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What you need to know now
The article reports VAT implementation news. Record retention must be assessed by record category and applicable law, with special rules for real-estate records.
The original article is preserved below as a historical record. Earlier deadlines, rates, offers and approval statements should not be used as current guidance.
- Do not apply one retention period to every business record.
- Separate real-estate records from general accounting records.
- Do not destroy records while an audit or dispute is unresolved.
Create a retention map by record category
The headline comes from early VAT implementation reporting and should not be used as a single disposal rule for every file a property business holds. Separate property transaction documents, ordinary VAT working papers, company records and other regulated information. For each category, identify the applicable legal requirement and the event from which the period is counted. A business can have several retention obligations at the same time, so use the longest applicable requirement when establishing its document policy.
Preserve the property transaction history
Connect title or lease documentation, agreements, invoices, credit notes, payment records and the tax treatment used for a property transaction. Keep records that explain changes in use, parties or contractual responsibilities where relevant. A ledger total may not reveal why a transaction was treated in a particular way years earlier. Use stable references linking the accounting entry to the supporting property file so a later review does not depend on the memory of the person who prepared the return.
Keep electronic records usable
Retention is useful only if records remain readable and retrievable. Organise electronic folders, control access and test backups rather than assuming a software subscription preserves everything indefinitely. If a property manager or accounting provider changes, include document export and handover in the transition. Keep original files and a clear version history for corrections. Do not destroy relevant records while an audit, dispute or other unresolved issue requires them to remain available.
Separate old implementation comments from current advice
The original article also reflects matters that were awaiting rollout in 2017. Those statements are retained as history and do not describe whether tourist refunds or other systems are operational today. For a present disposal decision, consult the current legislation and the particular records involved. Document who approved the retention policy and the basis used, review it when the law or business changes, and avoid interpreting the historical headline as permission to delete every other document earlier.
YOUR NEXT STEPS
A practical way forward
- 01
Step 1
Create a record-retention register by document category.
- 02
Step 2
Check tax, company and regulatory requirements.
- 03
Step 3
Maintain retrievable backups and a controlled disposal process.
CLEAR ANSWERS
Frequently asked questions
Does the headline establish all current retention rules?
No. Check the relevant legislation and circumstances.
Are tourist refund rules still awaiting implementation?
No. That statement records the pre-launch period.
Read the original article First published 28 November 2017 · retained for context
This earlier article is preserved for context. Its rates, deadlines, approvals and announcements may have been superseded. Use the current guidance and official references on this page for your next step.
Other sectors are required to keep their financial book records for five years
The Federal Tax Authority on Tuesday issued Executive Regulations for value-added tax (VAT), which stated that real estate firms would have to maintain their books for 15 years.
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, on Monday approved the Executive Regulations for VAT, which offered more clarity on tax matters pertaining to free zones.
“Any records related to a real estate required to be kept shall be held for a period of 15 years after the end of the tax period to which they relate,” state the Executive Regulations issued by the Federal Tax Authority (FTA).
Meanwhile, other sectors are required to keep their financial book records for five years.
With regard to refunds for tourists and business visitors, the FTA may come out with rules in due course. “Schemes and conditions to claim such refunds are yet to be finalised,” said Nirav Shah, director, Fame Advisory.
Shah said only the purchase and sale of goods within designated free zones will not be subject to VAT, but all services provided by companies in designated zones will be subject to VAT. All taxable persons based in a designated zone will be considered to be located within the UAE.
Designated zones are categorised as those free zones which have a specific fenced geographic area and security measures and customs controls in place to monitor the entry and exit of individuals and movements of goods to and from the area.
“Thus, all free zones which do not have such facility will not be regarded as designated zones, e.g. DMCC, Tecom, Internet City, Silicon Oasis, etc.,” he added.
He noted that any pharmaceutical products and medical equipment supplied even by intermediaries or traders to hospitals will be zero-rated. Cosmetic treatments will be subject to a standard five per cent rate of VAT.
The Executive Regulations specify that healthcare services would be zero-rated if they relate to the well-being of a human being, according to resident partner Pratik Shah and principal Sunny Kachalia from WTS Dhruva Consultants.
They noted that as per the Executive Regulations, fee-based financial services, which are provided in return for an explicit fee, discount, commission, rebate, etc., would be subject to VAT.
Thomas Vanhee, founding partner, Aurifer Middle East Tax, said that a missing piece of the puzzle is VAT returns. VAT return is an important document for the set up of tax codes to automate reporting. Without knowing where to report certain transactions, businesses cannot finish the set up of their ERP systems.
He said one of the important elements in the law is the requirement to mention the VAT number of the local business customer on the invoice. This requires a lot of businesses to update their customer master database and can be a lengthy administrative process, especially since very few companies are registered at the moment.
Surandar Jesrani, partner and CEO, Morison MJS, said only a handful of goods and services would be exempt under the UAE VAT regime.
“One such service is the supply of local passenger transport. Upon the release of the final Executive Regulations, we understand that any local passenger transportation service provided in a motor vehicle like taxi or bus shall qualify for the aforesaid exemption. Taxis in the UAE would, therefore, charge no VAT to its passengers. We need to see what will happen to the VAT on cars which automotive companies will sell to taxi business.”
Mayank Sawhney, director, MaxGrowth Consulting, said the long wait of all UAE businesses and residents on getting some clarifications on a number of grey areas of the VAT Decree Law seems to be over. However, there are still a number of areas which need further clarification. Guidance is expected from the Ministry of Finance and FTA over the coming days.
Khaleejtimes.com
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Official sources & further reading
Source checks support this general guide. Your treatment depends on the facts, tax period and applicable legislation.
