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Public Clarification on Tax Invoices

Public Clarification and VAT Guide issued by the FTA.

“I. UAE FTA releases a Public Clarification on Tax Invoices

 

The UAE FTA issued a Public Clarification on Tax Invoices (VATP006) which prescribes the requirements of a tax invoice and the circumstances in which one must be issued.

 

The Public Clarification specifically enumerated the following requirements on tax invoices:

 

  • In all circumstances where a taxable supply is made, a tax invoice (whether full or simplified) must be issued and delivered to the recipient.
  • Full tax invoice – The amount of tax and the net value of each item must be reflected. However, it is not mandatory to show the gross value of each line item as the total gross amount payable must be stated in the invoice.
  • Simplified tax invoice – The net value for each line item does not have to be shown. Issuing a simplified tax invoice is allowed if (1) the recipient is not registered for VAT; or (2) the recipient is VAT-registered, and the amount of consideration for the sale is AED 10,000 or less.
  • Amounts denominated in foreign currency must be translated to AED at the date of supply. The exchange rate shall be based on the UAE Central Bank.
  • For every line item, amounts shown in the tax invoices should be rounded off to the nearest Fils.”

 

II. UAE FTA updates the VAT user guide

 

The UAE FTA updated the VAT user guide from its website. The amendments include the (1) terms used in the VAT user guide; and (2) procedures and certain amendments of the VAT registration which requires approval from the FTA.

 

For further details on amending the VAT registration, you may refer to page 17 of the updated VAT user guide.

 

III. Cabinet Decision No. (41) of 2018 – Introducing the Tax Refunds for Tourist Scheme

 

The UAE Cabinet approved the “Cabinet Decision No. (41) of 2018 – Introducing the Tax Refunds for Tourist Scheme”, which was issued last 24 July 2018. The said Cabinet Decision provides the following mechanism of the Tourist Refund Scheme (the “Scheme”):

  1. The Person (or the “Tourist”) shall meet the following requirements in order to be eligible for a tax refund on its purchases and exports of goods:
    • The conditions in Clause (2) of Article 68 of Cabinet Decision No. (52) of 2017 are met;
    • The goods are purchased from a Retailer who is participating in the Scheme;
    • The purchase of the goods from the Retailer is conducted in accordance with requirements as determined in a decision issued by the Chairman;
    • The export of goods is conducted in accordance with requirements as determined in a decision issued by the Chairman;
    • The goods are not excluded from the Scheme by the Authority.
  2. The Retailer shall provide the necessary documents for a refund claim under the Scheme as determined by the Authority, including a tax invoice, to the person seeking for tax refund.
  3. The Tourist shall request his/her tax refund directly from an Operator. The Tourist is not allowed to request a tax refund directly to the Retailer.
  4. The Operator is allowed to charge fees for administering of the refund but not exceeding to the amount approved by the Cabinet. The said fees can be deducted from the amount to be refunded to the Tourist.
  5. The Tourist may be required to present goods for validation and inspection.
  6. If the Operator correctly issued a tax refund to the Tourist, the former is allowed to reimburse the refunded amount to the Retailer who sold goods to the Tourist.
  7. If the Retailer correctly reimbursed the tax to the Operator, the said amount of tax can be deducted from the output VAT in the tax period in which the refund was paid to the Tourist.

 

The Chairman will issue a decision determining the date of Scheme will come into effect which shall be no later than 1 January 2019. The Chairman will also issue a decision to determine the minimum value for refund claim.

 

On the other hand, the Authority may also issue further guidance on the requirements, including procedural, evidential, verification, documentation and record-keeping requirements, which need to be met by the Tourist, the Retailer, the Operator, and any other person for the Scheme to apply.”