On October 2, 2024, the Federal Tax Authority (FTA) released Cabinet Decision No. (100) of 2024, amending the Executive Regulation on VAT

Tax News – Updates to UAE VAT Executive Regulation No 100 of 2024
On October 2, 2024, the Federal Tax Authority (FTA) released Cabinet Decision No. (100) of 2024, amending the Executive Regulation of the Federal Decree-Law No. (8) of 2017 on Value Added Tax (VAT). The Updated Executive Regulation will take effect on November 15, 2024, incorporating over 30 amendments across various sectors. Below are the key changes.
1. Definitions (Article 1)
– Virtual Assets: Newly defined as digital value that can be traded or transferred and used for investment, excluding digital representations of currencies or securities.
2. Supply of Goods (Article 2)
– Expanded to include all disposals leading to the transfer of ownership of real estate, beyond just sales and tenancy contracts.
3. Exceptions from Supply of Services (Article 3 bis)
– New exceptions include transfers of rights related to government buildings and real estate assets between governmental bodies, applicable from January 1, 2023.
4. Deemed Supplies (Article 5)
– Introduced a threshold of AED 250,000 for output tax exemption on deemed supplies for government bodies or charities.
5. Voluntary Registration (Article 8)
– Applicants must prove intention to make taxable supplies or those treated as taxable if made in the UAE.
6. Tax Deregistration (Article 14 bis)
– FTA may issue deregistration for entities if their ongoing registration threatens tax system integrity.
7. VAT Group Membership (Article 15)
– Clarified that a member must be removed from a VAT group if they cease to make taxable supplies.
8. Profit Margin Scheme (Article 29)
– Purchase price for profit margin calculations now includes all costs related to purchasing goods.
9. Zero Rating for Exports (Article 30)
– Clarified documentation requirements for direct/indirect exports and customs suspension situations.
10. Zero Rating for Services (Article 31)
– New condition added: services must not be subject to special place of supply rules to qualify for zero-rating.
11. International Transportation Services (Article 33)
– Clarification that transportation of goods within the UAE as part of international transport must be provided by the same supplier to qualify for zero-rating.
12. Zero Rating of Transport Means (Article 34)
– Applies to both supplies and imports of means of transport.
13. Financial Services (Article 42)
– New exempt services include investment fund management, virtual asset transfers, and exchanges, with retroactive effect from January 1, 2018.
14. Composite Supplies (Article 46)
– New VAT rule for assessing the treatment of composite supplies based on the nature of all components.
15. Input Tax Recovery (Article 52)
– Updated conditions for determining the status of individuals for input VAT recovery on financial services supplied outside the UAE.
16. Non-Recoverable Input Tax (Article 53)
– Added medical insurance for employees and dependents to the list of non-recoverable input VAT.
17. Apportionment of Input Tax (Article 55)
– Taxable persons can request FTA approval for fixed apportionment recovery rates based on previous year rates.
18. Tax Invoices (Article 59)
– Simplified invoices must be issued at the date of supply; summary invoices within 14 days from the end of the month of supply.

These amendments will have significant implications across various sectors. Businesses are advised to review these changes carefully and assess how they may affect their VAT obligations and compliance processes.
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