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UAE Finalizes Adoption Of New VAT Framework

by Lorys Charalambous, Tax-News.com, Cyprus

30 November 2017


The Prime Minister of the United Arab Emirates has officially approved Regulations that set out rules for the value-added tax framework the country will adopt, alongside Saudi Arabia, from January 1, 2018.

The Executive Regulation for the Federal Decree-Law No. (8) of 2017 on Value Added Tax was unveiled at a Cabinet meeting on November 7.

According to the Ministry of Finance, among other things, the Regulation defines terms used; discusses how to categorize supplies and a taxable event; and discusses mixed supplies and deemed supplies.

The Regulations set out administrative rules, such as the requirement to register and voluntary registration; the treatment of supplies between related parties; conditions to be met to register a tax group and appointing a representative member; deregistration; exceptions from the requirement to register; transitional registration rules; and the rules surrounding reregistration.

The Regulation also looks at how to determine when a supply takes place, the place where a supply is deemed to have occurred; the place of supply of services connected with immovable property; and the treatment of transport services, telecommunications services, and electronic services, and intra-GCC supplies; rules concerning valuation of supplies; and pricing rules, including rules concerning discounts, subsidies, and vouchers. It also discusses reverse charges; reporting and documentation rules; and the treatment of cross-border supplies.

The Regulations are available on the Ministry of Finance's website and the tax agency's website.

Businesses are required to register to collect and remit value-added tax if at any time during the past twelve months the value of their taxable supplies exceeded the mandatory registration threshold of AED375,000 (USD102,000), or if the entity anticipates that they will exceed the threshold within the next 30 days.

Taxpayers can register voluntarily if the total value of their taxable supplies exceeded AED187,500, or if the business expects to exceed that threshold within the next 30 days.

Younis Al Khouri, Undersecretary at the Ministry of Finance, said: "Now that 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 said. "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."

It had been intended that the five percent levy be introduced across all GCC states (Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman) simultaneously. However, just the United Arab Emirates and Saudi Arabia are to introduce the tax from January 1, 2018, with approvals and preparations delayed in the other territories.

TAGS: United Arab Emirates | Finance | tax | business | value added tax (VAT) | Kuwait | Saudi Arabia | Bahrain | Qatar | standards | Oman | services | Regulations | Tax

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