Host
There’s just so much more to hear. Download our podcast at Dubai1038.com. Drive Live, Talks Legal. We’ve really got three main topics to delve into, and one of them is something we didn’t have time to cover last week. Just a reminder, if you have a question for Ali and need a legal answer or perspective, you can contact us via 4001 or the free app at 42310.
It was published last week, I think, but I still didn’t receive the official copy. I have an official copy, but not the official one that comes into force within one month of its publication. Right. So, it’s well worth talking about this—a day of celebration for the legal and business communities at least.
Can we start today, Ali, with VAT? Specifically, the applications during the transitional period and the status of contracts that don’t provide for tax payment obligations during such a period. For example, if you signed a contract back in 2017 that extends into 2018, what is the actual law of the land? Where are we legally?
Ali Al-Assad
Exactly. There are two aspects to cover. First, when we have a transaction where part of it occurred in 2017 and part in 2018, is it subject to VAT or not? Second, who bears this VAT—the supplier or the buyer?
For example, let’s say you’re buying a car. If you signed the contract in 2017 but received the car in 2018, this transaction is subject to VAT. However, if you received the car in 2017 but paid for it in 2018, it’s not subject to VAT. The actual position is that VAT applies whenever you receive the good in 2018.
Host
We had lots of questions about this when it first came in.
Ali Al-Assad
Yes, and it’s the same for services. For instance, if you bought a gym membership in 2017 for 12 months, six months of the membership would fall in 2017, and six months in 2018. VAT would only apply to the six months in 2018, not the entire contract.
Host
What about insurance policies? Some people paid their insurance in full before the end of 2017, but the policy straddled into 2018.
Ali Al-Assad
In this case, insurers have the right to issue a VAT invoice for the period of the policy that falls in 2018. For example, if the policy covers four months of 2018, the insurer can charge VAT for that period. Some insurers might absorb the VAT, but if they choose to charge it, they must issue a proper tax invoice.
Host
So, in 2018, the VAT would apply to the service provided during that time, even if the original invoice didn’t include VAT?
Ali Al-Assad
Exactly. For transactions occurring in 2018, the invoice must be reissued as a tax invoice, clearly stating the VAT.
Host
Let’s recap. For any service or good received in 2018, VAT is applicable. The responsibility for paying VAT depends on the contract terms. If the contract states that the price includes VAT, the supplier covers it. If it excludes VAT, the buyer pays. But what if VAT isn’t mentioned at all?
Ali Al-Assad
If the contract is silent on VAT, the supplier is liable to pay VAT unless the buyer is a registered entity with the FTA. In that case, the buyer must pay.
Host
What about long-term contracts signed before VAT was introduced?
Ali Al-Assad
If the contract doesn’t specify VAT, the supplier bears the liability. But if the buyer is registered with the FTA, they are responsible for the VAT.
Host
Let’s move on to some recent changes in labor and visa regulations. These seem to align with efforts to ease doing business and attract talent.
Ali Al-Assad
Yes, for instance, the new policy replaces the AED 3,000 sponsorship deposit for employees with a AED 60 insurance policy. This reduces costs for businesses and provides more protection for employees, covering up to AED 20,000 in case of disputes.
Host
It’s a significant improvement for both businesses and employees. What about overstaying visas?
Ali Al-Assad
Now, people overstaying visas may benefit from a six-month residency visa to find a job. This provides stability, allowing families to maintain rent contracts, utilities, and other services without disruption.
Host
That’s a huge relief for families. How about changes to arbitration?
Ali Al-Assad
The new arbitration law allows interim decisions during arbitration. Arbitrators can request courts to freeze assets or take other actions while arbitration is ongoing. This protects parties from losing money due to delays.
Host
So, the courts and arbitration panels now work more collaboratively?
Ali Al-Assad
Exactly. The process is more efficient, saving time and resources while ensuring better protection for all parties.
Host
Thank you, Ali. As always, insightful and informative.
Host
Ali, before we wrap up, we’ve received a few more questions from our listeners. Here’s one from Sophia: she says she left her job eight days ago and still hasn’t received her end-of-service calculation. She’s asking if that’s legal.
Ali Al-Assad
In most straightforward cases, the end-of-service calculation should be ready within a day or two, especially if the company initiated the termination. If Sophia resigned, then there might be a slight delay, particularly with weekends or holidays, but eight days is still on the longer side.
Host
What should she do if the company keeps delaying?
Ali Al-Assad
If she doesn’t hear back soon—say within a day or two—she should remind them politely. However, if the delay continues with no valid explanation, she has the right to approach the Ministry of Labour to resolve the matter.
Host
Sophia also mentioned in a follow-up text that she gave two months’ notice. So the company has essentially had over two months to prepare this.
Ali Al-Assad
That’s concerning. With two months’ notice, there’s no excuse for not having the end-of-service benefits calculated. If they don’t respond quickly, she should escalate this to the Ministry of Labour.
Host
Here’s another question from Shannon: if an employee leaves the UAE and decides not to return, can the company cancel their visa without having their physical passport?
Ali Al-Assad
Yes, there are ways to cancel a visa without the physical passport. One option is to wait for six months, as the visa is automatically canceled if the person stays outside the UAE for that duration. However, the company can’t issue a new visa for another person under the same sponsorship until the original visa is formally cleared.
Host
So what’s the process if the person’s passport isn’t available?
Ali Al-Assad
The company’s PRO (Public Relations Officer) would need to handle it. They might have to contact the immigration authorities, who can clear the visa administratively.
Host
Let’s take one last listener question. Pete says he recently changed his tourist visa to an employment visa without leaving the country. He’s asking if this is standard practice now.
Ali Al-Assad
Yes, under recent updates to visa regulations, a “change of status” process allows individuals to switch from a tourist visa to an employment visa without leaving the UAE. There’s a fee involved, but it’s a convenient and legal option.
Host
Ali, this has been an incredibly enlightening discussion. Thank you so much for joining us today and sharing your insights.
Ali Al-Assad
Thank you for having me. It’s always a pleasure to be here.
Host
And that’s all for today on Drive Live Talks Legal. Don’t forget to download our podcast at Dubai1038.com for more discussions like this. Have a great day!
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