The Executive Regulations for Federal Decree-Law No. (8) of 2017 on Value Added Tax has been officially adopted and signed by Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, Ruler of Dubai, announced the UAE Ministry of Finance.
The Regulations define Value Added Tax as the 5% tax imposed on the import and export of goods and services at each stage of production and distribution, including what is deemed to be a supply, with the exception of specific supplies subject to the zero rate and what is exempted as specified in the Decree-Law.
The Ministry of Finance went on to confirm that VAT will go into effect on January 1, 2018, as scheduled, calling on businesses to complete their preparations to meet tax obligations and avoid the penalties stipulated in Cabinet Decision No. (40) of 2017 on Administrative Penalties for Violations of the Tax Laws in the UAE.
His Excellency Younis Al Khouri, Undersecretary at the Ministry of Finance, said: “Now that H.H. Sheikh Mohammed bin Rashid Al Maktoum has signed off on the Executive Regulations of Federal Law No. (8) of 2017 on Value Added Tax, we are on the cusp of a new stage in the implementation of an effective tax system in the UAE – one that meets international standards and upgrades services, strategic sectors and overall quality of life in the emirates.”
“Over the past few months, the Ministry of Finance has been working together with the Federal Tax Authority to carry out extensive awareness campaigns to prompt businesses across the UAE to prepare for the upcoming tax system,” Al Khouri concluded. “We do expect that they have benefited from this preparation phase to align their operations with the requirements of the VAT system in time for the execution phase, beginning on January 1, 2018.”
Tax registration can be done through the Federal Tax Authority’s website, available 24 hours a day, 7 days a week. The website, which is designed according to the highest international standards, meets all requirements and
provides guidance regarding the necessary steps that different businesses must take to complete their transactions seamlessly.
For more details and registration requirements for VAT, please visit the Federal Tax Authority website: www.tax.gov.ae
The first title of the Regulation includes the definitions of terms used, while the second title deals with supply, which includes articles regulating the supply of goods and services, as well as supplies that consist of more than one component and the exceptions related to deemed supplies.
The third title of the document tackles the subject of registration, such as mandatory and voluntary registration, related parties, conditions to be met to register tax groups and appointing a representative member, deregistration, exception from registration, registration on law coming into effect and obligations to be met before deregistration. Meanwhile, the fourth title looks into rules relating to supply, including articles on the date of supply, place of supply for goods, place of supply of services for real estate, transport services, telecommunications and electronic services, intra-GCC supplies, the market value, prices to be inclusive of tax, discounts, subsidies and vouchers.
Furthermore, title five discusses profit margins and explains how to calculate VAT based on profit margins, while title six addresses zero-rated goods and services, including telecommunications, international transportation of passengers or goods, investment grade precious metals, new and converted residential buildings, as well as healthcare, education and buildings earmarked for charity.
Title seven clarifies provisions relating to products and services exempt from value added tax, namely: the supply of certain financial services as specified in the Executive Regulation, the supply of residential (non-zero-rated) buildings either by sale or lease, the supply of bare land, and the supply of local passenger transport.
The eighth title of the Regulation then addresses accounting for tax on specific supplies and includes articles relating to supplies with more than one component, general provisions in relation to import of goods and applying the reverse charge on goods and services, as well as moving goods to implementing states and imports by non-registered persons.
In title nine, the Executive Regulation address Designated Zones in article (51), while title 10 provides further detail on calculating due tax, recovery of input tax relating to exempt supplies, input tax not recoverable, and special cases for input tax. The following titles 11 includes article (55) on apportioning input tax and article (56) on adjusting input tax after recovery, whereas title 12 addresses the capital asset scheme in article (57) and adjustments within the capital asset scheme in article (58).
Title 13 of the Regulation includes article (59) on tax invoices, article (60) on tax credit notes and article (61) on fractions of the fils. Then in title 14, the Executive Regulation discusses Tax Periods and Tax Returns, before title 15 goes into recovery of excess tax in article (65). Adding to that, title 16 tackles recovery in other cases and includes article (66) on new housing for nationals, article (67) on business visitors, article (68) on tourists and article (69) on foreign governments.
The 17th title includes article (70) on Transitional Rules, article (71) on record-keeping requirements and article (72) on keeping records of supplies made. Meanwhile, the 18th and final titles discusses closing provisions.