What Does the New Amendment Say about UAE VAT Registration Exception?

As the new amendments to the UAE VAT Law took effect on January 1st 2023, businesses must ensure they comply with the provisions relevant to them. Flawless compliance with the UAE VAT Law is essential to avoid tax audits from the Federal Tax Authority (FTA) or prevent incurring hefty penalties. VAT consultants in Dubai can advise you on how to ensure VAT compliance by adhering to the amendments to the VAT Law.

Article 15 of the amended UAE VAT Law allows a taxable person to apply for an exception from VAT registration subject to certain conditions. Tax agents in Dubai can assist businesses to assess whether they will be eligible for the registration exception as per the new amendment. In this article, we will discuss what the new amendment says about the UAE VAT registration exemption. Read on to gain more insights:

What does Article 15 say about VAT Registration Exceptions?

Clause 1 of the Article 15 of the amended VAT Law says that “ Authority (FTA) may except a Taxable Person from Tax Registration whether a Registrant or not, upon his request if his supplies are only subject to the zero rates.” As per this provision, registered persons are also allowed to apply for VAT registration exemption in the UAE provided all of their supplies are zero-rated or if they no longer make any supplies other than zero-rated supplies.

What Has Changed in the New Amended VAT Law?

Before the amendment of the VAT Decree-Law, only those persons not registered for the UAE VAT were eligible for the exemption provided they make only zero-rated supplies. As per the new amendment, existing registrants who make only zero-rated supplies can also apply for VAT registration exemption starting from January 1st 2023.

How Does the UAE VAT Registration Exception Work?

Once the registrant’s application for the UAE VAT registration exemption is accepted, the FTA will deregister the person provided all the requirements are met. The requirements include the settlement of all due tax and administrative penalties.

What Are Zero-Rated Supplies as per the New UAE VAT Law?

VAT is levied in the UAE at a standard rate of 5%. However, zero-rated supplies in UAE VAT are the taxable supplies on which VAT is charged at a zero rate. In general, exports of goods and services in the UAE are treated as zero-rated supplies. However, apart from exports, certain other types of supplies are also considered zero-rated VAT supplies in the UAE. The tax registrant can apply for VAT registration exemption if it only makes the zero-rated supplies such as the following:

  • International transport of passengers and Goods that starts or ends in the UAE or passes through its territory
  • Air passenger transport in the State if it is considered an “international carriage” pursuant to Article 1 of the Warsaw Convention for the Unification of Certain Rules Relating to International Carriage by Air 1929
  • Supply or Import of air, sea and land means of transport for the transportation of passengers and Goods
  • Supply or Import of air or sea rescue and assistance aircraft or vessels
  • Supply of Goods and Services related to the transport of Goods or passengers aboard air, sea and land means of transport pursuant to the provisions of Clauses 2 and 3 of Article 45 of the UAE VAT Decree-Law
  • The supply or Import of investment precious metals
  • The first supply of residential buildings within 3 years of its completion
  • The first supply of buildings specifically designed to be used by Charities through sale or lease
  • The first supply of buildings converted from non-residential to residential through sale or lease
  • The supply or Import of crude oil and natural gas
  • The supply of educational services and related Goods and Services for nurseries, preschools, school education, and higher educational institutions owned or funded by the UAE Federal or local Government
  • The supply of preventive and basic healthcare Services and related Goods and Services, and the Import of concerned related Goods

What Happens in Case of Any Change in the Status?

As per Clause 2 of the Article 15 of the amended UAE VAT Law, the person is required to notify the FTA if the circumstances of the VAT registration exemption change. For example, the person should notify the FTA if it starts making standard-rated supplies. Consult with VAT consultants in Dubai before submitting the notification to the FTA.

Seek Advice from the Best VAT Consultants in Dubai, UAE

Taxable persons in the UAE need to assess their current VAT position to determine whether they can apply for VAT registration exceptions in the UAE in line with amended VAT provisions. They are encouraged to seek the help of VAT consultants in Dubai such as Jitendra Chartered Accountants (JCA) to make the proper assessments and submit the request to the FTA.

JCA is one of the leading providers of VAT consulting services in Dubai with more than 21 years of experience. The tax professionals at JCA are highly qualified to provide top-class tax consulting services in Dubai. Being one of the top FTA-approved tax agents in Dubai, we can make your tax compliance strategy flawless.