Sunday 12, November 2017 by Jessica Combes

DoF Abu Dhabi organises workshop to introduce VAT to government entities

 

The Department of Finance (DoF)–Abu Dhabi recently held a workshop to discuss the latest developments on financial systems and regulations related to government procurement frameworks, and introduce different government entities to the updates on VAT and tax regulations.

The workshop witnessed the participation of more than 500 representatives from 70 government entities in the Emirate of Abu Dhabi.

HE Riyad Abdulrahman Al Mubarak, Chairman of DoF–Abu Dhabi, stressed the Department’s commitment to implement initiatives which help achieving the Abu Dhabi Plan and Abu Dhabi Economic Vision 2030. HE also stressed DoF–Abu Dhabi’s belief in the importance of establishing unified policies and procedures that are characterised by the highest level of professionalism, integrity and efficiency, and aligned with Abu Dhabi’s government financial system. HE Al Mubarak highlighted the Department’s continuous support towards enabling government entities to use different systems, in particular that of government procurement and service pricing.

“The Department of Finance – Abu Dhabi continues its efforts to further develop the government financial system and work according to a vision aligned with a common strategic financial direction for government entities in Abu Dhabi. It is also important to prepare government entities to manage government financial work by following a precise methodology that is based on legal and scientific aspects to prove effectiveness. These steps help in achieving the government vision to build a secure, economic sustainable community with a competitive advantage, and ensure a prosperous future for generations to come,” said Al Mubarak. 

The workshop covered three different topics including: value added tax (VAT), the draft pricing manual for government services, and the programme to develop the government procurement system. Participants also had the opportunity to inquire about various elements presented during the workshop, where experts in the field offered the required answers to ensure government entities’ understanding of the topics and their commitment to implement the highest international standards in their work.

During the first module, government entities were briefed on the VAT, and its objectives, in addition to the latest developments in relevant tax legislation and the Federal Tax Authority’s (FTA) framework. This phase included support by the Authority through various complimentary materials, such as a handbook on VAT, as well as e-learning material and a telephone helpline. The workshop also reviewed the implementation of VAT within GCC countries, according to their unified VAT agreement and related federal laws in the UAE, and a detailed explanation on the registration process for taxation.

The discussion also included a presentation of the auditing mechanisms of the Federal Tax Authority with practical examples on the application of VAT, taxable supplies, and the calculation of outputs on supplies as well as mandatory and voluntary registration. Participants learned about the impact of VAT on government entities, and the independent activities carried out by government entities that fall outside the scope of VAT. Independent activities carried out by government entities are treated as non-commercial activities for the purposes of VAT and fall outside the scope of tax, VAT should be applied and enforced only where appropriate.

The second module of the workshop discussed the draft pricing manual for government services, prepared by the DoF–Abu Dhabi in accordance with the provisions of Law No. 1 of 2017. DoF–Abu Dhabi representatives reviewed the scope and objectives of the manual, the pricing principles and classification of government services as well as the mechanism for calculating the cost of government services, fees and standard cost. The workshop also discussed the pricing equation, infrastructure cost recovery, price and tariff calculation and their approval, as well as the procedures adopted to submit and approve pricing requests for government services.

The third module discussed the development programme with regards to the Government Procurement System, and the pivotal role it plays in contributing to the achievement of the strategic goals of the Government of Abu Dhabi. The module also highlighted the organisational and operational framework of the programme and its importance in improving the efficiency and effectiveness. These improvements are witnessed through the process of automating and standardising procurement procedures, and providing unified, detailed and timely procurement reports across various government entities in the Emirate of Abu Dhabi, based on the latest tools and in accordance with the best international standards in the field of government procurement. 

Al Mubarak stressed the importance of procurement standards in supporting employees in the government procurement sector, implementing best practices, as well as providing distinguished service and a unique experience for customers. HE pointed out that the Government Procurement Office established by DoF–Abu Dhabi has completed developing a two phase execution plan for strengthening government procurement. Most of the work related to the first stage has been completed, however the model will be activated and the second phase will be completed in 2018. 

DoF–Abu Dhabi had worked on developing the government procurement system utilising the latest international technologies; from a smart government perspective, and using the strategy of ‘internet of Things’ to implement integrated digital operations. The procurement development system supports efficient use of time and effort in a way that increases operational quality and customer satisfaction, in addition to enhancing the quality and accuracy of financial reports that support decision making. The system plays a main role in the provision of financial assets, and increasing the effectiveness and quality of financial procurement in alignment with the best international standards. This ultimately will promote the economic performance of the Emirate, and raise its position within global competitiveness indicators.

The Government Procurement Office was established with the aim of undertaking the assigned specialisations of the DoF – Abu Dhabi in light of Law No. (1) for the year 2017 pertaining to the financial system for the Government of Abu Dhabi. The Office specialises in the placement of organisational and operational frameworks for governmental procurements, bids, and the regulatory systems to be implemented. The Office further specializes in developing and operating the government procurement technology platform (procurement portal), and identifying the products and services that will be purchased through central contracts and finalising supplier contract signing procedures. The Office is also required to provide the necessary training for the government purchasing system.