The UAE ministry of finance announced amendments to certain provisions of the UAE VAT (value added tax) regime. The changes will come into force on January 1, 2023.

A total of 24 changes were introduced by Federal Decree-Law No. 18 that of 2022 on the Amendment of Some Provisions of the Federal Decree-Law No. 8 of 2017 on VAT, and one article was added in respect of the statute of limitation to the UAE VAT Law.

Here are some of the most significant changes in VAT registration UAE

• Under Article 15, registered persons who make taxable supplies are permitted to apply for an exception in VAT registration only if their supplies are zero-rated or if they don’t make any supplies other than zero-rated supplies.
• Article 55, which deals with the recovery of pre-registration input VAT, under this act now allows the taxable person to recover VAT that was paid or declared on the import of services or goods incurred by the taxable person before registration, which includes certain requirements.
• According to Article 62(2), if the taxpayer intends to adjust the output tax, which is in line with the time frame set for issuing tax invoices, a Tax Credit Note must be issued within the time frame of 14 days.
• Under article 65(4), it is mandatory to pay the VAT to the Federal Tax Authority (FTA) for the taxable person to pay in cases where such a person issues a tax invoice stating that it contains or receives an amount as VAT.
• Under article 26, the date of issuance of tax invoices will be 14 days from the of the supply.
• Under Article 33, the place of residence of a principal is redefined as the place of residence of the agent.
• Under Article 21, the FTA is empowered to forcibly deregister registered persons in certain cases.

Information on the new article on the statute of limitations (Article 79 bis)

• If FTA has issued a notice to audit the taxable person, the statute of limitations of five years will not apply. Such an audit is completed within four years from the date of issuance of the notice.
• The statute of limitations will be extended by one year In the case where the taxable person files a voluntary disclosure in the fifth year from the end of the relevant tax period.
• A voluntary disclosure can be filed by the taxable person within five years; it cannot be done five years from the end of the relevant tax period.
• The exceptions to the above are tax evasion, which has a 15-year limit.

VAT was introduced in the UAE (United Arab Emirates) on January 1, 2018. The general VAT rate in the UAE is 5% and applies to most goods and services. There are some goods and services subject to a 0% rate or an exemption from VAT.

Simon Gordan, Managing Director of Sovereign Corporate Services in Dubai, said that these amendments to the VAT legislation are considered another positive step for the UAE and demonstrate that the country is keeping pace with the changing global economy.

These are the VAT changes that will come into effect on January 1, 2023, which also affect UAE tax. In addition to that, UAE is set to introduce a 9% federal corporate tax on business profits from the next financial year, starting on June 1, 2023.