VAT Implementation Simplified

The FTA has issued exhibition and conference user guide. It is published to provide direction to suppliers of qualifying services and their customer with respect to licensing process and licensing application form, service request process followed by international customers, filing of tax returns by suppliers and the registration requirements for international customers.

VAT Refund for building residency by UAE nationals user guide was issued by the FTA to help the UAE nationals claiming a refund for building new residency. It was designed to provide answers to the queries related to the refund form and also for making the claimants aware of the icons and symbols which might appear on the form’s completion.

The VAT payment for commercial property buyers user guide has been issued with an aim to aid the persons who are buying commercial properties which are subject to VAT in the UAE for the purpose of completing their VAT payment on the FTA’s e-Services portal. This is however applicable to the sales of commercial property which is subject to 5% VAT. This, however, does not apply to any sales or leases of residential property, lease of commercial property and sale of commercial property.

The Director’s Service VAT guide also called as VATDGS01 was issued by the Federal Tax Authority. This has been issued to provide guidance to anyone who has either been appointed as director or who are key stakeholders responsible for tax matters in order to provide a characterization of the director’s services for determining as to whether a taxable supply of services exists for VAT purposes or not.

With an aim to provide assistance in understanding and applying the VAT legislation, the Federal Tax Authority has issued a Financial Services VAT Guide called VATGFS1.

Implementation of VAT in the UAE bought along with it a lot of legislation, procedures, and processes that were to be mandatorily followed by the people. One process amongst them was filing of VAT returns.

The implementation of VAT in the UAE creates a doubt on its applicability with regards to certain transactions. The same question of taxability also arises in case of a taxable person receiving payment from third parties including but not limited to employees, customers, suppliers etc in the nature of donations, sponsorships, and grants. For the determination of this question, the Federal Tax Authority has issued VATP011. The article below discusses certain principles which are to be applied while ascertaining the taxability of donations, grants, and sponsorships.

In order to provide clarification on the VAT implication of the interest income generated from bank deposits and dividend income, the Federal Tax Authority has issued VATP010- a public clarification on bank interest and dividends.

The Federal Tax Authority in a statement has clarified the conditions and procedures for tax deregistration for value-added tax in accordance with the Federal Decree-Law No 8 of 2017 since its implementation.

The VAT was implemented in the UAE on January 1, 2018. Since then, the consumers have been paying an extra 5% on most of the goods and services thereby ending the era of a completely zero tax regime. Irrespective of the challenges which were expected at the beginning of the implementation, the UAE has successfully rolled out a seamless and a flexible tax system with a progressive legislative environment.