Mohammed signs VAT Regulation
DUBAI: The Ministry of Finance (MOF), on Monday announced that the Vice President, Prime Minister of the UAE and Ruler of Dubai, His Highness Sheikh Mohammed Bin Rashid Al Maktoum, signed the Executive Regulation for the Federal Decree-law No.(8) of 2017 on Value Added Tax (VAT).
The Regulation defines VAT as the 5% tax imposed on the import and supply of goods and services at each stage of production and distribution, including what is a deemed supply, with the exception of specific supplies subject to the zero rate and what is exempted as specified in the Decree-law.
The tax will go into force effective January 2018, and all business have to take all necessary measures
to avoid the risk of non-registration by 1st January, 2018, which would entail ines as stipulated in Cabinet Decision No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE.
Commenting on the milestone, 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 eficient taxation system in line with best international standards with the ultimate objective of improving performance of primary sectors and enhancing social welfare.”
The irst title of the Regulation includes the deinitions of terms used, 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.
The third title of the document tackles the subject of registration, such as 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.
Meanwhile, the fourth title looks into rules relating to supply, including articles on the date of supply, place of supply for goods, place of supply of services for real estate, transport services, telecommunications and electronic services, intra-gcc supplies, the market value, prices to be inclusive of tax, discounts, subsidies and vouchers.
Furthermore, title ive discusses proit margins and explains how to calculate VAT based on proit margins, 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.
Title seven clariies provisions relating to products and services exempt from value added tax, namely: the supply of certain inancial services as speciied in the Executive Regulation, the supply of residential (non-zero-rated) buildings either by sale or lease, the supply of bare land, and the supply of local passenger transport.
The eighth title of the Regulation then addresses accounting for tax on speciic supplies and includes articles relating to supplies with more than one component, general provisions in relation to import of goods and applying the reverse charge on goods and services, as well as moving goods to implementing states and imports by non-registered persons.
In title nine, the Executive Regulation address Designated Zones in article (51), while title 10 provides further detail on calculating due tax, recovery of input tax relating to exempt supplies, input tax not recoverable, and special cases for input tax. The following titles 11 includes article (55) on apportioning input tax and article (56) on adjusting input tax after recovery, whereas title 12 addresses the capital asset scheme in article (57) and adjustments within the capital asset scheme in article (58).
Title 13 of the Regulation includes article (59) on tax invoices, article (60) on tax credit notes and article (61) on fractions of the ils.