Table of Contents
- Article 30: Export of Goods
- Key Definition Updates
- Article 31: Export of Services
- Article 42: VAT Treatment of Financial Services
- Article 46: Tax on Composite Supplies
- 1. What are the new VAT documentation requirements for exporting goods from the UAE?
- 2. How do the VAT changes impact services exported from the UAE?
- 3. Are there new VAT exemptions for financial services under the 2024 amendments?
- 4. How does the amendment affect VAT on composite supplies?
- 5.What is the impact of the new rules on digital assets and cryptocurrencies?
- 6. Can businesses recover VAT on employee medical insurance under the new rules?
- 7. What is the new VAT threshold for deemed supplies in the UAE?
- 8. What does the amendment to reverse charge mechanism invoicing mean for businesses?
- 9. How can N R Doshi & Partners help businesses navigate these VAT changes?
The UAE has introduced several amendments to the VAT framework under Federal Decree-Law No. 8 of 2017. These updates will affect businesses across various sectors—especially those involved in exports, financial services, and digital assets. Below is a breakdown of the key changes.
Article 30: Export of Goods
The requirements for applying the 0% VAT rate on exported goods have been simplified, making it easier for businesses to comply. The table below highlights the new and old requirements.
| Previous Requirement | New Requirement (Effective 15 Nov 2024) |
|---|---|
| Customs declaration + commercial evidence | A customs declaration or commercial evidence |
| Both customs and transport documents required | Transport certificate with valid proof or customs declaration showing suspended customs duties |
Key Definition Updates
The following terms have been redefined for clarity:
| Term | Updated Definition |
|---|---|
| Official Evidence | Validated documents that prove export. |
| Commercial Evidence | Contracts, invoices, purchase orders, etc., proving the sale. |
| Delivery Certificate | Evidence of goods being physically transported. |
Article 31: Export of Services
While exported services still qualify for 0% VAT, new conditions narrow the scope:
| Service Type | Old Condition | New Condition |
|---|---|---|
| Services performed outside UAE | Automatically zero-rated | Must not be performed in UAE or specified zones |
| Real estate, telecom, electronic | Broadly zero-rated | Now subject to stricter conditions |
An additional amendment to Article 31(3)(b) includes anti-avoidance provisions, ensuring businesses don’t misuse VAT exemptions.
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Article 42: VAT Treatment of Financial Services
Important updates for businesses in the financial services sector include new VAT exemptions, detailed below:
| Service Type | Previous VAT Treatment | Updated VAT Treatment (Effective 1 Jan 2018) |
|---|---|---|
| Investment fund management | Standard VAT | Exempt from VAT |
| Digital asset transactions (crypto) | Standard VAT | Exempt from VAT |
Article 46: Tax on Composite Supplies
The VAT treatment for composite supplies has also been clarified. When there is no primary component, VAT will be based on the overall nature of the supply.
| Scenario | Old Treatment | New Treatment (Effective 15 Nov 2024) |
|---|---|---|
| Supplies with no dominant element | The supply of each component is to be treated as a separate supply | Taxed as a single supply based on the overall nature |
| Example: Package includes goods and services | Taxed separately based on components | Taxed as a single supply based on overall nature |
Additional Updates
| Article | Key Update |
|---|---|
| Article 1 | Definitions of virtual assets and communication have been updated. |
| Article 2 | Real estate supply definition now includes broader ownership transfers. |
| Article 5 | Deemed supply now includes exceptions for deemed supplies between government or charitable entities with an output tax of AED 250,000 over 12 months. |
| Article 53 | Input tax on employee medical insurance (spouse + up to 3 children under the age 18) is recoverable. |
| Article 59(13)(1) | Where the Simplified Tax Invoice is issued then same shall be issued on the date of supply |
| Article 60 | Tax credit notes require adjustments for multiple notes and detailed record-keeping by agents and principals. |
What This Means for Your Business
The table below summarizes how different business sectors are impacted by these new VAT amendments 2024:
| Sector | Amendments Impact |
|---|---|
| Exporters | Documentation requirements for applying 0% VAT are simplified. |
| Financial Services | New exemptions for fund management and digital assets (including cryptocurrency transactions). |
| Digital Asset Businesses | Must review how the new VAT exemptions impact input tax recovery. |
| Agent | Detailed record-keeping requirement where the agent is issuing credit note on behalf of the principal supplier. |
| Service Providers | Scope of 0-rated services narrowed, particularly for real estate, telecom, and electronic services. |
Next Steps: Ensure Your Business Stays Compliant
With these changes coming into effect, businesses need to take action now:
Review your VAT strategy: Ensure your current processes align with the new requirements.
Get professional guidance: The amendments might provide opportunities for VAT recovery, especially in financial services and digital assets.
For expert advice and support, reach out to N R Doshi & Partners. We can help you navigate the complexities of the updated VAT regulations and ensure your business is fully compliant.
1. What are the new VAT documentation requirements for exporting goods from the UAE?
Under the updated VAT regulations effective from 15 November 2024, the documentation for applying 0% VAT on exports has been simplified. Exporters now need to maintain either:
A customs declaration with commercial evidence.
A transport certificate with valid proof.
A customs declaration proving suspension of customs duties in case goods are put into customs suspension.
This change makes it easier for businesses to comply with VAT regulations when exporting goods.ension.
This change makes it easier for businesses to comply with VAT regulations when exporting goods
2. How do the VAT changes impact services exported from the UAE?
The VAT amendments impose stricter conditions on exported services. While services rendered outside the UAE remain 0% VAT-rated, there are new restrictions:
The services must not be performed within the UAE or specific Designated Zones.
Certain services like real estate, telecom, and electronic services are now more narrowly defined, limiting their eligibility for 0% VAT.
Businesses providing these services must review the specific clauses to determine how the amendments apply
3. Are there new VAT exemptions for financial services under the 2024 amendments?
Yes, the 2024 VAT amendments introduce new exemptions for financial services, including:
Management of investment funds: Now exempt from VAT.
Digital assets and cryptocurrencies: Services related to transferring and converting digital currencies are exempt from VAT, retroactive from 1 January 2018.
These changes benefit businesses in the financial and digital asset sectors, reducing their VAT liabilities
4. How does the amendment affect VAT on composite supplies?
For composite supplies (transactions involving a mix of goods and services), a new provision (Paragraph 1(b)) has been added. When there is no clear main component in the transaction, the VAT treatment will now be based on the overall nature of the supply rather than focusing on any individual part
5.What is the impact of the new rules on digital assets and cryptocurrencies?
Under the updated VAT regulations, services involving digital assets, including cryptocurrencies, are now exempt from VAT. This applies retroactively from 1 January 2018. Businesses involved in transferring or converting digital currencies can benefit from these exemptions, improving their tax position
6. Can businesses recover VAT on employee medical insurance under the new rules?
Yes, under the updated Article 53, businesses can now recover VAT on medical insurance provided to employees and their dependents (spouse and up to three children who are under the age 18 years). This is a notable change for companies, helping reduce their overall VAT expenses
7. What is the new VAT threshold for deemed supplies in the UAE?
As of 15 November 2024, the VAT threshold for deemed supplies has been updated:
AED 500 for supply value of goods.
AED 250,000output tax payable for government entities or charities.
This change affects businesses and organizations involved in deemed supplies, ensuring VAT compliance at the new thresholds
8. What does the amendment to reverse charge mechanism invoicing mean for businesses?
The new VAT rules (Article 59(5)) specify that businesses can no longer issue simplified tax invoices for transactions under the reverse charge mechanism. This change affects businesses involved in cross-border transactions and requires more detailed VAT invoices for these transactions
9. How can N R Doshi & Partners help businesses navigate these VAT changes?
N R Doshi & Partners provides expert VAT compliance services to help businesses understand and adapt to the new VAT regulations. Our team can assist with:
VAT strategy review.
Input tax recovery optimization.
Compliance with export and financial services VAT rules.
Guidance on VAT exemptions for digital assets
