The Value-Added Tax (VAT) system is constantly changing and evolving in the UAE. Therefore, it is very important to know any amendments that may occur and affect the business processes. Effective January 1, 2023, there have been specific modifications to the 24 articles and an addition of one article on the statute of limitations in the VAT Law. The prime changes are as follows: 

• Definition: A new definition is applied which allows you to know your taxes better through audit understanding and assessment knowledge – all while keeping an informed perspective when it comes to voluntary disclosure practices, tax evasions, hydrocarbon use, tax audits, tax analysis, and much more.
• Addition: Article 7 allows for the Executive Regulations to identify an array of additional supplies that are not subject to VAT—beyond vouchers and business transfers outside the scope of VAT. 
• Major Change: De-Registration can be initiated automatically by the Federal Tax Authority (FTA)  if the threshold falls below the limit.
• To prevent Tax Evasion.
• Exemption: Registered and non-registered persons can apply and take advantage of Article 15’s exemption rule. If they are making only zero-rated sales then they can apply for an exemption.
• Date of Supply: As a special case, one of the events to determine the date of supply is stipulated in Article 26 (1) where one year has passed from the date on which the goods or services are provided is included. 
• Place of Supply: Article 30(8) now clarifies the place of supply for transport-related services, helping businesses to accurately calculate where their taxes should be paid. This ensures that all parties involved in cargo transportation have an informed understanding of taxation and start transactions on a level playing field.
• Principal Residence: According to Article 33, the home base of a principal is determined by their agent’s place of residence. This means that when calculating VAT amounts in relation to vital documents such as invoices or contracts, one must refer to where an appointed representative resides for accurate taxation details.
• Supply Value: Article 36 provides a strong shield against the avoidance of payments due to related parties, while Article 37 ensures fair market value is enforced. 
• Zero-Rate Charge: Article 45 (clauses 4, 5, and 6) provides additional goods with zero-rate of VAT, especially on transportation which includes the import of goods, rescue planes, and ships.
• New Reverse Charge: Under Article 48(3) Domestic reverse charge will apply to Pure Hydrocarbons which solely consist of hydrogen and carbon. The new Decree-Law defines those as combinations of hydrogen and carbon, making it easier to ensure fiscal compliance with this article in the tax code.
• Recovery of Input VAT: Article 55 now has two crucial additions which make it easier for businesses to get reimbursed for their input VAT which specifies the requirements of the taxable person or declared import of goods or services. 
• Government Entity and Charity Recovery of Input VAT: Article 57 allows government and charitable entities to recover input VAT through the provision of the relevant sovereign or charitable activities respectively. 
• Output VAT Adjustment: Article 61 (1) stipulates that if the taxable person has performed an incorrect tax treatment then the output tax needs to be adjusted through the issuance of a tax credit note. 
• Tax Payment: Article 65(4) requires mandatory payment of taxes, either through a tax invoice or directly to the Federal Tax Authority (FTA). Failure to adhere will invoke penalties from FTA.
• Timeline: Article 67(1) ensures that the business remains compliant with Article 26 – issuance of tax invoice is done within fourteen days of any supply to remain up-to-date and compliant with the laws. Similarly, specifying the period in which credit notes must be issued, Article 62 states that the registrant must issue the Tax Credit Note within 14 days from the date of occurrence of mentioned stance.

With a deeper understanding of how VAT works, individuals and businesses can gain access to simplified accounting processes and ensure compliant tax filing, thus avoiding hefty fines. Furthermore, timely awareness of VAT changes will help managers better manage cash flow by proactively dealing with the resulting financial implications ahead of time. Last but not least, those who are aware of VAT laws can make wise decisions when selecting products and services to purchase, thus preventing expensive mistakes from taking place. 

It is essential for one’s business success to be mindful of all modifications to the UAE’s Value Added Tax regulations. Get rid of cumbersome paperwork and reduce errors with AccountAbility’s team of experienced accountants and financial specialists by your side. 

Our high-caliber service ensures you can meet all deadlines and avoid unwarranted risks to keep up with the changes in the industry. And it doesn’t stop there – from consultation, and registration to the filing of VAT, our experts provide you with continuous support to maximize returns for your business. Get a free consultation today at +971 50 279 8784⁠  or message us at info@accountability.ae – jumpstart towards success now.