Federal Decree-Law No. 18 of 2022 on VAT amends or updates several articles of the Federal Decree-Law No. 8 of 2017 on VAT effective 1 January 2023. This is the first update of the UAE VAT Law since its implementation on 1 January 2018.
Some key revisions include:
- To allow for fair treatment of businesses, existing registrants making only zero-rated supplies may apply to be excepted from registration.
- The Federal Tax Authority (FTA) may initiate tax deregistration procedure in instances where the integrity of the tax system is prejudiced, for example, in some cases of tax evasion or where a business ceases to exist but the registrant fails to apply for deregistration.
- If output tax must be reduced after the date of supply, e.g., if the supply was cancelled, etc., the registrant must issue a tax credit note within 14 calendar days from the date of the occurrence of such instance.
- The value of deemed supply between related parties shall be the market value if both of the following conditions are met:
- The value of such supply is less than the market value;
- The deemed supply is a taxable supply and the recipient of goods or services does not have the right to recover the full tax that would have been charged on such supply as input tax.
- Generally, the FTA may not conduct a tax audit or issue a tax assessment after the expiry of 5 years from the end of the relevant tax period. However, the inclusion of a new article on statute of limitation allows the FTA to conduct a tax audit or issue a tax assessment for an additional 4 years where a notice for commencement of such tax audit is issued before the expiry of the initial 5-year period. The UAE Cabinet may amend such 4-year period for the completion of the tax audit or the issuance of the tax assessment.