UAE VAT law 2018

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.

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:
  • Exports
  • 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)
  • Land
  • 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
• Penalties
• 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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