The Federal Tax Authority introduced a significant number of changes to the Executive Regulation of Federal Decree-Law No. 8 of 2017 on VAT, effective 15 November 2024. Taxpayers should review these changes for operational impact.
VAT Alert
This alert highlights key amendments, specifically Articles 30, 31, 35, 42, 46 and 53.
Article 30 - Export of goods
The FTA has clarified documentary requirements for applying zero-rate VAT on goods exports. Exporters are now required to retain any of the following:
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Paragraph 4 is also amended and provides a definition of Official Evidence, Commercial Evidence and Shipping Certificate.
The definition of ‘Official Evidence’ now includes export certificates issued by customs or clearance certificates confirming goods’ departure from the UAE, and documents from destination authorities verifying goods’ entry.
The definition of ‘Commercial Evidence’ now refers to documents from transport companies that prove the transfer of goods from the UAE, including air waybills, sea waybills, and land waybills.
Previously, the FTA required exporters to retain Exit Certificates as primary proof of goods leaving the country, with non-compliance risking zero-rate VAT denial. Exporters could request exceptions for alternative documentation. Recent amendments now allow certificates from destination authorities confirming goods' entry as valid proof, aligning export documentation with recent Excise Legislation changes.
Article 31 - Export of services
A new exception to the zero-rating benefit for exported services is introduced. Under this amendment, if a service's place of supply is within the UAE—according to Articles 30 (3) to (8) and Article 31 of the UAE VAT Law—the taxpayer will not qualify for zero-rating. These articles define the place of supply for services related to goods, transportation, hospitality, real estate, and telecommunications.
Previously, to qualify for zero-rating, two conditions had to be met: the recipient had to be a non-resident, and the services could not be related to real estate or assets located in the UAE.
Additionally, the term “personal movable assets” has been replaced with “movable assets,” eliminating any ambiguity regarding whether the definition includes corporate assets.
Article 35 -Zero rating goods and services in connection with means of transport
This outlines services related to operating, repairing, maintaining, or converting transport means, which apply only if:
Conversion services ensure the transport remains compliant with Article 34 after conversion.
Article 42 - Tax treatment of financial services
Now specifically exempts these services from VAT.
FTA clarified VAT exemptions for virtual assets effective January 2018, requiring taxpayers to review historical records.
Taxpayers must analyze virtual asset expenses, apportion common costs, and conduct annual input tax wash-ups, as amending VAT returns from January 2018 to September 2019 may be limited by the five-year statute of limitations.
Regarding fund management services in the UAE, domestic services will be VAT-exempt starting 15 November 2024, while services for overseas funds will remain zero-rated under Article 42 (7) and Article 31 of the UAE VAT Executive Regulations. Fund managers should assess their operations, as they may need to consider de-registration under the UAE VAT Law if services become non-taxable.
Article 46 - Tax on supplies of more than one component
This has been amended to establish tax treatment based on the overall nature of a supply when no main component is included in a composite supply.
This guidance helps ensure the accurate application of tax rules in such situations, providing greater certainty for taxpayers regarding their obligations.
Article 53- Non-recoverable Input Tax
This now enables the recovery of input VAT for health insurance, including enhanced coverage for employees and their dependents—up to one spouse and three children under eighteen.
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