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Executive Regulations on Value Added Tax

09-06-2018

The Cabinet:

Having reviewed the Constitution,

Federal Law No. (1) of 1972 on the Competencies of the Ministries and Powers of the Ministers and its amendments,

Federal Decree-Law No. (13) of 2016 on the Establishment of the Federal Tax Authority,

Federal Law No. (7) of 2017 on Tax Procedures,

Federal Decree-Law No. (8) of 2017 on Value Added Tax, and

Pursuant to the presentation of the Minister of Finance,

Has decided:

Title One

Definitions

Article (1)

In the application of the provisions of this Decision, the following words and expressions shall have the meanings assigned against each, unless the context requires otherwise:

State: United Arab Emirates.

Minister: Minister of Finance.

Authority: Federal Tax Authority.

Value Added Tax: A tax imposed on the import and supply of Goods and Services at each stage of production and distribution, including the Deemed Supply.

Tax: Value Added Tax (VAT).

GCC States: All countries that are full members of The Cooperation Council for the Arab States of the Gulf pursuant to its Charter.

Implementing States: GCC States that are implementing a Tax law pursuant to an issued legislation.

Goods: Physical property that can be supplied including but not limited to real estate, water, and all forms of energy as specified in this Decision.

Services: Anything that can be supplied other than Goods.

Standard rate: The Tax rate specified in Article (3) of the Decree-Law.

Import: The arrival of Goods from abroad into the State or receiving Services from outside the State.

Concerned Goods: Goods that have been imported, and would not be exempt if supplied in the State.

Concerned Services: Services that have been imported where the place of supply is in the State, and would not be exempt if supplied in the State.

Person: Natural or legal person.

Taxable Person: Any Person registered or obligated to register for Tax purposes under the Decree-Law.

Taxpayer: Any person obligated to pay Tax in the State under the Decree-Law, whether a Taxable Person or end consumer.

Legal Representative: The manager of a company or a guardian or custodian of a minor or incapacitated person, or any other Person appointed legally to represent another Person.

Tax Registration: A procedure according to which the Taxable Person or his Legal Representative registers for Tax purposes at the Authority.

Tax Registration Number (TRN): A unique number issued by the Authority for each Person registered for Tax purposes.

Registrant: The Taxable Person issued with a TRN.

Recipient of Goods: Person to whom Goods are supplied or imported.

Recipient of Services: Person to whom Services are supplied or imported.

Tax Return: Information and data specified for Tax purposes and submitted by a Taxable Person in accordance with a form prepared by the Authority.

Consideration: All that is received or expected to be received for the supply of Goods or Services, whether in money or other acceptable forms of payment.

Business: Any activity conducted regularly, on an ongoing basis and independently by any Person, in any location, such as industrial, commercial, agricultural, professional, service or excavation activities or anything related to the use of tangible or intangible property.

Exempt Supply: A supply of Goods or Services for Consideration while conducting Business in the State, where no Tax is due and no Input Tax may be recovered except according to the provisions of the Decree-Law.

Taxable Supply: A supply of Goods or Services for a Consideration by a Person conducting Business in the State, and does not include Exempt Supplies.

Deemed Supply: Anything considered a supply and treated as a Taxable Supply according to the instances stated in the Decree-Law.

Input Tax: Tax paid by a Person or due from him when Goods or Services are supplied to him, or when conducting an Import.

Output Tax: Tax charged on a Taxable Supply and any supply considered to be a Taxable Supply.

Recoverable Tax: Amounts that were paid and can be repaid by the Authority to the Taxpayer pursuant to the provisions of the Decree-Law.

Due Tax: Tax that is calculated and charged pursuant to the Decree-Law.

Payable Tax: Tax that is due for payment to the Authority.

Tax Period: The specified timeframe, for which Payable Tax shall be calculated and paid.

Tax Invoice: A written or electronic document in which the occurrence of a Taxable Supply is recorded with details pertaining to it.

Tax Credit Note: A written or electronic document in which the occurrence of any amendment to a Taxable Supply that reduces or cancels it is recorded and the details pertaining to it.

Government Entities: Federal and local ministries, government departments, government agencies, authorities and public institutions in the State.

Charities: Societies and associations of public welfare not aiming to make a profit that are listed within a decision issued by the Cabinet upon the recommendation of the Minister.

Mandatory Registration Threshold: An amount specified in this Decision that if exceeded by the value of Taxable Supplies or is anticipated to be exceeded, the supplier must apply for Tax Registration.

Voluntary Registration Threshold: An amount specified in this Decision that if exceeded by the value of Taxable Supplies or taxable expenses or is anticipated to be exceeded, the supplier may apply for Tax Registration.

Transport-related Services: Shipment, packaging and securing cargo, preparation of Customs documents, container management, loading, unloading, storing and moving of Goods, or any another closely related services or services that are necessary to conduct the transportation services.

Place of Establishment: The place where a Business is legally established in a country pursuant to its decision of establishment, in which significant management decisions are taken or central management functions are conducted.

Fixed Establishment: Any fixed place of business, other than the Place of Establishment, in which the Person conducts his business regularly or permanently and where sufficient human and technology resources exist to enable the Person to supply or acquire Goods or Services, including the Person’s branches.

Place of Residence: The place where a Person has a Place of Establishment or Fixed Establishment, in accordance with the provisions of the Decree-Law.

Non-Resident: Any person who does not own a Place of Establishment or Fixed Establishment in the State and usually does not reside in the State.

Related Parties: Two or more Persons who are not separated in economic, financial or regulatory aspects, where one can control the others either by Law, or through the acquisition of shares or voting rights.

Designated Zone: Any area specified by a decision of the Cabinet upon the recommendation of the Minister, as a Designated Zone for the purpose of the Decree-Law.

Export: Goods departing the State or the provision of Services to a Person whose Place of Establishment or Fixed Establishment is outside the State, including Direct and Indirect Export.

Direct Export: An Export of Goods to a destination outside of the Implementing States, where the supplier is responsible for arranging transport or appointing an agent to do so on his behalf.

Indirect Export: An Export of Goods to a destination outside of the Implementing States, where the overseas customer is responsible for arranging the collection of the Goods from the supplier in the State and who exports the Goods himself, or has appointed an agent to do so on his behalf;

Overseas Customer: A Recipient of Goods who does not have a Place of Establishment or Fixed Establishment in the State, does not reside in the State, and does not have a Tax Registration Number.

Voucher: Any instrument that gives the right to receive Goods or Services against the value stated thereon or the right to receive a discount on the price of the Goods or Services. Vouchers do not include postage stamps issued by the Emirates Post Group.

Capital Assets: Business assets designated for long-term use.

Capital Assets Scheme: A scheme by which initially recovered Input Tax is adjusted based on actual use during a specified time.

Administrative Penalties: Amounts charged to a Person by the Authority for a breach of the provisions of the Decree-Law and the Federal Law No. (7) of 2017 on Tax Procedures.

Tax Group: Two or more Persons registered with the Authority for Tax purposes as a single Taxable Person in accordance with the provisions of the Decree-Law.

Notification: Notification to the concerned Person or his Tax Agent or Legal Representative of decisions issued by the Authority through the means stated in the Federal Law No. (7) of 2017 on the Tax Procedures.

Tax Evasion: The use of illegal means by a Person resulting in lowering the amount of Due Tax, non-payment of the Due Tax or a refund of Tax that he does not have the right to have refunded under the Decree-Law.

Decree-Law: Federal Decree Law no. (8) of 2017 on Value Added Tax.

Title Two

Supply

Article (2)

Supply of Goods

A transfer of ownership of Goods or of the right to use them from one Person to another Person shall include for instance the following:
1. A transfer of ownership of Goods under a written or verbal agreement for any sale;
2. A transfer of ownership for a Consideration in a compulsory manner pursuant to the applicable legislations.
For the purposes of Clause (1) of this Article, a transfer of the right to use any assets shall not be treated as a supply of Goods unless the other Person is able to dispose of them as owner.
Entry into a contract between two parties causing the transfer of Goods at a later time shall be considered a supply of Goods where the agreement mentions a transfer or intention to transfer the ownership of Goods or a future transfer of ownership of Goods.
The following shall be considered a supply of Goods:
1. A supply of water.
2. A supply of real estate including sale and tenancy contracts.
3. A supply of all forms of energy, which includes electricity and gas, including biogas, coal gas, liquefied petroleum gas, natural gas, oil gas, producer gas, refinery gas, reformed natural gas, and tempered liquefied petroleum gas, and any mixture of gases, whether used for lighting, or heating, or cooling, or air conditioning or any other purpose.

Article (3)

Supply of Services

The supply of anything other than the supply of Goods shall be regarded as a supply of Services including any of the following:

The granting, assignment, cessation, or surrender of a right.
Making available a facility or advantage.
Not to participate in any activity, or not to allow its occurrence, or agree to perform any activity.
The transfer of an indivisible share in a good.
The transfer or licensing of intangible rights, for example rights of authors, inventors, artists, and rights in trademarks, and rights which the legislation of the State deems to be within such category.

Article (4)

Supply of More Than One Component

Where a Person made a supply consisting of more than one component for one price, the Person shall determine whether the supply constitutes a single composite supply or multiple supplies.
The phrase “single composite supply” means a supply of Goods or Services, where there is more than one component to the supply, and taking into account the contract and the wider circumstance of the supply.
A single composite supply shall exist in the following cases:
1. Where there is supply of all of the following:
  1. A principal component.
  2. A component or components which either are necessary or essential to the making of the supply, including incidental elements which normally accompany the supply but are not a significant part of it; or do not constitute an aim in itself, but are instead a means of better enjoying the principal supply.
  3. Where there is a supply which has two or more elements so closely linked as to form a single supply which it would be impossible or unnatural to split.
2. Where there is a supply which has two or more elements so closely linked as to form a single supply which it would be impossible or unnatural to split.
A single composite supply may exist under Clause (2) of this Article if all of the following conditions are met:
1. The price of the different components of the supply is not separately identified or charged by the supplier.
2. All components of the supply are supplied by a single supplier;
3. Where a Taxable Person supplies more than one component for one price and the supply is not a single composite supply, then the supply of the components shall be treated as multiple supplies.

Article (5)

Exceptions related to Deemed Supply

The supply shall not be regarded as a Deemed Supply in any of the following instances:
1. Where the Input Tax on the relevant Goods or Services is not recovered.
2. Where the supply is exempted.
3. Where the refunded Input Tax on Goods and Services is amended according to the Capital Assets Scheme.
4. Where the value of the supply of Goods for each recipient, within a 12-month period, does not exceed AED 500, and the supply made is to be used as samples or commercial gifts.
5. Where the total of Output Tax payable on all Deemed Supplies for each Person for a 12-month period is less than AED 2,000.
For the purposes of Paragraphs (d) and (e) of Clause (1) of this Article, the 12-month period is a period preceding the end of the month in which the Person makes a supply referred to in either of those Clauses.

Title Three

Registration

Article (6)

Application for Registration

For the purposes of mandatory or voluntary registration, the application for Tax Registration must contain such information as required by the Authority, and be submitted through the means specified by the Authority.

Article (7)

Mandatory Registration

The Mandatory Registration Threshold shall be AED 375,000 (three hundred and seventy-five thousand dirhams).
The Person required to register for Tax pursuant to the provisions of the Decree-Law must file a Tax Registration application with the Authority within (30) days of being required to register.
Where a Person does not file his Tax Registration application despite being required to, the Authority shall register that Person with effect from the date on which the Person first became liable to be registered for Tax and impose the necessary penalties in accordance with the Federal Law No. (7) of 2017 on Tax Procedures.
Where supplies made by a Person exceed, in accordance with the Decree-Law, the Mandatory Registration Threshold during the previous 12-months period, the Authority shall register the Person with effect from the first day of the month following the month in which the Person is required to register, whether or not he applies for Tax registration, or from such earlier date as agreed between the Authority and the Person.
Where a Person expects that his supplies, in accordance with the Decree-Law, will exceed the Mandatory Registration Threshold during the next (30) days, the Authority shall register him with effect from the date on which there are reasonable grounds for believing the Person will be required to register as specified in that Clause, whether or not he so notifies them of the liability to register for Tax, or from such earlier date as agreed between the Authority and the Person.
Where a Person is not a resident of the State and is required to register in accordance with the provisions of the Decree-Law, the Authority shall register him with effect from the date on which he started making supplies in the State, whether or not he so notifies them of the liability to register for Tax, or from such earlier date as agreed between the Authority and the Person.
A Taxable Person who has been late in registering for Tax according to the provisions of this Article is liable to account for and pay to the Authority the Due Tax on all Taxable Supplies and Imports made by him before registering.

Article (8)

Voluntary Registration

The Voluntary Registration Threshold shall be AED 187,500 (one hundred eighty-seven thousand five hundred dirhams).
Where a Person applied to register voluntarily in accordance with the provisions of the Decree-Law, the Authority shall register a Person with effect from the first day of the month following the month in which the application is made, or from such earlier date as may be requested by the Person and agreed by the Authority.
Where a Person applied to register voluntarily due to his expectation that his supplies under the provisions of the Decree-Law will exceed the Voluntary Registration Threshold during the next 30 days, he should be able to provide evidence of an intention to make Taxable Supplies or incur expenses which are subject to Tax in excess of the Voluntary Registration Threshold.
The Authority shall determine the evidence it may deem necessary to demonstrate eligibility for voluntary Tax Registration.
For the purpose of voluntary registration, the phrase “Taxable Expenses” means expenses which are subject to the standard rate and which are incurred in the State by a Person who has a Place of Residence in the State.
A Person may not register voluntarily unless he satisfies the Authority that he is carrying on a Business in the State.

Article (9)

Related Parties

For the purposes of Tax Group provisions, the definition of Related Parties shall relate to any two legal persons in instances such as:
1. One Person or more acting in a partnership and having any of the following:
  1. Voting interests in each of those legal Persons of 50% or more;
  2. Market value interest in each of those legal Persons of 50% or more;
  3. Control of each of those legal Persons by any other means.
2. Each of Persons is a Related Party with a third Person.
Two or more Persons shall be considered Related Parties if they are associated in economic, financial and regulatory aspects, taking into account the following:
1. Economic practices, which shall include at least one of the following:
  1. Economic practices, which shall include at least one of the following:
  2. One Person’s Business benefiting another Person’s Business;
  3. One Person’s Business benefiting another Person’s Business;
2. Financial practices, which shall include at least one of the following:
  1. Financial support given by one Person’s Business to another Person’s Business.
  2. One Person’s Business not being financially viable without another Person’s Business.
  3. Common financial interest in the proceeds
3. Regulatory practices, which shall include any of the following:
  1. Common management.
  2. Common employees whether or not jointly employed.
  3. Common shareholders or economic ownership.
4. For the purposes of this Article:
  1. “Market value interest” in a legal Person shall be calculated as the percentage of the market value of shares and options a Person owns over total market value of all shares in the legal Person.
  2. b. Any shareholding will be disregarded if there exists another agreement, which contradicts it. In that case, the shareholding will be treated as the adjusted value under that other agreement.

Article (10)

Registration as a Tax Group

A Tax Group shall select one of its registered members to act as the representative member of this Tax Group.
A request to register a Tax Group shall be made by the representative member of that Tax Group.
The Authority should make a decision regarding any application submitted for registration of two or more Persons as a Tax Group within the period of 20 business days starting with the day on which it was received by the Authority.
Where a request to form a new Tax Group is approved, the Tax Group registration shall be in effect according to the following:
1. From the first day of the Tax Period following the Tax Period in which the application is received;
2. From any date as determined by the Authority.
From any date as determined by the Authority.
1. The Persons do not meet the requirements for Tax Group registration in accordance with the provisions of the Decree-Law and Article (9) of this Decision.
2. Where there are serious grounds for believing that if the registration as a Tax Group is permitted, it would enable Tax Evasion or significantly decrease Tax revenues of the Authority or increase the administrative burden on the Authority significantly;
3. Where any of the Persons included in the application is not a legal Person.
4. Where one of the Persons is a Government Entity specified under Article (10) and (57) of the Decree-Law and the other is not.
5. Where one of the Person is a Charity under Article (57) of the Decree-Law and the other is not.
The Authority may reject adding a Person to a Tax Group where that Person does not meet the requirements for Tax Group registration in accordance with the provisions of the Decree-Law or for the reasons mentioned under Clause (5) of this Article.
Where the Authority establishes that two or more Persons are in association as a result of their economic, financial and regulatory practices in Business, the Authority may register them as a Tax Group after considering the individual circumstance of each case, including the presence of the factors mentioned in Clause (2) of Article (9) of this Decision.
The Authority may only register a Person as part of a Tax Group under Clause (7) of this Article if the two following conditions are met:
1. The Person’s Business includes making Taxable Supplies or importing Concerned Goods or Concern Services.
2. If all the Taxable Supplies or imports of Concerned Goods or Concerned Services of the Business by Persons carrying on the Business would have exceeded the Mandatory Registration Threshold.
The Authority may reject the application of registration as a Tax Group if there are serious grounds for believing that registering the Related Parties would significantly decrease Tax revenue.

Article (11)

Amendments to a Tax Group

The representative member appointed under Article (10) of this Decision may apply to the Authority to do any of the following:
1. Add another Person to become a member of the Tax Group.
2. Remove one of the members of that Tax Group.
3. Nominate another member of the Tax Group to be the representative member with the consent of the other member.
4. Deregister that Tax Group.
For the purposes of Clause (1) of this Article, the Authority may accept the request mentioned in the application from either:
1. The first day of the Tax Period following the Tax Period in which the application is received;
2. Any date as determined by the Authority.
Any Notification by the Authority, which is addressed to the representative member of any Tax Group shall be deemed to be served on the representative member and all other members of that Tax Group.

Article (12)

Effect of registration as a Tax Group

Registration of Persons as a Tax Group shall result in the following:
1. Any Business carried on by a member of the Tax Group shall be deemed to be carried on by the representative member and not by any other member of the Tax Group.
2. Any supply made by a member of the Tax Group to another member of the same Tax Group may be disregarded.
3. Any supply, taxable or otherwise, by a member of the Tax Group shall be deemed to be made by the representative member.
4. Any Import of Concerned Goods or Concerned Services by a member of the Tax Group shall be deemed to be an import by the representative member.
5. Any supply of Goods or Services to a member of the Tax Group from a Person who is not a member of the Tax Group is a supply to the representative member.
6. Any Output Tax charged by a member of the Tax Group shall be deemed to be charged by the representative member.
7. Any Input Tax incurred by a member of the Tax Group shall be deemed to be incurred by the representative member.
For the purposes of Clause (1) of this Article, all members of the Tax Group shall remain personally and jointly liable for any Payable Tax of the representative member.

Article (13)

Aggregation of Related Parties

Where two or more Persons are in association as a result of their economic, financial and regulatory practices in Business in accordance with Clause (2) of Article (9) of this Decision, and these Persons are not registered as a Tax Group and have artificially segregated their business, then the Taxable Supplies of each of the Persons shall be treated as aggregated for determining whether they both have exceeded the Mandatory Registration Threshold and Voluntary Registration Threshold.
Where the Business was not segregated artificially but the Authority considers that there is a Tax revenue loss due to segregation, the Authority may treat Taxable Supplies of each of the Persons as aggregated to determine whether the total of their taxable supplies exceeded the Mandatory Registration Threshold and Voluntary Registration Threshold.
Where any of the cases mentioned in Clause (1) and (2) of this Article applies, each of the Persons shall be treated as making Taxable Supplies made by the other Person and shall apply for Tax Registration if the Mandatory Registration Threshold has been exceeded pursuant to the provisions of the Decree-Law.

Article (14)

Tax Deregistration

The Registrant must apply to the Authority for de-registration in accordance with the cases mentioned in the Decree-Law, within (20) business days of the occurrence of any of them.
The Authority shall accept a Registrant’s application for deregistration where the two following conditions are met:
1. The Registrant stops making supplies referred to in Article (19) of the Decree-Law and does not expect to make any such supplies over the next 12-month period;
2. The value of supplies referred to in Article (19) of the Decree-Law made, or taxable expenses incurred, by the Registrant over the previous 12-months is less than the Voluntary Registration Threshold and the Authority is satisfied that his supplies, according to the provisions of the Decree-Law, or taxable expenses, expected over the next 30 days, are not expected to exceed the Voluntary Registration Threshold.
If the deregistration application is approved, the Authority shall cancel the Tax Registration of the Registrant with effect from the last day of the Tax Period during which the Registrant has met the conditions for deregistration or from such other date as may be determined by the Authority.
Where the Authority is satisfied that the conditions in Clause (2) above are met, and the Registrant has not applied for deregistration, the Authority shall deregister the Registrant with effect from the last day of the Tax Period in which the Authority became satisfied that the conditions have been met or from any other date determined by the Authority.
A Registrant shall not be deregistered unless he has paid all Tax and Administrative Penalties due and filed all Tax Returns as due under the Decree-Law and the Federal Law No. (7) of 2017 on Tax Procedures.
For the purposes of Clause (5) of this Article, any Goods and Services forming part of the assets of Business carried on by a Registrant shall be deemed to be supplied by him at a time immediately before ceasing to be a Registrant and any tax payable shall be included in the final tax return, unless the Business is carried on by an appointed trustee in bankruptcy pursuant to the Federal Law No (7) of 2017 on Tax Procedures.
Where a Registrant requests to be deregistered from Tax due to the reduction of his Taxable Supplies to less than the Mandatory Registration Threshold, the Authority will, if in agreement with the Registrant, cancel the Tax Registration with effect from:
1. The date requested by the Registrant in the application; or
2. The date on which the request is made if the Registrant did not indicate the preferred deregistration date.
Where the Authority has deregistered a Registrant from Tax, it shall notify that Registrant of the date on which deregistration takes effect within (10) business days of making the decision.

Article (15)

Deregistration of a Tax Group Registration or Amendment Thereof

The Authority must deregister a Tax Group if the following conditions are met:
1. If the Persons who are registered as a Tax Group no longer meet the requirements for registration as a Tax Group in accordance with the Decree-Law.
2. If there is no longer an association based on economic, financial and regulatory practices.
3. If there are serious grounds for believing that if the registration as a Tax Group is permitted to continue, it would enable Tax Evasion or would significantly decrease Tax paid to the Authority.
The Authority shall amend the composition of a Tax Group in any of the following circumstances:
1. A Person shall be removed from a Tax Group where the conditions in Clause (1) are met for that Person.
2. A Person shall be added to a Tax Group where the Authority establishes that a Person’s activities should be regarded as part of the Business carried out by a Tax Group in accordance with Clause (7) of Article (10) of this Decision.
The representative member of a Tax Group shall notify the Authority if any member of the Tax Group is no longer eligible to be part of the Tax Group, within 20 business days of the ceasing to be eligible.
Where the Authority decided to either deregister a Tax Group or amend a Tax Group registration, it shall give Notification of that decision and its effective date to the representative member within 10 business days of making such decision.
Where a Taxable Person is no longer a member of a Tax Group, the Authority shall issue it with a new individual Tax Registration Number or re-activate a Tax Registration Number that was assigned to it prior to joining a Tax Group, and it shall be treated as a Registrant immediately following the time when it left the Tax Group.

Article (16)

Exception from registration

A Taxable Person that wants to apply for an exception from Tax Registration on the basis that all of his supplies are zero rated, shall apply to the Authority in a manner and by means specified by the Authority.
The Authority shall review the exception from registration application and either accept the exception from Tax Registration or notify the Taxable Person that his application is rejected.
A Person excepted from Tax Registration must notify the Authority if he makes any supplies or Imports of Goods or Services that are subject to Tax at the standard rate.
A Person shall give the notice referred to in Clause (3) of this Article within not more than 10 business days of making the supply or import which is taxable at the standard rate.
Where the Person ceases to satisfy the requirement of being excepted from Tax Registration, he shall be required to register for Tax.

Article (17)

Registration when the Decree-Law Comes into Force

A Person who will be a Taxable Person on the date the Decree-Law comes into force, must apply for Tax Registration prior to the Decree-Law coming into effect as per the timelines as announced by the Authority.
The effective date of registration of the Taxable Person is 1 January 2018, if he so notifies them of the liability to Tax Registration under Clause (1) of this Article.
Where a Person has registered for Tax prior to the Decree-Law coming into effect, the Person shall be subject to the same rights and obligations as if the Tax Registration was processed after the Decree-Law has come into effect.

Article (18)

Liabilities due before Deregistration

Deregistration does not exempt the Person from his obligations and liabilities that were applicable under the Decree-Law while he was still a Registrant.

Title Four

Rules Relating to Supplies

Article (19)

Due Tax at Date of Supply

For the purposes of Articles (25), (26) and (80) of the Decree-Law, where Tax is due because a payment is made or a Tax Invoice is issued in respect of a supply of Goods or Services, the Tax shall be due to the extent of the payment made or stated in the Tax Invoice, and the remainder of Due Tax on that supply shall be payable according to the provisions of the Decree-Law.

Article (20)

Place of Supply of Goods Delivered within the State

Where as part of a supply of Goods, those Goods are required to exit and re-enter the State in the course of being delivered from one location in the State to another location in the State, the Goods shall not be treated as exported or imported where all of the following conditions are met:

Where the exit from and re-entry into the State takes place in the course of a journey between two points in the State.
Where there is no significant break in transportation whilst outside of the State, and any break is limited to what is reasonably expected in the course of physically transporting Goods.
Where the Goods are not unloaded from the relevant means of transport whilst outside the State.
Where the Goods are not consumed, supplied, or subjected to any process whilst outside of the State;
Where the nature, quantity or quality of the Goods does not change as a result of exiting and re-entering the State.

Article (21)

Place of Supply of Services Related to Real Estate

For the purposes of the Decree-Law and this Decision, “real estate” includes as an example:
1. Any area of land over which rights or interests or services can be created.
2. Any building, structure or engineering work permanently attached to the land.
3. Any fixture or equipment which makes up a permanent part of the land or is permanently attached to the building, structure or engineering work.
A supply of Services is deemed to relate to a real estate where the supply of Services is directly connected with the real estate, or where it is the grant of a right to use the real estate.
A supply of Services directly connected with real estate includes:
1. The grant, assignment or surrender of any interest in or right over real estate.
2. The grant, assignment or surrender of a personal right to be granted any interest in or right over real estate.
3. The grant, assignment or surrender of a licence to occupy land or any other contractual right exercisable over or in relation to real estate, including the provision, lease and rental of sleeping accommodation in a hotel or similar establishment.
4. A supply of Services by real estate experts or estate agents.
5. A supply of Services involving the preparation, coordination and performance of construction, destruction, maintenance, conversion and similar work.

Article (22)

Place of Supply of Certain Transport Services

The place of the supply of each transportation service is the place where the supply of that transportation service commences, where a trip includes more than one stop and consists of multiple supplies in accordance with Clause (5) of Article (4) of this Decision.
The place of supply of Transport-Related Services shall be the same as the place of supply of the transportation service to which they relate.

Article (23)

Telecommunication and electronic services

“Telecommunication services” means delivering, broadcasting, converting or receiving any of the services specified below by using any communications equipment or devices that transmit, broadcast, convert, or receive such service by electrical, magnetic, electromagnetic, electrochemical or electromechanical means or other means of communication, including:
1. Wired and wireless communications.
2. Voice, music and other audio material.
3. Viewable images.
4. Signals used for transmission with the exception of public broadcasts.
5. Signals used to operate and control any machinery or equipment;
6. Services of an equivalent type which have a similar purpose and function.
“Electronic services” means Services which are automatically delivered over the internet, or an electronic network, or an electronic marketplace, including:
1. Supply of domain names, web-hosting and remote maintenance of programs and equipment;
2. The supply and updating of software;
3. The supply of images, text, and information provided electronically such as photos, screensavers, electronic books and other digitized documents and files;
4. The supply of music, films and games on demand;
5. The supply of online magazines;
6. The supply of advertising space on a website and any rights associated with such advertising;
7. The supply of political, cultural, artistic, sporting, scientific, educational or entertainment broadcasts, including broadcasts of events;
8. Live streaming via the internet;
9. The supply of distance learning;
10. Services of an equivalent type which have a similar purpose and function.
“Electronic marketplace” means a distribution service which is operated by electronic means, including by a website, internet portal, gateway, store, or distribution platform, and meets the following conditions:
1. Which allows suppliers to make supplies of electronic services to customers.
2. The supplies made by the marketplace must be made by electronic means.

Article (24)

Evidence for Certain Supplies Between the Implementing States

Where a Taxable Person makes a supply of Goods from the State to a Person who has a Place of Residence in another Implementing State, and the supply requires the Goods to be physically moved to that other Implementing State, the Taxable Person shall retain official and commercial evidence of Export of those Goods to that other Implementing State.
The Authority may require a Taxable Person who make supplies of Goods or Services to another Implementing State to collect, retain and provide any evidential information other than required under Clause (1) of this Article, by the means determined by the Authority.
The Customs Departments shall confirm the type and quantity of the exported goods with its exported documents.

Article (25)

Market Value

The phrase “similar supply”, in relation to a supply of Goods or Services, means any other supply of Goods or Services that, in respect of the characteristics, quality, quantity, functional components, materials, and reputation, is the same as, or closely or substantially resembles, that supply of Goods or Services.
The market value of a supply of Goods or Services at a given date is the Consideration in money which the supply would generally achieve if supplied in similar circumstances at that date in the State, being a supply freely offered and made between Persons who are not connected in any manner.
Where the market value of a supply of Goods or Services at a given date cannot be determined as mentioned under Clause (2) of this Article, the market value is the Consideration in money which a similar supply would achieve if supplied in similar circumstances at that date in the State, being a supply freely offered and made between Persons who are not connected in any manner.
Where the market value of any supply of Goods or Services cannot be determined as mentioned under Clauses (2) and (3) of this Article, the market value shall be determined by reference to the replacement cost of identical Goods or Services, with such supply being offered by a supplier who is not connected to the Recipient of Goods or Recipient of Services in any manner.

Article (26)

Apportionment of Single Consideration

For the purposes of Clause (4) of Article (34) and Article (47) of the Decree-Law, where the Consideration payable to the Taxable Person relates to both a supply of Goods or Services and matters other than the supply of Goods or Services, or to two different supplies of Goods or Services, then the Taxable Person must identify the portion of the Consideration that is the market value of each part according to the provisions of Article (25) of this Decision.

Article (27)

Price Excluding Tax

In the case of a Taxable Supply, the published prices shall be inclusive of Tax.
As an exception to Clause (1) above, the Taxable Person may declare prices as being exclusive of Tax in the following cases:
1. The supply of Goods or Services for Export.
2. Where the customer is a Registrant.
Where the declaration of prices as being exclusive of Tax applies according to Clause (2) of this Article, the price should be clearly identified as being exclusive of Tax.
As an exception of Clause (1) above, the Taxable Person shall declare the price as being exclusive of Tax in the following cases:
1. The supply of Concerned Goods or Concerned Services, which is subject to Clause (1) of Article (48) of the Decree-Law.
2. The supply of Goods subject to Tax in accordance with Clause (3) of Article (48) of the Decree-Law.

Article (28)

Discounts, Subsidies and Vouchers

The State shall not be treated as providing a subsidy to the supplier if the subsidy or part of it is a Consideration for a supply of Goods or Services to the State.
The value of supply may be reduced in the case of a discount if the following conditions are met:
1. The customer has benefited from the reduction in price.
2. The supplier funded the discount.
The value of a discount shall be the amount by which the Consideration is reduced.
The value of a discount shall not include the value of any Voucher used, and any such reduction will be ignored unless that Voucher was provided for no Consideration.
Where the Voucher was issued and sold by the Supplier for Consideration that is less than the value stated on the Voucher, the value of a discount shall be the difference between the value of the Voucher and the Consideration paid for that Voucher.
“Voucher” shall not include an instrument that gives the right to receive Goods or Services or the right to receive a discount on the price of the Goods or Services unless the monetary value for which the Voucher may be redeemed is identifiable at the time the Voucher is issued.

Title Five

Profit Margin Scheme

Article (29)

Accounting for Tax on the Margin

The Taxable Person may calculate Tax on any supply of Goods by reference to the profit margin in the following situations:
1. Where he made a supply of Goods mentioned in Clause (2) of this Article which were purchased from either:
  1. A Person who is not a Registrant.
  2. A Taxable Person who calculated the Tax on the supply by reference to the profit margin.
2. Where he made a supply of Goods for which Input Tax was not recovered in accordance with Article (53) of this Decision.
The Goods to which Clause (1) of this Article refers are Goods which have been subject to Tax before the supply which shall be subject to the profit margin scheme and those Goods are:
1. Second-hand Goods, meaning tangible moveable property that is suitable for further use as it is or after repair.
2. Antiques, meaning goods that are over 50 years old.
3. Collectors' items, meaning stamps, coins and currency and other pieces of scientific, historical or archaeological interest.
A Taxable Person may not elect to calculate Tax by reference to the profit margin in respect of Goods referred to in paragraph (a) of Clause (1) of this Article if a Tax Invoice or other document is issued for that supply mentioning an amount of Tax chargeable on the supply.
The profit margin is the difference between the purchase price of the Goods and the selling price of the Goods, and the profit margin shall be deemed to be inclusive of Tax.
The Taxable Person must keep the following records in respect of supplies made in accordance with this Article:
1. A stock book or a similar record showing details of each Good purchased and sold under the profit margin scheme.
2. Purchase invoices showing details of the Goods purchased under the profit margin scheme. Where the Goods are purchased from Persons who are not Registrants, the Taxable Person must issue an invoice showing details of the Goods himself, including at least the following information:
  1. The name, address and Tax Registration Number of the Taxable Person.
  2. The name and address of the Person selling the Good.
  3. The date of the purchase.
  4. Details of the Goods purchased.
  5. The Consideration payable in respect of the Goods.
  6. Signature of the Person selling the Good or authorized signatory.
Where a Taxable Person has charged Tax in respect of a supply with reference to the profit margin, the Taxable Person shall issue a Tax Invoice that clearly states that the Tax was charged with reference to the profit margin, in addition to all other information required to be stated in a Tax Invoice except the amount of Tax.

Title Six

Supplies Subject to the Zero Rate

Article (30)

Zero-rating the export of goods

The Direct Export shall be subject to the zero rate if the following conditions are met:
1. The Goods are physically exported to a place outside the Implementing States or are put into a customs suspension regime in accordance with GCC Common Customs Law within 90 days of the date of the supply.
2. Official and commercial evidence of Export or customs suspension is retained by the exporter.
An Indirect Export shall be subject to the zero rate if the following conditions are met:
1. The Goods are physically exported to a place outside the Implementing States or are put into a customs suspension regime in accordance with GCC Common Customs Law, within 90 days of the date of the supply under an arrangement agreed by the supplier and the Overseas Customer at or before the date of supply
2. The Overseas Customer obtains official and commercial evidence of Export or customs suspension in accordance with GCC Common Customs Law, and provides the supplier with a copy of this.
3. The Goods are not used or altered in the time between supply and Export or customs suspension, except to the extent necessary to prepare the Goods for Export or customs suspension.
4. The Goods do not leave the State in the possession of a passenger or crew member of an aircraft or ship.
For the purposes of this Article, a movement of Goods into a Designated Zone from a place in the State or a supply of Goods to a Designated Zone shall not be considered an Export of those Goods.
For the purposes of Clauses (1) and (2) of this Article:
1. “Official evidence” means Export documents issued by the local Emirate Customs Department in respect of Goods leaving the State.
2. “Commercial evidence” shall include any the following:
  1. Airway bill.
  2. Bill of lading.
  3. Consignment note.
  4. Certificate of shipment.
The evidence obtained as proof of Export, whether official or commercial, must identify the following:
1. The supplier.
2. The consignor.
3. The Goods.
4. The value.
5. The Export destination.
6. The mode of transport and route of the export movement.
The Authority may specify alternative forms of evidence according to the nature of the Export or the nature of the Goods being exported.
The Authority may extend the 90-day period mentioned in Clauses (1) and (2) of this Article, if the Authority has determined, after the supplier has applied in writing, that either of the following apply:
1. Circumstances beyond the control of the Supplier and the Recipient of Goods have prevented, or will prevent, the Export of the Goods within 90 days of the date of supply.
2. Due to the nature of the supply, it is not practicable for the supplier to Export the Goods, or a class of the Goods, within 90 days of the date of supply.
An Indirect Export would include a supply of Goods in a departure area of an airport or port to a passenger of an aircraft or a vessel if:
1. The Goods are intended to leave the State in the possession of the passenger.
2. The supplier has obtained and retained evidence, such as the details of the boarding pass of the passenger, that the passenger intends to leave for a destination outside the Implementing States.
If the Person required to Export the Goods in accordance with this Article does not do so within the period of 90 days or a longer period that the Authority has allowed under Clause (7) of this Article, Tax shall be charged on the supply at the rate that would have been due on the supply if it was made in the State.
For the purposes of this Article a supply of Goods shall be subject to the zero rate if Goods that would otherwise have been exported are destroyed or cease to exist in circumstances beyond the control of both the supplier and the Recipient of the Goods.
Customs Departments shall check to confirm the type and quantity of the exported goods with its export documents.

Article (31)

Zero-rating the Export of Services

The Export of Services shall be zero-rated in the following cases. a.
1. If the following conditions are met:
  1. The Services are supplied to a Recipient of Services who does not have a Place of Residence in an Implementing State and who is outside the State at the time the Services are performed;
  2. The Services are not supplied directly in connection with real estate situated in the State or any improvement to the real estate or directly in connection with moveable personal assets situated in the State at the time the Services are performed.
2. If the services are actually performed outside the Implementing States or are the arranging of services that are actually performed outside the Implementing States.
3. If the supply consists of the facilitation of outbound tour packages, for that part of the service.
For the purpose of paragraph (a) of Clause (1) of this Article, a Person shall be considered as being “outside the State” if they only have a short-term presence in the State of less than a month, or the only presence they have in the State is not effectively connected with the supply.
As an exception to paragraph (a) of Clause (1) of this Article, a supply of Services shall not be zero-rated, if the supply is made under an agreement that is entered into, whether directly or indirectly, with a Recipient of Services who is a Non-Resident, if all of the following conditions are met:
1. The performance of the Services is, or it is reasonably foreseeable that the performance of the Services will be, received in the State by another Person, including but not limited to, an employee or a director of the Non-Resident Recipient of Services.
2. It is reasonably foreseeable, at the time the agreement is entered into, that that other Person in the State will receive the Services in the course of making supplies for which Input Tax is not recoverable in full under Article (54) of the Decree-Law.
For the purposes of paragraph (c) of Clause (1) of this Article, services that consist of the “facilitation of outbound tour packages” means the services that a Taxable Person provides in packaging one or more tourism products and also services outside the Implementing States, including but not limited to such goods and services as accommodation, meals, transport, and other activities.

Article (32)

Zero-Rating Exported Telecommunications Services

The export of telecommunications services shall be subject to the zero rate in the following situations:
1. A supply of telecommunications services by a telecommunications supplier who has a Place of Residence in the State to a telecommunications supplier who has Place of Residence outside the Implementing States.
2. A supply of telecommunications services by a telecommunications supplier who has a Place of Residence in the State to a Person who is not a telecommunications supplier and who has Place of Residence outside the State for a telecommunications service that is initiated outside the Implementing States.
For the purposes of paragraph (b) of Clause (1) of this Article, the place where a supply is initiated shall be identified according to the following:
1. The place of the Person who commences the supply.
2. If paragraph (a) of this Clause does not apply, the Person who pays in return for the services.
3. If paragraphs (a) and (b) of this Clause do not apply, the Person who contracts for the purposes of the supply.
For the purposes of this Article, a “telecommunications supplier” means a Person whose main activity is the supply of telecommunications services.

Article (33)

Zero-rating international transportation services for Passengers and Goods

The supply of international transportation Services for Passengers and Goods and Transport-related Services shall be subject to the zero rate in the following cases:
1. Transporting passengers or Goods from a place in the State to a place outside the State.
2. Transporting passengers or Goods from a place outside the State to a place in the State.
3. Transporting passengers from a place in the State to another place in the State by sea or air or land as part of a supply of an international transport of those passengers if either or both the first place of departure, or the final place of destination, is outside the State.
4. Transporting Goods from a place in the State to another place in the State if the Services are supplied as part, or for the purpose, of the supply of Services of transporting Goods either from a place in the State to a place outside the State or from a place outside the State to a place in the State.
The following Goods and Services shall be zero-rated if they are supplied in respect of the transportation services of passengers or Goods to which either Clause (1) of this Article applies or which are treated as taking place outside the State:
1. The Goods which are supplied for use or consumption or sale by or on an aircraft or a ship.
2. The Services supplied during the supply of transportation services.
3. The Service of insuring, or the arranging of the insurance, or the arranging of the transport of passengers or Goods.
A supply of a postage stamp issued by Emirates Post Group shall be zero-rated where the postage stamp may only be redeemed for transportation of Goods to a place outside the State.

Article (34)

Zero-rating certain means of transport

The supply of the means of transport shall be subject to the zero rate in the following cases:

A supply of an aircraft that is designed or adapted to be used for commercial transportation of passengers or Goods and which is not designed or adapted for recreation, pleasure or sports.
A supply of a ship, boat or floating structure that is designed or adapted for use for commercial purposes and which is not designed or adapted for recreation, pleasure or sports.
A supply of bus or train that is designed or adapted to be used for public transportation of (10) or more passengers.

Article (35)

Zero-rating Goods and Services Supplied in Connection with Means of Transport

The Goods and Services related to the supply of the means of transport mentioned in Article (34) of this Decision shall be subject to the zero rate if they are any of the following:
1. Goods, except fuel or other oil or gas products, that are supplied in the course of operating, repairing, maintaining or converting means of transport in any of the following cases:
  1. The Goods shall be incorporated into, affixed to, attached to or form part of those means of transport.
  2. The Goods are consumable Goods that become unusable or worthless as a direct result of being used in the operation, repair, maintenance, or conversion process.
2. Services which are supplied directly in connection with means of transport referred to in Article (34) of this Decision for the purposes of operating, repairing, maintaining or converting those means of transport.
3. Services which are supplied directly in connection with parts and equipment of a means of transport referred to in Article (34) of this Decision for the purpose of repairing and maintaining those parts and equipment, provided that any of the following applies:
  1. The services are carried out on board of the means of transport.
  2. The part or equipment is removed for repair or maintenance, and is subsequently replaced in the same means of transport.
  3. The part or equipment is removed for repair or maintenance, and is subsequentl