UAE’s finance ministry amends some provisions of VAT law

The UAE Ministry of Finance has announced amendments to some provisions of the Federal Decree-Law No. 8 of 2017 on Value Added Tax (VAT), which will be effective from January 1, 2023.

The amendments were made in line with international best practice in light of the GCC Unified VAT Agreement. They are based on past experiences, challenges faced by various business sectors and recommendations received from the relevant parties, official news agency WAM reported.

The UAE Ministry of Finance announces amendments of some provisions of the Value Added Tax Decree Law#mofuae #UAE #news pic.twitter.com/nKnOB1juzB

— وزارة المالية | الإمارات (@MOFUAE) October 28, 2022

Some of the major amendments introduced by the Federal Decree-Law No. 18 of 2022 on the Amendment of Some Provisions of the Federal Decree-Law No. 8 of 2017 on VAT include the following:

– Registered persons who make taxable supplies are allowed to apply for an exception from VAT registration if all of their supplies are zero-rated or if they no longer make any supplies other than zero-rated supplies.
– Setting a 14-day period to issue a tax credit note to settle output tax, in line with the time frame set for issuing tax invoices.
– The Federal Tax Authority may forcibly deregister registered persons in specific cases if deemed necessary.

Furthermore, the Decree-Law includes amendments to certain provisions to clarify and confirm the intended meaning of the text; to rephrase; or to improve the legislative sequence of legal provisions.

The UAE government instituted a 5 per cent VAT on goods and services in January 2018, to promote the country’s economic growth and to wean itself off dependence on oil revenues.

In its first year of implementation, as many as 296,000 businesses registered for VAT across the country. More than 650,000 periodic tax returns were received by the Federal Tax Authority (FTA) from registered businesses in 2018.

The country’s Federal Tax Authority in partnership with Planet Tax Free, recently launched a fully digital VAT-refund scheme for tourists, with the paperless solution integrated electronically between retail outlets and the tax refund schemes.

Read: UAE’s Federal Tax Authority, Planet Tax Free launch digital VAT-refund scheme for tourists

The UAE will also introduce a federal corporate tax on business profits from the financial year starting on or after June 1, 2023, setting a rate of 9 per cent for taxable income exceeding Dhs375,000.

Read: UAE to introduce federal corporate tax on business profits from 2023