Content of Tax Invoice

Pursuant to Decision No. 3 of 2018, the Federal Tax Authority (FTA) has clarified that for supplies which necessitate the issuance of a tax invoice or tax credit note, such document may not include the physical address of the recipient of goods or services where the mailing address has been included in the tax invoice. Furthermore, such clarification shall be applicable only on the content of tax invoice and tax credit note, i.e., it shall not impact the applicability of place of supply provisions. This decision shall be effective from 1 January 2018.

Mechanism of applying VAT on Gold and Diamonds between Registrants in the State

If the following conditions are satisfied, then the supplier is not liable for calculating VAT in relation to the supply of the goods and shall not include it in his tax returns:

  1. Supply is of gold, diamonds and any products where the principal component is of gold or diamonds (specified goods);
  2. The acquisition of the specified goods is for the purpose of resale, or to produce/manufacture any of the specified goods;
  3. The supplier and recipient are registered under UAE VAT Laws on the date of supply;
  4. The recipient calculates tax on the value of the goods supplied to him and shall be responsible for all applicable tax obligations related to the supply;
  5. Recipient declares in writing the above facts to the supplier.

The above mechanism of applying tax is not applicable wherein the supplier is aware that the recipient is not registered under UAE VAT Laws or does not verify whether the recipient is registered under UAE VAT Law as per approved means. The decision will be effective as of 1 June 2018.

Refund of VAT Paid on Services Provided in Exhibitions and Conferences

The FTA has prescribed for refund of tax paid by a licensee authorized to provide exhibition and conference services in case the following conditions are fulfilled:

  1. The refund request is applied by way of filling of the VAT return during the same tax period during which the date of supply of service occurred.
  2. The refund request shall be equal or less than the tax charged on the supply of exhibition and conference services by such supplier.
  3. The recipient of the exhibition and conference services does not have a place of establishment or a fixed establishment in the state.
  4. The recipient of the exhibition and conference services is not a registrant or required to register in the state.
  5. The recipient of the exhibition and conference services has not paid the amount of tax to the supplier.
  6. The supplier shall obtain a written declaration from the recipient of the exhibition and conference services confirming that the recipient does not have a place of establishment or a fixed establishment in the state, and is not a registrant or required to register for tax in the state.

Additionally, FTA has published a detailed guide covering specific procedural details with forms formats to be utilized in due course for availing the benefit of the scheme.

Payment of VAT at UAE Exchange1

UAE Exchange has recently announced that it has started accepting VAT payments on behalf of the FTA. All entities registered with the FTA who have a valid Tax Registration Number (TRN) and a GIBAN account number can now make their VAT payments in any of the 150 UAE Exchange branches spread across the seven emirates.

Footnote

https://www.khaleejtimes.com/businesses-can-settle-vat-payments-at-uae-exchange

SKP comments

The Cabinet decision on VAT Refund for Exhibitions and Conferences ensures that UAE continues to be an ideal location for MICE industry (i.e., Meetings Incentives Conferences and Exhibition Industry).

Furthermore, the new mechanism of calculation of VAT for gold and diamond industry has substantially provided relief of reduced cash flow requirements to the sector players within the UAE. Accordingly, dealers/manufacturers from the gold and diamond industry have hailed the Cabinet's decision of new a VAT accounting mechanism. As a way forward, in our view, the companies operating in this sector must obtain the required written declarations from their customers to take the benefit of the new VAT accounting mechanism.

Separately, FTA has also released guides for tax group and tax agents which brings clarity on various VAT obligations/procedures attached with such registrations or certifications.

It is evident that the FTA has adopted a business-friendly approach by addressing industry concerns thereby ensuring that VAT implementation has a smooth transition into business cycles rather than disrupting the day to day operations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.