Significant VAT changes in the UAE business owners must know about

Did you recently hear about the amendments made to the VAT structure in the UAE? Yes, the Finance ministry announced eight major changes in the VAT laws that will be effective from January 1, 2023. The provision that allows registered people to request an exclusion from VAT registration if all of their supplies are zero-rated or if they no longer make any supply other than zero-rated supplies is one of the amendments made to Federal Decree-Law No. 8 of 2017 on VAT.

Let’s take a look at the eight VAT amendments:

1. Extended time for a Tax Audit

If a taxpayer is notified of the initiation of a tax audit within such 5 years, the audit can be conducted and/or completed within the following 4 years.

2. Tax audit after Voluntary Disclosure

The FTA will get an additional year to conduct a tax audit if a voluntary disclosure is submitted in the 5th year after the tax period.

3. Tax Evasion

A tax audit can be conducted 15 years after the end of the tax period in which the tax evasion occurred in the case of tax evasion.

4. Failure to obtain VAT registration

Upon failure to obtain a tax registration, the FTA may conduct a tax audit within 15 years.

5. Good news for 100% exporters

Business owners are not required to comply with VAT compliance obligations if 100% of their supplies are zero-rated.

6. Additional compliance for input credit on import of service

VAT laws require taxpayers to retain invoices in order to recover input credits for imports of services.

7. Construction sector and retention payments

It has now been added as a specific date of supply for VAT purposes that the goods/services expire 1 year after they were provided.

8. Deemed supplies to related parties

FOC goods/services to related parties may not be liable for VAT if the recipient company is otherwise entitled to 100% input credit.

How did you like the new VAT rules? Comment below and let us know.?