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UAE VAT law 2018


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.

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:
    • 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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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.