A Guide to the Amendments to the UAE VAT Executive Regulations

The Federal Tax Authority (FTA) has amended the UAE VAT Executive Regulations via Cabinet Decision No. 100 of 2024. The new amendments are effective from 15 November 2024 and taxable persons need to assess its impact on their businesses.

It is advisable to consult with registered tax agents in the UAE to learn about the potential implications of the amended VAT regulations on your business.

The key amendments are listed below:

Article 3 (bis): Exceptions of Supplies

Transfer of real estate and related assets between government entities are no longer considered a supply of VAT from 1st January 2023.

Article 5: Exceptions related to Deemed Supply

Deemed supplies between government or charitable entities under AED 250,000 over 12 months will be excluded from VAT.

Article 8: Voluntary Registration

Voluntary registration under VAT needs proof of carrying out the business and intent to make specific supplies under Article 54(1).

Article 14 (bis) Tax Deregistration to Protect the Integrity of the Tax System

This article outlines the conditions for deregistering taxpayers to protect integrity of the tax system.

Article 29: Profit Margin Scheme

As per the new amendment to the UAE VAT regulations, the purchase price for the Profit Margin Scheme now includes acquisition costs and fees incurred to purchase the goods.

Article 30: Supplies Subject to the Zero Rate

The new amendments allow taxable persons to use various forms of evidence to substantiate a zero-rated export. For example, they can use customs declarations, shipping certificates, etc. for this purpose.

This adds more flexibility to validate exports and makes it easier for businesses to claim zero-rated VAT.  The new amendment minimizes the risk of export claims due to missing exit certificates.

Article 31: Zero-rating the Export of Services

Special place of supply rules apply to services such as telecommunications and electronic services. Zero-rating of VAT does not apply to such services.

Article 33: Zero-rating International Transportation Services for Passengers and Goods

Zero-rating for services supplied during the transportation services applies only when services are provided to the recipient.

Article 35: Zero-rating Goods and Services in Connection with Means of Transport

Zero-rating for services supplied for the purposes of operation, repair, and maintenance of means of transport is narrowed to those conducted onboard.

Article 42: Tax Treatment of Financial Services

Investment fund management services, transfer of ownership and conversion of virtual assets (e.g., cryptocurrencies, investments) are exempt from VAT.

 Article 46: Tax on Supplies of More Than One Component

Tax treatment of composite supplies follows the principal component of the supply.

Article 53: Non-recoverable Input Tax

Input tax on health insurance for one spouse and up to three children under 18 years, is now recoverable when a taxable person provides health insurance, including enhanced health insurance to its employees and their family members

Article 55: Apportionment of Input Tax

New rules for tax year-end and proportionate thresholds apply for input tax apportionment.

Article 59: Tax Invoice  

Simplified tax invoices must be issued on the date of supply and are not permitted where VAT is accounted for under the reverse charge mechanism. When a registrant makes more than one supply of goods or services to the same person, a summary tax invoice can be issued and delivered to the recipient within 14 days after the end of the calendar month in which the supplies took place.

Article 60: Tax Credit Notes

Tax credit notes require adjustments for multiple notes and detailed record-keeping by agents and principals.

Registered Tax Agents can Help you with UAE VAT Regulations

The new UAE VAT amendments are expected to streamline compliance and provide clarity for businesses operating across industries such as cryptocurrencies and investment management businesses. Taxable persons need to have a comprehensive understanding of these amendments and assess how they will affect their businesses.

Registered tax agents in the UAE such as Jitendra Tax Consultants (JTC) and its brand Tax Gian can help you navigate the challenges of the amended VAT regulations. Feel free to connect with Tax Gian’s tax experts to get more VAT-related insights.