His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE has approved Law No. 7 of 2017 issuing the Tax Procedure Law (‘the Law’). The Law shall be regulated by the recently formed Federal Tax Authority (FTA) of the UAE by the Ministry of Finance.

The Law is essentially the framework which outlines the procedures that businesses must adhere to for governance purposes in respect of all compositions of tax, including but not mutually exclusive to value-added tax (VAT).
 
In summary, the areas covered within the law include:

• Record keeping of financial and accounting details for five years;
• Tax procedures;
• Empowering the FTA to conduct audits;
• Objections and Appeals;
• Collections and refunds;
• Voluntary disclosures in cases of oversight and errors;
• Tax Evasion and provisions governing Penalties and enforcement; and
• Any tax related documents required by the tax laws.

The regulation also includes the recently announced excise duties on tobacco products, carbonated and energy drinks alongside details of the impending VAT.  Further, a significant announcement also refers to the requirement for Tax Agents to register with the Authority.
 
Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, UAE Finance Minister and Chairman of the FTA was quoted as saying “this legislation lays the groundwork for the UAE’s plans to ensure sustainability and diversification of the economy ensuring revenue streams for the Government to achieving the UAE’s goal to meeting the most stringent international standards”.
 
The announcement of the Tax Procedure Law marks a pivotal move within the UAE, specifically relating to the implementation of VAT on 1 January, 2018, which correlates to the recently announced VAT Law and Regulation of Saudi Arabia which is scheduled to also commence on the same date.
 
These active movements further validate the need for businesses to act now in preparation for the implementation of VAT which will take effect in less than five months.