FEDERAL DECREE LAW NO. 8 OF 2017
ON VALUE ADDED TAX

HIGHLIGHTS OF LAW NO. 8 OF 2017 ON VALUE ADDED TAX

On January 1, 2018, the UAE implemented Value Added Tax (VAT) charged at a rate of 5%. Businesses must register for VAT in the following two cases:

• If the taxable supplies and imports of a UAE-based business exceed AED 375,000 per annum.
• If a non-UAE-based business makes taxable supplies in the UAE, regardless of their value, and there is no other person obligated to pay the due tax on these supplies in the UAE.

VAT-registered firms must generally:

• Charge VAT on taxable products and services they provide.
• They may recover any VAT paid on business-related products or services.
• Maintain a variety of company documents that will help the authorities to ensure that everything is in order.

VAT-registered enterprises must disclose to the government regularly the amount of VAT they have charged and the amount of VAT they have paid. It will be an official submission, with internet reporting.

They must pay the difference to the government if they charge more VAT than they paid. They can recoup the difference if they pay more VAT than they charged.

ISSUER OF LAW NO. 8 OF 2017 ON VALUE ADDED TAX

The Value Added Tax (VAT) Law in the UAE is promulgated at the federal level by the UAE Ministry of Finance.

WHO IS SUBJECT TO THE ‘VALUE ADDED TAX LAW’?

The Value Added Tax (VAT) Law in the UAE applies to a wide range of individuals and entities engaged in various economic activities within the country. Here are the main groups subject to the UAE VAT Law:

• Most businesses operating in the UAE, including sole proprietorships, partnerships, limited liability companies, and joint-stock companies, are subject to the UAE VAT Law.
• Some individuals who provide taxable goods or services independently and meet the registration threshold are also subject to VAT requirements.
• Consumers as they bear the cost of VAT when purchasing goods and services.
• Certain government entities and public bodies in the UAE.
• Non-resident businesses that make taxable supplies in the UAE.