Archive for the ‘Dubai and regional news’ category

VAT update Qatar, KSA

September 10th, 2019

On 23 May 2019, Qatar’s General Tax Authority (GTA) disclosed to tax advisors in Qatar a new online tax management system known as “Dhareeba.” The new system should be available to taxpayers near the end of 2019, with all taxpayers expected to be registered before 1 January 2020, at which time Dhareeba will replace the current Tax Administrative System (TAS). PwC Qatar was invited to go through its own registration as a ‘pilot’ exercise during the last week of July 2019.

The Qatar General Tax Authority (‘GTA’) has redesigned the Tax website, allowing it to be operational in both English and Arabic. The website aims to provide vital information regarding any new taxes which may be implemented, particularly emphasizing the Excise Tax which came into effect on January 2019.

VAT is widely expected to be introduced on 1 Jan 2020. Synergy support several companies in Qatar and has a local registered company there. If you need assistance with planning VAT implementation for Dynamics Ax./Dynamics 365 Finance and Operations, or Infor SunSystems then please contact us. we have already undertaken numerous VAT projects In the GCC.

You will find much useful advice in our previous blog posts.

Meanwhile today the International Monetary Fund (IMF) has suggested that the value-added tax (VAT) should be doubled from 5% to 10% in Saudi Arabia in consultation with the other Gulf countries. Analysts expect the hike in VAT rate will come only after 2021 once Kuwait and Oman will also be ready to implement it and as a customs union, the increase makes sense across the GCC countries.

The UAE and Saudi Arabia introduced the 5% value-added tax from January 2018 and both the countries surpassing their tax collection targets. So this proposed increase seems odd because it has already impacted businesses more than expected.

The Kingdom’s non-oil revenues last year increased by 59%, buoyed by the VAT, excises, expatriate levy, and proceeds from the settlement agreements. IMF estimated that the VAT rate increase will add 2.0% to the Kingdom’s GDP in 2024.

Of course, as a customs union, it is logical that GCC countries would seek to keep their VAT rates harmonized in order to prevent tax arbitrage opportunities emerging within the GCC.

“Disbursements & Reimbursements’: U.A.E. – VAT clarification

July 31st, 2019

The Federal Tax Authority (‘FTA’) has released a Public Clarification on “Disbursements & Reimbursements” which addresses how to distinguish reimbursements and disbursements, and to clarify the applicable VAT treatment.

U.A.E. businesses incur expenses and subsequently recover such expenses from another party. The VAT treatment of the subsequent recovery of expenses depends on whether the recovery is a “disbursement” or a “reimbursement”.

The first step to determine whether a recovery is a disbursement or reimbursement is to establish whether you have acted as a principal or an agent in purchasing the goods or services

General principles to determine the VAT treatment of such recoveries:
Where a taxable person acts in the capacity of an agent, the recovery would generally amount to a disbursement.
A disbursement does not constitute a supply and is,therefore, not subject to VAT

Where a taxable person acts in the capacity of a principal, the recovery would generally amount to a reimbursement.
A reimbursement is part of consideration for the supply and follows the same VAT treatment as the main supply.

Principles

* The other party (from who you are recovering such expenses) should be the recipient of the goods or services;

* The other party should be responsible for making the payment to the supplier;

* The other party should have received an invoice or tax invoice in their own name from the supplier;

* The other party should have authorized you to make the payment on his behalf;

* The goods or services paid for should clearly be additional to the supplies you make to the other party;

* he payment should separately be shown on the invoice and you should recover the exact amount paid to the supplier, without a mark-up.

* You should have contracted for the supply of goods or services in your own name and capacity;

* You should have received the goods or services from the supplier;

* The supplier should have issued the invoice in your name;

* You have the legal obligation to make payment to the supplier;

* In case of goods, you should own the goods prior to making any onward supply.

Examples

Company A procured group medical insurance from a local insurance company and received an invoice directly from the insurance company.

* Company A requested Company B to make the payment on its behalf.

* The subsequent recovery of the amount by Company B from Company A will amount to a disbursement, and would not be subject to VAT.

* Company A should ensure that the Tax Invoice is addressed to it from the insurance company and should recover the input tax through its UAE VAT return, subject to the normal input tax recovery rules.

Company A entered into a contract with Company B to provide marketing services.

* The contract stipulated that Company A would be eligible to reimburse the expenses from Company B.

* Company A incurred the expenses in its own name and subsequently recovered the amounts from Company B as per the terms of the contract.

* The recovery of expenses from Company B would follow the same VAT treatment as that of the main supply.

We recommend;

* Identify the nature of your contract and agent/principal relationships (if any) based on the above principles;
* Ensure that all disbursements have proper authorizations (contracts); and
* Re-view all inter-company disbursements/ reimbursements (cross-charges).

Calorie counts on menus in Dubai deferred.

July 22nd, 2019

Khalid Mohammad Sherif Al Awadhi, CEO of the environment, health and safety control sector at Dubai Municipality recently said that displaying calories in menus will be optional for next two years and that the Municipality decided to postpone the implementation of the rule,, “to allow enough time for the industry to prepare itself.”The Food Safety Department will continue to encourage food establishments to declare calorie content.

(In May it was announced that restaurants, cafeterias and cafes with more than five branches were expected to mandatorily display the caloric value of each and every food item from November this year. All other restaurants, catering establishments and hotels were given the deadline of January 2020 to implement the rule).

A similar postponement happened in the USA ( part of the 2010 Affordable Care Act) due to industry lobbying. For example grocery store and convenience store industries argued that the rules didn’t take into consideration the vast differences between how the various types of affected establishments operate (think fast-food restaurants versus pizza delivery chains versus gas stations). They protested the legislation would place unfair burdens on businesses that sell food and drinks that aren’t displayed on a centralized menu board, such as gas stations that may have multiple drink stations where customers can get self-serve sodas, frozen drinks, or coffee.

A number of chains, including McDonald’s and Starbucks, had already put menu labeling into effect in recent years in anticipation of the new guidelines.

Arguably one reason a lot of restaurant food tastes so good is because it’s full of fat and salt — and no restaurant wants to broadcast to its diners that they’re serving 2,000 calorie salads or 1,200 calorie milkshakes. However, In light of the global epidemics of obesity and diabetes, some believe it’s simply irresponsible for restaurants to serve burgers with more calories than an average adult human needs in a day, or lattes that have more sugar than a chocolate bar.

Whether displaying nutritional information on menus actually causes consumers to make healthier choices or not is still up for debate: Some studies indicated that calorie counts on menus don’t ahave much of an effect on what people order — but they may be somewhat effective in encouraging the restaurants themselves to offer lower-calorie foods. However, many worry about nutritional data, like eating the ‘right calories’, not eating gluten products etc.

Food establishments are free to choose the services of qualified professionals or compute the caloric value of ingredients by using third-party software. It is likely there will be a future requirement to add additional nutritional information to help customers to make informed, healthy eating choices.

If you are seeking a specialist solution to provide and manage and compute nutritional information then contact us on 097143365589

Integration as a Service – ask Synergy Software Systems, Dubai about Snap Logic

July 2nd, 2019

Why do companies like Adobe, AstraZeneca, Box, GameStop, OSN, Verizon, and Wendy’s choose SnapLogic?

They have a problem that many other companies are facing today. On one side, business managers rely more and more on SaaS applications and big data for daily tasks yet IT is responsible for integrating the applications. These business managers need daily access to accurate information but can’t always wait for IT. On the other side, IT is managing multiple projects, including integration requests and is working with far fewer resources. Requests can take weeks or even months to complete and business leaders can’t wait that long, so end up making decisions based on less than perfect data.

The Snaplogic Enterprise Integration Cloud comes with Iris Artificial Intelligence built in. Take away he complexity of dealing with multiple applications, big data, complex APIs, and IoT and abstract it into drag and drop components, all in one platform. SnapLogic’s Iris AI further democratizes the use of data by empowering users from all departments and teams to make data-driven decisions quickly and easily with higher accuracy. Business manager can now do their own analysis with minimal support from IT and make informed, data-backed decisions quickly.

IT people can spend less time building routine integrations and more time helping the business grow. SnapLogic is already helping many businesses with these challenges. GameStop reduced the amount of time it took to build integrations by 83%. Business processes cut across functions and applications. Transform business processes faster and stay focused on managing your business with data-driven insights rather than spend time on writing and maintaining code.

General Electric’s (now Suez Water) employees are 4 times more productive when it came to onboarding partners through its multiple systems.

AstraZeneca has more than 500 users around the world who are performing self-service integrations.

Box has connected 40 applications and is processing more than 15M transactions daily with only 1.5 full-time developers needed to support this volume.

Corporate performance management or Big data analytics from multiple, disparate corporate erp and finance systems, hybrid cloud and on premise integration, migrating to the cloud or to new software versions, IoT, T@A, EAM systems, WMS systems, Payroll systems, there are many integration challenges.

To support your digital transformation call us on 0097143365589

Oman and VAT – Ask Synergy Software Systems to help prepare and update your systems

June 30th, 2019

Oman government representatives have said that the state is looking to implement a 5% VAT regime from 1 September 2019. In 2017,
it signed the Gulf Cooperation Council VAT Framework Agreement, which included: Saudi Arabia, Qatar, UAE, Bahrain and Kuwait. Local media reports in March 2019 quoted a senior official from Oman’s Ministry of Finance as saying that the date of implementation of VAT in Oman is under review. The official reportedly indicated that the target date had been 1 September 2019 but that this is not confirmed, although the intention clearly remains to implement VAT as early as possible. Businesses should take this as a cue to continue their VAT implementation plans in Oman, or restart and reinvigorate those if the work has been put on hold.

A key lesson from our experience of VAT implementation projects in UAE, KSA and Bahrain, across more than 100 companies is that companies that started their VAT planning and implementation projects early had a smoother transition to VAT, than those that waited for the final publication of the domestic law and regulations. A ‘wait and see’ approach backfired on many businesses in the UAE, KSA and Bahrain where there was minimal time between the release of the law and regulations and the go-live date for adequate training, data preparation and testing, and a shortage of resources in the market to cope with the backlog.

There are practical steps to take now. the first is to form an internal VAT working group of key stakeholders to monitor developments in VAT and ensure that VAT is on the Board agenda and is included in budget discussions. The working group will be best placed to negotiate professional services to support implementation, to train end users, and to define test scenarios, etc.

Next ensure there is VAT awareness is key – customers, vendors, and staff. Many in the region have never dealt with VAT, and a solid understanding of the mechanics, scope and terminology of the tax takes time, and that is a necessary foundation for the next steps.

Document your transaction flows . VAT is a transaction tax, with each transaction triggering a potential VAT consequence. This will help you to identify: software changes, processes to update, training needs, data collection needs, commercial document redesign, financial report redesign etc.

Review Contract to ensure they are ‘future proofed’ for the introduction of VAT. For example, to identify whether they include suitable clauses allowing VAT to be charged in addition to contractually agreed prices. The UAE VAT law clearly mandated that communication be sent to all customers within a specific timeline stipulating whether their contracts will be treated as exclusive of tax, failing which customers can dispute the tax being charged in the contract. Therefore, revisiting contractual obligations for both customers and vendors and determining cutover dates, incorporating tax clauses and revising prices and quotations will play a pivotal role to safeguard the business interests of all parties to a contract.

There will be transactions which are closed before the go-live date, and there will be instances where payment is received post the go-live date or where the supply is scheduled post the go-live date, but where the relevant invoices are paid prior to it. Failure to assess and communicate/agree on the VAT impact between all parties to the transaction on such spillover transactions might increase the cost of such transactions and either of the parties may be out of pocket in such scenarios, and there may be unwelcome friction with trading partners, if not managed.

IT infrastructure will be the ‘backbone’ of the VAT compliance function from issuing VAT compliant invoices to producing the VAT return.

Identify VAT resource requirements, particularly external consultants and auditors. Skilled VAT resources are drawn from a diminishing pool of individuals. Take advantage of the experience gained by service providers implementing in Dubai, KSA and Bahrain. There are many wrinkles, not immediately obvious.

Industry associations can raise common issues and concerns with the Ministry of Finance, particularly in advance of the formal publication of the VAT law.

While you can choose to defer VAT implementation be ready to demonstrate to your owners/investors/respective boards and shareholders, that you have done so only after undertaking an appropriate level of due diligence of the likely preparation of the VAT environment. Some key areas include:

Upgrades to ERP systems and user acceptance testing Reporting
Timely VAT registration, (company by company or at Group level?)
Timely Collection of Tax registration numbers for Trading partners
Timely returns, accrual and and payment of taxes
Scoping the need for professional service and selection/references, time for reaching agreement with partners.
Unforeseen penalties
Cash flow management – how will this change? the delayed inflow on account of receipts from customers; outflow after the discharge of tax liabilities on supplies without consideration/deemed supplies (if any); outflow on account of payment to vendors; and additional outflow due to the payment of taxes (net of input tax recoverable) to tax authorities.

Tracking changes in law/ public clarifications

Some businesses in the UAE and Saudi Arabia faced challenges when ERP systems were not implemented in time to capture VAT on transactions or to generate customised VAT payable or receivable reports. The first quarter of the respective VAT regimes required substantial manual effort to properly account for transactions.

Another hurdle was training staff on the upgraded ERP software as well as new reporting standards

In a test system for financial or erp system, for training and requirement scope you could get early familiarity with the Dubai or KSA framework – there are unlikely to be major changes in the Oman framework.

If you current system is largely manual, or has significant limitations then now be the time to plan for upgrade, or reimplementation or a new system. The UAE VAT law has a penalty provision whereby every incorrect invoice can trigger an AED 5,000 fine (approx. OMR 500), irrespective of the value of the invoice. Exposure to these fines can be significant in industries where high volumes of transactions are made per day, for example the retail, utilities and banking industries. Compliance depends on a robust system and operations preparedness. The audit trail of the process, and other documents, help to ensure correct and timely filing of the returns as well as avoiding any unwarranted penalties.

Businesses across the globe tend to see a fall in demand where the display prices on products do not include VAT, specifically in the case of products which are price sensitive. The implementation of a new indirect tax law will have an impact on turnover and consumer preferences. Some prices ma need to be rounded up or down. You may need to show VAT separately, item by item on a receipt or invoice – is your software able to do that?

Given that the potential VAT rate in Oman may vary between 5 per cent, exempted, non-taxable and zero-rated, businesses should ascertain the price impact of VAT on imports which are recoverable and non-recoverable, final product pricing and alternative sourcing if imports are expensive, and vice versa.

Calorie display on Dubai menus – are you ready? Ask Synergy Software Systems.

June 30th, 2019

It will soon be mandatory to display the caloric value of each and every item in the menu, in whichever form it is. The Food Safety Department announcement is that:
All food outlets in Dubai have to display calorie content of ready-to-eat foods by January 1, 2020.
An early deadline of November 1, 2019 is set for establishments with more than five branches to implement it.

The circular and guidebook is posted on municipality’s portal www.dm.gov.ae and has clear instructions for labelling nutritional value with examples for manual calculation in Excel-sheet templates.

The department will verify the accuracy of the calculations through auditing. It will also at a later stage, provide an electronic-platform for computing the calories

Eateries, including fast food chains, must display caloric value of food items either on the menu or at the point of sale. There are some establishments that already declare calorie content on packaging, flyers, tray mats, websites etc. However, the municipality wants everyone to display the caloric value, against each item in the menu from which diners choose items at the point of sale. When there is no menu, then it should be in the menu boards or the menu displayed on tablets — basically, whichever form of the menu which the consumer checks for choosing the food.

Dubai eateries will have options how to calculate calorie contents for display in the menus to comply with a new regulation that aims to help diners make informed choices. For most a software package will be administratively simplest to ensure compliance.

For online menus displayed for food ordering services, the rule will not be mandatory, for the time being, since the department is not regulating electronic platforms for food delivery.

Dubai Municipality says that Food establishments in Dubai should declare in their menus the calorie content of all ready-to-eat food items.

The primary objective of the rule is to help diners make healthy food choices for reducing obesity and related diseases. The Food Safety Department of Dubai Municipality hopes to make a big difference in food decisions taken by diners just with the knowledge of how much of calories they consume.
The population of Dubai is three million. As per our calculations, we expect more than one billion food decisions to be based on the calorie count displayed in menus in a year,” Iman Ali Al Bastaki, Director of the Department
.
During the six months of the World Expo 2020 starting on October 20, 2020, Dubai expects to welcome 25 million visitors. Hence, the number of food decisions taken based on displayed calories is expected to be multi-billion during the Expo.

For example, a food outlet making a traditional meal with a lot of oil will have to display a high caloric value for the meal. When consumers prefer to go for another meal with less calories or a smaller portion of the same meal, the establishment will encourage its chefs to reduce the use of oil, thereby reducing the calories and providing a healthier meal.

Dubai, is the first emirate in the UAE to implement such a rule. It referred to similar practices in countries like the US and Canada. Dubai already has a system of nutrition labelling that displays all nutritional values in packaged food items e.g.: sugar, sodium, fat.

For cooked or prepared food that is ready-to-eat, the first step in declaration is the basic declaration of calories. The municipality wants to ensure the readiness of the market before moving to the next level of detailed nutrition labelling in cooked foods.

This is part of a holistic approach that Dubai Municipality has been working on to improve health and to reduce obesity and diabetes in Dubai that include healthy meal project in school canteens, an initiative to reduce salt and sugar content in bakery items and verification of claims about healthy food items.

With over 100 branded hotels and industrial caterers, and other food producers as our customers we have more than 20 years extensive experience in the F@B area, and our solution for nutrition data is widely adopted.

If you need, a software solution or to integrate our nutrition data to your erp system or F@B software, then contact us to learn more about our solutions.

Synergy Software Systems: 00917 43365589
Deyafa Systems: 00971 4 3240066

Electronic health data originating in the UAE – Federal Law No. 2 of 2019 (the Law)

June 26th, 2019

Important changes for anyone who collects, processes or transfers electronic health data originating in the UAE.

Besides a host of new data protection measures and new rules around use of a centralized database managed by the United Arab Emirates (UAE) Ministry of Health, a general prohibition on transferring health data outside the UAE has a significant impact on healthcare service providers and life sciences companies operating locally.

Cloud based health solutions which involve collection, storage and processing of health data, such as wearables and health monitoring apps, may be particularly affected. It is imperative for companies operating in the sector to carefully monitor developments.

On 6 February 2019, the President of the UAE issued Federal Law No. 2 of 2019 (the Law) which regulates the use of information technology and communications (ITC) in the healthcare sector. This Law:
• aims to raise the minimum bar for protection of health data and to introduce certain concepts which are on a par with best international practice in information law;
• supports the legislative trend towards localization of sensitive categories of data;
• paves the way for centralized health data capture and analysis to support public health initiatives conducted by the UAE Ministry of Health.

The Law was published in the Federal Gazette on 14 February 2019 and will come into force three months from publication. (May2019). The implementing regulations which will provide further details on its application are to be issued within six months from the date of publication.

The law is the first Federal data/privacy law of its kind in the United Arab Emirates albeit limited to healthcare data.

The law prescribes 31 articles and its application is wide both in terms of geographical spread and industry sectors. The law covers the entire United Arab Emirates (UAE) including its Free Zones and will impact on many sectors including local healthcare regulators in the different Emirates as well as all sectors dealing with healthcare data/information.

The health authorities in each local emirate are empowered to establish the rules, standards and controls for their own electronic data and health information systems, such as the methods of operation, exchange of data and information and their protection, as well as access to and copying of data and information

The Law applies to all entities operating in the UAE, whether onshore or from one of its free zones (including Dubai Healthcare City), which provide:
• healthcare services;
• health insurance services (including insurance brokers or providers of related administrative services);
• healthcare IT services; or
• any other services, directly or indirectly, related to the healthcare sector, or engaged in activities that involve handling of electronic health data.

1. Regulation of health data

The scope of the Law is broad – it regulates the processing of all electronic health data regardless of its form, including names of patients, information collected during consultation, diagnosis and treatment, alpha-numerical patient identifiers, common procedural technology (CPT) codes, images produced by medical imaging technology, and lab results among other types of data.

2. Prohibition on storage of health data outside of the UAE

The Law formalizes the longtime informal regulatory policy that health data must be processed and stored inside the UAE. Critically it provides that such data may not be transferred outside of the UAE, except where an exception is issued by the relevant heath authority. The Law also prohibits the creation of health data outside of the UAE which relates to health services provided inside the UAE. Accordingly, cloud solutions hosted out of country, outsourcing of IT services to overseas locations, remote IT support from other departments within multi-national Healthcare Service Providers and remote collection and monitoring of patient information within the UAE, such as heart rate, sleep patterns, or steps walked, from outside the UAE through apps and wearables may be significantly impacted.

The Law envisages certain exceptions to the default data localization requirements. These will be set out in subsequent ministerial resolutions or the implementing regulations.

3. Minimum standards for processing of health data

In addition to reinforcing the duty of Healthcare Service Providers to maintain the confidentiality of health data, the Law introduces a number of concepts similar to overseas data protection frameworks. For example:
• Purpose limitation: Patient information must not be used other than for the purpose of the provision of health services, except with the prior consent of the patient;
• Accuracy: Healthcare Service Providers must ensure that the health data processed is accurate and reliable;
• Security measures: Healthcare Service Providers must put in place measures to protect health data and to prevent its unauthorized processing, damage, alteration, deletion or amendment; and
• Non-disclosure/patient consent: The Law reiterates existing obligations not to disclose patient data to any third party without the prior consent of the patient.

4. Retention period

Health data must be retained for a minimum period of 25 years from the date on which the last procedure on the patient was conducted, or as long as is necessary if longer.

5. Centralized data management system

A new centralized data management system (DMS) will be established and operated by the UAE Ministry of Health to facilitate access to, storage and exchange of health data. Healthcare Service Providers are required to register to access the DMS and identify all members of personnel who are authorized to access it.

6. Website blocking for advertisement or licensing violations

The UAE Ministry of Health is entitled to instruct the relevant local or federal health authorities to block any website, whether inside or outside of the UAE that does not comply with the regulations applicable to healthcare advertising or which provides healthcare information without a license or permission from the UAE Ministry of Health.

The only circumstances in which a patient’s information may be used or disclosed without the patient’s consent are:
• to allow insurance companies and other entities funding the medical services to verify financial entitlement;
• for scientific research (provided that the identity of the patient is not disclosed and applicable scientific research standards and guidelines are complied with);
• for public health preventive and treatment measures, for example. in the case of a public health crisis;
• at the request of a competent judicial authority; or
• at the request of the relevant health authority for public health purposes including inspections.

There is a delicate balance to be struck between the potential benefits of this practice and the protection of each individual’s right of privacy. Where to draw the line in this assessment remains a topic of discussion between industry stakeholders and regulators, particularly in light of high profile breaches in recent years such as the collaboration between the Royal Free London NHS Trust and Google Deep Mind to identify patients at risk of kidney disease, or in the context of using health data for secondary research purposes. In January 2019 the European Data Protection Board issued its opinion on the European Commission’s draft Q&A on the interplay between data protection under the EU General Data Protection Regulation and clinical trials regulation. Wewait for the Law’s implementing regulations to see what position the UAE authorities will take on this sensitive issue.

As well as certain penal sanctions for breach of key requirements, such as the data localization obligations, the Law sets out a number of overarching disciplinary sanctions for breach of its provisions. These sanctions range from warnings to fines of AED 1 million and/or cancelling the breaching company’s permit to use the DMS.

Typically, access to centralised systems – such as the planned healthcare system – is facilitated by open APIs (application programme interfaces) made available to third party suppliers of IT systems which access the system. Where those IT systems already exist and are in use (under contracts between healthcare providers and the suppliers), technical changes to the systems will be required.

Some businesses will need to revisit their business procedures to comply with the Law. We recommend that companies affected by the Law:
• Keep up to date with the executive regulations setting out further details
• Ensure IT systems are capable of interacting with the central IT system
• Complete necessary administrative steps to obtain access to the central IT system, such as registration / licensing requirements
• Have technical and organisational processes in place to ensure that all patient data is treated confidentiality, kept secure, kept accurate and uncorrupted, not used for other purposes and retained as required
• Not transfer or store any patient data outside the UAE unless authorised to do so by a resolution issued by the local health authority
• Conduct a data mapping exercise to identify what type of health data is held, where it is processed and with which third parties it is shared.
• Where such third parties are based overseas, take steps to cease the transfer of health data to them, or to anonymize / denonymize the health data transferred;
• for any health data which cannot be anonymized / denonymized due to the nature of the processing activities, source alternative third party service providers to conduct the processing of that data within the borders of the UAE
• review contracts with third party service providers which process personal data and ensure that the contractual obligations for data processing and information security are sufficient to meet the new requirements of the law
• consider contracting obligations on service providers to support compliance with the law, such as annual rights of audit;
• add a step to the existing compliance sign-off process prior to adoption of new operational processes and business lines to ensure that no health data leaves the UAE and that the minimum statutory compliance standards are met.

Synergy certifications

June 22nd, 2019

Happy to announce that our Gold partnership with Microsoft has been confirmed again for the next 12 months.

Recently we have also certified consultants in ABBY the industry leading OCR software.

Earlier in the year we became a gold partner with UIPath the market leading Robotic Process Automation solution, for which Synergy has more than 50% of the certified consultants in the region.

This is part of our commitment to deliver professional service for digital transformation to our clients.

UAE and AI

June 20th, 2019

A report commissioned by Microsoft and conducted by EY says the UAE has seen the second highest AI investment over the past decade, more than USD $2.15 billion
• One in five companies in the country consider AI as their top digital priority
• 94% of C-suite leadership consider ‘AI strategy’ as an important topic and 35% of non-managerial staff are actively having AI discussions

New research shows the state of AI within businesses across the UAE is expected to improve dramatically over the next three years,as a growing number of executives look to AI to drive their digital agendas. Already, 18% of businesses in the country consider AI their most important digital priority. (AI Maturity Report in the Middle East and Africa (MEA) Click here – a new study commissioned by Microsoft and conducted by EY.)

The UAE’s progress in elevating the AI agenda is a direct result of leaders across the country recognising that the technology is a key differentiator across all sectors. 94% of companies in the UAE report involvement in AI at executive management level – the highest percentage of any surveyed country in MEA.

“When we examine companies with high AI maturity, it’s clear that the technology is driven directly by the CEOs themselves. This high level of involvement typically results in greater investment in AI, broader adopti on and a greater number of successful implementations,” says Sayed Hashish, regional general manager at Microsoft Gulf.

Leadership capability in the UAE is also rated high when compared with other countries in MEA. While 64% of respondents believe they have moderate, little or no AI leadership competency, 24% of executives in the UAE rated themselves as highly competent, with another 46 percent indicating they are either competent or very competent. Most companies still consider themselves to be in the planned phase of AI maturity, meaning AI has not yet been put to active use. On the opposite end of the spectrum, just 8% of businesses perceive themselves as advanced in their application of AI.

It’s not surprising that the UAE is the second highest regional investor in AI over the past ten years, investing $2.15 billion in total. The bulk of this investment went towards social media and Internet of Things (IoT) transactions. This was followed by notable spend across a further eight technologies, including smart mobile, gamification, and machine learning.

Machine learning is ranked as the most useful AI technology, with primary emphasis placed on decision support solutions, then smart robotics and text analysis, where customer interactions are the key focus.

The UAE’s open culture around AI is a highly positive indicator of the health of the technology within the country. 94% of UAE companies have ‘AI Strategy’ as an important topic at C-suite level and a significant 35% of companies say AI discussions are filtering down from top management right the way through to non-managerial levels. As a result, employees in the UAE embrace opportunities to participate in skills training and pilot programmes.

UAE companies are, in general, heavily focused on customer engagement when it comes to AI. The use of chatbots in the marketing space has become common, largely because they enhance the customer experience, ultimately demonstrating obvious value to management. UAE respondents expect AI to deliver greater operational efficiencies, drive down costs and, most importantly, enable them to be more competitive. Companies within the Emirates view prediction (76%) and automation (76%) as the most relevant applications of AI for their businesses.

65% of UAE companies rate themselves as highly to very competent when it comes to drawing on external alliances to strengthen their AI capabilities.

Synergy Software Systems offers Integration as a service, Robotic Process Automation, Machine learning, and Advanced analytics solutions

The first Microsoft cloud datacenter regions in the Middle East are now available!

June 20th, 2019

On the 19th June 2019, Microsoft launched two new cloud data centres in the United Arab Emirates – in Dubai and Abu Dhabi.
These new cloud regions join Microsoft’s global cloud infrastructure – one of the largest and most innovative in the world.

Microsoft Azure and Microsoft Office 365 are now available from the new cloud regions in the UAE and give local access for Middle East organizations, enterprises and developers to scalable, available and resilient cloud services to bring applications closer to users, while maintaining data residency, security and compliance needs.

These new cloud regions in the UAE are the dawn of a new era, driving digital transformation, economic growth and job creation,” said Sayed Hashish, Regional General Manager, Microsoft Gulf. “We are committed to empowering every person and every organization on the planet to achieve more. Now, more customers in the Middle East can move with confidence to the trusted and intelligent Microsoft Cloud. They will be more competitive as they start their digital transformation journeys – engaging customers, empowering employees, optimising operations, and reinventing products and services.”

Azure, is an ever-expanding set of cloud services, that offers computing, networking, databases, analytics, artificial intelligence and Internet of Things (IoT). Office 365 provides email, collaboration, conferencing, enterprise social networking and business intelligence.

Dynamics 365 and Power Platform, offer the next generation of intelligent business applications and tools, and are anticipated to be available from the cloud regions in the UAE by the end of 2019.

Microsoft provides expertise in data protection, security and privacy as well as the industry’s broadest set of compliance certifications to helpmanage compliance with supported industry standards and regulations such as ISO 27001/27018, SSAE 18 SOC, and GDPR.

Data residency in the UAE will help enable government organizations and enterprises to comply with in-country regulatory frameworks and decrease the obstacles for cloud adoption. This allows, for example, public sector departments to revitalize their service delivery with the ability to improve data gathering, promote teamwork, portal development and analytics.

Regional organizations of all sizes from across all industries have placed their trust in the Microsoft Cloud. These include the Emirates Group, Emaar Properties, Majid Al Futtaim, Jumeirah Hotels and Resorts, Landmark Group, Abu Dhabi Global Markets (ADGM), Miral, Daman Insurance, RAK Ceramics, Imdaad, Gulf Air, Viva, Kuwait Finance House, and Dubai World Trade Center.

Entities from sectors such as government, aviation, financial services, manufacturing and healthcare are among those that are already benefiting from the new cloud regions. These include Dubai Airports, Etihad Airways, Mubadala Development Company, Mashreq Bank, The First Group, Network International, and Shelf Drilling.

Microsoft has been working closely with Abu Dhabi Digital Authority (ADDA) and Dubai Electronic Security Center (DESC) to enable compliant adoption of Cloud Services by the UAE government and semi-government entities. Microsoft is the first cloud service provider in the UAE to achieve DESC’s Cloud Service Provider certification.

Dubai F@B – calorie content menus, and QR codes to choose safe hygenic food,

May 24th, 2019

Dubai: Food establishments in Dubai should declare in their menus the calorie content of all ready-to-eat food items, Dubai Municipality has said in a circular last Saturday.

The new rule is applicable to restaurants, cafeterias and cafes with more than 5 branches from November.

All other restaurants, catering establishments and hotels should implement it in the second phase in January 2020, the civic body said in a press release on Saturday.

There are more than 18,000 food businesses in various categories according to Dubai Municipality.

.On Sunday a new QR Code system was also launched by the Dubai Municipality which will allow you to choose food based on hygiene and safety in Dubai-based food outlets. Under this system, Dubai’s Food Safety Department will issue smartphone-readable codes to food outlets through its “Food Watch” digital platform. It will be mandatory for food outlets to display the QR codes in their premises as and when they are issued one.

In the next phase, people will be able to see what kind of a license is issued to an outlet. So, if somebody is making cakes or taking up catering services, you can ask for the code and find out if they are licensed to do it. Accessibility, location, web address, contact details etc. are the other details of food outlets available through QR code scanning. Dubai Municipality’s hotline number to register complaints 800900 is also shown.

If you need a proven software solutions for your F@B operations, then contact us.

Synergy Software Systems, Iftar 2019

May 13th, 2019

About 120 staff and families joined together for an Iftar celebration over the weekend.

Ramadan working hours 2019 – Synergy Software Systems

May 2nd, 2019

The holy month of Ramadan is expected to start from 6th May, and to end on the evening of 3rd June.
During this period of fasting and spiritual reflection there will be several changes to our office routine,
In line with Ministry directives our working hours will be reduced.
Our office will open Sun-Thu from 9am to 4pm for support calls.
We will be closed on Fridays and Saturdays.

سائلين الله عـز وجـل أن يرزقكـم فيه مغـفـره ورحمه وعتق من النار.

May all your prayers be answered.

Microsoft opens first cloud data centres in Africa and signs agreements to support U.A.E. Smart solutions

April 15th, 2019

A landmark achievement for the MEA region. 6 March 2019 saw the launched of the first Microsoft datacenters in Africa. which opened in both Cape Town and Johannesburg. This world-class cloud infrastructure will power emerging cloud, AI and edge computing innovations across the African continent. Microsoft is the first global provider to deliver cloud services from datacenters in Africa, and has announced 54 Azure regions worldwide, more than any other cloud provider.

According to the Cloud Africa 2018 report, use of the cloud among medium and large organisations has more than doubled from less than 50 percent in 2013 to pervasive use in 2018. While Kenyan and Nigerian businesses see business efficiency and scalability as the most significant benefits of cloud computing, South African companies view time-to-market and speed of deployment as the greatest advantage. The security and reliability of cloud services are pivotal when discussing digital transformation. At the same time, cloud services help with compliance for evolving laws around data protection, which have become increasingly focused on data residency requirements.

Today the Abu Dhabi Smart Solutions and Services Authority (ADSSSA) today announced that it has signed a memorandum of understanding (MoU) with Microsoft to establish a ‘Cloud centre of Excellence’ that will aim to build its capacity for the delivery of cloud services and platforms, as well as upskill the emirate’s public sector workforce. Microsoft’s collaboration with ADSSSA will focus on the establishment of a Cloud Centre of Excellence. Under the agreement, Microsoft will provide instructor-led training for 240 government employees from various departments and agencies. The training will be distributed across 11 tracks, and will encompass all Microsoft skill levels, from 0 to 300. Instruction will ensure that Government of Abu Dhabi employees are well-versed in such technologies as Microsoft’s Azure cloud platform, Office 365, data, AI and Dynamics 365. Through Cloud Society in Box, Abu Dhabi Government employees will receive access to an online training portal hosted on ADSSSA Azure Tenant that can be customised to assign and track training paths. Microsoft specialists will be on hand to deliver regular support to all training delegates and guide them on their upskilling journeys.

Yesterday Smart Dubai today announced a landmark collaboration with Microsoft to achieve the goal of making Dubai the happiest city on Earth. The move aims to accelerate digital transformation across the emirate and empower government employees to innovate faster. Under the terms of a memorandum of understanding (MoU) signed by H.E. Dr. Aisha Bint Butti Bin Bishr, Director-General, Smart Dubai, and Sayed Hashish, General Manager, Microsoft Gulf, Microsoft will support Smart Dubai in its digital transformation journey by accelerating adoption of Microsoft Cloud technologies, and will conduct targeted training sessions as well as upskilling workshops in cloud and other associated technologies.

Smart Dubai was formed under the guidance and vision of His Highness Sheikh Mohammad bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to make Dubai a knowledge hub and the happiest city on Earth. The organisation’s strategy is to urge participation and counsel from a wide array of city stakeholders, including residents, visitors and business owners.

“We all have a responsibility to accelerate towards the vision established by His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Prime Minister & Vice-President of the UAE, and Ruler of Dubai, to create a Dubai that shines as a beacon for others to emulate,” said H.E. Dr. Aisha Bin Butti Bin Bishr, Director-General, Smart Dubai. “Through this collaboration with our trusted partner Microsoft, we are taking another decisive step in that journey. By upskilling and empowering our people, we are building a platform for change and innovation that will serve our citizens, residents, visitors and businesses for decades to come.”

Under the MoU, Microsoft’s UAE datacenters that are expected to open this year, will be used to support the Government of Dubai’s digital transformation efforts through the adoption of a range of Microsoft technologies. Microsoft will train departmental staff in those technologies, empowering them to achieve more in their roles, and accelerate digital transformation across the emirate of Dubai.

“The intelligent cloud has become a cornerstone of digital transformation, and Dubai’s government has led the way in its adoption,” said Jean-Philippe Courtois, EVP and President, Microsoft Global Sales, Marketing & Operations. “We remain a steadfast partner to the Government of Dubai in its journey to become a smart city. As strong proponents of lifelong learning, we are uniquely poised to reskill and upskill public sector employees in cloud, allowing them to add immeasurable value to Dubai’s excellence e-government services.”

Microsoft experts will also collaborate with Smart Dubai on use cases and adoption scenarios, and will work jointly on roadmaps for rolling out new platforms to other government entities. Microsoft will also conduct awareness sessions on its cloud technologies for government entities and guide those entities on how best to benefit from online Microsoft courses and certifications.

Last week HE Omar Sultan Al Olama, Minister of State for Artificial Intelligence confirmed that the UAE government adopts an integrated and dynamic model for the utilization of artificial intelligence that supports industry growth, development of new sectors as well as strengthening governance and ethics frameworks, ultimately anticipating future challenges and creating a positive change for humanity.

This came during the signing of a Memorandum of Understanding with Sayed Hashish, Regional General Manager, Microsoft Gulf, to enhance joint cooperation in the field of artificial intelligence development, governance and ethics in the UAE, as well as developing a set of concepts, strategies and future ideas and study implementation mechanisms then implementing them. HE Al Olama said: “The UAE government focuses on enhancing innovation in modern technology applications and employing them in achieving sustainable development, and realizing the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai”

The focus of this collaboration will be on four key areas: identifying and developing technological solutions based on artificial intelligence to achieve the United Nations goals of sustainable development, enhancing the use of artificial intelligence in all government bodies in the UAE, establishing an integrated and global framework for governance and AI ethics, contributing to achieving the outputs of the UAE Strategy for Artificial Intelligence.

Recent G.C.C VAT updates

February 16th, 2019

Passive interest and dividends
The Federal Tax Authority (FTA) asserted that passively earned interest income from bank deposits and dividend income are outside the scope of Value Added Tax (VAT), and there is no requirement to report these in the VAT return.
VAT is a tax imposed on the import and supply of goods and services at each stage of production and distribution, therefore, VAT implications arise only when there is a supply – when there is no supply, there is no VAT implication.
The FTA explained that the Federal Decree-Law No. (8) of 2017 on VAT and its Executive Regulations have included specific provisions on what would constitute a supply of goods and a supply of services and also included a definition for taxable supplies. As such, where any transaction falls outside the scope of these provisions, it would, as a consequence, fall outside the scope of VAT.
The FTA also noted that although Article (42) of the Executive Regulations outlines the tax treatment of financial services, stating that the payment or collection of any amount of interest and dividend is considered to be a financial service and is therefore exempt from VAT, this would only apply where there is, in fact, a supply.
The Authority had issued the “VAT Public Clarification on Bank Interest and Dividends” as part of its Public Clarifications service, which are available on the FTA website and seek to educate taxpayers on all technical issues surrounding taxes, allowing them to implement the tax system efficiently.
In a press statement the Federal Tax Authority noted that if, for instance, a retail business deposits its income into a bank account and earns interest on the deposited amount, and the said retail business does not do anything to earn this income aside from merely depositing the money in the account, it can then be said that the interest was earned passively. In this case, the retail business is not considered to have made a supply to the bank, and the interest income received is not a consideration for a supply, which, in turn, means that the retail business is not required to declare this income on its VAT return, as it is outside the scope of VAT.
The Authority noted, however, that the above position only applies to interest derived from bank deposits and does not have any bearing on the interest generated from extending loans or credit, which are exempt supplies for VAT purposes.
Dividend income:
• The FTA explained that the payment of a dividend by a company is a distribution of its profits to its shareholders, where the holder of a share is not entitled to a dividend until the company has declared a dividend.
• Dividend income becomes due for shareholders in a company by the mere ownership of shares in that company and if the company makes any profits and declares dividends.
• The shareholder then receives the dividends and does not make any supply in order to be eligible for a payment of dividends, making the dividend a generally passive income.
• Accordingly, dividend income is outside the scope of VAT, and is therefore, not required to be reported on the VAT return. T
• he Authority noted, nonetheless, that while dividend income is generally outside the scope of VAT, any amount charged as a “management fee” would be subject to VAT. For example, management fees charged by a holding company to its subsidiaries would be subject to VAT.

The Public Clarifications service can be accessed through the Federal Tax Authority’s official website by clicking the “Help” button, then choosing the “Public Clarifications” tab, and selecting the required document. (https://www.tax.gov.ae/en/public-clarification.aspx)

Deregistration
The Federal Tax Authority (the “Authority”) explained that the Federal Decree-Law No. 8 of 2017 on Value Added Tax has defined the cases for tax de-registration. As such, when a registrant stops making taxable supplies or if the value of the taxable supplies made by the registrant over a period of 12 consecutive months is less than the voluntary registration threshold of AED 187,500 and it is not expected that the total value of the registrant’s anticipated taxable supplies or expenses subject to tax in the coming 30-day period will exceed the voluntary registration threshold, then the registrant must submit a de-registration application to the Authority within 20 business days of the occurrence of any of these cases using the Authority’s e-Services portal, knowing that failing to submit the de-registration application within the period specified in the tax legislation will lead to the imposition of administrative penalties as stipulated in the Cabinet Resolution No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE. This was the subject of a press release issued by the Authority to clarify the conditions and procedures for de-registration for Value Added Tax, after more than a year of its implementation. The Authority confirmed that registrants will not be de-registered unless they have paid all due taxes and administrative penalties and filed all required tax returns for the period in which they were registered as stipulated under the tax legislation.

The Authority went on to assert that the UAE Tax System is based entirely on voluntary compliance by Taxable Persons, whether it being with regards to registration, filing Tax Returns and payment of due tax or de-registration, noting that these services are available free of charge.
The Authority also mentioned that these procedures can be completed within few minutes through simple steps via the e-Services portal, available 24/7 on the Authority’s website (www.tax.gov.ae).

KSA
Reduction of the value-added tax (VAT) registration threshold to SR 375,000 from January 1, 2019, will increase the taxpayer base by about 150,000
The 2018 base was over 140,000 VAT-registered taxpayers.

Non-resident taxpayers are required to appoint a tax representative to act on their behalf and to assume joint liability for VAT debts. This requirement is posing some challenge to some non-resident taxpayers. Hopefully, progress in this area can be made soon.

VAT audits have commenced and assessments issued for contraventions of the regulations such as late registration and filing of VAT returns as well as incorrect declarations.
The global trend is towards tax authorities accessing taxpayer data directly and, in some territories, preparing the return for the taxpayer. Saudi taxpayers need to be prepared. Expect an increase in the level of scrutiny as GAZT continues to build its resources to challenge the VAT treatment of specific transactions.

Foreign Business VAT recovery
In a new guide on “VAT Refunds for Business Visitors”, published on its official website, the Federal Tax Authority (FTA) outlined four conditions that allow foreign businesses to recover Value Added Tax (VAT) incurred in the UAE To be eligible for the VAT refund.
1.The first condition is that foreign businesses must not have a place of establishment or fixed establishment in the UAE or in any of the VAT-Implementing GCC States that fully comply with the provisions of the Common VAT Agreement of the Cooperation Council for the Arab States of the Gulf.
2.Second, such foreign businesses must not be a Taxable Person in the UAE.
3.Third, they must also be registered as an establishment with a competent authority in the jurisdiction in which they are establishe
4. The fourth condition is that they must be from a country that implements VAT and that equally provides VAT refunds to UAE businesses in similar circumstances.

FTA Director General His Excellency Khalid Ali Al Bustani described the refund procedure as clear and transparent, noting that it supports economic activities in the areas in which the visiting business of the country participates, which is reflected positively on many sectors including tourism, trade, exhibitions, conferences, etc. He stated that the mechanism is in accordance with the Federal Decree-Law No. 8 of 2017 on Value Added Tax and the terms and conditions set in its Executive Regulations, which call for refunding taxes paid on supplies or imports made by a foreign entity not residing in the UAE or any of the Implementing States, subject to meeting certain conditions. He further explained that reciprocity is a key condition for the procedure, whereby the Authority will refund the VAT to businesses resident in countries that refund VAT for UAE businesses visiting their territories.

The Federal Tax Authority clarified that the period of each refund claim shall be a calendar year, noting that for claims in respect of the 2018 calendar year, refund applications can be made as of April 1, 2019. However, for subsequent calendar years, the opening date for accepting refund applications will be March 1st of the following year; this means that for the period from January 1 to December 31, 2019, applications will be accepted as of March 1, 2020.

The FTA went on to stress that the minimum claim amount of each VAT refund application submitted by business visitors is AED2,000, which may consist of a single purchase or multiple purchases. The Authority urged potential applicants to hold on to the original tax invoices on the purchases for which they would like to reclaim VAT, as they will be required to be submitted along with the refund applications.
Businesses residing in any GCC State that is not considered to be an Implementing

State may still submit a VAT refund application to reclaim VAT incurred in the UAE under this scheme, the FTA assured, outlining only 3 situations where VAT cannot be reclaimed,
1,The first situation is if the Foreign Business in question makes supplies in the UAE, unless the recipient is obliged to account for VAT under the Reverse Charge Mechanism.
2. Second, a VAT refund cannot be processed if the Input Tax in respect of any goods or services is “blocked” from recovery and, therefore, not recoverable by a Taxable Person in the UAE.
3. The third situation where a refund is not possible is if the Foreign Business is a non-resident tour operator.

The guide on “VAT Refunds for Business Visitors” can be accessed on the FTA’s official website via the link:
https://www.tax.gov.ae/pdf/VAT%20Refund%20User%20Guide-Business%20Visitors_EN.pdf (See Public Ax 2012 Finance Vat folder)
Independent Directors Services

Independent Directors’ services
The Federal Tax Authority (FTA) has confirmed that the date of supply for Value Added Tax (VAT) with regard to Independent Directors’ services is determined either in accordance with the general rules or the special rules, depending mainly on whether the fees for the said directors were known from the outset or not.
Where such fees are known from the outset, the date of supply shall be determined in accordance with the provisions of Articles (25) and (26) of Federal Decree-Law No. (8) of 2017 on VAT, depending on whether or not there will be periodic payments. If such fees are not known from the outset, they shall be determined upon conclusion of the Annual General Meeting and the date of supply shall be established only when such fees become known.
The date of supply prescribes the point in time when a VAT Registrant needs to account for VAT, the Authority explained in the Public Clarification on the Date of Supply for Independent Directors. This is part of the “Public Clarifications” service available on the FTA’s website to introduce taxpayers to all aspects of the tax system and facilitate compliance. The service can be accessed via the link: https://www.tax.gov.ae/public-clarification.aspx
The FTA explained that in instances where the Board Fees are known at the outset and involve periodic or multiple payments, the date of supply would be determined as per Article (26) of Federal Decree-Law No. (8) of 2017 on VAT, where the date of supply would be the earliest of the following three: The date of issuance of the tax invoice; the date the payment is due as shown on the tax invoice; and the date of receipt of payment. If 12 months have passed from the date of provision of services and none of the aforesaid events has occurred, the date of supply will be triggered at the end of the 12th month.
As for the instances where Board Fees are known at the outset but there are no periodic or multiple payments, the date of supply would be determined as per Article (25) of the Federal Decree-Law No. (8) of 2017 on VAT. Accordingly, the date of supply would be the earliest of the following three: The date of issuance of a tax invoice; the date on which the provision of services was completed; and the date of receipt of payment.

Profit Margin Scheme
The UAE Federal Tax Authority (FTA) asserted that only those goods which have previously been subject to VAT before the supply in question may be subject to the profit margin scheme. As a result, stock on hand of used goods which were acquired prior to the effective date of Federal Decree-Law No. (8) on Value Added Tax (“VAT law”), or which have not previously been subject to VAT for other reasons, are not eligible to be sold under the profit margin scheme. VAT is therefore due on the full selling price of such goods.

The taxable person will not be allowed to apply the profit margin scheme in such cases where he has issued a tax invoice or any other document mentioning an amount of VAT chargeable in respect of the supply.
• The profit margin is the difference between the purchase price of the Goods and the selling price of the Goods,
• The profit margin shall be deemed to be inclusive of Tax
• A VAT registered business may apply the profit margin scheme to eligible goods when:
o the goods must have been purchased from either a person who is not registered for VAT;
o or a taxable person who calculated VAT on the supply by reference to the profit margin i.e. a VAT registered business, which already applied the profit margin scheme on the same goods.
o In addition, the profit margin scheme may also apply when the taxable person made a supply of the goods where input tax was not recovered in accordance with Article 53 of Cabinet Decision No. 52 of 2017.
Suppliers should be confident that a good has previously been subject to tax in order to apply the profit margin scheme. Such evidence or information of this position could include but is not limited to.:
o information relating to the date the good was first manufactured, sold or brought in to use
o e.g. in the case of a car, the date the car was first registered would indicate its sale would have been subject to VAT if it was registered on a date after 1 January 2018;
o Evidence that the supplier paid VAT on their original purchase e.g. by asking the supplier for a copy of the tax invoice relating to their purchase of the good.
Where a Taxable Person has charged Tax in respect of a supply with reference to the profit margin, the Taxable Person shall issue a Tax Invoice that clearly states that the Tax was charged with reference to the profit margin, in addition to all other information required to be stated in a Tax Invoice except the amount of Tax.

Transportation

As per the Clause (4), Article (45) of the Federal Decree-Law No. 8 of 2017 on Value Added Tax and as per Article (34) of Cabinet Decision No. 52 of 2017 on the Executive Regulations (“VAT Executive Regulations”): The supply of the means of transport shall be subject to the zero rate in the case of, a supply of bus or train that is designed or adapted to be used for public transportation of (10) or more passengers.

One such qualifying means of transport includes the supply of a bus or train that is designed or adapted to be used for public transportation of 10 or more passengers. This Public Clarification discusses the definition of ‘public transportation’ and its interpretation for the purposes of identifying those buses or trains which qualify to be supplied at the zero rate under this provision.As a result, those means of transport which are designed to transport a specific category of individuals, such as school students or employees of a business, do not meet the conditions to be treated as a qualifying means of transport for the purposes of the zero-rating provisions. Such means of transport shall therefore be subject to the standard rate of VAT.
This denotes that, any supplies of means of transport (e.g. supply of buses) made for the use of schools or business are subject to 5% tax at the time of its purchase.
It has also been clarified by the FTA that, whether or not the original supply of the means of transport qualified for zero rating has no impact on the VAT liability of any charges made for the supply of transportation services. The VAT treatment of the means of transport when purchased does not determine the VAT treatment of any supply of transport services made using that vehicle. Providing services to business for transporting its employees from one place to another still remains exempt under law. Therefore, where local transport is made for a charge to a defined group of people, any VAT incurred on the costs of purchasing the means of transport, fuel etc. in order to provide that service is not recoverable.

Difference between private transportation & public transportation in the VAT Law:
What is Private Transportation?

FTA defines ‘Private Transportation’ as ‘all means of transportation used to transport a specific group of people under contracts.’
What is Public Transportation?
The transport used for ‘public transportation’ shall be interpreted by the FTA as, ‘all means of mass transportation used to transport all individuals without specifying any category.’
The difference between the two forms of transportation therefore means that public transportation should be available for all individuals without exception. Public transportation would not include transportation which is only available to a specific category of user.
To summarize, if a bus or train is designed or adapted for a specific class or group of people, or is only available for use by a specific class or group of people, then it shall be considered to be designed or adapted for use for private transportation. And thus, the supply of such means of transport will be taxable.
Factors relevant to identify Public Transportation:
In order to determine whether a bus or train is designed or adapted for use for public transportation, the following factors would be relevant:
1. Features exist which allow passengers to pay for the transportation or to indicate they possess a ticket e.g. a payment booth, ticket scanner or device to take payment;
2. There is branding either within or outside the vehicle advertising the transport service, indicating the transportation is available to all;
3. There is branding or other features indicating regulation of the means of transport by the entity regulating public transportation in the Emirate of operation;
4. The intended use of the means of transport is to transport members of the public without exception or limitation to a specific group.
By considering above points, the following means of transports are not be considered to be used for public transportation:
1. School buses;
2. Buses used to transport groups of employees or workers to or from a place of work;
3. Shuttle buses used to transport hotel guests to other locations e.g. a mall, airport, park, or other tourist attraction.
Hence the and the supply of such means of transports shall be subject to VAT at the standard rate.
VAT Liability of Transportation Services:
To add on, services related to transportation shall be governed by Clause 4 of Article 46 of the VAT Law and Article 45 of the Executive Regulations which state that any supply of local passenger transport shall be exempt from VAT where the supply is of local passenger transport services in a qualifying means of transport by land, water or air from a place in the UAE to another place in the UAE.
For the purposes of the exemption from tax, one of the qualifying means of transport listed includes a motor vehicle, including a taxi, bus, railway train, tram, mono-rail or similar means of transport, designed or adapted for transport of passengers.

Emirati Nationals – Home owners
The Federal Tax Authority issued a guide Apr2018 with details for home owners on how to claim the refund.
Emirati house owners have the right to a five per cent value added tax (VAT) refund when constructing their homes, the Federal Tax Authority (FTA) has stated. The Authority has issued a guide with details for home owners on how to claim the refund. It clarifies that only UAE citizens have the right to ask for the refund. They need no new account on the Authority’s website, and only need to download and fill a form and submit it back so the Authority
t UAE nationals can claim the VAT refund against the construction expenses for a residential building, when they construct it either for themselves or for their family members.
UAE nationals can claim the refund against a newly constructed building to be used solely as residence, under Article (66) of Cabinet Decision No. (52) of 2017 on the Executive Regulations, of the Federal Decree-Law No (8) of 2017 on Value Added Tax,”.
The VAT refund is not allowed in relation to a building that will not be used solely as a residence by the person or the person’s family. For example, it is not to be used as a hotel, guest house, hospital, or if the property is to be used for rental purposes or for any other purpose not consistent with it being used as a residence,
According to the guide issued by the FTA, an Emirati owner has the right to ask for the VAT refund if he bought a piece of land and allowed an authorised person or company to establish a housing unit on it. The guide says that the VAT refund only includes the money spent on establishing the unit, adding that it includes the amounts paid as building materials, except for electricity products of furniture or green areas.
On the other hand, the refund also includes VAT paid for doors, fire alarms systems, floors, kitchens, health units, bathrooms, windows, and electricity cables. A third entity is going to review the housing units to approve the refund and its amount after the Emirati owner submits the form. Moreover, the owner needs documents that prove his ownership for the unit, show the date of issuing the certification of establishment, prove the ownership of the land and show the value of VAT paid during the process.
It should be noted that the VAT refund will be claimed after completion of the new building which is ready to use. The owner must file a VAT refund application after getting registration with the FTA within six months from the date of completion of the newly built residence. Processing can take up to 20 days.
A newly built residence is considered complete at the date the residence becomes occupied, or the date when it is certified as completed by a competent authority in the state, or as may otherwise be stipulated by the Authority.
Also where the Authority has repaid tax and following the receipt of such repayment, if the person used the building for rental or any other commercial purpose, then he will be required to repay the amount of the tax that was claimed by him. The UAE national can claim VAT against construction related expenses excluding furniture or electrical appliances.

Grants and Sponsorships
The VAT treatment of donations, grants and sponsorships depends on whether the donor, grantor or sponsor, as the case may be, received any benefit in return for such payments.
o Where any benefit is received in return for the payments, VAT implications will arise.
o However, where no benefit is received, the payments will be treated as outside the scope of VAT as they will not be seen as consideration for a supply.
The VATP011 clarification states where donation and grants do not have any supply, they are considered as out of scope.
Generally, sponsorship will be subject to VAT as there is usually associated supply to such sponsorship.

Pre Vat Orders and post Vat supply
As per the FTA’s statement, the only case where consumers are directly responsible for paying VAT on services are those that were delivered fully or partially after VAT went into effect from January 1 and it was contractually/ stated that the amount due is exclusive of tax.
According to the FTA’s statement, suppliers will be liable for VAT in two cases:
o if the contract states that the amount received against the good or service is inclusive of VAT;
o or if the contract issued to the consumer did not refer to VAT.
In the latter case, when the goods or services recipient is registered for tax, the amount due is treated as exclusive of tax. So the supplier has to ascertain whether the recipient is registered, and the recipient ability to recover tax as per Article 70 of the VAT Executive Regulations.
The authority stressed that in all cases, the supplier remains liable for accounting for the tax and paying it to the FTA.

Bahrain and Utility Bills
A Bahraini lawyer has insisted that the recent decision by the Electricity and Water Authority (EWA) to apply Value Added Tax (VAT) on subscribers’ bills are unconstitutional, demanding immediate cancellation of the decision. This came as lawyer Mohammed Al Thawadi appeared before the High Administrative Court, which is examining a complaint lodged by him against the authority. The court said that it would issue its final verdict in the case on February 24.
In his statements, the lawyer asserted that the decision is unconstitutional, claiming that Articles 15 and 17 of the Constitution of the Kingdom stipulate that taxes should only be imposed through legislation. Mr. Al Thawadi also accused EWA of not adhering to the Unified GCCVAT Agreement.
“Article 29 did not stipulate the imposition of taxes on electricity supply services, but on the contrary, it gave each state the right to exempt some sectors in accordance with local law. “Additionally, Article 30 stipulates the exemption of government bodies from paying taxes, and therefore it is not permissible for the authority to collect taxes.” The lawyer’s last statement came after the authority denied the accusations during the previous hearing.
“The authority does not exercise its functions as sovereign and there is no monopoly of providing electricity and water supply services in the Kingdom,” the authority’s counsel had told the court. Further supporting his accusations against the authority, Mr. Al Thawadi said: “The authority’s claim that it does not operate in a sovereign manner and that there is nothing preventing competition with it from any other party in providing its services is incorrect.