UAE Finance Ministry amends some provisions of VAT law

The Federal Tax Authority may forcibly deregister persons in some cases, says new decree

The UAE in 2018 introduced 5 per cent VAT on a majority of goods and services as part of its plans to diversify the economy and reduce its dependence on oil. Bloomberg

The UAE Ministry of Finance announced amendments to some provisions of the Federal Decree-Law No 8 of 2017 on value added tax (VAT), which will be effective from January 1, 2023, according to state news agency Wam.

The amendments made are in line with international best practice in light of the GCC Unified VAT Agreement. They are based on experiences, challenges faced by various business sectors as well as recommendations received from relevant parties, Wam said.

The UAE in 2018 introduced 5 per cent VAT on a majority of goods and services as part of its plans to diversify the economy and reduce its dependence on oil.

The Emirates will also introduce a 9 per cent federal corporate tax on the profit of businesses from the financial year starting on or after June 1, 2023, the Ministry of Finance said on January 31.

A standard statutory tax rate of 9 per cent applies for companies, positioning the UAE competitively when compared with other financial centres and developed economies globally.

Some of the major amendments introduced by Federal Decree-Law No 18 of 2022 on the amendment of some provisions of Federal Decree-Law No 8 of 2017 on VAT include the following:

• 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.
• 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.
• The Federal Tax Authority may forcibly deregister registered persons in specific cases if deemed necessary.