The smooth application of the tax system in the UAE was reflected in the basic indicators of the local economy, so the pace of business growth continued, represented by increasing commercial licenses, and the gross domestic product recorded good growth, despite the global market conditions, as foreign direct investment increased, and inflation levels stabilized at natural rates after Only four months from the start of the application.

Over the past two years, the UAE’s experience in applying the tax has received praise from the International Monetary Fund mission for the mechanisms and method of applying the tax system locally, as it has more than once confirmed that the implementation of value-added tax in the UAE has been well managed, despite the challenges that were expected, After the implementation of the tax constituted a major administrative and cultural transformation.

The economic growth of the country was not affected by the application of the two types of tax, as the gross domestic product recorded a growth rate of 1.7% in 2018, rose to 2.3% for the current year, according to the quarterly review report issued by the central bank recently.

Foreign investment

During the first year of applying the tax, the UAE attracted foreign direct investments in 2018 amounting to $ 10.4 billion, to top the Arab rank first, accounting for 36% of the total foreign direct investment flowing to the group of Arab countries, and the second rank at the level of West Asia, accounted for About 33.4% of the total FDI inflows to this region, according to the latest data issued by the Ministry of Economy.

In 2019, it ranked 27 globally in terms of its ability to attract foreign direct investment, according to the classification followed by the United Nations Conference on Trade and Development (UNCTAD), in the results of the global foreign direct investment report issued for 2019.

New licenses

The number of licenses for new economic activities, which were registered in all emirates during the first 11 months of 2019, reached about 45 thousand licenses, bringing the total number to 585 thousand and 423 licenses, a growth of 8.3% compared to the same period in 2018, according to data The National Economic Register of the Ministry of Economy.

Multiple factors

The Undersecretary of the Ministry of Economy, Mohamed Abdulaziz Al-Shehhi said that there are many factors that contributed to the local economy not being affected by the application of taxes, as indicators show all the growth and absorption of the market for application over the past two years, pointing out that among the most important of these factors are diversity, the multiplicity of economic sectors, and work According to comprehensive plans, whether Emirates strategy 2021 or 2071.

Al-Shehhi stressed that there is a continuous focus on economic diversification, away from oil, such as the services and tourism sector, retail trade, construction, construction, and industry, noting that all of this boosted the country's GDP growth at a good rate, despite the global market conditions.

Al-Shehhi revealed that the UAE has immediate and future economic plans, based on the knowledge economy, the application of artificial intelligence and innovation, accompanied by a package of laws and advanced laws, in order to serve the goals of sustainable development, and contribute to the stability of growth rates, stressing that all of this helped a lot in the application of smooth Flexible to the tax system, and growth and business sectors are not affected.

Continuous consultations

For its part, the Chairman of the Merchants Committee at the Abu Dhabi Chamber of Commerce and Industry, member of the Board of Directors, Reid Al-Dhaheri, said that the implementation of the tax system was accompanied by continuous consultations between the private sector and the Federal Tax Authority, regarding the impact of the tax on businesses or specific sectors, and this was evident when it was affected Some gold dealers and suppliers, and here the authority listened to the demands of merchants, and measures were taken to exempt investors and suppliers in the gold and diamonds sector from value added tax, in addition to returning the tax paid on services provided in exhibitions and conferences, and returning it to tourists.

And she continued: «Since the beginning of the implementation of the value-added tax, gold merchants were affected, so we held extensive meetings with merchants and the Federal Tax Authority, and the negatives that affected this important sector were presented, and indeed the response came from the official authorities on a large amount of responsibility.

She continued: “We conveyed the aspects of the image and our concerns as merchants and business owners honestly, so the government reaction that pleased us all came with the issuance of a decision by the Council of Ministers, in May 2018, i.e. just five months after the application, as the cabinet approved a decision on commercial transactions for value tax Added to the gold and diamonds sector, in which it stipulates that investors and suppliers in the gold and diamonds sector are exempt from any taxes on their commercial transactions.

Low percentage

In turn, the spokesperson for the tax agents in the UAE, the tax agent Muhammad Hilmi, said that the rates by which the tax was applied, especially the value-added tax, came low which is 5% and zero% compared to international rates that reach rates above 20%, along with the exemption of some Tax goods and services, which contributed to the business sectors not being affected, but rather allowed them to develop their systems and contributed to improving the level of performance, raising the level of corporate credibility, increasing the level of transparency in the markets, and opening more job opportunities in the government and private sectors, in the areas of accounting, auditing and consulting Tax.

“During the past two years, tax agents took the initiative to help the private sector and large companies, to ensure conformity with their systems, submit their declarations in a manner consistent with the system, and ensure degrees of full compliance with the value-added tax system, and those establishments made changes in their operations Basic financial management, and the methods adopted by it in bookkeeping and accounting records, in addition to the technical means that it uses, in addition to making changes in its human resources, such as accountants and consultants, as well as linking with tax agents accredited by the Federal Authority Friendly tax ».

Helmy stressed that the Federal Tax Authority made a significant and noticeable effort during the previous period, and developed and harnessed all solutions, energies and capabilities, despite the recent application, to facilitate and simplify tax procedures for taxpayers, through continuous clarifications, and activating rapid communication channels, workshops and periodic meetings with Agents and business sectors, providing tax clinics, and activating and supporting the strategic role of the tax agent as a major partner in the tax system.

Healthy system

Helmy explained that the tax system in any country is a health system, and all modern economies adopt it, especially if it is characterized by flexibility, effectiveness and fairness in application, because of its positive impact in reducing consumption of goods harmful to health or the environment, as well as urging individuals to rational consumption, pointing to The UAE has successfully managed to implement this modern system in a short period of time, and has surpassed all challenges and obstacles, depending on national experiences and competencies.

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