FTA amends law to avoid double taxation of VAT – News

The new law entered into force on October 30, 2021



The FTA said the latest ruling was aimed at avoiding double taxation of VAT on goods supplied in designated areas and to facilitate procedures for non-resident suppliers operating in designated areas. – Photo file

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Posted: Sat, Oct 30, 2021, 6:23 PM

Last update: Sat, Oct 30, 2021, 9:35 PM

The Federal Tax Authority (AFC) announced on Saturday that an amendment to the tax treatment of deliveries of goods to designated areas and related shipping or delivery services to avoid double taxation of VAT has entered effective October 30, 2021.

In a statement, the FTA confirmed the importance of Cabinet Decision No. (88) of 2021 amending Article 51 of Cabinet Decision No. (52) of 2017 on the Executive Regulation of Federal Legislative Decree No. ° (8) of 2017 on value added tax (VAT), and the latter measure aims to avoid double taxation of VAT on goods supplied in designated areas and to facilitate procedures for non-resident suppliers operating in designated areas, as these goods will be treated – under certain conditions – outside the scope of the tax, therefore no tax registration is required from the supplier.

The Federal Tax Administration has issued “public clarifications” to the Cabinet decision to amend Section 51, explaining the new change in tax treatment for the supply of goods in designated areas and their related shipping or delivery services. , available on the authority’s website in an effort to raise tax awareness among industries and ensure the best rates of tax compliance.

The service is accessible via the following link: https://www.tax.gov.ae/en/vat/guides-listing

What are designated areas

The designated areas have been defined by decision of the Council of Ministers and must meet certain conditions for specific supplies. A full list of the 27 designated areas is available on the authority’s website; the areas are considered to be outside the territory of the United Arab Emirates for VAT purposes.

According to the authority’s “public clarification”, the supply of goods in the designated area should be made outside the scope of UAE VAT, if such goods are not consumed within the country. or in the event that the goods are consumed outside the designated area. , and provided that evidence is obtained and retained proving that the goods were delivered to a location outside the UAE or that VAT was paid on the importation of such goods from the designated area into the UAE. The shipping and delivery services of qualifying goods are also outside the scope of UAE VAT if provided by the same supplier of goods, under certain conditions, including the supplier being a non- resident who is not registered for VAT in UAE.

The public clarification offered a detailed explanation and guidance on the implementation of the amendment to Article (51) of the Cabinet Decision regarding the implementing regulations of the Federal Decree Law on VAT.

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About Natalee Broderick

Natalee Broderick

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