For the purpose of applying the provisions of this Decree-Law, the following words and expressions shall have the meanings assigned thereto respectively, unless the context requires otherwise:
State: The United Arab Emirates.
Minister: The Minister of Finance.
Authority: The Federal Tax Authority.
Value-Added Tax (VAT): A tax levied on the importation and supply of goods and services at every stage of production and distribution, including the deemed supply.
Tax: The Value-Added Tax.
GCC States: All the states which are full members of the Cooperation Council for the Arab States of the Gulf, in accordance with the GCC Charter.
Applying States: The GCC States which apply the Tax law under a legislative instrument issued thereby, and as defined by the Executive Regulations of this Decree-Law.
Goods: Tangible properties which can be supplied, including real property, water and all types of energy, as defined by the Executive Regulations of this Decree-Law.
Services: Anything, other than Goods, which can be supplied.
Importation: Brining Goods into the State from abroad, or receiving Services from abroad.
Relevant Goods: Goods imported and not exempted from the Tax if supplied in the State.
Relevant Services: Services imported, whose place of supply is in the State, and not exempted from the Tax if supplied in the State.
Person: A natural or legal person.
Taxable Person: Each Person that is, or ought to be, registered for the tax purposes under this Decree-Law.
Taxpayer: Any Person that is obligated to pay the Tax in the State, pursuant to this Decree-Law, whether such Person is a taxable Person or an end consumer.
Tax Registration: A procedure under which the Taxable Person or the legal representative thereof registers for the Tax purposes at the Authority.
Tax Registration Number (TRN): A unique number assigned by the Authority to each Person registered for the Tax purposes.
Registrant: A Taxable Person holding a Tax Registration Number.
Recipient of Goods: The Person to whom the Goods are supplied or imported.
Recipient of Services: The person to whom the Services are supplied or imported.
Importer: In relation to the importation of Goods, an importer is the Person who acts as the importer of Goods on the date of Importation for the purposes of customs clearance. In relation to the importation of Services, it means the recipient of such services.
Taxable Trader: A Taxable Person in the Applying States, whose main activity is the distribution of water and all types of energy, as defined by the Executive Regulations of this Decree-Law.
Tax Return: The information and data specified for the Tax purposes provided by the Taxable Person in accordance with the form prepared by the Authority.
Consideration: Anything that has been received or expected to be received for the supply of Goods or Services, whether cash payments or any other forms recognized as compensation.
Business: Any activity that is practiced on a regular, ongoing and independent basis by any Person and in any place, such as industrial, commercial, agricultural, professional, handicraft or service activity, excavation activities or any activity related to the use of tangible or intangible properties.
Exempted Supply: The supply of Goods or Services for a Consideration during the practice of the Business within the State, which shall not be taxed and the input tax levied on may not be refunded except under the provisions of this Decree-Law.
Taxable Supply: The supply of Goods or Services for a Consideration during the practice of the Business by any Person within the State, not including the Exempted Supply.
Deemed Supply: All that is regarded as a supply and treated as a Taxable Supply, in accordance with the cases set forth in this Decree-Law.
Input Tax: The Tax paid or payable by a Person when Goods or Services are supplied to, or importation is made, by such Person.
Output Tax: The Tax levied on the Taxable Supply and on any supply which is deemed Taxable Supply.
Refundable Tax: Amounts paid that may be refunded by the Authority to the Taxpayer under the provisions of this Decree-Law.
Due Tax: The Tax that is calculated and levied under the provisions of this Decree-Law.
Payable Tax: The Tax which becomes due to be paid to the Authority.
Tax Period: A specific period for which the Payable Tax shall be calculated and paid.
Tax Invoice: A written or electronic document in which any Taxable Supply and its details are recorded.
Tax Credit Note: A written or electronic document in which any amendment to reduce or cancel a Taxable Supply and its details are recorded.
Government Agencies: Ministries, government departments and entities and federal and local public authorities and institutions in the State, or any other entities receiving the treatment prescribed for Government Agencies, in accordance with the resolutions issued by the Cabinet for the purposes of applying the provisions of this Decree-Law.
Charities: Non-governmental, non-profit organizations of public welfare, which are determined by a Cabinet resolution to be issued upon the proposal of the Minister.
Relevant Charitable Activity: A non-profit activity generating no benefits for any owner, member or shareholder of a Charity, and is performed by the Charity within its purposes or objects to carry out a charitable activity in the State or to promote such Charity, as approved by the relevant authorities, or pursuant to its articles of incorporation as a Charity under legislation, decree or federal or local resolution, or based on its license, to carry out a charitable activity through an authority granting such licenses on behalf of the federal government or the Emirate's government.
Mandatory Registration Threshold: An amount specified in the Executive Regulations of this Decree-Law and if the value of Taxable Supplies exceeds or is expected to exceed such amount, the supplier shall apply for the Tax Registration.
Voluntary Registration Threshold: An amount specified in the Executive Regulations of this Decree-Law and if the value of Taxable Supplies or taxable expenses exceeds or is expected to exceed such amount, the supplier may apply for the Tax Registration.
Transport-Related Services: Cargo transport, packaging and sealing; preparation of customs documents; container management services and loading, unloading, storage and movement of goods, or any other services that are closely related or necessary for the completion of transport services.
Business Establishment: The place where the Business is legally established in a state, in accordance with the establishment resolution, and where important management decisions are taken or the functions of the central administration are carried out.
Fixed Establishment: Any fixed place of Business other than the Business Establishment, through which the Person conducts its Business on a regular or permanent basis and which has the sufficient human and technical resources necessary to enable it to supply or receive Goods or Services, including the Person's branches.
Place of Residence: The place where a Person has a Business Establishment or Fixed Establishment, in accordance with the provisions of this Decree-Law.
Non-Resident Person: Any person that has no Business Establishment or Fixed Establishment in the State and usually does not reside therein.
Related Parties: Two or more Persons that are not economically, financially or organizationally separated, where one of them can control the others either by law, shareholding or voting rights.
Customs Legislation: Federal and local legislation regulating customs in the State.
Designated Area: Any area identified by a Cabinet Resolution, upon the proposal of the Minister, as a Designated Area for the purposes of this Decree-Law.
Exportation: Taking Goods outside the State or providing Services to a person whose Business Establishment or Fixed Establishment is outside the State.
Voucher: Any instrument entitling the holder thereof to get access to Goods or Services against the value stated thereon or enclosed therein, or to obtain a discount on the price of Goods or Services, and it does not include postage stamps issued by the Emirates Post Group.
Activities Performed in a Sovereign Capacity: Activities performed by Government Agencies in their sole capacity, with or without a Consideration.
Capital Assets: Business assets designated for long-term use.
Capital Assets Scheme: A scheme whereby the input tax initially refunded is adjusted based on the actual use during a specific period.
Administrative Fines: Amounts to be imposed on the Person by the Authority for violating the provisions of this Decree-Law and Federal Law No. (7) of 2017, on Tax Procedures.
Administrative Fine Assessment: A decision issued by the Authority on due administrative fines.
Excise Tax: A tax levied by virtue of a law on particular Goods.
Tax Group: Two or more Persons registered at the Authority as a single Taxable Person for the tax purposes, in accordance with the provisions of this Decree-Law.
Pure Hydrocarbons: Any type of various pure compounds of a chemical formula composed only of hydrogen and carbon (Cx Hy).
Tax Evasion: The person's use of illegal means which cause reducing the amount of the Due Tax, the non-payment thereof, or the refund of a Tax that such Person is not entitled to refund.
Tax Audit: An action made by the Authority to audit business records or any information, data or commodities related to a Person so as to verify the fulfillment of their obligations, pursuant to the provisions of this Decree-Law or the Tax Procedures Law.
Tax Assessment: Means the Tax Assessment as defined in the Tax Procedures Law.
Voluntary Disclosure: A form prepared by the Authority whereby the Taxpayer notifies the Authority of any errors or omissions in the Tax Return, Tax Assessment or tax refund application, pursuant to the provisions of the Tax Procedures Law.
Tax Procedures Law: Federal Law No. (7) of 2017, on Tax Procedures, as amended, and any federal law superseding the same.
The Tax shall be levied on:
1. Every taxable supply and deemed supply carried out by the taxable person.
2. Importation of the relevant goods except for what is specified by the Executive Regulations of this Decree-Law.
Subject to the provisions of Part VI of this Decree-Law, the standard rate of the tax to be levied on any supply or importation shall be (5%) in accordance with the provisions of Article (2) hereof based on the value of the supply or importation specified in accordance with the provisions of this Decree-Law.
The responsibility for the levied tax shall fall on the following:
1. The taxable person that makes any supply set forth in Clause (1) of Article (2) of this Decree-Law;
2. The importer of relevant goods;
3. The registrant acquiring goods in accordance with the provisions of Clause (3) of Article (48) hereof.
The following shall be considered a supply of Goods:
1. Transfer of ownership of the Goods or the right to dispose thereof to another Person, as determined by the Executive Regulations of this Decree-Law.
2. Concluding an agreement between two or more parties, which entails the transfer of Goods later, under the conditions laid down in the Executive Regulations of this Decree-Law.
Each supply not considered a supply of goods shall be deemed as a supply of services, including any provision of services in accordance with what is determined in the Executive Regulations of this Decree-Law.
Notwithstanding the provisions contained in Articles (5) and (6) of this Decree-Law, the following shall not be deemed as a supply:
1. Selling or issuing any Voucher, unless the received Consideration exceeds its declared cash value, as determined by the Executive Regulations of this Decree-Law;
2. Transferring Business or independent part thereof from a Person to a Taxable Person to continue such transferred Business; and
3. Any other supply identified by the Executive Regulations of this Decree-Law.
The Executive Regulations of this Decree-Law shall define the conditions of the transaction of the supply composed of more than one component for a single price, whether such components are goods and/or services.
1. Where goods and services are supplied by an agent acting on behalf of a principal, the supply shall be deemed to be made by the principal and for his benefit.
2. Where goods and services are supplied through an agent acting in his own name, the supply shall be treated as a direct supply by the agent and for his benefit.
1. The government agency shall be deemed as making a supply in the course of business in the following cases:
a. If its activities are performed in a non-sovereign capacity.
b. If its activities are in competition with the private sector.
2. The Cabinet shall issue a resolution, upon the proposal of the Minister, which shall determine the government agencies, their activities considered to be performed in a sovereign capacity and the cases where their activities are considered not in competition with the private sector.
The following cases shall be regarded as deemed supply:
1. Supply of goods or services forming the whole assets of the taxable person or part thereof, but such goods or services no longer form part of the assets, provided that the supply is made for no consideration.
2. Transfer of goods forming part of the business assets of a taxable person in the State to his business in one of the applying states, or from the taxable person's business in an applying state to his business in the State, except in the case where such transfer is:
a. deemed temporary pursuant to the Customs Legislation.
b. made as part of another taxable supply of such goods.
3. Supply of goods or services for which input tax may be recovered but they have been used in whole or in part for purposes other than the business, and such supply shall be regarded as deemed supply within the limits of use for non-business purposes.
4. Goods and services owned by the taxable person at the date of cancellation of tax registration.
The supply shall not be regarded as deemed supply in the following cases:
1. If the amount of the input tax for the related goods and services is not refunded.
2. If the supply is an exempted supply.
3. If the refunded input tax on the goods and services is adjusted in accordance with the Capital Assets Scheme.
4. If the value of the supply of goods, for each recipient during the period of twelve months, does not exceed the amount determined by the Executive Regulations of this Decree-Law and the supply is intended to use such goods as samples or commercial gifts.
5. If the total output tax payable for all the deemed supplies per person for the period of twelve months is less than the amount specified by the Executive Regulations of this Decree-Law.
1. Two or more persons practicing the business may apply for the tax registration as a tax group if the following conditions are satisfied:
a. Each of them shall have a business establishment or fixed establishment in the State.
b. The relevant persons shall be related parties.
c. One or more persons practicing the business in a partnership shall control the others.
2. The Executive Regulations of this Decree-Law shall define the cases where the Authority may reject the application for registering the tax group.
3. No person who practices the business shall have more than one Tax Registration Number, unless otherwise provided for in the Executive Regulations.
4. If the related parties fail to apply for the tax registration as a tax group in accordance with Clause (1) of this Article, the Authority may assess their relation based on their practice of the business on an economic, financial and organizational basis and register the same as a tax group if it verifies their relation in accordance with the controls and conditions established by the Executive Regulations of this Decree-Law.
5. The Authority may cancel the registration of the tax group under the provisions contained in this Article, in accordance with the conditions laid down in the Executive Regulations of this Decree-Law.
6. The Authority may make amendments to those registered as a tax group by adding or removing some persons, upon request of the taxable person or in accordance with the cases set out in the Executive Regulations.
1. The Authority may exempt the Taxable Person, whether registered or unregistered, from the Tax Registration, upon their request, if their supplies are zero-rated only.
2. If any changes to the business of the Taxable Person who is exempted from the Tax Registration occur, pursuant to Clause (1) above, and lead, or would lead, to the elimination of the reason based on which they have been exempted, they shall notify the Authority of such changes within the time limits and according to the procedures identified by the Executive Regulations of this Decree-Law.
3. The Authority shall be entitled to collect the Due Tax and the Administrative Fines for the period of exemption if it found that the Taxable Person is not entitled to be exempted.
Government agencies to be determined by the Cabinet resolution referred to in Clause (2) of Article (10) of this Decree-Law shall apply for the tax registration and such registration may not be cancelled except under a Cabinet resolution to be issued upon the proposal of the Minister.
Any person who is not liable to be registered in accordance with the provisions of this Part may apply for the tax registration voluntarily in the following cases:
1. If such person proves, at the end of any given month, that the value of supplies set forth in Article (19) hereof or the taxable expenses incurred during the previous twelve months has exceeded the Voluntary Registration Threshold.
2. If it is expected, at any time, that the value of supplies set forth in Article (19) hereof or the taxable expenses to be incurred during the next thirty days will exceed the Voluntary Registration Threshold.
A non-resident person may not take the value of goods and services imported to the State for the purpose of determining whether he is entitled to be registered if the calculation of tax for such goods and services is the responsibility of the importer in accordance with the provisions of Clause (1) of Article (48) of this Decree-Law.
For the purpose of determining whether a person exceeds the Mandatory Registration Threshold and the Voluntary Registration Threshold, the total value of the following shall be calculated:
1. The value of taxable goods and services.
2. The value of relevant goods and relevant services received by the person if not calculated under Clause (1) of this Article.
3. The value of the whole or relevant part of taxable supplies belonging to such person if he acquires, in whole or in part, a business of a person who has made such supplies.
4. The value of taxable supplies made by related parties according to the cases defined by the Executive Regulations of this Decree-Law.
The supply of capital assets belonging to the person during practicing the business shall be disregarded when determining whether a person exceeds the Mandatory Registration Threshold or the Voluntary Registration Threshold.
1. The Registrant shall submit to the Authority an application for the Tax deregistration in any of the following cases:
a. If he ceases to make Taxable Supplies.
b. If the value of the Taxable Supplies made during the period of (12) twelve consecutive months is less than the Voluntary Registration Threshold, and the case set out in Clause (2) of Article (17) of this Decree-Law is not applicable to him.
2. The Authority may issue a Tax deregistration decision where it is convinced that the retention of tax registration would adversely affect the tax system's integrity, pursuant to the conditions and controls set forth in the Executive Regulations of this Decree-Law.
3. The Tax deregistration shall not invalidate the Authority's right to claim any tax due or administrative fines.
The registrant may submit to the Authority an application for cancellation of tax registration if the value of the taxable supplies made during the period of previous twelve months is less than the Mandatory Registration Threshold.
The registrant shall not be entitled, pursuant to Article (17) hereof, to submit an application for cancellation of his tax registration within twelve months as of the date of his tax registration.
The Executive Regulations of this Decree-Law shall determine the procedures, controls and conditions of the tax registration, cancellation thereof and rejection of applications for tax registration and its cancellation as set forth in this Part.
The tax shall be calculated on the date of supply of goods or services, which shall be the earlier date of any of the following:
1. The date of transferring the goods if they are transferred under the supervision of the supplier.
2. The date on which the goods are made available to the recipient if they are not transferred under the supervision of the supplier.
3. The date on which the assembly or installation of goods is completed if there is an obligation to install and assemble the supplied goods.
4. The date on which the goods are imported in accordance with the Customs Legislation.
5. The date on which the recipient accepts the supply, or no later than twelve (12) months following the date on which the goods are transferred or made available to the recipient, if the supply id made on a returnable basis.
6. The completion date of providing the services.
7. The date of receiving the payment or the date of issuing the tax invoice.
1. The date of supply of Goods and Services for any contract that contains periodic payments or consecutive invoices shall be the earliest date of the following:
a. The date of issuing any tax invoice;
b. The maturity date of the amount stated in the tax invoice;
c. The date of receiving the paid amount; or
d. The date on which a year has lapsed following the date of supplying the goods or services.
2. The date of supply, in cases where payment is made through vending machines, shall be the date on which the amount is collected from such machines.
3. The date of Deemed Supply of Goods or Services shall be the date of their supply, disposal thereof, change of their use purposes or Tax deregistration, as the case may be.
4. The date of supply of Vouchers shall be the date of their issuance or supply thereafter.
1. The place of supply of Goods shall be in the State if such supply is made in the State and does not involve Exportation from or Importation into the State.
2. The place of supply of installed or assembled Goods if exported from or imported to the State shall be:
a. In the State if such Goods are assembled or installed in the State.
b. Outside the State if such Goods are assembled or installed outside the State.
3. The place of supply of Goods that involves Exportation or Importation shall be as follows:
a. Inside the State in the following cases:
i. If the supply involves Exportation to a place outside the Applying States;
ii. If the Recipient of Goods in an Applying State is not registered for the Tax in the state of destination, and the total exports from the same supplier to such state does not exceed the Mandatory Registration Threshold of such state;
iii. If the Recipient of Goods does not have a Tax Registration Number in the State and the total exports from a supplier in an Applying State to the State exceeds the Mandatory Registration Threshold; and
iv. If Article (26.1) above is applicable and the title to Goods is transferred inside the State.
b. Outside the State in the following cases:
i. If the supply involves Exportation to a customer registered for the Tax purposes in one of the Applying States.
ii. If the Recipient of Goods is not registered for the Tax purposes in one of the applying state to which Exportation is made, and the total exports from the same supplier to such state exceeds the Mandatory Registration Threshold of such state.
iii. If the Recipient of Goods does not have a Tax Registration Number and imports Goods from a supplier registered for the Tax in an Applying State from which importation is made, and the total imports from the same supplier to the State do not exceed the Mandatory Registration Threshold.
4. Goods shall not be treated as exported outside the State and then re-imported thereto if such Goods are supplied in the State and the supply requires sending the Goods outside the State and then the re-entry thereof into the State, as per the cases defined by the Executive Regulations of this Decree-Law.
1. The supply of water and types of energy defined by the Executive Regulations of this Decree-Law through a distribution system, shall be deemed to be made in the place of residence of the taxable trader if the distribution is carried out by a taxable person whose place of residence in the State to a taxable trader whose place of residence in an applying state.
2. The supply of water and types of energy defined by the Executive Regulations of this Decree-Law through a distribution system, shall be deemed to be made at the place of actual consumption if the distribution is carried out by a taxable person to a non-taxable person.
The place of supply of services shall be the place of residence of the supplier.