On October 30, the Ministry of Finance amended a few provisions in the UAE Value Added Tax (VAT), with all of these changes coming into effect on January 1, 2023.
A total of 24 changes were made, as per the Arabic version of Decree-Law No.18 2022 on VAT, which was published in the official gazette (issue no. 736 of 28 September 2022).
The changes are as follows:
- Those persons who are registered and make taxable supplies are permitted to apply for an exception from VAT registration. However, all of their supplies must be zero-rated and/or if they no longer make any supplies other than zero-rated supplies.
- A 14-day period to issue a tax credit note will be set to settle output tax, in line with the time frame set for issuing tax invoices.
- The Federal Tax Authority can forcibly deregister registered persons in certain cases, if necessary.
These amendments are aligned with the international best practice in the GCC unified VAT agreement.
They are based on various challenges and experiences faced across business sectors, as well as recommendations received from relevant parties, the Emirates News Agency (WAM) said.
Value Added Tax in the UAE was first introduced in 2018, with a 5 percent tax on majority of goods and services. This came into effect as part of the nation’s efforts to diversify the economy, thus reducing its reliance on oil.
Aside from these changes that will come into effect on January 1, UAE will also introduce a 9 percent federal corporate tax on business profits from the financial year starting on or after June 1, 2023, according to the Ministry of Finance said on January 31.
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