereof was not entered into with the intention of tax benefit or avoidance.

Impermissible Transactions:

In case the tax authority considers a transaction or arrangement, to be impermissible – the consequence would be a denial of the tax benefit or treaty to the assesse.

disregarding, combining or re-characterising
Treating the arrangement as if never entered into
Disregarding and Treating the accommodating party as one and the same
deeming persons who are connected persons as same persons
reallocating amongst the parties to arrangement
treat the place of residence of any party to the arrangement
the sit us of an asset or of a transaction

In other words, the Assessing officer lifts the veil to look through any arrangement by disregarding any corporate structure; or treat equity as debt, capital expenditure as revenue expenditure or vice versa.

Thus, in order to safeguard against the consequence – the assesse may follow Section 245N, Chapter XIX-B of the Act, which provides for an advance ruling for the arrangement being an impermissible avoidance arrangement or not, further such ruling can be sought either by a resident or a non-resident. It is pertinent to note that it must be taken prior to entering into any such arrangement as Advance Ruling is binding on both the assesse and the revenue.

In Conclusion:

The act provides that even if part of an arrangement or transaction if results in a tax benefit, the whole arrangement to be treated as ‘impermissible avoidance agreement’ resulting into, transactions to bealways prone and susceptible by the tax department. The act allows the tax official to deny the tax benefit, in case the deal is with purpose to evade taxes. Thus, the rules aim to improve transparency in tax matters and help curb tax evasion.

Newsletter

Highlights of IBBI’s New Corporate Voluntary Liquidation Process Regulations, 2017

April 27, 2017

Introduction

The insolvency and Bankruptcy Board of India (IBBI) via its notification dated 31^st March 2017 have issued regulations for voluntary liquidation of corporate persons. These regulations came into force with effect from 1^st April 2017. The Corporate persons shall include limited liability partnerships, companies, and other incorporated entities for these regulations.

Chapter V of the Insolvency and Bankruptcy Code, 2016 consolidates the bankruptcy, insolvency and liquidation laws for the companies. The Bankruptcy code attempt to shift the process of voluntary liquidation from the scope of the Companies Act, 2013. The newly effected regulations are a result of the same and are made by the board in the exercise of the powers conferred upon it through Section 59, 196, 208 read with 240 of the Insolvency and Bankruptcy Code, 2016. This article shall provide the major highlights of the newly effected regulations for voluntary liquidation of corporate persons.

Highlights

The regulation prescribes the entire process of liquidation right from the initiation to the dissolution of the corporate persons. The regulations provide that:

A corporate person may opt to initiate a proceeding for its voluntary liquidation if it has not committed any default in payment of its debts.
A declaration of solvency is need to be given by majority of directors/ designated partners of corporate person.
A special resolution for voluntary liquidation will be required to be passed to obtain the approval of shareholders/ contributors of the corporate person within four weeks of declaration of solvency by the directors as mentioned in the above point. The process of voluntary liquidation shall be deemed to be initiated from the date of passing the special resolution.
The corporate person is required to appoint an insolvency professional to act as a liquidator. The corporate person should not carry any business activity after the appointment. The regulations also provide the procedure for appointment and the eligibility criteria for the person to be appointed as an insolvency professional.
The regulations also prescribe the manner for submitting the claims of operational and creditors, employees and other stakeholders
The liquidator shall prepare a list of claims within 30 days of receipt of claims and prepare a list of stakeholders within 45 days of receipt of claims. After completing this, the liquidators shall realize the assets of the company, recover outstanding debtors and unpaid capital/ contribution. This money should be deposited in a separate bank account and shall be distributed to stakeholders within six months of its receipt.
If the proceeds of receipts in the above point are not sufficient to pay off the debts of the corporate person, the liquidator shall make an application to the National Company Law Tribunal (NCLT) to pass the order the tribunal may deem fit.
The liquidator shall complete the liquidation process within twelve months of commencement. If for any reason, the liquidation is not completed within the specified period, he should call for a meeting of contributories to present annual status report at the end of each year.
Liquidator must submit his final report to the Registrar of Companies (RoC) and the IBBI and shall make an application to NCLT to dissolve the corporate person.
The liquidator is also mandatorily required to preserve and maintain copy of reports, registers and books of accounts of the corporate person for minimum eight years after the dissolution.

Conclusion

The regulations are an innovative toward having separate code for voluntary liquidation of companies not having much operations. Closing a company in India is a lengthy and cumbersome process. The introduction Insolvency professionals is again a welcome move as they shall the experts in intricate issues involved in the process of dissolution of the company.

Newsletter

RBI Liberalizes the norms for FDI in LLP

April 27, 2017

Introduction

Limited liability partnership (LLP) was introduced by Ministry of corporate affairs of India in 2008 as a tool for small businesses who want to have a corporate status and need flexibility in compliance requirements in comparison to companies registered under the Companies Act. However, initially the Foreign Direct Investment (FDI) in LLP’s was permitted only under the approval route and there were restrictions in obtaining external commercial borrowings (ECBs).

Later, in 2015 the Reserve Bank of India (RBI) allowed FDI under automatic route for LLP’s in some sectors where are no FDI linked performance conditions. However, there are still concerns about the restrictions on external commercial borrowings and conversion of existing company into an LLP through FDI was allowed only under the approval route.

Highlights

RBI via its FEMA notification dated 3^rd March 2017 have amended Schedule 9 to FEMA notification no. FEMA 20/2000 – RB to make appreciable changes in existing scenario. We shall discuss the highlights of this newly issued notification in the coming paragraphs:

An existing company can now be converted into LLP through FDI under automatic route in sectors where 100% FDI is permitted under the automatic route and subject to the condition that are zero FDI linked performance conditions.
The foreign companies can now be appointed as Designated Partners (DPs) in LLPs after removal of mandatory condition which only allowed body corporate registered under Indian Companies Act to appoint a DP in LLP.
The new amendments also waive the residency requirements to be fulfilled by individual DP’s of LLP that has received FDI. Now, the individual DP’s will only require to fulfill the residency requirements mentioned under the LLP Act.
The LLP’s which have received FDI are mandatorily required to submit reports to the RBI in their annual return on foreign assets and liabilities by 15^th Day of July every year.

Conclusion

The new notification will help Indian businesses to procure desired funds through FDI and boost the economic growth. Foreign entities looking for expansion may also find this a welcome step to have their presence in India in the form of LLP’s with relaxed provisions for FDI and ECB. It also bridges the existing gap between the RBI regulations and Indian Government’s policy on FDI.

Newsletter

GST Updates – Road to Implementation of GST in India

April 27, 2017

Introduction

The Goods and Services Tax (GST) is soon going to be a reality in India and the government is taking effective steps to achieve its target implementation dated which is 1^st July 2017 waiving the existing dual system of taxation of goods and services in the form of VAT, sales and service tax. It will subsume all existing indirect taxes in India. GST has been recognized as one of the most decisive tax reform in the history of tax reforms in India. The GST bill passed in Lok Sabha on 29^th March 2017 ratifying the earlier one passed on 8^th August 2016 and received nods of the upper house of parliament on 6^th April 2017. We shall discuss the latest updates on GST in the coming paragraphs.

Recent Developments

Four Supplementary bills viz. GST (compensation to States) Bill, 2017, Central GST (CGST) Bill, 2017, Integrated GST (IGST) Bill, 2017 and the union territory GST bill was approved by the GST council during its various meetings held in February and March 2017. These bills were later approved by the union cabinet chaired by the Prime minister of India on 22^nd March 2017 before they are presented in the budget session of parliament.
To involve taxpayers and provide regular updates about the developments, the ministry of finance launched a mobile app for tax payers and stakeholders on 24^th February 2017.
The Central Board of Excise and Customs (CBEC) will soon be renamed as Central Board of Indirect Taxes and Customs (CBIC) and the minister of finance has also approved reorganization of field formations. It shall be operational from 1^st June 2017
The union cabinet also given its nod to the amend the relevant existing legislation for smooth implementation of GST and to annul the Acts which will become irrelevant post implementation of GST.
GST council has decided a four-tier tax rate viz. 5%, 12%, 18% and 28%, with lower tax rate for essential items and the highest for luxury goods and demerit goods like tobacco and aerated drinks. Council also approved a maximum cess of 15% for highest rate.
A GST working group have been set up via CBEC order dated 24^th March 2017 to examine sector specific issues to identify and address the peculiar issue relevant to sectors.
The prime minister of India has announced a major public outreach program to enlighten the stakeholders about the provisions and benefits of GST.

Bottom Line

Implementation of GST is in the final stages of completion and it is visible from proactive efforts of governmental authorities. The GST council is already discussing the draft rules for Registration, valuation, input tax credit and transition towards GST. It is now high time for the industry as well as professionals to tighten their belts to ensure they are well prepared before the GST go live on papers.

Newsletter

India jumps to 8th place on Global FDI Confidence Index

April 27, 2017

India has jumped one spot to rank 8th in the 2017 AT Kearney Foreign Direct Investment (FDI) Confidence Index with 31 percent of the surveyed respondents being more optimistic on economic outlook over the next three years.

“Investors see India as a vast and diverse up-and-coming market with plans to increase investments there over the near to medium term,” said Vikas Kaushal, Partner and Head of India at AT Kearney.

Investor confidence in India has been growing steadily over the last two years, making it one of the top two emerging market performers on the FDI Index, said the UK-based AT Kearney in the index.

“Reform efforts by the current government have improved the country’s investment environment. This includes the national goods and service tax (GST) reform, the largest non- direct tax reform in India in recent years,” Vikas said.

“India’s vast domestic market is an added attraction for foreign companies. Investors are looking at India’s phenomenal economic performance as a key selling point.

“It is forecast to be the fastest-growing major economy in the world in the coming years, which should provide a variety of investment opportunities to global firms,” he said.

Among the investors surveyed, over half said a successful GST implementation would cause them to significantly or moderately increase their investment in India.

More broadly, 70 percent of the respondents plan to maintain or increase their FDI in India in the coming years, according to Kearney.

India’s government is considering further policy reforms to further boost FDI inflows. A proposal to loosen FDI regulations on the retail sector is being evaluated, in part to support the country’s ‘Make in India’ initiative and bolster the manufacturing industry, said the consultancy.

The government is eliminating the need for FDI approvals in sectors where licenses are also required, such as defence, telecommunications and broadcasting.

Newsletter, VAT

VAT FAQ -Released by Ministry of Finance

March 31, 2017

In the quickly shifting legal environment of the GCC, the introduction of Value Added Tax (VAT) is the most trending topic this month. In this article, we discuss the general FAQs and what VAT means for your business in GCC.

1. General Questions

1.1 What is tax?

Tax is the means by which governments raise revenue to pay for public services. Government revenues from taxation are generally used to pay for things such public hospitals, schools and universities, defence and other important aspects of daily life.

There are many different types of taxes:

A direct tax is collected by government from the person on whom it is imposed (e.g., income tax, corporate tax).
An indirect tax is collected for government by an intermediary (e.g. a retail store) from the person that ultimately pays the tax (e.g., VAT, Sales Tax).

1.2 What is VAT?

Value Added Tax (or VAT) is an indirect tax. Occasionally you might also see it referred to as a type of general consumption tax. In a country which has a VAT, it is imposed on most supplies of goods and services that are bought and sold.

VAT is one of the most common types of consumption tax found around the world. Over 150 countries have implemented VAT (or its equivalent, Goods and Services Tax), including all 29 European Union (EU) members, Canada, New Zealand, Australia, Singapore and Malaysia.

VAT is charged at each step of the ‘supply chain’. Ultimate consumers generally bear the VAT cost while Businesses collect and account for the tax, in a way acting as a tax collector on behalf of the government.

A business pays the government the tax that it collects from the customers while it may also receive a refund from the government on tax that it has paid to its suppliers. The net result is that tax receipts to government reflect the ‘value add’ throughout the supply chain. To explain how VAT works we have provided a simple, illustrative example below (based on a VAT rate of 5%):

1.3 What is the difference between VAT and Sales Tax?

A sales tax is also a consumption tax, just like VAT. For the general public there may be no observable difference between how the two types of taxes work, but there are some key differences. In many countries, sales taxes are only imposed on transactions involving goods. In addition, sales tax is only imposed on the final sale to the consumer. This contrasts with VAT which is imposed on goods and services and is charged throughout the supply chain, including on the final sale. VAT is also imposed on imports of goods and services so as to ensure that a level playing field is maintained for domestic providers of those same goods and services.

Many countries prefer a VAT over sales taxes for a range of reasons. Importantly, VAT is considered a more sophisticated approach to taxation as it makes businesses serve as tax collectors on behalf of the government and cuts down on misreporting and tax evasion.

1.4 Why is the UAE implementing VAT?

The UAE Federal and Emirate governments provide citizens and residents with many different public services – including hospitals, roads, public schools, parks, waste control, and police services. These services are paid for from the government budgets. VAT will provide our country with a new source of income which will contribute to the continued provision of high quality public services into the future. It will also help government move towards its vision of reducing dependence on oil and other hydrocarbons as a source of revenue.

1.5 Why does the UAE need to coordinate VAT implementation with other GCC countries?

The UAE is part of a group of countries which are closely connected through “The Economic Agreement Between the GCC States” and “The GCC Customs Union”. The GCC group of nations have historically worked together in designing and implementing new public policies as we recognize that such a collaborative approach is best for the region.

1.6 When will the VAT go into effect and what will be the rates?

VAT is likely to be introduced across the UAE on January 1 2018. The rate will be low and is likely to be 5%.

1.7 How will the government collect VAT?

Businesses will be responsible for carefully documenting their business income and costs and associated VAT charges. Registered businesses and traders will charge VAT to all of their customers at the prevailing rate and incur VAT on goods / services that they buy from suppliers. The difference between these sums is reclaimed or paid to the government.

1.8 Will VAT cover all products and services?

VAT, as a general consumption tax, will apply to the majority of transactions in goods and services. A limited number of reliefs may be granted.

1.9 Will the cost of living increase?

The cost of living is likely to increase slightly, but this will vary depending on the individual’s lifestyle and spending behaviour. If your spending is mainly on those things which are relieved from VAT, you are unlikely to see any significant increase.

1.10 What measures will the government take to ensure that businesses don’t use the VAT implementation as an excuse to increase prices?

VAT is intended to help improve the economic base of the country. Therefore, we will include rules that require businesses to be clear about how much VAT you are paying for each transaction. You will have the required information to decide whether to buy something or not.

1.11 When will more details on VAT be available?

We anticipate that more detailed information will be available in the near future.

2. VAT for Businesses

2.1 Will all businesses need to register with the government for VAT?

No, not all businesses will need to register for VAT. In simple terms, only businesses that meet a certain minimum annual turnover requirement will have to register for VAT. That is, many small businesses will not need to register for VAT. We have made this decision to safeguard small businesses from the extensive documentation and reporting that a system like VAT requires. Also, businesses may not need to register with the government if they only provide goods and services which are not subject to VAT.

Please note that we have not yet finalized the specific conditions (such as minimum annual turnover) that will help identify businesses that do not need to register for VAT. Once that information is finalized, it will be shared with the public.

2.2 What are the VAT-related responsibilities of businesses?

All businesses in the UAE will need to record their financial transactions and ensure that their financial records are accurate and up to date. Businesses that meet the minimum annual turnover requirement (as evidenced by their financial records) will be required to register for VAT. Businesses that do not think that they should be VAT registered should maintain their financial records in any event, in case we need to establish whether they should be registered.

VAT-registered businesses generally:

must charge VAT on taxable goods or services they supply;
may reclaim any VAT they’ve paid on business-related goods or services;
keep a range of business records which will allow the government to check that they have got things right

If you’re a VAT-registered business you must report the amount of VAT you’ve charged and the amount of VAT you’ve paid to the government on a regular basis. It will be a formal submission and it is likely that the reporting will be made online.

If you’ve charged more VAT than you’ve paid, you have to pay the difference to the government. If you’ve paid more VAT than you’ve charged, you can reclaim the difference.

2.3 What does a business need to do to prepare for VAT?

Concerned businesses will have time to prepare before VAT will come into effect. During that time, businesses will need to meet requirements to fulfil their tax obligations. Businesses could start now so that they will be ready later. To fully comply with VAT, We believe that businesses may need to make some changes to their core operations, their financial management and book-keeping, their technology, and perhaps even their human resource mix (e.g., accountants and tax advisors). It is essential that businesses try to understand the implications of VAT now and once the legislation is issued make every effort to align their business model to government reporting and compliance requirements. We will provide businesses with guidance on how to fully comply with VAT once the legislation is issued. The final responsibility and accountability to comply with law is on the business.

2.4 When are businesses supposed to start registering for VAT?

Registration for VAT is expected to be made available to businesses that meet the requirements criteria three months before the launch of VAT. Businesses will be able to register online using eServices.

2.5 How often are registered businesses required to file VAT returns?

Registered businesses will be expected to submit VAT returns on a regular basis. It is expected that the default period for filing VAT returns will be three months for the majority of businesses.

Registered businesses will be able to file their returns online using eServices.

2.6 What kind of records are businesses required to maintain, and for how long?

Businesses will be required to keep records which will enable the authorities to identify the details of the business activities and review transactions. The specifics regarding the documents which will be required and the time period for keeping them will be communicated in due course.

3. VAT for Tourists and Visitors

3.1 Will tourists also pay VAT?

Yes, tourists are a significant source of revenue for the UAE and will pay VAT at the point of sale. Nevertheless, we have set the VAT rate deliberately low so that VAT is a limited burden on all consumers.

3.2 Will visiting businesses be able to reclaim VAT?

It is intended that we will allow foreign businesses to recover the VAT they incur when visiting the UAE. This is important as it encourages them to do business and also, because a lot of other countries have VAT systems, it protects the ability of UAE businesses to recover VAT when visiting other countries (where the rates are a lot higher).

4. UAE VAT Frequently Asked Questions (FAQs)

4.1 How can someone access UAE Tax Law?

UAE VAT law is currently being finalized, and will be published once approved. Announcements regarding the Tax Law will be made to the press and details will be published on the Ministry of Finance website. The primary source of information regarding the UAE VAT Law is the Ministry of Finance website. We recommend that you bookmark the page and visit it frequently to stay up to date on VAT related information.

5.Other Questions

5.1 What other taxes is the UAE considering?

As per global best practice, the UAE is exploring other tax options as well. However, these are still being analysed and it is unlikely that they will be introduced in the near future. The UAE is not currently considering personal income taxes, however.

5.2 Will this impact economic growth of the UAE?

Our analysis suggests that it will help the country strengthen its economy by diversifying revenues away from oil and will allow us to fund many public services. This is a sign of a maturing economy.

5.3 Where can I learn more about the UAE’s plan to implement VAT?

Over the course of 2016, the government will launch awareness and education campaigns to educate UAE residents, businesses, and other impacted groups. Our aim is to help everyone understand what VAT is, how it works, and what businesses will need to do to comply with the law.

We will also set up a website in 2016 where you can find information to understand the new tax in detail. A telephone hotline will also be established so that you can call and speak to one of our employees directly about VAT.

5.4 Are there any groups (individuals or organizations) that will be exempted from paying VAT?

VAT is a broad based tax and it is not intended that there will be special exceptions for individuals. However, there may be some special rules on VAT for organizations such as government entities as well as refunds available in some circumstances, especially where international obligations require us to make those refunds.

5.5 Changing my business systems for VAT reporting will cost money. Can the government help?

When VAT is introduced, the government will provide information and education to businesses to help them make the transition. The government will not pay for businesses to buy new technologies or hire tax specialists and accountants. That is the responsibility of each business. We will, however, provide guidance and information to assist you and we are giving businesses time to prepare.

5.6 What are the penalties for not complying with a business’s VAT responsibilities?

Everyone is urged to fully comply with their VAT responsibilities. The government is currently in the process of defining the exact fees and penalties for non-compliance.

Newsletter

Saudi-China business talks to boost trade and investment

March 31, 2017

RIYADH: The meeting of the Saudi-China Business Council in Beijing is expected to help boost trade and investment between the Kingdom and China, an official has said.
Abdullah Al-Mobty, chairman of the council, told Arab News that the business talks will coincide with King Salman’s visit to Beijing.

Al-Mobty said the discussions at the bilateral business talks will focus on cooperation in a number of areas, such as the Silk Road Economic Belt, part of a wider initiative of integrating trade and investment in Eurasia.

The trade volume between China and the Kingdom in 2016 was $42.36 billion, a decline of 18 percent on the previous year.

Newsletter, VAT

All six GCC states to implement VAT together, says UAE council official

March 31, 2017

The six members of the Gulf Cooperation Council (GCC) will all simultaneously introduce a law to implement value-added tax (VAT) in 2018, even if it means a slight delay due to some countries lagging behind in their preparations, an official in the United Arab Emirates (UAE) said.

Younis Al Khouri, under-secretary at the UAE’s finance ministry, told Zawya in an interview last month that a 5 percent VAT is expected to be implemented simultaneously across the GCC from January 1, 2018, as part of fiscal reforms following the plunge in oil prices.

However, tax experts have voiced concerns on the feasibility and likelihood of a totally simultaneous adoption, with some suggesting that the UAE might go ahead with implementation ahead of other Gulf Arab states.

Salem Abdulla Al Shamsi, a member of the UAE’s Federal National Council, told that no member of the regional trade bloc would move forward with the implementation of the tax system independently, even if it meant passing the January 1, 2018 target date.

“There will not be a country in the GCC that will do it standalone,” he said. “When they do it, everybody has to do it, as per the agreement before the GCC. They should sign together and start the VAT (implementation).”

The UAE’s Federal National Council (FNC) approved a draft federal law regarding the introduction of taxation procedures at a meeting on March 15 – a move that indicates that the state is in advanced stages of preparations to put a taxation system in place.

Obaid Humaid Al Tayer, UAE Minister of State for Financial Affairs, told the FNC meeting that the VAT framework agreement would be implemented across the GCC in a timeframe between January 1, 2018, to January 1, 2019, according to the official transcript of the council’s meeting.

Al Shamsi said that all six states were working very hard to meet the deadline. “In my personal view, if it (the implementation) does not take place on January 1, 2018, it will still go within 2018, but (with) all the countries entitled to start the VAT,” Shamsi said.

“The minister (Al Tayer) clearly mentioned yesterday (at the FNC meeting on March 15) that we will work along with all the partners and neighbour GCC countries to release it together,” he added.

Framework and procedures

During the meeting, the council said the tax procedures bill would provide a legislative framework and standardised procedures for any future tax laws, according to a transcript of the council’s meeting on its website.

“It is only the structure for the taxes – not just VAT, (but) for every other tax,” Shamsi said.

“Like it can apply to individual taxes, VAT, company taxes, real estate taxes – but we don’t have any (of those) yet the structure can easily make sure that if we launch any tax it will be within the guidelines.”

The tax procedures draft law included clauses laying out processes for the submission and collection of taxes, according to the transcript.

As per the draft law, each taxpayer would have to provide a tax statement and supporting documents in Arabic, the transcript stated.

The draft also outlined violations and penalties for tax evasion. It said penalties would apply to taxpayers who had intentionally refrained from paying taxes or those who provided false or incorrect documents.

Tax violators or evaders will be subject to either imprisonment or a fine that would not exceed five times the tax amount that was evaded, or both.

A director general and tax auditors will be appointed to enforce the tax law by a decree from the Minister of Justice, the transcript stated.

The UAE is expected to earn around 12 billion dirhams ($3.3 billion) of revenue from VAT in its first year.

Newsletter

Ethiopia, Russia sign MoU, Protocol Agreement

March 31, 2017

Ethiopia and Russia signed a Memorandum of Understanding (MoU) on Tourism and Culture and Protocol of the Intergovernmental Commission on Economic, Scientific, Technical and Trade Cooperation.

The agreement was signed by the two countries at the end of the 6th meeting of the intergovernmental Ethio-Russia Commission.

The Ethio-Russia Commission also agreed to boost the two countries trade exchange and diversify tradable commodities in both countries markets.

At the signing ceremony, Co-Chair of the Commission and Minister of Cabinet Affairs Alemayehu Tegenu said the meeting was crucial for Ethiopia in terms of extending and taking measures in enhancing its relation with Russia.

He noted that the two countries also agreed to diversify areas of cooperation in trade and investment fields and to establish industrial, education and agricultural partnership.

“Ethiopia and Russia also come to terms to bolster ties in science and technology, energy and mining sectors as well as commercial air transport services,” he said.

Co-chair of the Russian side of the commission and Deputy of Natural Resources and Environment Evgeny Kiselev on his part said his country is concerned with strengthening its economic relations Ethiopia.

He reiterated that he had discussion with officials from Ministry of Mines, Petroleum and Natural gas on ways his country’s investors could involve in the energy and mining sectors.

The co-chair further expressed his conviction to the joint commission’s roles in luring more Russian investment to Ethiopia.

The joint technical group agreed to establish follow up mechanism of the protocol and agreed to hold the 7th meeting of the Commission in Moscow in 2018.

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Ongoing Support

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Corporate Complaince

Outsourcing

Blog

Introduction

General Anti Avoidance Rules (‘GAAR’): Evolution

Chapter X – A of Income Tax Act, 1961:

Impermissible Transactions:

In Conclusion:

Introduction

Highlights

Conclusion

Introduction

Highlights

Conclusion

Introduction

Recent Developments

Bottom Line

1. General Questions

2. VAT for Businesses

3. VAT for Tourists and Visitors

4. UAE VAT Frequently Asked Questions (FAQs)

5.Other Questions

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