The UAE Ministry of Finance recently declared the news of the amendments to some provisions of the Federal Decree-Law No. 8 of 2017 on Value Added Tax (VAT), which is supposed to be effective from January 1, 2023.
What are the new VAT regulations?
According to the new changes, registered individuals who fall under the category of making taxable supplies will now be allowed to apply for an exception from VAT registration only if all their supplies are zero-rated. They may equally be eligible if they no longer make any kind of supplies other than zero-rated ones.
Zero-rated supplies- a Sneak Peak
The supplies of services and property that are taxable at the rate of 0 per cent are known as Zero-rated supplies. For a better understanding here are some examples of zero-rated supplies- exported goods, equipment for the disabled and prescription medications, certain foods and beverages, donated goods that are sold by charity shops, etc.
Are there any Additional Changes or Updates on the VAT Regulation?
Yes, there are a few more. Other changes include establishing a 14-day period for issuing a tax credit note to settle output tax, which corresponds to the time frame established for issuing tax bills.
These were some of the significant changes on VAT made by Federal Decree-Law No. 18 of 2022 on the Amendment of Certain Provisions of Federal Decree-Law No. 8 of 2017.
In light of the GCC Unified VAT Agreement, the new provisions were developed in compliance with the best practices that are regarded all across the globe. They are based on earlier experiences, issues experienced by various business sectors and also recommendations from relevant parties.
This new decree-law also incorporated revisions to different clauses to clarify and validate the text's intended meaning; to rephrase or improve the legislative sequence of legal provisions.
In case the individual fails to comply with this new VAT law, The Federal Tax Authority (FTA) may forcibly de-register the registered individuals. However, you must keep the fact in mind that no changes have been announced to the VAT rate, which remains unchanged at 5 per cent.
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