Value-added tax (VAT) is a consumption tax that is applied to most goods and services sold in the United Arab Emirates (UAE). The standard VAT rate is 5%, but there are some goods and services that are exempt from VAT or subject to a 0% rate. Businesses that sell goods or services in the UAE are required to register for VAT if their annual turnover exceeds AED 375,000. Businesses that register for VAT must file VAT returns on a monthly or quarterly basis.
The Ministry of Finance announced an amendment to some provisions of the Federal Decree-Law No.8 of 2017 on Value Added Tax.
The changes align with the best practice in light of the GCC Unified VAT Agreement. According to the ministry, the updates are based on past experiences and challenges experienced by different business sectors, also as the recommendation received from the related parties.
Some of the critical amendments launched by the Federal Decree-Law No. 18 of 2022 on the amendment of some provisions of the Federal Decree-Law No. 18 of 2017 on Value Added Tax include the following:
- Registers individuals who make taxable supplies are permitted to apply for an exception from Value Added Tax registration if all of their supplies are zero-rated or if they don’t make any supplies any longer than zero-rated ones.
- Updating fourteen days to issue a tax credit not to settle output tax with the time frame set to issue tax invoices.
- The Federal Tax Authority (FTA) might forcibly deregister the registered persons in particular cases if deemed necessary.
These amendments are a positive development for the country’s economy. They will help to make the VAT regime more efficient and compliant with international standards.
Businesses and individuals must embrace these changes as opportunities to remain compliant, innovative, and well-informed participants in the UAE’s evolving economic landscape.
For more information, you may contact our team: