VAT Regulations in UAE Receives a Green Signal from Sheikh Mohammed

Posted on Nov 29, 2017

VAT Regulations in UAE Receives a Green Signal from Sheikh Mohammed

Executive Regulations for the Federal Decree-Law No. (8) of 2017 on Value Added Tax, VAT were signed and approved by the Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE.

The executive regulations explaining the new taxation regime called VAT were signed by the prime minister of UAE. VAT will be imposed as 5 percent tax on the import and supply of goods and services at each stage of production and distribution, including what is a deemed supply. However, there is the exception of specific supplies subject to the zero rate and what is exempted as specified in the law.

Underlining the landmark step taken Younis Haji Al Khoori, Undersecretary of MoF, said "Today's signing of the Executive Regulation by the Vice President, Prime Minister and Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum, marks a new milestone in the application of an efficient taxation system in line with best international standards with the ultimate objective of improving performance of primary sectors and enhancing social welfare."

The initial heading of the Regulation explains the various terms used in the new regime, while the second title deals with supply, which includes articles regulating the supply of goods and services, as well as supplies that consist of more than one component and the exceptions related to deemed supplies.

Further, the third title of the regulation explains the various terms related to registration like mandatory and voluntary registration, related parties, conditions to be met to register tax groups and appointing a representative member, deregistration, exception from registration, registration on law coming into effect and obligations to be met before deregistration.

In the next heading, the various regulations relating to the place of supply of goods and services are stated.

Furthermore, in title five the basis for calculation of profit margin and VAT calculations based on profit margins are explained. While title six addresses zero-rated goods and services, including telecommunications, international transportation of passengers or goods, investment grade precious metals, new and converted residential buildings, as well as healthcare, education and buildings earmarked for charity.

In heading seven the provisions relating to exempted products and services under the VAT regime are specified. However, in the eighth title of the Regulation, the accounting for tax on specific supplies are stated.

Moreover, certain other provisions are included in the executive regulations which explains the various aspects of VAT in detail and are aimed at providing more clarity to the taxpayer.  

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