Since it was announced that the UAE would be implementing VAT from the 1 January 2018 a number of Tax legislations have been issued. These include the GCC VAT Framework, the UAE Tax Procedures law and the VAT Law. However, one piece of key legislation yet to be released (at the time of writing) are the Executive regulations on VAT. These rules will provide the finer details on how VAT will be governed and implemented in the UAE. There are up to 60 sections within the VAT Law referring to it which are outlined below:
Article 2 – Tax treatment regarding the import of goods to UAE that would be exported to any other GCC countries.
Article 5 – Supply of goods as to what qualifies a transaction to be supply of goods.
Article 6 – Supply of services such as supply that will be deemed as supply of services.
Article 7 – Supply under special cases such as sale or issuance of any voucher.
Article 8 – Tax treatment of supply, which consist of more than one component for one price, whether it will be treated as goods or services or both.
Article 12 – Clause 4 & 5, the limit of amount of tax or the value of the supply under which the deemed supply would be exempted from being treated as supply.
Article 13 – Clause 3, time limits that a person has to inform the Authority about his liability to register for tax and the effective date of tax registration.
Article 14 – Clause 2, the instances under which the Tax Authority may reject the application to register a Tax Group.
Article 14 – Clause 3, the instances where a person can have more than one Tax Registration Number.
Article 14 – Clause 4, cases under which the Tax Authority may register related parties as a Tax Group based on their economic, financial and regulatory practices in the business where the related parties fail to register.
Article 14 – Clause 5 & 6, situations under which the Tax Authority may deregister the Tax Group and the situations to make any changes by adding or removing a person from the Tax Group
Article 24 – Procedures, controls and conditions for Tax Registration, De-registration and rejection of applications for Tax Registration and De-registration.
Article 27 – Situations where the supply of goods will be treated as made in UAE even though those goods were exported outside the state and then reimported.
Article 28 – Supply of water and all forms of energy.
Article 30 – Clause 8, details regarding the place of supply for transportation services and where the trip includes more than one stop.
Article 34 – Rules to determine the market value of the supplies.
Article 38 – Specify the instances where displayed prices do not need to include the Tax.
Article 39 – Conditions and restrictions for calculating the Tax when the discount is made.
Article 43 – Specifying the instances and the conditions under which the Tax will be calculated on the profit margin earned on the Taxable supplies and not based on the value of these supplies.
Article 44 and 45 – Details regarding exports, supply of means of transport, supply or import of investment precious metal, first supply of residential buildings, first supply of buildings to be used by charity, first supply of buildings converted from non-residential to residential, supply of educational services, and the supply of preventive and basic healthcare services and related goods and services that are subject to zero rate.
Article 46 – Conditions and controls for exempting supplies.
Article 46 – Specify the details regarding the tax treatment of any supply that consist of supplies that are subject to different tax treatments.
Article 48 – Clause 7, conditions and instances where reverse charge mechanism will be applied and the additional obligations related to record keeping of tax calculated as per the reverse charge mechanism.
Article 49 – Payment mechanism of tax on goods imported from outside the GCC countries.
Article 50 – Conditions for declaring and exempting a zone such as Designated Zone.
Article 51 – Procedures for the transfer of goods from a Designated Zone to another Zone as well as the method of keeping, storing and processing such goods thereof.
Article 52 – Specify the conditions under which the business conducted in the Designated zone will be regarded as conducted in the state.
Article 54 – Provision regarding the conditions and instances to recover and not to recover input tax.
Article 58 – The method by which the recoverable input tax can be calculated if the input tax was incurred for making both taxable and exempted supplies.
Article 59 – The conditions and mechanism of Input Tax Adjustment.
Article 60 – Details regarding Capital Asset Scheme such as Capital Assets that are subject to the provisions of the federal law and their estimated useful life, the methods for adjusting Capital Assets and the periods for which adjustments should be made and instances where period of record keeping related to Capital Assets can be extended.
Article 65 – The conditions and requirements for issuing Tax Invoices.
Article 68 – The details regarding the rounding method of calculation of tax.
Article 70 – Specify the conditions and instances for issuing a Tax Credit Note.
Article 71 – The Tax Period for which the Taxable Person shall calculate and pay Tax as well as the exceptional circumstances under which the Tax Authority may amend the Tax Period.
Article 72 – Details regarding the procedure for submitting the Tax return to the Tax Authority at the end of each tax period.
Article 73 – The time limits and procedures for payment of Tax.
Article 74 – Clause 2, specifying the time limits, procedures and mechanisms of returning any remaining excess recoverable tax to the Taxable person.
Article 75 – The conditions, restrictions and procedures for Tax recovery under special cases.
Article 78 – Clause 2, the details regarding the time limits, restrictions and conditions for keeping the records of documents.
Article 78 – Clause 2, the restrictions and procedures regarding the maintenance of the confidentiality of the records that may be accessed by the Tax Authority in the case of Government Entities.
Article 80 – Special provisions related to the implementation of transitional provisions where a contract has been concluded before 1 January 2018 but the supply under the contract is made after 1 January 2018.
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This article has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of its contents.