UAE amends some value added tax rules, effective from 2023

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The United Arab Emirates has amended certain provisions to the value added tax (VAT) rules, effective from January 1, 2023.

The Emirates New Agency WAM reported on Friday that “the UAE Ministry of Finance announced amendments to some provisions of the Federal Decree-Law No. 8 of 2017 on Value Added Tax (VAT).”

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The changes reportedly come in light of the GCC Unified VAT Agreement, “past experiences, challenges faced by various business sectors as well as the recommendations received from the relevant parties,” WAM reported.

The three major changes to the existing VAT rule are as follows:

  1. Registered persons who make taxable supplies are allowed to apply for an exception from VAT registration if all of their supplies are zero-rated or if they no longer make any supplies other than zero-rated supplies.
  2. Setting a 14-day period to issue a tax credit note to settle output tax, in line with the time frame set for issuing tax invoices.
  3. The Federal Tax Authority (FTA) may forcibly deregister registered persons in specific cases if deemed necessary.

“The Decree-Law includes amendments to certain provisions to clarify and confirm the intended meaning of the text; to rephrase; or to improve the legislative sequence of legal provisions,” the WAM report said.

The Gulf state does not impose any income tax. However, a five percent value-added tax was introduced in the UAE at the beginning of 2018.

The UAE also levies corporate tax on oil companies and foreign banks, a tourism tax of around 10 percent of the cost of a hotel room.

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