Unless you're a tax lawyer, you don't generally want to be at a New Year's Eve party where the main subject of conversation is tax. However, reports from my friends around the UAE confirm that little other than VAT was discussed at social events during the final hours of the country's days as a tax-free jurisdiction.
And now here we are: the VAT regime is in force. Even a couple of months ago, there were rumours that the UAE and Saudi Arabia may delay its introduction, partly to allow businesses more time to prepare given the late publication of the legislation and partly because of a fear of a competitive disadvantage with the GCC countries that were not introducing VAT. If any discussion of such a proposal took place within the Government, it was (rightly) rejected.
So far, the fiscal sky has not fallen in. People have posted photographs of VAT receipts on Twitter - anecdotally, prices seem to have increased by up to, but not more than, 5 per cent - and my smartphone and e-mail have generally been quieter in 2018 than they were in the last half of December. But don’t be fooled. Big challenges remain.
Over the holiday period, I received a communication from a friend that he had received from his landlord, erroneously stating that his residential rent will increase by 5 per cent because of VAT. Was this a misunderstanding of the law on the part of the landlord or a deliberate attempt to seek to raise prices? How will it be resolved? Note that unlike most businesses, landlords will suffer a VAT cost because their suppliers will generally have to charge VAT, something they will be unable to recover, so you can understand why they might want to increase prices.
I've seen arguments from tax advisers that certain supplies are not subject to VAT because they are not supplies of goods or services, notwithstanding that not only are they supplies under the general rule, but they are specifically referred to in the legislation. And in applying the legislation to certain more complex factual situations, I've seen that the law seems to throw up answers that may not entirely reflect the intention of the framers, or principles underlying VAT, such as "fiscal neutrality".
Which leads to this question: to what extent is the legislation that is in place today fixed for all eternity? Any changes could come at a number of levels.
First, to the extent the legislation doesn’t “work” at a micro-level, the Federal Tax Authority (FTA) and courts may be able to interpret it in a way that results in a fairer, more just outcome. If that is the case, it is important that these interpretations are well disseminated, and consistently applied. It would be detrimental to the rule of law, and in turn the business environment, if rules are applied inconsistently.
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Read more from Jeremy Cape:
Predicting outcome of VAT is a hit and miss affair
VAT may be simpler in the GCC but litigation will be complex
Who will bear the burden of VAT in the UAE?
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Secondly, to the extent the legislation doesn't work and the wording is sufficiently clear that there is not a simple administrative or judicial workaround, the legislation itself may need to be amended. That will give rise to questions of whether any desired amendment is consistent with the mandated approach outlined in the Unified VAT Agreement. If not, that will give rise to some difficult policy decisions on the part of the UAE – whether to keep the legislation as is, whether to seek an amendment to the Unified VAT Agreement, or whether to change the law and sort out the inconsistencies with its international obligations later. A decision would also need to be made whether any such corrective changes should be retrospective or not. If so, significant VAT refunds may in theory arise, but this is again not an entirely straightforward point.
Thirdly, the legislation may work as intended, but that intention may change. For example, the Government may determine some supplies that are currently zero rated should, say, be exempt. Or some supplies that are currently standard rated should, say, be zero rated. Changes in tax policy are sometimes criticised, but often there are good reasons for amending the scope and incidence of tax.
Fourthly, like other taxes, VAT needs to be dynamic on a macro level, to respond to broader changes in the UAE, the GCC and the wider world. For example, fundamental changes to the place of supply rules have occurred over time in the EU and VAT rates have changed (generally increasing) across the world. As recently as October 2017, the EU Commission announced a proposal to change the VAT regime fundamentally, including a move to the principle of "destination" whereby the final amount of VAT is always paid to the member state of the final consumer and charged at the rate of that member state.
Intuitively, one might conclude that the measure of success would be not seeing any change in the VAT legislation. In reality, I would argue that the measure of success of VAT in the UAE would be seeing all four types of changes over time.
That’s a subject to discuss at your next social event.
Jeremy Cape is a tax lawyer at Squire Patton Boggs, which has offices in London, Dubai and Abu Dhabi. Follow him on Twitter @jeremydcape
The most expensive investment mistake you will ever make
When is the best time to start saving in a pension? The answer is simple – at the earliest possible moment. The first pound, euro, dollar or dirham you invest is the most valuable, as it has so much longer to grow in value. If you start in your twenties, it could be invested for 40 years or more, which means you have decades for compound interest to work its magic.
“You get growth upon growth upon growth, followed by more growth. The earlier you start the process, the more it will all roll up,” says Chris Davies, chartered financial planner at The Fry Group in Dubai.
This table shows how much you would have in your pension at age 65, depending on when you start and how much you pay in (it assumes your investments grow 7 per cent a year after charges and you have no other savings).
|
Age
|
$250 a month
|
$500 a month
|
$1,000 a month
|
|
25
|
$640,829
|
$1,281,657
|
$2,563,315
|
|
35
|
$303,219
|
$606,439
|
$1,212,877
|
|
45
|
$131,596
|
$263,191
|
$526,382
|
|
55
|
$44,351
|
$88,702
|
$177,403
|
COMPANY%20PROFILE
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MATCH INFO
Asian Champions League, last 16, first leg:
Al Jazira 3 Persepolis 2
Second leg:
Monday, Azizi Stadium, Tehran. Kick off 7pm
Kill%20
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MATCH INFO
Uefa Champions League, Group B
Barcelona v Inter Milan
Camp Nou, Barcelona
Wednesday, 11pm (UAE)
How much sugar is in chocolate Easter eggs?
- The 169g Crunchie egg has 15.9g of sugar per 25g serving, working out at around 107g of sugar per egg
- The 190g Maltesers Teasers egg contains 58g of sugar per 100g for the egg and 19.6g of sugar in each of the two Teasers bars that come with it
- The 188g Smarties egg has 113g of sugar per egg and 22.8g in the tube of Smarties it contains
- The Milky Bar white chocolate Egg Hunt Pack contains eight eggs at 7.7g of sugar per egg
- The Cadbury Creme Egg contains 26g of sugar per 40g egg
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Killing of Qassem Suleimani
The Lowdown
Kesari
Rating: 2.5/5 stars
Produced by: Dharma Productions, Azure Entertainment
Directed by: Anubhav Singh
Cast: Akshay Kumar, Parineeti Chopra
How to volunteer
The UAE volunteers campaign can be reached at www.volunteers.ae , or by calling 800-VOLAE (80086523), or emailing info@volunteers.ae.
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
The specs: 2019 Mercedes-Benz C200 Coupe
Price, base: Dh201,153
Engine: 2.0-litre turbocharged four-cylinder
Transmission: Nine-speed automatic
Power: 204hp @ 5,800rpm
Torque: 300Nm @ 1,600rpm
Fuel economy, combined: 6.7L / 100km
North Pole stats
Distance covered: 160km
Temperature: -40°C
Weight of equipment: 45kg
Altitude (metres above sea level): 0
Terrain: Ice rock
South Pole stats
Distance covered: 130km
Temperature: -50°C
Weight of equipment: 50kg
Altitude (metres above sea level): 3,300
Terrain: Flat ice
The%20Genius%20of%20Their%20Age
%3Cp%3EAuthor%3A%20S%20Frederick%20Starr%3Cbr%3EPublisher%3A%20Oxford%20University%20Press%3Cbr%3EPages%3A%20290%3Cbr%3EAvailable%3A%20January%2024%3C%2Fp%3E%0A
The biog
Hometown: Cairo
Age: 37
Favourite TV series: The Handmaid’s Tale, Black Mirror
Favourite anime series: Death Note, One Piece and Hellsing
Favourite book: Designing Brand Identity, Fifth Edition
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
The specs: 2017 Ford F-150 Raptor
Price, base / as tested Dh220,000 / Dh320,000
Engine 3.5L V6
Transmission 10-speed automatic
Power 421hp @ 6,000rpm
Torque 678Nm @ 3,750rpm
Fuel economy, combined 14.1L / 100km
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
The%20specs
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UAE currency: the story behind the money in your pockets
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
The%20specs
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VEZEETA PROFILE
Date started: 2012
Founder: Amir Barsoum
Based: Dubai, UAE
Sector: HealthTech / MedTech
Size: 300 employees
Funding: $22.6 million (as of September 2018)
Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
