Tax – in general –  is an amount of money that a person or a company have  to  pay to the government so that it can pay for public services such as healthcare, educations ,social services ..Etc.Tax – in general –  is an amount of money that a person or a company have  to  pay to the government so that it can pay for public services such as healthcare, educations ,social services ..Etc.

UAE – as party of GCC – will implement Tax regulations to improve sources of revenue that will help government departments to provide high quality public services .The introduction of Tax in UAE will be for 2 types of Tax,

(i) Excise Tax

(ii) Value Add Tax (VAT).

Legislations:

UAE governments had issued the following Tax legislations:

1- Federal law by decree no. 13 of 2006 concerning the Establishing of Federal Tax Authorities on 26 / 9/ 2016

2- Federal law no. 7 of 2017 for Tax Procedures on  11/ 6 / 2017.

3- Federal Law by Decree no. 7 of 2018 on Excise Tax on 17 / 8 / 2017

4- Federal law by Decree no. 8 of 2017 on VAT on 23 / 8/ 2017.

5- The Executive Regulation is approved by Government and soon will be release to public.

The above legislations provide the guide lines of the legal Procedures, Financial rules and grounds for the Tax Registration, Tax Return, and Exempt Supply, Tax evasion, Legal Representative, Tax Agent, violations, penalties and punishments.

Excise Tax is indirect tax lived ( as of 1st October 2017) on certain goods such as carbonated & Energy Drinks , Tobacco , and other good that will be nominated by concerned Authorities as per regulations set forth in law no. 7 of 2017 on Excise Tax. Federal Tax Authority (FTA) announced on 14/9/2017 that the registration will start on 17/9/2017 at FTA website (www.tax.gov.ae) and any person or company involves in of the said activities must register prior to October 2017. FAT also announced that the Tax Excise revenue will be collected through  e-dirham  electronic system.

Value Add Tax is (VAT) is a type of consumption tax that will  placed on a product whenever value is added at a stage of production and at final sale. The UAE had announced its intention to the introduce value added tax (VAT) in the country starting January 1, 2018. The Vat ( 5% ) levied at each stage of Supplying , manufacturing ,   importing, selling  goods or   providing Services will applicable to the  buyer / beneficiary/ Customer  or End User. Any company whose turnover is quantified to be AED 375,000 (which is the    Mandatory Registration limit) needs to register-  as Designate Party – with Federal Tax Authorities as per Standard Form of Registration. The Executive Regulation Decree will define the Exempt Activities.

 Duties of Taxable party:

The legislations specified the general obligations & duties of Taxable person or entity (individuals or Companies) including registration with Federal Tax Authorities, maintaining proper Financial Records for day to day activities, submitting Tax return and settle the Tax amount on due date, releasing all records to the officer of Federal Tax Authorities who has the legal capacity and authorities to exam all records relates to the business of designate party.

The decree-law provides that all supplies of goods and services are subject to VAT at a standard rate of 5 per cent with the exception of specific supplies subject to the zero rate and what is exempted as specified in the decree-law.

According to the decree-law, a supply of goods includes the transfer of ownership of the goods or the right to use them as an owner from one person to another and an entry into a contract between two parties triggering the transfer of goods at a later time. A supply of service is any supply that is not considered a supply of goods.

The decree-law made two exceptions as to what constitutes a supply: the issuance or sale of any voucher unless the received consideration exceeds its declared monetary value; and the transfer of whole or an independent part of a business from a person to a taxable person for the purposes of continuing such business that was transferred.

Record Keeping:

It is mandatory for every taxable person to maintain books of accounts under UAE VAT law. In addition to that the authority can ask for additional documents such as, annual accounts, general ledger, purchase day book, invoices issued, invoices received, credit notes, debit notes, VAT Ledger etc. Under the UAE VAT law the books of accounts and records are to be maintained for five years.

For most businesses, VAT returns should be filed every three months. Filing of returns can also be done online using the government’s eServices.

Businesses are also strongly advised to ensure that in all the commercial contracts they enter into, they include a clause that spells out that the VAT burden can be passed on to the consumer.

The easiest way to do this is to alter your IT systems to automatically calculate and add VAT to the invoices.

VAT is not only a finance issue. It flows through all operational departments of the company.  This is because wherever a company acquires products or services, it may pay VAT and it would need to capture all the documentation relating to VAT paid, in order to claim refunds.

Advertisements affecting the image of a brand

Background

This article is based on the premise that a company circulated a picture/image of four major car brands operating in the UAE depicting one brand as inferior to the other brand in an image/picture reflecting their brand incompetency in the market. The said advertising is accessible online/publication in the UAE, therefore the laws of UAE apply.

Question of Laws

1. Does such advertisement violate any specific Laws in the UAE?

In the UAE, brand tarnishing is a form of unfair competition and is punishable under the following laws.

1. The UAE Federal Law no.18 of 1993 on Commercial Transactions Law, Section 3, Art 66 details about (Unfair Competition) intentional damage to the reputation of a brand or business, they can face penalties under the law.
2. The Federal law no.37 of 1992 on Trademarks (the “trademarks Law”) provides the legal framework for protecting trademarks by prohibiting a party from unlawful use of another party’s trademark and preventing unfair competition.
3. Federal Law no.4 of 2012 governs competition law principles for organizations in the UAE and includes provisions related to fair trade practices. The law prohibits any act or practice that is considered to be in violation of fair-trade principles anti-competitive behavior.
4. The National Media council is authorized under the advertisement standards to apply various penalties for non-compliant advertisement. Such penalties may not be isolated from any other penalties detailed under Federal law no. 15 “On Publishing House” of 1980 regarding printed matters and publications.
5. The UAE Law no.5 of 2012, Article 29 of the Cybercrime Law criminalizes the act of intentionally damaging the reputation of a natural or legal person through the use of information technology and shall be punished by imprisonment and a fine.

• What is the remedy available to the aggrieved brand?
• Violation of advertising activities may result in administrative, civil, and criminal liability. The supervisory authority may decide to impose sanctions on the advertiser in the form of a fine, removal or blocking of the advertisement, suspension, and revocation of the license. Trademark law & competition law violation can result in significant penalties, including fines and/or imprisonment.

Globalization has led to rapid developments in today’s fast-paced corporate world, among which an increasingly growing interest in arbitration.

Parties would rather resort to this alternative contract-based form of dispute resolution than going to Courts given its numerous advantages. These include but are not limited to its speed, privacy, economy, efficiency, and the flexibility when it comes to choosing the applicable laws, regulations and arbitrators. Thus explains why, more frequently than before, an arbitration clause is being included in contracts. Alternatively, parties may agree on signing a separate arbitration agreement in the event a dispute related to the implementation of their contract arises.

The final award rendered by the arbitral tribunal has furthermore a final and binding effect in the sense that it represents an enforceable decision to which the parties are obliged to comply.

 Within this context, the UAE legislator, wishing to position itselfas a regional leader in this field, established key arbitration institutions in its major cities (Abu Dhabi, Sharjah, Ras Al Khaimah, Dubai) in addition to the International Islamic Centre for Reconciliation and Arbitration.

The most significant however remains the Dubai International Arbitration Centre (DIAC) established in 2004, which has become the “largest and most preferred Alternative Dispute Resolution (ADR) entity in the Middle East”, with disputes amounting to 5.5 Billion AED in 2020 and covering a wide array of sectors, ranging from construction, Commerce, Real Estate, commercial and civil transactions, corporate governance, to IP, finance and banking to oil and gas.

The DIFC-LCIA Arbitration Centre and Emirates Maritime Arbitration Centre were both abolished pursuant to the Decree No. 34 of 2021 of the Ruler of Dubai and merged into the DIAC in an effort to concentrate institutional arbitration there.

As for Abu Dhabi, its Commercial Conciliation and Arbitration Centre (ADCCAC), established in 1993, represented the first center in the GCC to solve national and international commercial disputes. An initiative by the Abu Dhabi Chamber of Commerce and Industry, its mission is to build “an independent, effective and just structure for the mechanisms of conciliation and arbitration to serve the local and international business community”.

Both the DIAC and ADCCAC have their own rules and regulations that are regularly updated, taking into account the international standards and best practices.

How can we help you?

Khalifa Al Sada Advocates and Legal Consultants’ prides itself in its knowledgeable team of legal consultants, solicitors, paralegals, and arbitrators with over two decades ears of experience in various types of arbitration, whether it be institutional, ad hoc, national or international.  

Our offices in Dubai and Abu Dhabi provide arbitration and other Alternative Dispute Resolution (ADR) methods such as conciliation and mediation, before the DIAC, ICC, DIFC and ADCCAC. We are specialized and up-to-date with the latest trends in these subjects; we aim to get our clients the most beneficial and cost-effective outcome while taking into consideration the circumstances of their case.

Please reach out to us by email on contact@thelawyers.ae to discuss further.

Sources:

http://www.diac.ae/idias/resource/DIAC%20Flyer.pdf

https://u.ae/en/information-and-services/justice-safety-and-the-law/litigation-procedures/alternative-methods-to-settle-disputes-/key-arbitration-institutions

http://www.diac.ae/idias/services/diac/advantages/#:~:text=Hearings%20at%20the%20DIAC%20are,details%20of%20an%20arbitration%20case.&text=Arbitration%20is%20inexpensive%20in%20comparison%20to%20litigation

http://www.adccac.ae/English/AboutUs/Pages/OverView.aspx