UAE VAT law 2018
- 27 August 2017 | Richard Asquith
The United Arab Emirates has published its Value Added Tax decree law today, paving the way for the introduction of the indirect tax on 1 January. The standard VAT rate will be 5%, with a nil rate for certain goods.
The detailed Executive Regulation, providing guidance on VAT compliance processes, will be provided at a later date.
They will join Saudi Arabia, which has already published its draft VAT law and regulations. It is expected that the four of the other six Gulf Co-Operation Council states will launch VAT in the next twelve months.
UAE VAT law
The key element of the new law cover:
- 5% on taxable supplies and imports
- VAT registration requirement threshold (Dh 375,000) and calculations, including voluntary registration option (if revenue above Dh 187,500)
- Setting up VAT groups
- Determining the date of supply for VAT purposes
- Place of supply of goods and services rules
- VAT nil-rating on the supply of goods and services within other GCC states which have implemented VAT
- Exemptions on supply of service rules i.e. taxable where supplied
- Role and impact of tax agents
- Determining the value of taxable supplies, discounts and imports
- Mixed supply rules
- Supplies subject to zero rating:
- International passenger transport
- Import of precious metals
- First supply (within 3 yrs of construction) residential properties
- Crude oil and natural gas
- Publically provided education
- Exempt supplies
- Financial services, including insurance
- Supply of residential building (subject to zero rating clauses)
- Passenger transport
- Reverse charge rules, including imports and movements from other GCC VAT implementing rules – more details to be provided in Executive Regulation
- The right to recover input VAT, including import VAT incurred on goods subsequently moved to UAE (onward supply relief)
- Credit notes and bad debts
- VAT invoice requirements, FX treatment and requirements for date of issuance
- Tax credits, carry forwards and when refunds may be made
- VAT recovery for non-resident businesses and consumers
- Record keeping requirements, including:
- Invoices, credit notes etc
- Import and export records
- Minimum period for retaining records will be contained with the Executive Regulation
- Transitional rules for the launch of VAT
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