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On 01 August 2017, the President of the United Arab Emirates (the “UAE”) issued the Federal Law No 7 of 2017 for Tax Procedures (the “Law’’) establishing the legal framework for a new tax regime planned in the UAE. This will commence with the implementation of value added tax (‘’VAT’’) as of 01 January 2018.

The Law defines the role of the Federal Tax Authority (‘’FTA’’), which has been tasked by the Government to manage and collect federal taxes and related fines, distribute tax generated revenues and to apply the tax-related procedures being implemented. The Law provides a foundation for the new tax system, regulating the relationship between the FTA and all persons conducting business (“Taxable Persons”), as well as the procedure for the determination, assessment and collection of taxes. The criteria for businesses that may be a Taxable Person are yet to be defined.

In brief, the Law:

• imposes obligations on all Taxable Persons to maintain accurate commercial books and accounting records, to register with the FTA, to prepare and submit tax returns in Arabic (other languages may be accepted) and to pay taxes within the stipulated time frame;
• mandates that a register of tax agents be established with the FTA;
• establishes penalties for failure to observe general obligations;
• establishes penalties for tax evasion;
• sets out the parameters of the FTA’s conduct; and
• establishes procedures for reviews and legal challenges of any decision taken by the FTA.

The Law lays the foundation for the implementation of new tax laws in the UAE and will be most relevant to the introduction of VAT and excise taxes on 01 January 2018. Detailed information on the scope and effect of the Law will be made available once the Executive Regulations have been published. This is anticipated to be within 6 months from issuing the Law.