His Highness Sheikh Khalifa bin Zayed Al Nahyan has just issued a new law in relation to the planned UAE tax system.

The new rule that has been announced, Federal Law No. 7 of 2017 for Tax Procedures, sets the foundation of the system as well as regulates the administration and collection of taxes.

Why was it issued?

HH Sheikh Hamdan stated that, “The Tax Procedures Law is a significant milestone towards establishing the UAE’s tax system and diversifying the economy”. 

The framework that is being planned out is set to ensure the sustainability as well as the diversity of the governments revenue streams in order to maintain momentum of UAE development. 

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What does this mean?

Once the Federal Law No. 7 of 2017 goes into effect, UAE-based companies are required to keep records for five years, penalties for non-compliance will begin as well as new processes for appeals that will be carried out by the Federal Tax Authority.

This also means that the nation will soon witness the introduction of VAT and excise tax systems.