In light of the growing prominence of digital assets, a new definition for virtual assets has been added.

These virtual assets present a digital value that can be traded or transferred digitally, and may be used for investment purposes. Specially they do not include digital representations of paper currencies or securities.

A new Article has been added defining additional exceptions from Supply of Services and now include the following scenarios affecting the government sector:

• The granting or transferring of the right to own or dispose governmental buildings, real estate assets, and other projects or similar between governmental bodies.
• The granting or transferring of the right to use/exploit, or benefit from governmental buildings, real estate assets, and other similar projects between governmental bodies. This provision covers rights granted or transferred starting from 1 January 2023.

The Article provides a clearer categories that should be considered governmental buildings, real estate assets, and other projects of a related kind.

Government & Charities

The additional output tax threshold for the exception from deemed supplies has been expanded as follows:

• Up to AED 250,000 of output tax payable on all deemed supplies, for each person for a period of 12 months, on the condition the person is a government body or charity and that the recipient is a government body or charity.
• Any excess should be considered as a payable tax.

It has been clarified that under voluntary registration, the applicant should provide sufficient evidence to FTA, confirming that in addition to carrying on a business in UAE, the applicant intends to carry out any of the supplies mentioned in Clause 1 of Article 54 of the VAT Federal Decree Law No. 8 of 2017 and its amendments:

• Taxable supplies
• Supplies made outside the UAE which would have been taxable supplies had they been made in the UAE.
• Supplies made outside the UAE, which would have been treated as exempt had they been made inside the UAE

Article (14) –  

Tax deregistration to protect the integrity of the tax system 

An important clarification for exporters, this Article has provided better understanding on the expected documents that should be retained as evidence for the direct/indirect export, or customs suspension situation. This can include any of the following: 

• Customs declaration and commercial evidence, proving the export; or 

• Certificate of shipment and official evidence, proving the export. 

• Customs declaration proving the customs suspension situation. 

The Article has also expanded the definitions of official evidence, commercial evidence, and certificate of shipment, as follows: 

• Official evidence has been defined as export certificates issued by the customs authorities in the UAE or a clearance certificate issued by those authorities or the competent authorities in the UAE that the goods that have left the country upon verification, or a document or a clearance certificate certified by the competent authorities at the country of destination confirming the arrival of the goods into that country. 

• Commercial evidence as a document issued by the transportation companies/agencies as evidence that the goods have been transported and moved outside the country, including airway bill/air cargo manifest, bill of lading/sea cargo manifest, and land transport bill/land cargo manifest. 

• Certificate of shipment issued by the transportation companies/agencies that can be treated as commercial evidence, if such evidence is not available. 

Article (31) – Zero rating the export of services 

Article (33) – Zero rating international transportation services for passengers and goods 

Article (34) – Zero rating certain means of transport 

Article (35) – Zero rating goods and services supplied in connection with means of transport 

 A new condition has been added for the supply of services to qualify for zero-rating, where the services should not be subject to the special place of supply rules as mentioned in Articles 30 and 31 of the VAT Federal Decree Law No. 8 of 2017 and its amendments. 

The transport of goods from a place in the UAE to another place in UAE, as part of international transportation of goods, should be supplied by the same suppliers in order to qualify for zero-rating. 

The provisions of this Article state that in addition to the supplies of means of transport, to the imports of means of transport. 

The provisions of this Article state than in addition to the supplies of goods related to the supplies of means of transport, to the imports of such goods. 

The zero-rating conditions have been defined in more detail for services provided directly in connection with means of transport for the purpose of operating, repairing, maintaining, or converting the means of transport 

 New services have been expanded to the scope of financial services where such services should be exempted from VAT. These include: 

• Investment fund management: such services are a service provided by the fund manager independently, for a consideration, to funds licensed by the competent authorities in the UAE. 

• Transfer of ownership of virtual assets including cryptocurrency. 

• Exchange of virtual assets. 

• Management and safeguarding of virtual assets services  

However, such services would only be exempted from VAT to the extent they are not provided in return for an explicit fee or similar. 

Exemptions are applicable for the transfer of ownership of virtual assets (including cryptocurrency) and the exchange of virtual assets shall have retrospective effect on services supplied from 1 January 2018. 

For the purpose of input VAT recovery on supplies of financial services provided outside UAE, the conditions for a person to be considered as outside the UAE even where that person is present in the UAE are updated, the following two conditions should be met:  

1. the presence is of short term in UAE of less than one month,  
2. and the presence in UAE is not effectively connected with the supply. 

 Taxable persons can now FTA approval for the use of a fixed apportionment recovery rate, based on the apportionment recovery rate of the previous tax year. 

New requirements have been added to adjust the annual adjustment threshold of AED 250,000 proportionately with the tax year period where it is less than 12 months. 

The date of issuance of tax invoices has been updated for the following scenarios: 

• Simplified tax invoices should be issued at the date of supply. 

• Summary tax invoices should be issued and delivered within 14 days from the end of the calendar month that includes the date of supply of these supplies.