|By K Raveendran| With the VAT announcement already having been made, the next landmark decision business circles are keenly watching out for is the establishment of the UAE Federal Tax Authority.
The new authority or department is expected to be entrusted with the task of implementing and collecting various taxes, including the proposed corporate taxes.
In June last year, the Ministry of Finance (MOF) had outlined in a report the move for the establishment of a tax system in the UAE.
The corporate tax policy has already been approved by the Cabinet along with the draft on the common value added tax (VAT) law framework for Gulf Cooperation Council (GCC) countries. The draft law on the establishment of a Federal Tax Authority is now before the Ministry of Justice’s technical committee for legislation. This will now go to the Cabinet, the Federal National Council and the Supreme Council, before it is presented to the President for signature.
According to Younis Haji Al Khouri, Undersecretary of the MOF, the draft of the corporate tax law and the value added tax law has been discussed with the local and federal governments. Several steps have already been initiated in this regard, although the specific timeline for implementation of the corporate tax policy has not yet been announced.
One of the complicated issues relates to the implementation of the tax laws at the individual Emirate’s level as it has to be in conjunction with various laws applicable to each emirate. Since the country does not have any significant taxation policy in place, the infrastructure for the tax administration has to be built from the scratch, which will present its own challenges.