UAE amends VAT executive regulations

The UAE's Ministry of Finance

The Ministry of Finance issued Cabinet Resolution No. 149 amending certain provisions of the executive regulations of Federal Decree-Law No. 8 of 2017 regarding value-added tax (VAT), as part of its ongoing efforts to develop the tax system in the UAE.

Thee amendments aim to streamline procedures and provide clear guidelines for taxpayers, supporting higher levels of voluntary compliance and reducing tax disputes, WAM reported.

They address several technical and regulatory aspects, notably clarifying provisions related to input tax recovery, amending the rules for the supply and import of medical products to align with the updated legislative framework for the healthcare sector in the country, and further clarifying the provisions on employee housing for the purposes of input tax recovery.

The changes also clarify the application scope of the capital assets scheme to ensure alignment with the provisions of the value-added tax law.

Additionally, the amendments enhance the input tax apportionment mechanism to better reflect the economic activities of taxable persons, while retaining the existing mechanism for government and charitable entities.

Moreover, provisions regulating the tax treatment of composite supplies were also introduced, in line with the economic reality of each supply. New provisions address cases where input tax recovery is not permitted for cash payments exceeding thresholds set by a decision from the Minister of Finance, with the goal of promoting compliance and minimizing tax evasion risks.

The Ministry of Finance confirmed that these amendments reflect its ongoing approach to reviewing and developing tax legislation to ensure adaptation to economic and legislative developments, enhancing the competitiveness of the UAE's tax environment, supporting the value-added tax system, and facilitating compliance for the business community.