The UAE Ministry of Finance recently declared the news of the amendments to some provisions of the Federal Decree-Law No. 8 of 2017 on Value Added Tax (VAT), which is supposed to be effective from January 1, 2023.
What are the new VAT regulations?
According to the new changes, registered individuals who fall under the category of making taxable supplies will now be allowed to apply for an exception from VAT registration only if all their supplies are zero-rated. They may equally be eligible if they no longer make any kind of supplies other than zero-rated ones.
Zero-rated supplies- a Sneak Peak
The government classifies supplies of services and property taxed at a 0 percent rate as zero-rated supplies. To clarify, examples include exported goods, prescription medications, medical equipment for the disabled, certain foods and beverages, and donated items sold by charity shops.
Are there any Additional Changes or Updates on the VAT Regulation?
Yes, there are a few more. Other changes include a 14-day deadline for issuing tax credit notes to settle output tax. This mirrors the time frame set for issuing tax invoices.
Federal Decree-Law No. 18 of 2022 amended key VAT rules in Federal Decree-Law No. 8 of 2017, introducing several major changes.
The authorities developed the new provisions under the GCC Unified VAT Agreement to align with global best practices. They are based on earlier experiences, issues experienced by various business sectors and also recommendations from relevant parties.
The new decree-law revised several clauses to clarify the intended meaning of the text. It also rephrased and reorganized provisions to improve the legal structure.
If the individual fails to comply new VAT law, The Federal Tax Authority (FTA) may forcibly de-register the registered individuals. However, remember that the government has not announced any changes to the VAT rate, which still stands at 5 percent.
Final Words
If you want to get all the latest business news of the UAE, you can read our blogs. You can also follow us on Facebook, Twitter and other social media platforms.
We are experts, ready to assist clients with business set-up, and company liquidation in UAE!
Call us to discuss your requirements!