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UAE achieves '98.8 per cent VAT compliance': Federal Tax Authority

'Achieving that level of compliance reflects how advanced the UAE is', says official, looking back at the first 100 days of value added tax in UAE

11:38 April 11, 2018

Dubai: Nearly 100 per cent of companies in the UAE that were obliged to pay value added tax (VAT) have since registered to do so, according to Khalid Al Bustani, director general of the Federal Tax Authority (FTA).

In remarks to the media on the anniversary of the first 100 days of VAT in the UAE, the senior official also said he suspected a number of companies failing to register, either deliberately or accidentally.

"We will not tolerate tax evaders, and we will not tolerate tax avoiders,” Al Bustani said sharply. 

All you need to know about VAT in UAE

Despite this, he said that the FTA had attained a good level of compliance.

”We have achieved 98.8 per cent compliance," Al Bustani told the gathered media on Wednesday morning.

"Even though the UAE is new to the tax system, achieving that level of compliance reflects how advanced the UAE is. They were ready for the implementation of VAT," he added.

Al Bustani also pointed to the success of the self-declaration system, which encouraged private sector companies to submit tax returns on a self-declared basis.

The five per cent tax was implemented on January 1, 2018, as part of the government’s strategy to diversify its revenues.

"VAT came after comprehensive studies from the UAE. The results of studies showed that a new tax will support economic development," Al Bustani said.

According to the FTA, around 275,000 companies have registered to date, with 2,160 applications pending. Al Bustani said he was pleased by this number, given that the project is only 100 days old.

They say that around 14,402 firms were forced to resubmit their applications.

"We are under discussion with these companies, who needed to re-apply due to missing information, or information not submitted correctly, before they can be approved by the FTA," Al Bustani said.

Meanwhile, the FTA said that it suspected a number of companies of not registering.

"We believe there are a large number of companies who have not registered yet,” the senior official said, adding that some of these may be intentional.

“We want to pass the message on: It’s an obligation to register, and they are violating the law if they don’t,” he said.

The FTA has postponed the penalty for not registering until the end of April to give companies more time to prepare their business, but it said on Wednesday that this did not mean these companies were exempt from registering.

“They are obliged to register, and pay VAT amounts since January,” Al Bustani said bluntly.

“We will need to take action against them, and violate them. Those who have not registered are tax evaders. We will take necessary actions,” he said.

To combat this, the FTA says that it has planned a roadshow with the Department of Economic Development (DED) to send its analysts to these unregistered companies to “help them register, if they are having technical issues.”