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UAE Clarifies Tax Rules For Contracts Agreed Prior To VAT

by Lorys Charalambous, Tax-News.com, Cyprus

06 March 2018


The UAE's Federal Tax Authority has issued guidance on whether a supplier or consumer is liable for VAT on goods or services for contracts negotiated before VAT was introduced.

In a statement released on March 3, the FTA explained that consumers will be responsible for the payment of VAT where a contract issued before January 1, 2018, states that the amount due is exclusive of tax and the supply takes place on or after January 1.

Suppliers will be liable to pay VAT in two cases, the guidance states: if the contract states that the amount received against the good or service is inclusive of VAT; or if the contract issued to the consumer did not refer to VAT.

In the latter case, the guidance states that if the recipient is registered for tax, the amount due is treated as exclusive of tax. The supplier must then ascertain whether the recipient is registered and whether the recipient is able to recover tax as per Article 70 of the VAT Executive Regulations.

TAGS: United Arab Emirates | VAT tax authority guidance | tax | value added tax (VAT) | tax authority

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