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UAE changes some VAT rules, effective from 2023

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The United Arab Emirates has revised certain provisions of the Value Added Tax (VAT) rules, effective January 1, 2023.

“The UAE Ministry of Finance has announced amendments to certain provisions of Federal Decree No. 8 of 2017 on Value Added Tax (VAT),” WAM, a new UAE agency, reported on Friday.

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The changes are reportedly based on the GCC’s harmonized VAT agreement, “past experience, challenges faced by various business units and advice from interested parties,” WAM reported.

The three major changes to the current VAT rules are as follows:

  1. Registered persons who provide taxable supplies are permitted to apply for an exemption from VAT registration if all their supplies are zero-rated or no longer produce any supply other than zero-rated.
  2. Set a 14-day period to issue tax credit notes to settle output tax, consistent with the time frame for issuing tax invoices.
  3. The Federal Tax Administration (FTA) may, in certain circumstances, enforce the cancellation of a registrant’s registration if it deems it necessary.

“The statute includes amendments to certain provisions to clarify and confirm the intended meaning of the text; to rewrite; or to improve the legislative sequence provided by the law,” the WAM report said.

The Gulf states do not levy any income tax. However, the UAE introduced a 5% VAT in early 2018.

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

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