The UAE Cabinet recently announced amendments to the Value Added Tax (VAT) law, which include exemptions on investment fund management services, services related to virtual assets, and in-kind donations between charitable and government entities. These services were previously taxed at 5 per cent but will now be exempt to boost investment, stimulate growth, and ease the burden on charitable entities. In-kind donations valued at up to Dh5 million within a 12-month period will be tax-exempt, allowing charitable and government entities to benefit more from the goods they receive. Additionally, the Federal Tax Authority has been granted the power to de-register taxpayers in some cases to tighten tax compliance.
The Cabinet’s decision to amend the Executive Regulations of Federal Decree-Law No. 8 of 2017 on Value Added Tax is part of the ongoing efforts to refine the tax environment in the UAE. The aim is to strike a balance between collecting tax revenues, boosting the investment climate, and attracting more businesses and investors to the country. Younis Haji Al Khoori, Undersecretary of the Ministry of Finance, highlighted the commitment of the Ministry to collaborate with relevant stakeholders and update regulations to enhance the UAE’s business environment. These amendments are expected to minimize misunderstandings, simplify procedures for taxpayers, and align with international best practices.
The amendments were developed in line with international best practices, taking into account the GCC Unified VAT Agreement, past experiences, challenges faced by the business community, and stakeholder recommendations. The amendments introduced in the Executive Regulations are aimed at aligning certain provisions with Federal Decree-Law No. 18 of 2022, which also amended Federal Decree-Law No. 8 of 2017. Other amendments seek to implement the legislative policy of updating specific provisions within the Executive Regulations. Overall, the changes are designed to create a more conducive business environment in the UAE.
The Ministry of Finance emphasized the importance of updating regulations to enhance the UAE’s business environment and contribute to an improved quality of life for all. The amendments to the VAT law are seen as a positive step towards achieving these goals by simplifying procedures, aligning with international best practices, and boosting the investment climate. The amendments also reflect the government’s commitment to continuously refining the tax environment in the UAE and ensuring compliance with tax regulations. By exempting certain services from VAT and empowering the Federal Tax Authority to de-register taxpayers, the government aims to streamline processes and facilitate growth in the business sector.
Overall, the recent amendments to the VAT law in the UAE represent a strategic move to boost investment, stimulate growth, and ease the burden on charitable entities. By exempting certain services from VAT and empowering the Federal Tax Authority to tighten tax compliance, the government is working towards creating a more conducive business environment in the country. The amendments are aligned with international best practices and aim to attract more businesses and investors to the UAE while ensuring compliance with tax regulations. Through collaboration with relevant stakeholders, the government is committed to enhancing the UAE’s business environment and improving the quality of life for all.
