UAE VAT Updates: Key Amendments in Executive Regulation No. 100 of 2024
- December 31, 2024
- Posted by: Umer
- Category: VAT
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The Federal Tax Authority (FTA) published Cabinet Decision No. (100) of 2024 on October 2, 2024 on the Executive Regulation of Federal Decree Law No. (8) of 2017 on Value Added Tax (VAT). The amendments will come into effect on 15 November 2024, introducing over 30 amendments that impact a range of industries in the UAE. In this article, we will be discussing the practical implications of these changes. Below, we highlights as per VAT regulatory updates that businesses must take into account:
Summary of the key amendments to the Executive Regulation on Value Added Tax (VAT).
Article and Summary of Changes
Article (1) – Definitions
– A new definition of virtual assets has been introduced. These assets are digital values that can be traded or transferred digitally and may be used for investment purposes. They do not include digital representations of paper currencies or securities.
Article (2) – Supply of Goods
– The definition of real estate supply has been expanded. In addition to sales and tenancy contracts, it now includes any disposal that results in the transfer of ownership between parties.
Article (3) (bis) – Exceptions from Supply of Services
– A new article outlines exceptions from the supply of services, including:
- Transfer of the right to own or dispose of government buildings, real estate assets, and similar projects between government bodies.
- Transfer of the right to use, exploit, or benefit from government buildings and real estate assets between government bodies. This provision applies to transfers starting from 1 January 2023.
- The article also defines which categories of assets are considered government buildings, real estate, and similar projects.
Article (5) – Exceptions related to Deemed Supplies
– An additional output tax threshold has been introduced for exemptions from deemed supplies reporting. Up to AED 250,000 of output tax payable on deemed supplies within 12 months is exempt, provided both the supplier and recipient are government bodies or charities. Any amount exceeding this threshold will be considered payable tax.
Article (8) – Voluntary Registration
– To apply for voluntary registration, applicants must provide sufficient evidence to the FTA, confirming their intention to conduct taxable supplies or other qualifying transactions (e.g., taxable supplies, supplies made outside UAE, or exempt supplies if made inside UAE).
Article (14) (bis) – Tax Deregistration to Protect Tax System Integrity
– A new article clarifies the FTA’s right to deregister taxable persons if their continued registration may undermine the integrity of the tax system.
Article (15) – Deregistration of a Tax Group or Amendment Thereof – Clarifies that a member can be removed from a VAT group if they are no longer making taxable supplies, in addition to other specified cases.
Article (29) – Profit Margin Scheme
– Purchase price for calculating profit margin now includes all costs and fees incurred in purchasing the goods, not just the purchase price itself.
Article (30) – Zero Rating of Export of Goods
– Provides clarity on documentary evidence required for proof of export, including customs declarations, commercial evidence, or certificates of shipment. Expands definitions of official evidence, commercial evidence, and certificate of shipment.
Article (31) – Zero Rating of Export of Services
– A new condition for zero-rating services: they should not be subject to the special place of supply rules in Articles 30 and 31 of the VAT Federal Decree Law.
Article (33) – Zero Rating International Transportation Services for Passengers and Goods
– Clarifies that for international transport of goods, zero-rating applies only if the transport from one place in the UAE to another is part of the same transport service and provided by the same suppliers.
Article (34) – Zero Rating Certain Means of Transport
– Extends zero-rating provisions to imports of means of transport, in addition to supplies.
Article (35) – Zero Rating Goods and Services in Connection with Means of Transport
– Clarifies that services related to the operation, repair, maintenance, or conversion of means of transport are zero-rated, in addition to the goods supplied.
Article (42) – Tax Treatment of Financial Services
– Adds new services to the scope of VAT-exempt financial services:
- Investment fund management services.
- Transfer and exchange of virtual assets (including cryptocurrency)
Exemptions for virtual asset services apply retroactively from 1 January 2018.
Article (46) – Tax on Supplies of More Than One Component
– Introduces a rule where the VAT treatment of composite supplies without a principal component will be assessed based on the overall nature of the entire supply.
Article (52) – Input Tax Recovery in Respect of Exempt Supplies
– Updates conditions for input VAT recovery on financial services provided outside the UAE. A person is considered outside the UAE if their stay is less than one month and not directly related to the supply.
Article (53) – Non-Recoverable Input Tax
– Updates exceptions for input VAT recovery on employee-related expenses, including medical insurance for employees and their dependents, as per local labor law and designated zones.
Article (55) – Apportionment of Input Tax
– Taxable persons can now request FTA approval for a fixed apportionment recovery rate based on the previous tax year’s rate. The annual adjustment threshold of AED 250,000 is now adjusted proportionately if the tax year is shorter than 12 months.
Article (59) – Tax Invoices
Clarifies the date of issuance for different types of tax invoices:
- Simplified tax invoices must be issued at the date of supply.
- Summary tax invoices should be issued and delivered within 14 days from the end of the calendar month that includes the date of supply
ZS Consultants with the team of experienced Chartered Accountants help identify the current framework and operational infrastructure of your business to streamline regulatory compliance for taxation. We are ready to assist you with any changes, requests, and representation with FTA as a registered company.
To align your current practices and functions with the recent FTA amendments, contact us today to update the portfolio. Our team would be happy to make this transition smooth for your business, take responsibility so you could focus on your core business operations.