Taxpayers in the UAE should prepare for new VAT changes effective January 1, 2023. It is advisable to consult tax consultants in Dubai promptly due to the significant impact of the recent amendment on your business.
Key dates
- The revised, amended provisions became effective from January 1, 2023
- As per new rules, qualifying registrants must submit reports from July 1, 2023
- The FTA kindly requests Qualifying Registrants to inform them by March 15, 2023
FTA updates the UAE VAT’s Tax Policy and Executive Regulation. The Federal Tax Department has modified the essential regulations surrounding UAE VAT:
Federal Decree-Law No. 28 of 2022 Modifications, Part I (Tax Procedures)
II. Act No. 8 of 2017’s executive rule amendments (Executive Regulations)
Based on the interpretation of the precise wording of the pertinent legislation, we have offered a comprehensive understanding following table:
1. The Federal Decree-Law No. 28 of 2022 updates Federal Decree-Law No. 7 in 2017 of a UAE on VAT, which will take effect on March 1, 2023.
| Article | Title | Modification | IMC Remarks |
| 1 | Meaning | The terms “Tax Residency Certificates” and “Tax Residency” now have new terminology. A few small changes were also applied to the tax and business concept. | For the Corporate Income taxes of June 1, 2023, the changes above were done to the legislation to ensure compatibility. |
| 5 | Linguistic | In addition to Arabic, the Council can consider materials in other languages. In particular, if the Government demands it, an Arabic version could be necessary. | Corporate and personal coordination with the Tax Authority will be improved. |
| 7 | Legal Advocates | Members, too, can comply with any new obligations and present tax records to the Board. | If the taxpayer is a juvenile or incompetent, there are no restrictions on filing the tax return. |
| 10 | Voluntary Disclosure (VD) | When there is no increment of taxable income, individuals must file the VD. The segments and penalty provisions will be outlined in the Executive Order. | Taxpayers may not be able to rectify errors in the subsequent report. |
| 16 | Power to do an internal audit |
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| 23 | Tax Evaluation |
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Help taxpayers determine the appropriate income tax. |
| 24 | Penalty for Regulatory Evaluation | Administrative fines ranging from a set AED 500 penalty to a high equal to double the taxes | Reduced the burden on taxpayers |
| 25 | Tax Offenses and Sanctions |
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It lessened the strain of covering the initial sum—someone who fully adheres to the legal system and supports the Authorities. |
| 32 | Submission of a complaint and any other non-acceptance instances | Within 40 business days, an appeal to the Council’s judgment must be filed. | Taxpayers are given more time to submit their complaints. |
| 36 | Jury’s appeal system processes | The panel’s judgment could be challenged within forty days. | Chance to challenge in courts within the given timeframe |
| 46 | Limited Time Period | Whenever five years have passed, the authority can impose tax assessments or perform tax audits in case:
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It gives the Authorities more chance to execute tax evaluations within the given timeframe, appearing in judgment. |
In addition, the following additional sections are added for offenses involving taxes, reviews of valuations, complaints, and reviews.
| Article no. | Details |
| 26 | Measures and Techniques |
| 27 | Agreement on Tax Fraud Charges |
| 28 | Petition for a Taxation Modification |
| 29 | Increase in Timelines |
2. Cabinet Decision No.99 of 2022 revised Executive Regulation – Law No. 8 of 2017 and will prevail on January 1, 2023.
The concept of service has now been changed in Article 3, exempting services offered by an entity to carry out duties as a board of any private or Government organization.
Article 72, which deals with monitoring the contributions made, has already been modified to the following extent:
- Where a taxpayer has a business located in the UAE, no permanent premises must have detailed records
- When services provided by a taxpayer into an ECO surpass AED 100,000,000, they must maintain documents to demonstrate the Emirate wherein the supply is acquired
- The crossover threshold is also used to determine the provision’s relevance
Our Comments:
Since adjustments must be made to how enterprises are now operating, a modified federal decree-law, tax regulations, and administrative regulations are released. Therefore, organizations must ensure that the changes above are made to the relevant evidence and procedures as soon as possible before the law takes effect to prevent any legal implications.
How can IMC help?
IMC can assist your business by conducting a simulated audit that replicates the type of assessment the FTA may work. This audit will pinpoint any areas of non-compliance and provide recommendations to align your business with the UAE VAT regulations.
