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We Provide Here Below an ‘Article-by-Article’ Detailed Summary of the UAE VAT Legislation (VAT Law UAE) and UAE VAT Rules and Regulations

Here below (SCROLL DOWN) follows what is essentially an article-by-article Summary of the UAE VAT Legislation (“The UAE VAT Law’) we prepared for You. Its purpose is to have in one document a ‘quick’ and easy to read and understand summary that can help you quickly understand the main and ALL provisions of the new UAE VAT Law and implement VAT for your UAE Business … without going ‘straight into’ the UAE VAT Law itself.

In format it follows the actual numbering found in The UAE VAT Law itself so you can easily reference to the Law, if required. In language it is written in simple but somewhat technical format for the use of accountants and seasoned businessmen.

If you prefer more practical and simple to understand UAE VAT Law summaries that give the same information but in more simple English then our next section below ‘Practical UAE VAT Law Guides’ will be very helpful. Ideally one should read both this article-by-article summary AND the Practical Guides.

Practical VAT Law UAE Summaries – UAE VAT Practical Guides

These guides provide guidance in simple to understand English and a more practical approach to UAE VAT Rules:

Latest VAT Law UAE – Important Updates & MOF Announcements

Our A to Z Guide for VAT Legislation in the UAE – Everything you need to know About VAT Law UAE – from A to Z

A Short ‘Road-Map” to UAE VAT Law Implementation – How to Manage the UAE ‘VAT Law Challenge’!

Practical Tips for Your VAT Law UAE Implementation – To Help You Get Your Business “VAT Law-Ready”

VAT Law UAE – Responsibilities of Your Business (FAQ)

UAE VAT Legislation – UAE VAT Rules – General FAQ

How We Can Help You! – Detailed list of Our UAE VAT Law -Related Services

VAT Law UAE – An Article By Article Summary

Federal Decree-Law No. (8) 0f 2017 on UAE VAT (Value Added Tax)

VAT Law UAE | UAE VAT Legislation

Title One

Definitions

Article 1

Definitions

Title Two

UAE VAT Law – Scope and VAT Rate

Article 2

Scope of UAE VAT Tax

Imposition of VAT Tax shall be on:

Every Supply (Sale), under UAE VAT Law, Taxable or Deemed, made by a Taxable Person.
Goods importation with the exceptions as defined in the Executive Regulation of this Law.

Article 3

UAE VAT Tax Rate

With the reservation of the provisions of Title Six of this Law, the standard rate shall be 5% and shall be imposed on the value of any import or Supply, under UAE VAT Law, of Article 2.

Article 4

Responsibility for UAE VAT Tax

The responsibility of the imposed Tax shall be of the following:

The Taxable person making Deemed or Taxable Supplies, under UAE VAT Law
The Concerned Goods Importer
The Registrant acquirer of Goods as stipulated in Article 48, Clause 3, of this Law

Title Three

Supply, under UAE VAT Law,

Chapter One

Supply (Sale) of Services and Goods, under UAE VAT Law

Article 5

Supply of Goods, Under UAE VAT Law

Goods Supply, under UAE VAT Law, shall be considered the following:

The transfer of the privilege to use the Goods or the transfer of ownership of the Goods as defined in the Executive Regulation of this Law.
When two parties enter into an agreement for the Goods to be transferred at a time later, as defined in the Executive Regulation of this Law.

Article 6

Supply of Services, under UAE VAT Law

Every Supply, under UAE VAT Law, not being a Goods Supply, under UAE VAT Law, shall be considered as a Supply, under UAE VAT Law, of Services, including any Services as defined in the Executive Regulation of this Law.

Article 7

Supply in Special Cases, under UAE VAT Law

The following shall not be considered as a Supply, under UAE VAT Law, as stated in Article 5 and Article 6 of this Law:

Any Voucher issuance or sale, except for the case where the advertised monetary value is smaller than the Consideration received, pursuant to the conditions of the Executive Regulation of this Law.
Business transfer to a Taxable Person from a Person, in whole or an independent part, with the view of continuation of the Business transferred.

Article 8

Supply of more than one component, under UAE VAT Law

The conditions whether more than one component shall be treated as Services or Goods or both when supplied for one price, shall be defined in the Executive Regulation of this Law.

Article 9

Supply via Agent, under UAE VAT Law

If an agent is acting in the name of and on behalf of a principal, the Services and Goods Supply, under UAE VAT Law, by the agent, is considered as a Supply, under UAE VAT Law, by the principal and for his benefit.
If an agent is acting in his own name, the Services and Goods Supply, under UAE VAT Law, by the agent, is considered as a direct Supply, under UAE VAT Law, by the agent and for his own benefit.

Article 10

Supply by Government Entities, under UAE VAT Law

In the following cases, a Supply, under UAE VAT Law, by an Entity of the Government will be regarded in the course of doing business:
a) If it conducts its activities in a non-sovereign Capacity.
b) If it conducts its activities by competing with the private sector.
Upon the Minister’s suggestion, a Decision will be issued by the Cabinet specifying Government Entities conducting activities either on a sovereign Capacity or not competing with the private sector.

Chapter Two

Deemed Supply, under UAE VAT Law

Article 11

The cases of Deemed Supply, under UAE VAT Law

Deemed Supply, under UAE VAT Law, shall be considered in the following cases:

When a Supply, under UAE VAT Law, is made without Consideration, the Services or Goods Supply, under UAE VAT Law,, which constitute the whole assets of a Taxable Person or a part thereof, but are considered to be no longer as such.
The transfer of Goods by a Taxable Person that constituted a part of his assets in Business from the Taxable Person’s business in a Implementing State to his Business in the State of UAE or from the State of UAE to another Implementing State, except in the following cases:
Under the Customs Legislation such transfer is considered as temporary.
Where such a transfer took place as part of another Taxable Supply, under UAE VAT Law, of the Goods.
When Services or Goods were used, in whole or in part, for non-Business purposes, a Services or Goods Supply, under UAE VAT Law, shall be considered as deemed only to the extent of the use for purposes other than Business.
Services and Goods owned by a Taxable Person at the date of Tax Deregistration.

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Article 12

Exceptions for Deemed Supply, under UAE VAT Law

In the following cases a Supply, under UAE VAT Law, is not considered as deemed:

If for the related Services and Goods no Input Tax was recovered.
In case of an Exempt Supply, under UAE VAT Law,.
If there was an adjustment in the Input Tax recovered for Services and Goods pursuant to the Capital Assets Scheme.
If the Goods were supplied as samples or commercial gifts and the value of the Supply, under UAE VAT Law,, for each recipient, does not exceed the amount defined in the Executive Regulation of this Law, within a 12-month period.
If for all the Deemed Supplies, under UAE VAT Law, per Person for a 12-month period the total Output Tax is smaller than the amount defined in the Executive Regulation of this Law.

Title Four

UAE VAT Registration and UAE VAT De-registration

Article 13

Mandatory VAT Registration

Every person, who is not already registered for Tax and who has in the State of UAE a Place of Residence or an Implementing State, shall register in the following cases:
When, over the previous 12-month period the value in total of all Supplies, under UAE VAT Law, as defined in Article 19, exceed the Obligatory Threshold for Registration.
When the value of the Obligatory Threshold for Registration, for all Supplies, under UAE VAT Law, as defined in Article 19, is anticipated to be exceeded in the forthcoming 30 days.
Every person, who is not already registered for Tax and who does not have a Place of Residence in the State of UAE or an implementing State, only in case that person makes Supplies, under UAE VAT Law, of Services or Goods in the State of UAE, for which no other person is obliged to pay the Tax due for these Services or Goods.
Time limits about a Person’s liability to inform the Authority about Tax registration and the effective date of the Tax Registration shall be defined by the Executive Regulation of this Law.

Article 14

VAT Group

Two or more persons who conduct Businesses, may apply for Registration for Tax as a Tax Group only if they meet all the below preconditions:
A Fixed Establishment or Place of Establishment in the State of UAE is required by each.
The Persons in question must be Related Parties.
In a Partnership more than one or one Person who conducts Business must control the others.
Instances where the Authority can reject the application for Tax Group registration, shall be determined by the Executive Regulation of this Law.
Unless otherwise defined by the Executive Regulation of this Law, any Person shall have only one Tax Registration Number.
The Authority can assess the relation of Related Parties based on their regulatory, financial and economic practices in business, if they do not apply for Registration for Tax as a Tax Group under clause 1 of this Article, and make them register as a Tax Group if their relation is proved thereto according to the Conditions & Controls defined by the Executive Regulation of this Law.
Executive Regulation of this Law shall specify the conditions under which the Authority can deregister a Tax Group.
The Executive Regulation of this Law will mention instances where the Authority can add or remove Persons of a Tax Group. The Authority can also make changes to the Persons of a Tax Group following a request by the Taxable Person.

Article 15

VAT Registration Exceptions

If the Services or Goods Supply, under UAE VAT Law, by a Taxable Person are only subject to zero rate, the Authority can exempt him from mandatory Tax Registration.
Any person, exempted as per Clause 1 of this Article, who makes any changes in his Business subject to Tax, shall inform the Authority according to the time limits and procedures as defined in the Executive Regulation of this Law.
Where the Taxable Person was not qualified for the exemption, the Authority shall have the power to collect any Administrative Penalties and Tax Due for the period of Exemption.

Article 16

VAT Registration of Governmental Bodies

The Cabinet under clause 2 of Article 10 shall determine by a Decision which Government Entities shall apply for Tax Registration. Only by the Minister’s suggestion and Decision of the Cabinet an Entity may be De-registered.

Article 17

Voluntary VAT Registration

Any Person may apply for Registration for Tax although not obligated pursuant to this Chapter, in the following cases:

If the value in total of Supplies, under UAE VAT Law, mentioned in Article 19 of this Law or the expenses that were incurred during the period of the past 12-months and are subject to Tax, are proved to be more than the Voluntary Threshold for Registration.
If the value in total of Supplies, under UAE VAT Law, mentioned in Article 19 of this Law or the expenses that will be incurred and are subject to Tax, are anticipated to exceed the Voluntary Threshold for Registration during the forthcoming 30-days.

Article 18

VAT Registration for a Non Resident

The value of Services and Goods imported in the State of UAE for which the Importer is responsible for the calculation of the Tax according to Clause 1 of Article 48 of this Law, may not be taken by a non resident Person in consideration when determining whether he is qualified for application for Tax Registration.

Article 19

Calculating the VAT Registration Threshold

The following shall be taken into account in order to determine when a Person’s Supplies, under UAE VAT Law, have gone beyond the Mandatory or Voluntary Threshold for Registration:

The value of Taxable Services & Taxable Goods.
Unless covered by Clause 1 of this Article, the value of Concerned Services & Concerned Goods received by the Person.
When a Person has acquired a Business partly or wholly from another Person who made the Supplies, under UAE VAT Law,, the value of the relevant part or of the whole of the Taxable Supplies, under UAE VAT Law, that is owned by the said Person.
The value between Related Parties Taxable Supplies, under UAE VAT Law, according to the cases stipulated in the Executive Regulation of this Law.

Article 20

Capital Assets , under UAE VAT Law

A Person owning Capital Assets may not take into account the Supply, under UAE VAT Law, of Capital Assets to his Business in determining whether the Mandatory or Voluntary Threshold for Registration was exceeded.

Article 21

VAT De-Registration Cases

In any of the following cases a Registrant may apply for Tax Deregistration to the Authority:

If he no longer makes Taxable Supplies, under UAE VAT Law,
Where over the period of 12 successive months the Value of Taxable Supplies, under UAE VAT Law, is less than the Voluntary Threshold for Registration and it is not anticipated that the value in total of Supplies, under UAE VAT Law, mentioned in Article 19 of this Law or the expenses that will be incurred and are subject to Tax, to exceed the Voluntary Threshold for Registration during the forthcoming 30-days.

Article 22

Application for VAT De-Registration

Where the value of Taxable Supplies, under UAE VAT Law, made by a Registrant during the past 12 months were less than the Obligatory Threshold for Registration, he can apply to the Authority for Tax Deregistration.

Article 23

Voluntary VAT De-Registration

A Taxable Person registered under Article 17 may apply for Tax Deregistration after the lapse of 12 months from the date of Tax Registration.

Article 24

Procedures, Controls and Conditions of VAT Registration and VAT De-Registration

Procedures, Controls and Conditions of Tax Registration and De-Registration and rejection of applications for these, shall be defined by the Executive Regulation of this Law.

Title Five

Chapter One

Date of VAT Supply, under UAE VAT Law

Article (25)

Date of VAT Supply, under UAE VAT Law

For the Supply, under UAE VAT Law, of Goods or Services, Vat will be accounted for at the earlier of the following dates:

Date of transfer of Goods, if the supplier was responsible for arranging the transportation.
Date on which Goods were made available to the customer, i.e. Recipient of Goods, in the case where the transportation was not arranged and supervised by the supplier.
Date of assembly or installation of the Goods.
Date of Importation of Goods under Customs legislation.
Date on which the customer accepts the Supply, under UAE VAT Law,, or if the Supply, under UAE VAT Law, was made on a refund basis, a date no more than 12 months from the date that the Goods were placed at the recipient’s premises.
Date of completion of Services.
Date of receiving payment or the date of issue of Tax Invoice.

Article (26)

Date of VAT Supply, under UAE VAT Law, in Special Cases

The date of Supply, under UAE VAT Law, for Goods or Services that are continuously supplied is the earliest of any of the following dates, provided that this date is no more than one year from the date of provision of these Goods and Services:
1. Date of issue of Tax Invoice.
2. Payment date, as indicated on the Tax Invoice.
3. Date of receipt of payment.
For vending machines the date of Supply, under UAE VAT Law, is when the money is collected from the machines.
The date of Deemed Supply, under UAE VAT Law, of Goods and Services, depending on the case, shall be the date of their Supply, under UAE VAT Law,, disposal, change of use or the date of Deregistration.
Date of Supply, under UAE VAT Law, of a voucher is the date that this is issued or supplied.

Chapter Two

Place of VAT Supply, under UAE VAT Law

Article (27)

Place of VAT Supply of Goods, under UAE VAT Law

The place of Supply, under UAE VAT Law, of Goods will be in the United Arab of Emirates (UAE) if the Supply, under UAE VAT Law, took place in the UAE.
For Goods that are assembled or installed, which were either imported into or exported from UAE, the place of Supply, under UAE VAT Law, will be:
In UAE if the assembly or installation of Goods took place in the UAE.
Outside UAE if the assembly or installation of Goods was completed outside the UAE.
For Exports or Imports the place of Supply, under UAE VAT Law, of Goods will be as follows:
Inside UAE:
- For exports outside GCC States.
- Exports to a customer in a GCC State that is not registered for VAT in that State, and the value of the exports to this state does not exceed the Mandatory Registration threshold of that State.
- When the recipient of Goods is not VAT registered in UAE and the total value of imports from a supplier from another GCC State exceeds the Mandatory Registration Threshold of UAE.
Outside UAE:

When the Supply, under UAE VAT Law, includes an Export to a customer in another GCC State who is registered for VAT purposes.
When the recipient of Goods in another GCC State is not registered for VAT in that State and the value of exports from UAE to the customer exceeds the Mandatory Registration Threshold of the said State.
When the Recipient of Goods is a UAE non VAT registered person, the Goods are imported in the UAE from a supplier that is registered for VAT in a GCC State and the total values of imports from this supplier does not exceed the Mandatory Registration Threshold of UAE.

In certain circumstances, which will be specified by the Executive Regulations of this VAT Law, for Goods supplied in UAE for which Supply, under UAE VAT Law, is required that Goods exit and then enter the UAE again, such Supply, under UAE VAT Law, will not be treated as an export outside UAE and then as an import.

Article (28)

Place of Supply of Water and Energy, under UAE VAT Law

The place of Supply, under UAE VAT Law, of water and all forms of energy, as specified in the Executive Regulation of this Decree-Law, the Supply, under UAE VAT Law, of which is done through a distribution system, will be the Place of Residence of the Taxable Trader if the distribution was made by a VAT registered person having a Place of Residence in UAE to a Taxable Trader having a Place of Residence in a GCC State.
The place of actual consumption if distribution was done by a Taxable Person (i.e. a Person registered or obligated to register for VAT) to a Non-Taxable Person.

Article (29)

Place of Supply of Services, under UAE VAT Law

The place of Supply, under UAE VAT Law, of Services will be the Supplier’s Place of Residence.

Article (30)

Place of Supply, under UAE VAT Law, in Special Cases

The following are exceptions to the basic rule of Place of Supply, under UAE VAT Law, of Services as mentioned in Article (29) of the UAE VAT Law:

When the customer (recipient of the Service) has a Place of Residence in another GCC State and is registered for VAT in that State then the place of Supply, under UAE VAT Law, will be the customer’s Place of Residence.
If the supplier of the service is a non UAE resident and the recipient of the service is a Taxable Person in UAE then the place of Supply, under UAE VAT Law, will be the UAE.
For services related to installation of Goods the place of Supply, under UAE VAT Law, will be where the services are actually performed.
Place of Supply, under UAE VAT Law, of means of transport to a person not registered for VAT in UAE and GCC States is the place where these means of transport were put to the disposal of the recipient.
For the Supply, under UAE VAT Law, of restaurant, hotel and catering services the place will be where these Services are actually provided.
For cultural, artistic, sporting, educational or similar services the place of Supply, under UAE VAT Law, will be where the services are actually performed.
The place of Supply, under UAE VAT Law, for services related to real estate will be where the real estate is situated.
For transportation services the place of Supply, under UAE VAT Law, shall be from where the transportation begins. The Executive Regulations will clarify the place of Supply, under UAE VAT Law, for transportation services for journeys with more than one stop.

Article (31)

Place of Supply of Telecommunication and Electronic Services, under UAE VAT Law

The place of Supply, under UAE VAT Law, of telecommunications and electronic Services will be:
In the UAE if these are used and enjoyed inside the UAE.
Outside UAE if the services are actually used outside the UAE.
The place of contract or payment is irrelevant for determining the place of Supply, under UAE VAT Law, for telecommunications and electronic services.

Chapter Three

Place of Residence for UAE VAT

Article (32)

Place of Establishment

The Place of Residence of the supplier and customer (the Recipient of Services) will be:

Where the person has his Place of Establishment or his Fixed Establishment, provided he has no Place or Fixed Establishment in any other state.
If the person has in more than one state a Place of Establishment or Fixed Establishment then the place of residence is that Fixed Establishment which is more closely related to the transaction.
Where the person has his Residence if he has no Place or Fixed Establishment in any other state.

Article (33)

The Agent

The Place of Residence of an agent will be that of the principal in the following instances:

If the agent negotiates and enters on a regular basis into agreements on behalf of the principal.
When the agent holds stock which is used to meet the principal’s Supply, under UAE VAT Law, agreements.

Chapter Four

Value of VAT Supply, under UAE VAT Law

Article (34)

Value of Supply, under UAE VAT Law

The Consideration for the value of the Supply, under UAE VAT Law, of Goods and Services will be as follows:

If the Consideration is expressed only in money then the value of that Supply, under UAE VAT Law, will be the money received less VAT.
If the Consideration is partly monetary and non-monetary then the value of the Supply, under UAE VAT Law, will be the money received for the monetary part plus the Fair Value of the non-monetary part.
For Services received and are accounted for by using the Reverse Charge mechanism as per UAE VAT Law, then the value of the Supply, under UAE VAT Law, will be the market value of the consideration excluding VAT.
The value of the Supply, under UAE VAT Law, shall be the Consideration that relates only to the Supply, under UAE VAT Law, of Goods and Services.

The Executive Regulations will provide guidance on how market value is calculated.

Article (35)

Value of Import, under UAE VAT Law

The Import value of Goods shall be:

The customs value including insurance, freight, import duties and Excise Tax on which VAT is excluded.
If the value cannot be determined in accordance with the above Clause 1 valuation procedures as per Customs Legislation shall be used to set up the value.

Article (36)

Value of Supply, under UAE VAT Law, for Related Parties

As opposed to Articles (34) and (35) of the UAE VAT Law the value of the Supplies, under UAE VAT Law, of Goods and Services between Related Parties have to be adjusted to market values when:

The value of the Supply, under UAE VAT Law, is lower than the market value.
The Supply, under UAE VAT Law, is a taxable one but the Recipient of Goods or Services doesn’t have the right to fully recover the input VAT.

Article (37)

Value of Deemed Supply, under UAE VAT Law

Another exception to Articles (34) and (35) of the VAT Law is that the value of a Deemed Supply, under UAE VAT Law,, when Goods or Services are acquired to make Taxable transactions but the Taxable Person eventually doesn’t use them, will be equal to the cost of the Deemed Supply, under UAE VAT Law, of Goods and Services.

Article (38)

VAT-Inclusive Prices

Prices shall be VAT inclusive. The Executive Regulations will specify on which circumstances prices will not include VAT.

Article (39)

Value of Supply, under UAE VAT Law, in case of Discount or Subsidies

Value of Supplies, under UAE VAT Law, will be reduced by any discounts or subsidies offered.

Article (40)

Value of Supply of Vouchers, under UAE VAT Law

A Voucher’s value of Supply, under UAE VAT Law, is the difference between consideration received and its advertised monetary value.

Article (41)

Value of Supply, under UAE VAT Law, of Postage Stamps

The value of postal stamps will be the amount stated on the stamp.

Article (42)

Temporary Transfer of Goods for VAT

If Goods are transferred outside UAE or into a Designated Zone (also treated outside UAE if it meets the conditions of the Regulations of this Law) for repairs or further processing then the value of the Supply, under UAE VAT Law, of these Goods when are imported back to UAE is the value of the service provided.

Chapter Five

Profit Margin Scheme for UAE VAT

Article (43)

Charging Tax based on Profit Margin

On certain conditions a Taxable Person can charge VAT based on the Profit Margin scheme.
The conditions for the Profit Margin Scheme will be specified in the Executive Regulations of the VAT Decree Law.

Title Six

UAE VAT Zero Rates (0%-Rated) and UAE VAT Exemptions

Zero Rate

Article (44)

Supply and Import Taxable at Zero Rate, under UAE VAT Law

This chapter states the Zero rated (0%) Taxable Supplies, under UAE VAT Law,.

Article (45)

Supply, under UAE VAT Law, of Goods and Services that is Subject to Zero 0% Rate

Zero (0%) Rated Goods and Services:

Export of Goods and Services outside GCC States.
International transportation of passengers and Goods and any related services.
Air transportation of passengers made in UAE if it is considered as an “international carriage” as per rules of the Warsaw Convention.
Supplies, under UAE VAT Law, of air, sea and land means of transport.
Supply, under UAE VAT Law, of Goods and Services which are needed for the operation, repair and maintenance of means of transport.
Supply, under UAE VAT Law, of aircrafts and vessels used for air or sea rescue and assistance.
The Supply, under UAE VAT Law, of Goods and Services which are used during international or air transportation as stated in Clauses (2) and (3) of this Article.
The Supply, under UAE VAT Law, of investment grade precious metals. The Executive regulations will specify which precious metals are used for investment purposes.
The sale or lease of new residential buildings that are supplied for the first time within 3 years of completion of their construction.
First Supply, under UAE VAT Law, of buildings that are intended to be used by Charities.
Newly converted residential buildings.
Supply, under UAE VAT Law, of crude oil and natural gas.
The Supply, under UAE VAT Law, of education services and related Goods and Services. These are for nurseries, preschools, elementary and higher educational institutions owned by Local Government.
Supply, under UAE VAT Law, of basic healthcare services and related Goods and Services.

Chapter Two

UAE VAT Exemptions

Article (46)

Supply Exempt from VAT, under UAE VAT Law

Exempt Supplies, under UAE VAT Law,:

Financial Services as per the Executive Regulations of this VAT Law.
Supply, under UAE VAT Law, of residential properties, other than those that are zero rated.
Bare Land
Local passenger transport.

Conditions and controls for the above exemptions will be provided in the Executive Regulations.

Chapter Three

Single and Mixed Supplies, under UAE VAT Law

Article (47)

Supply, under UAE VAT Law, of More Than One Component

For Supplies, under UAE VAT Law, that consist of more than one component and for which each component that has a different VAT treatment the Executive Regulations will provide specifications for their treatment.

Chapter Four

Specific Obligations to Account for UAE VAT

Article (48)

Reverse Charge, under UAE VAT Law

When a Taxable Person imports Goods and Services that would be subject to UAE VAT if acquired from UAE, then the Person shall account for such Supply, under UAE VAT Law, through the reverse charge mechanism whereas he accounts for Input VAT and at the same time for Output VAT as if he was making the Supply, under UAE VAT Law, to himself.
An exception to the above Clause (1) is when a Taxable Person imports goods into UAE but the final destination is another GCC State, then VAT is paid on importation without the right to recover it.
The Supply, under UAE VAT Law, of crude or refined oil, unprocessed or processed natural gas and hydrocarbons between two Taxable Persons within UAE shall be treated as follows if the Recipient of these Goods intends to resell them or use them to produce or distribute energy:
1. The Supplier will not charge VAT on the value of the Supply, under UAE VAT Law,.
2. The customer will account for VAT by applying the Reverse Charge and therefore be responsible for reporting the VAT transactions and as well as for all the applicable obligations.
The above provisions of Clause (3) will not apply in the following situations:
1. When the Recipient of Goods, before the Supply, under UAE VAT Law,, has not provided in writing a confirmation to the Supplier that he intends to resell the Goods.
2. The supplier cannot verify the Tax Registration Number of the customer and he has no written confirmation from the customer that he is VAT registered.
3. On the export of the Goods outside GCC States as this Supply, under UAE VAT Law, is subject to zero rate.
4. Supply, under UAE VAT Law, of Goods and Services other than those Goods mentioned in Clause (3) of this Article.
In relation to the Supply, under UAE VAT Law, of crude or refined oil, unprocessed or processed natural gas and hydrocarbons, if the customer provides to the supplier a written confirmation that he is VAT Registered for the purposes of applying clause (3) of this Article then:
1. The supplier will not be held responsible for any VAT obligations unless he knew or was supposed to know that the customer was not VAT Registered.
2. The customer will be liable for any VAT due.
Following above clause (5) if the supplier was aware that the customer was not VAT registered then both supplier and customer will be jointly held responsible for any VAT due and for any penalties that may arise.
The Executive Regulations shall specify:
1. Circumstances and conditions to apply the Reverse Charge mechanism.
2. Extra requirements for keeping proper books and records.

Article (49)

Import of Concerned Goods, under UAE VAT Law

A non VAT Registered person in UAE will pay VAT on import of Taxable Goods.

Chapter Five

Designated Zones | Free Zones under UAE VAT Law

Article (50)

Designated Zone

A “Designated Zone” that meets the criteria of the Executive Regulations of the VAT Law will be considered as an area outside UAE.

Article (51)

Transfer of Goods in Designated Zones

Transfer of Goods from one Designated Zone to another has no VAT implications.
The procedures and conditions for transfer of Goods between Designated Zones, as well as how such Goods have to be stored and processed, will be specified by the Executive Regulations.

Article (52)

Exceptions for Designated Zone

There will be circumstances under which transactions within the “Designated Zone” will be considered as conducted within UAE. The exceptions will be specified in the Executive Regulations.

Title Seven

Calculation of Due UAE VAT Tax

Chapter One

Due VAT for a VAT Tax Period

Article (53)

The Payable Tax regarding each Period is calculated, for each Taxable Person, by deducting Input VAT of this Tax Period from the total VAT collected during the specific payment period.

Article (54)

Recoverable Input VAT

The Input Tax that shall be recovered for each Tax Period totals the VAT Tax credits regarding Services and Goods that have been or expected to be used for producing the following:
Supplies, under UAE VAT Law, that are considered taxable.
Any Supply, under UAE VAT Law, that has taken place out of the State that would be considered a Taxable Supply, under UAE VAT Law, if it took place within the State.
Any Supply, under UAE VAT Law,, listed specifically in the Executive Regulations of the present VAT Law that was made outside the State which would be considered as an exempt Supply, under UAE VAT Law, if it took place within the State.
In the case where a Taxable Person imports Goods with the State as final destination, through another state implementing VAT, then it is eligible to consider the Import Tax paid in the latter state as Recoverable Tax, under terms defined by the Executive Regulation of this Law.
In the case where a Taxable Person acquires Goods within another State implementing VAT and subsequently moved into the State, then it is eligible to consider and treat the Tax paid in relation to the acquired Goods to the first state as Recoverable, under terms and conditions defined by the Executive Regulation of this Law.
Any Tax Credit (Input VAT) regarding the Tax paid according to Clause [2] of Article [48] of this Law in not recoverable by any Taxable Person.
Further specifications regarding the cases of Input Tax that could not be recoverable will be determined by the Executive Regulations of this Decree-Law.

Article (55)

Recovery of Recoverable Input VAT in the VAT Tax Period

Recovery of Input Tax can be deducted through the Tax Return in relation to the first Period in which the below terms are satisfied:
The Taxable Person shall receive and maintain the Tax Invoices, in accordance with this Decree-Law, given that the details of the Supply, under UAE VAT Law, in relation to this Input Tax are included in the Tax Invoice or in case other documentation is kept, in accordance with Clause (3) of Article (65) of this Law related to the Supply, under UAE VAT Law, or import on which the Taxable Person has paid Input Tax.
Consideration for the Supply, under UAE VAT Law, or any of its part is paid by the Taxable Person, as defined in the Executive Regulation of this Decree-Law.
Recoverable Tax of a specific Tax Period that failed to be recovered by the Taxable Person in the period that the terms stated in Clause (1) of this Article, can be claimed and recovered after included in the subsequent Tax Period.

Article (56)

Input VAT Paid before VAT Registration

A Registered Taxable Person could be eligible to recover VAT before the date of Registration on the first Tax Return, in cases that VAT was paid for the following purposes:
Any Supply, under UAE VAT Law, of Services and Goods to him before the date of Tax Registration.
Any import of Goods took place by him before the date of Tax Registration.

On condition that the specific Services and Goods have been used for Supplies, under UAE VAT Law, that are giving the right to recover Tax, after Registration.

Input Tax shall not be recovered in the below cases:

When the Taxable Person receives Services and Goods that are not intended to be used for Taxable Supplies, under UAE VAT Law,.
When Input Tax was paid for the Capital Assets that depreciated before the Tax Registration date.
When the received Services have been rendered more than five years before the Tax Registration date.
In the case of Goods that have been moved to another implementing state before the Tax Registration date in the State.

Article (57)

Recovery of VAT by Government Entities and Charities

Government Entities and Charities eligible to recover the full amount of Input VAT shall be specified after a Cabinet Decision, exemptions will apply for:

Tax that is considered as unrecoverable as per the Executive Regulation of this Decree-Law.
Any tax paid for Services and Goods intended to be used for exempt Supplies, under UAE VAT Law,.

Chapter Two

Apportionment and Adjustment of Input VAT Tax

Article (58)

Calculating the Input VAT that may be recovered

Specifications regarding the calculation of the Input Tax that could be recovered will be described in the Executive Regulation, for cases of Supplies, under UAE VAT Law, that allow future recovery of the Input Tax and others that do not; whether being exempted Supplies, under UAE VAT Law, or are not related to the business’s activities.

Article (59)

Conditions and Mechanism of Input VAT Adjustment

Adjustment of the Input Tax’s terms and mechanism will be specified by the Executive Regulation of the present Decree-Law:

In cases when Input Tax is attributed by the Taxable Person, in total or partially, for making Taxable Supplies, under UAE VAT Law,, but their usage or intended usage of the specific Services or Goods has been changed before proceeding with the Taxable Supply, under UAE VAT Law,.
In cases when Input Tax is attributed by the Taxable Person, in total or partially, for making Exempt Supplies, under UAE VAT Law, or are not related to business’s activities, but their usage or intended usage of the specific Services or Goods has been changed before proceeding with the Exempt Supply, under UAE VAT Law,.

Chapter Three

Capital Assets Scheme, under UAE VAT Law

Article (60)

Capital Assets Scheme, under UAE VAT Law

In case where a Taxable Person Supplies, under UAE VAT Law, or imports a Capital Asset, then the period of use of this asset shall be assessed and adjusted to the Input Tax paid in accordance with the Capital Asset Scheme.
All records in relation to Capital Assets must be kept by the Taxable Person for at least ten years.
The following aspects will be specified by the Executive Regulation of the present Decree-Law.
Which Capital Assets and their estimated useful life will be subjected to the provision of this Executive Regulation.
How Capital Assets will be adjusted and which shall be the period of these adjustments.
Cases where the keeping record period shall be extended.

Chapter Four

Adjustment of VAT after the Supply Date, under UAE VAT Law

Article (61)

Instances and Conditions for Output VAT Adjustments

Output Tax shall be adjusted by the Registrant after the date of Supply, under UAE VAT Law, in any of the below cases:
Cancellation of the Supply, under UAE VAT Law,.
In case the nature of the Supply, under UAE VAT Law, is changed and subsequently its Tax treatment.
In case of alteration of the agreed Consideration for the Supply, under UAE VAT Law,.
In case that the Recipient of services or goods has returned them in total or partly to the Registrant, along with the related Consideration.
In case of error on the charge of the Tax.
In case that the place of Supply, under UAE VAT Law, was treated at the date of Supply, under UAE VAT Law, as being subject to Clause (1) of Article (27), but apparently as consequence of a movement of Goods it should have been treated as a Supply, under UAE VAT Law, related to paragraph (b)(1) of Clause (3), then paragraph (e) of Clause (1) shall not be applied.
Adjustment of the Output Tax shall take place when the below conditions are met:
In case the Tax that ought to be charged on the Supply, under UAE VAT Law, in relation to events described in Clause (1) of this Article, is not matching the Output Tax amount charged on the Supply, under UAE VAT Law, as per the Tax Invoice.
In case of submission of a Tax Return of a specific period when the Supply, under UAE VAT Law, took place and an amount was calculated incorrectly as Output Tax for this Supply, under UAE VAT Law, as a result of events mentioned in Clause (1)

Article (62)

Mechanism for Output VAT Adjustment

Adjustment of Output Tax shall occur according to the below:

In cases where that Output Tax calculated by the Registrant is exceeded by the Output Tax due for the Supply, under UAE VAT Law,, a new Tax Invoice shall be issued for the additional amount of Tax. The additional Tax due for the specific period shall be calculated accordingly.
A Tax Credit Note, as per the provision of this Law, shall be issued in case that the Output Tax calculated by the Registrant exceeds that of the proper Output Tax of the specific Supply, under UAE VAT Law,.

Article (63)

Adjustment due to the Issuance of VAT Credit Notes

In cases where a Tax Credit Note is issued by a Registered Tax Person for the correction of Output Tax that has been charged to Recipient of Goods or Services, the Tax stated in the Tax Credit Note shall be considered:

Reduced output Tax for the Registrant of the specific Credit Note.
Reduced Input Tax by the Recipient of Goods or Services, regarding the specific Tax Period when the Credit Note was issued.

Article (64)

Adjustment for Bad Debts, under UAE VAT Law

Output Tax of a specific Tax Period can be reduced by the Registrant supplier to adjust paid Tax of previous period provided that:
Due Tax has been charged and paid accordingly and Supply, under UAE VAT Law, of services and goods have occurred.
Any consideration for the Supply, under UAE VAT Law, is written off as a bad debt.
A period of six months has passed since the date of Supply, under UAE VAT Law,.
The supplier has informed the Recipient of Goods or Services regarding the amount of Consideration that is written off.
The Recipient of goods or services will have to reduce the Input Tax to be recovered for the current Period that relates to a received Supply, under UAE VAT Law, during previous periods when the below conditions are satisfied and the Consideration was not paid.
The Recipient of Goods or Services have been notified from the Supplier regarding the Consideration written off. Accordingly the Supplier has reduced the Output Tax as stated in Clause (1).
Goods or Services have been received by the Recipient and deduction of the related Input Tax has occurred.
A period of six months has passed without full or partial payment of the Consideration.
Reduction of Output Tax as mentioned in Clause (1) & (2) has to be equal to the Tax related to the Consideration which is written off.

Chapter Five

UAE VAT Invoices

Article (65)

Conditions and Requirements for Issuing VAT Invoices

An original Tax Invoice, issued according to the Regulations, shall be delivered to the Recipient of Goods or Services.
In case where a Deemed Supply, under UAE VAT Law, occurs the registered Supplier shall issue an original Tax invoice and deliver it accordingly to the Recipient otherwise, in case of not available Recipient, the original invoice shall be kept in the Supplier’s records.
The Executive Regulation of this Decree-Law shall specify the following:
Further clarifications and instructions regarding the necessary date to be included in the Tax invoice.
Any terms and proper procedures to be followed in order to issue an electronic Tax Invoice.
Cases that the registered Supplier is not obligated to issue and deliver the corresponding Tax Invoice to the Recipient of Goods or Services.
Cases that further documentation could be issued instead of a Tax Invoice and the relevant required date.
Cases in which a Tax Invoice could be issued by a Person rather than the registered supplier.
The Tax amount paid to any Person as related to any document issued by his part shall be paid to the Authorities independently of being due or not.

Article (66)

Document of Supplies to an Implementing State

With consideration to Article (65) of this Law, a Registered Tax Person that Supplies, under UAE VAT Law, Services or Goods to any of the Implementing States, has to provide the Recipient of Services or Goods with the proper documentation including all the necessary data that has also to be included in the Tax Invoice. The abovementioned document shall not be classified as “Tax Invoice” neither including any charged Tax.

Article (67)

Date of Issuance of VAT Tax Invoice

As stated in Article (35) a Tax Invoice shall be issued by the Registered Supplier within 14 days as of the date of Supply, under UAE VAT Law,.

Article (68)

Rounding on VAT Tax Invoices

Clarifications regarding the treatment and calculation of the total amount to be paid in cases of Tax being less that one fils of a UAE Dirham will be available in the Executive Regulations of the Decree-Law.

Article (69)

Currency Used on VAT Tax Invoices

In case where a Tax Invoice is issued in relation to a Supply, under UAE VAT Law, in another currency other than UAE Dirham, it shall include also the corresponding UAE Dirham amount calculated based on the official daily exchange rates approved by the Central Bank.

Chapter Six

UAE VAT Credit Notes

Article (70)

Conditions and Requirements for Issuing VAT Credit Note

An original Tax Credit Note shall be issued, as also delivered to the Recipient, by the Registered Tax Person in case the Output Tax is reduced and related to any Supply, under UAE VAT Law, occurred by him according to Clause (2) of Article (62).

In the case of a Deemed Supply, under UAE VAT Law,, an original Tax Credit Note shall be issued by the Registered Person when the Output Tax is reduced and is related to a Deemed Supply, under UAE VAT Law, according to the Article (61) of this Law. Tax Credit Notes issued must be kept in the Registrant’s records.

Specifications will be issued by the Executive Regulation of the present Decree-Law regarding the following:
Required details and data that a Tax Credit Note shall include in case it is required by the Taxable Person to issue this Tax Credit Note.
The terms and necessary procedure that should be followed in order to issue an electronic Tax Credit Note.
Cases where a Tax Credit note is not required to be issued by the Registered Person neither be delivered to the Recipient of Services or Goods.
Cases where the Registered Person would be allowed to issue other documents instead of a Tax Credit Note, along with the requirements of the Credit Note’s proper issuance.
Cases where a Tax Credit Note could be issued by a Person other than the Registered Supplier.

Title Eight

UAE VAT Period, UAE VAT Returns, VAT Payment and Reclaiming of VAT

Chapter One

UAE VAT Tax Period

Article (71)

Duration of VAT Period

Authority is entitled to amend the Tax Period of a Taxable Person after certain conditions described in the Executive Regulation of this Decree-Law as well as to define the specific Tax Period for which the calculation and payment of Tax shall be occurred by the Taxable Person.

Chapter Two

UAE VAT Returns and UAE VAT Payment

Article (72)

Submission of VAT Returns

All Supplies, under UAE VAT Law, occurred during a specific Tax Period shall be declared in the Tax Return of the corresponding period. Specifications regarding the time limits and required procedures of the Tax Return submission shall be issued in the Executive Regulation of this Law.

Government Entities may be obliged to submit simplified Tax Returns after a Cabinet Decision after being recommended by the Minister.

Article (73)

Payment of VAT

Time limits and necessary procedures regarding the payable Tax, as declared in the corresponding Tax Return, shall be specified in the Executive Regulation of this Decree-Law.

Chapter Three

Carrying forward the Excess of Recoverable UAE VAT and VAT Tax Recovery

Article (74)

Excess Recoverable VAT

Unless cases specifically exempted according to the Executive Regulation of this Decree-Law, any excess of Recoverable Tax may be carried forward to the subsequent Tax periods and set off any future Payable Tax or Administrative Penalties in the below instances:
In cases where the Output Tax payable is exceeded by the Input Tax Recoverable of the Taxable Person.
In cases, other than the described in paragraph (a) of Clause (1) of this Article, where the Tax paid by the Taxable Person exceeds the Payable Tax.
The Taxable Person is eligible to apply to reclaim the remaining excess in case it is carried forward for a certain period of time. Specifications shall be issued of the relevant necessary procedure and time limits in the Executive Regulation of this Law.

Chapter Four

Other Provisions on Recovery of UAE VAT

Article (75)

VAT Recovery in Special Cases

The Authority has the right to specify the mechanism, terms and conditions that shall define which Taxable Person is eligible to recover Tax paid for any Supply, under UAE VAT Law, or import occurred. The eligible Tax Person could be:

A citizen of the State in relation to Services and Goods regarding the constructions residence newly built which is not part of this Person’s business activities.
A non-Resident of the State who is not a Resident of an Implementing State and in not a Taxable Person while also conducting Business.
A Non-Resident, in case where he will export the Goods purchased by his part.
International organizations, diplomatic missions and bodies or foreign governments.
A Tax Person or class listed in a Cabinet Decision after the Minister’s suggestion.

Title Nine

Violations and Penalties, under UAE VAT Law

Article (76)

VAT Administrative Penalties Assessment

Without detriment to the provisions of the Article (7) of the Federal Law on Tax Procedure, an Administrative Penalty Assessment shall be issued to the Person and subsequently notified to him within five business days, in the following instances:

In cases where the Taxable Person fails to display amounts including Tax as of the Article (38) of this Law.
In cases where the Taxable Person fails to inform the Authority of applying Tax based on the margin in relation to Article (43) of the present Decree-Law.
In cases where a Taxable Person fails to be in compliance with the terms and procedures in relation to keeping the Goods within a certain Designated Zone or moving the Goods to another Designated Zone.
In cases where a proper Tax Invoice, or any other accepted documentation, is not issued by the Taxable Person.
In cases where a proper Tax Credit Note, or any other accepted documentation, is not issued by the Taxable Person.
In cases where a proper issuance of an electronic Tax Invoice or Tax Credit Notes, is not issued by the Taxable Person according to the compliant terms and procedures as defined and described in the Executive Regulation.

Article (77)

VAT Tax Evasion

If Goods are acquired by a Person who is not a Registered Tax Person, but claiming otherwise, then it will be considered as Tax Evasion by this Person and penalties will be imposed according to the Federal Law No. (7) on Tax Procedures.

Title Ten

General Provisions, under UAE VAT Law

Article (78)

Record-keeping, under UAE VAT Law

The Taxable Person in order to be in compliance with the provisions of the Law and its Executive Regulation shall keep the following records:
Documentation regarding all Imports and Supplies, under UAE VAT Law, of Services and Goods.
All proper documentation, including tax invoices or alternative documents, in relation to purchasing of Services and Goods.
All proper documentation, including Tax Credit Notes or alternative documents, in relation to purchasing of Services and Goods.
All proper documentation, including Tax Invoices or alternative documents, in relation to sales of Services and Goods.
All proper documentation, including Tax Credit Notes or alternative documents, in relation to sales of Services and Goods.
All records regarding Services and Goods that were used for non Business-related matters or have been disposed of, including Taxes paid for this Supply, under UAE VAT Law,.
All records regarding Services and Goods that have been purchased without the Input Tax to be deducted.
All proper documentation regarding exports of Goods and Services.
Proper documentation regarding all corrections or adjustments of Tax Invoices and accounts.
Records of Supplies, under UAE VAT Law, received or made in relation to Clause (3) of Article 48 of this Law, along with all declarations that have been received or provided in relation to these Taxable Supplies, under UAE VAT Law,.
Also a Tax Record including the below data:

1) Due Tax on Taxable Supplies, under UAE VAT Law,.

2) Due Tax on Taxable Supplier in accordance with the mechanism in Clause (1) of Article (48) of this Decree-Law.

3) Due Tax after the proper adjustment or correction.

4) Recoverable Tax in relation to imports or Supplies, under UAE VAT Law,.

5) Recoverable Tax after the proper adjustment or correction.

Specifications regarding the following will be issued by the Executive Regulation of this Law:

1. Terms, regulations and time limits regarding the record keeping as listed in Clause (1) of this Article.

2. Regulations and proper procedures with regard to maintaining the necessary confidentiality of the records of Government Entities, as mentioned under Clause (2) of Article (72) of this Law.

Articles (79)

Stating the UAE VAT Tax Registration Number (TRN)

All Tax related documentation, correspondence and procedure shall include the Tax Registration Number of the Taxable Person, in compliance with Law No. (7) on Tax Procedures of 2017.

Title Eleven

Closing Provisions, under UAE VAT Law

Article (80)

VAT Transitional Rules

When the consideration or part thereof or the issue of the invoice for Goods or Services, by the supplier, before the Decree-Law has effect, the Supply, under UAE VAT Law, date shall be the effective date of the Decree-Law. This has effect under the following cases, when the Decree-Law occurs after:
The supplier supervises the transfer of the goods.
The goods are placed at the disposal of the recipient.
The goods are installed or the assembly is complete.
The customs declaration is issued.
The recipient accepts the Goods of the Supply, under UAE VAT Law,.
If the conclusion of the contract is before the enforcement of this Decree-Law, concerning a Supply, under UAE VAT Law, to be fully or partly made after the effective date of this Decree-Law, but not to include any clauses related to Tax on the Supply, under UAE VAT Law,, it shall be treated as below:
The consideration shall include the Tax if it is charged according to the Decree-Law.
Even if it has been taken into account when determining the consideration for the Supply, under UAE VAT Law,, the tax shall be calculated on the Supply, under UAE VAT Law,.
Special provisions shall be set in relation to this Decree-Law in the cases where a Supply, under UAE VAT Law, has taken place in whole or partly after the effective date of the Decree-Law but the relevant contract has been conducted on an earlier date.

Article (81)

Revenue Sharing, under UAE VAT Law

Revenue by Tax and Administrative Penalties will be shared between the Emirates Governments and the Federal Government in accordance with the provisions of the Federal Decree Law No.(13) of 2016 on the Establishment of the Federal Tax Authority.

Article (82)

Executive Regulation, under UAE VAT Law

With the suggestion of the Minister the Cabinet shall issue the Executive Regulation of this Decree-Law.

Article (83)

The Provisions of Federal Law No.(7) of 2017 on Tax Procedures will be applied in instances that a special provision is made in this Decree-Law.

Article (84)

Cancellation of Conflicting Provisions, under UAE VAT Law

Any text or provisions contrary to or inconsistent with the provisions of this Decree-Law shall be considered invalid.

Article (85)

Effective Date of The UAE VAT Law and its Application

January 1^st 2018 shall be the publishing and effective date of this Decree-Law.