VAT Treatment of Crypto Mining in the UAE 

Insights

Home Tag Archives: Insights

Public Clarification on VAT Treatment of Crypto Mining in the UAE (VATP039)

A public clarification (VATP039) has been issued by FTA to provide detailed guidance on VAT applicability of crypto mining activities. 

Crypto Currency  

“Crypto currencies” are a form of virtual assets, which means digital representation of value that can be digitally traded or converted and can be used for investment purposes, and does not include digital representations of fiat currencies or financial securities.  

Examples – Bitcoin, Ethereum (Classic), and other currencies that are based on proof of work. 

Cryptocurrency Mining 

Cryptocurrency mining is the process of validating transactions on a blockchain network using specialised computers, also known as mining rigs. Miners contribute computational power to solve cryptographic equations, and in return, they may receive cryptocurrency rewards. The FTA categorizes mining into two primary types: 

  • Mining for Personal Use – Individuals mine cryptocurrencies for their own accounts. 
  • Mining as a Service – Individuals or businesses mine on behalf of others in exchange for a fee. 

VAT Treatment of Crypto Mining in the UAE

Mining for Personal Use 

  • When an individual mines cryptocurrency for personal purposes (without providing mining services to others), it is not considered a taxable supply under UAE VAT law. 
  • The reward received from the blockchain network is not regarded as consideration for a taxable supply. 
  • Since mining is not a business transaction in this case, input VAT on mining-related expenses (such as electricity and equipment) is not recoverable. 

Mining as a Service (Providing Computational Power to Others) 

  • If a person or business provides mining services to another entity for a fee, this is classified as a taxable supply of services under UAE VAT law. 
  • The supplier of the mining services must charge VAT at the standard rate of 5%, provided the recipient is in the UAE. 
  • If the services are provided to a non-resident entity, the supply may qualify for zero-rating, subject to specific conditions in UAE VAT legislation. 
  • Businesses offering mining services can recover input VAT on expenses related to the taxable supply, such as the purchase of mining equipment and electricity costs. 

VAT Implications for Businesses Receiving Mining Services 

  • If a VAT-Registered business receives mining services from a non-resident provider, it must apply the reverse charge mechanism and account for VAT accordingly. 
  • If the recipient is a non-registered entity, the foreign service provider must register for VAT in the UAE and charge VAT on its supplies. 

Summary

VAT Treatment of Crypto Mining in the UAE
  • Mining for personal purposes falls outside the scope of VAT, and associated input VAT costs are not recoverable. 
  • Mining as a service is a taxable supply, subject to 5% VAT (or potentially zero-rated if the recipient is outside the UAE). 
  • Input VAT recovery is allowed for businesses conducting taxable mining services but not for individuals mining for personal use. 
  • Businesses receiving mining services from abroad may need to apply the reverse charge mechanism. 
Don’t Let VAT Regulations Derail Your Crypto Profits Secure Your Compliance Strategy
Contact Us Today

Search

Recent Insights

UAE VAT Decree Law (28) 2022 Tax Procedures
February 20, 2025

Litagation Overview Under UAE VAT Federal Decree-Law No. (28) of 2022 on Tax Procedures

UAE Introduces Domestic Minimum Top-up Tax for MNEs
February 11, 2025

UAE Introduces Domestic Minimum Top-up Tax for MNEs

Best of 2024: Fame's insights on Corporate Tax, VAT, & More
January 6, 2025

Best of 2024: FAME’s Year in Review

Tax treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax
November 20, 2024

MoF Amends Tax Treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax

Tax Procedures for Private Clarifications: UAE Corporate Tax
November 19, 2024

Tax Procedures for Private Clarifications: UAE Corporate Tax

Real Estate Investment for Natural Persons
October 27, 2024

UAE Corporate Tax – Real Estate Investment for Natural Persons

Litagation Overview Under UAE VAT Federal Decree-Law No. (28) of 2022 on Tax Procedures

UAE VAT Decree Law (28) 2022 Tax Procedures

Insights

Home Tag Archives: Insights
UAE VAT Decree Law (28) 2022 Tax Procedures

Tax Assessment Review Request ( New Optional Mechanism) (TAXP008)

Intention

A Person may submit a request to the Authority to review a Tax Assessment review if the person has reasonable grounds to believe that there were technical errors relating to the incorrect application of the relevant tax legislation or tax treaties, calculations errors or errors in audit procedures that led to an incorrect determination of tax differences and administrative penalties by the FTA.

Time frame

The request is to be made within (40) forty Business Days from the date the Person is notified of the Tax Assessment and the related Administrative Penalties with the specific the reason.

Response

The FTA team has been providing responses to the clarification requests within 40 business days from the date of receiving such requests.

Decision

Mostly, decisions made by the FTA in a Tax Assessment Review request are based on the facts of the case and the applicant is informed of the decision within (5) five Business Days from the date of issuance of the decision

Conclusion

If the clarification decision is not favorable to a taxpayer, he can apply for filing Reconsideration.

*If the person wishes to introduce new information or additional documentary evidence/facts that were not presented to the FTA auditors during the audit process, the tax assessment review mechanism is not the appropriate dispute channel. In such instances, the person may apply for reconsideration

Reconsideration Request

Intention

A Person may submit a request to the Authority to reconsider any decision, or part thereof, issued by the Authority.

Time frame

  • The request is to be made within (40) forty Business Days from the date from the date he was notified of decision.
  • If an application for review of a Tax Assessment has been submitted to the Federal Tax Authority (FTA), a reconsideration request can only be filed after the FTA issues a decision or after the expiry of the time limit within which the FTA is required to issue a decision and notify the applicant.

Response

The FTA team has been providing responses to the clarification requests within 40 business days from the date of receiving such requests.

Decision

FTA inform the applicant of the decision within (5) five business Days from the date of issuance of the decision.

Conclusion

If the Reconsideration request is not favorable to a taxpayer, he can apply for “TDRC”.

TDRC Mechanism

Time Frame

If the reconsideration decision is not favorable to a tax payer, he can object the same within 40 business days from the date of reconsideration order.

Working mechanism

Taxpayer should file an appeal when he disagrees with FTA’s reconsideration and has good arguments to support his position. TDRC works independently from the FTA, i.e. it falls under the Ministry of Justice.

Payment

Payment of taxes should be made before submission (not penalties anymore)

Response

The Committee shall review the objection submitted  and make a decision within (20) twenty Business Days from the receipt of the objection.

Decision

FTA informs the applicant of the decision within (5) five business days from the date of issuance of the decision.

Conclusion

TDRC has the power to cancel FTA’s decision if it is found out that decision passed earlier was not correct.

Appeal Process

Time Frame

If the outcome of TDRC is not favorable to taxpayer he can file an appeal with the Court within 40 business days from the date of TDRC order.

Prerequisites

An appeal can be filed with the Court only when combined tax and penalty amount exceeds AED 100,000.

Who can appeal?

Both taxpayer and FTA can file an appeal with the Court to challenge against decisions laid out by TDRC.

Payment

Payment of taxes and at least 50 % of the prescribed administrative penalty (either through cash payment or bank guarantee in favor of the authority) should be made.

Conclusion

Decision to the appeal can be either ruled out against taxpayer or the FTA after considering all the facts, information available and presented before it.

Timeline Mechanism

Tax Assessment Review Request

It has to be submitted to the FTA within 40 business days from the date the person is notified of the tax assessment and related administrative penalties

Reconsideration

It has to be filed within 40 business days from being notified of the FTA decision.

TDRC

It has to be submitted within 40 business days from the date of reconsideration order.

Appeal

It has to be filed within 40 days from the date of TDRC order.

Need clarity on UAE VAT Federal Decree-Law No. (28) of 2022? Our team of experts can guide you through tax assessments, reviews, and appeals.
Reach out to us!

Search

Recent Insights

March 4, 2025

VAT Treatment of Crypto Mining in the UAE 

UAE Introduces Domestic Minimum Top-up Tax for MNEs
February 11, 2025

UAE Introduces Domestic Minimum Top-up Tax for MNEs

Best of 2024: Fame's insights on Corporate Tax, VAT, & More
January 6, 2025

Best of 2024: FAME’s Year in Review

Tax treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax
November 20, 2024

MoF Amends Tax Treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax

Tax Procedures for Private Clarifications: UAE Corporate Tax
November 19, 2024

Tax Procedures for Private Clarifications: UAE Corporate Tax

Real Estate Investment for Natural Persons
October 27, 2024

UAE Corporate Tax – Real Estate Investment for Natural Persons

UAE Introduces Domestic Minimum Top-up Tax for MNEs

UAE Introduces Domestic Minimum Top-up Tax for MNEs

Insights

Home Tag Archives: Insights
UAE Introduces Domestic Minimum Top-up Tax for MNEs

On the 6th of February 2025, the UAE Ministry of Finance released the legislation introducing a Domestic Minimum Top-up Tax (“DMTT”) for multinational enterprises (“MNEs”), through the publication of Cabinet Decision No. 142 of 2024 introducing a 15% Global Minimum Tax effective January 1, 2025. This follows the announcement made by the Ministry on December 9, 2024. The legislation is broadly aligned with the Organisation for Economic Co-operation and Development (OECD) Inclusive Framework.

The key provisions of the decisions have been outlined below: 

Applicability

  1. The decision applies to MNEs with annual consolidated revenue of at least EUR 750 million in two of the four preceding fiscal years. 
  2. Constituent entities, Joint Ventures (JV), and JV subsidiaries in the UAE will be subject to top-up tax if their effective tax rate falls below the global minimum tax rate of 15%. 

Excluded Entities

  1. To boost the UAE’s competitiveness as a leading investment hub, the rules have been structured to exclude certain entities, such as governmental entity, International Organisation, Non-Profits, organizations, Pension Funds, Investment Funds, and Real Estate Investment Vehicles that is an Ultimate Parent Entity.  
  2. Sovereign Wealth Funds that qualify as Government Entities are not the Ultimate Parent Entity (UPE) of any group shall also be excluded. 
  3. An excluded entity is also an Entity: 
    • where at least 95% of the value of an Entity is owned (directly or through a chain of Excluded Entities) by one or more Excluded Entities mentioned above (other than a Pension Services Entity) and where that Entity: (i) operates exclusively or almost exclusively to hold assets or invest funds for the benefit of the Excluded Entity or Entities; and/or (ii) only carries out activities that are ancillary to those carried out by the Excluded Entity or Entities. 
    • where at least 85% of the value of an Entity is owned (directly or through a chain of Excluded Entities), by one or more Excluded Entities mentioned above (other than a Pension Services Entity) provided that substantially all of the Entity’s income is Excluded Dividends or Excluded Equity Gain or Loss that is excluded from the computation of Pillar 2 Income or Loss. 
    • Entities owned 100% by Non-profit Organizations can be classified as Excluded Entities under certain revenue conditions, especially when the revenue of Non-profits and Excluded Entities is disregarded. 

International Shipping Income Exclusion 

  1. For an MNE Group that has International Shipping Income, each Constituent Entity’s International Shipping Income and Qualified Ancillary International Shipping Income shall be excluded from the computation of its Pillar Two Income or Loss for the Jurisdiction in which it is located. Where the computation of a Constituent Entity’s International Shipping Income or Qualified Ancillary International Shipping Income results in a loss, the loss shall be excluded from the computation of its Pillar Two Income or Loss.  
  2. In order for a Constituent Entity’s International Shipping Income and Qualified Ancillary International Shipping Income to qualify for the exclusion from its Pillar Two Income or Loss under this Article, the Constituent Entity must demonstrate that the strategic or commercial management of all ships concerned is effectively carried on from within the Jurisdiction where the Constituent Entity is located.  

Substance Based Income Exclusion (SBIE)

  1. In order to compute Top-up Tax, the Net Pillar 2 Income for the UAE shall be reduced by the SBIE to determine the Excess Profits. 
  2. The SBIE amount is the sum of the payroll carve-out and the tangible asset carve-out for each Constituent Entity, except for Constituent Entities that are Investment Entities, located in the UAE. 
  3. The payroll carve-out for a Constituent Entity located in the UAE is equal to 5% of its Eligible Payroll Costs of Eligible Employees that perform activities for the MNE Group in the UAE. 
  4. The tangible asset carve-out for a Constituent Entity located in the UAE is equal to 5% of the carrying value of Eligible Tangible Assets located in the UAE. 
  5. To provide transitional relief, the 5% value will be replaced by the higher exclusion rate for the first 8 fiscal years as specified in the law. 

De Minimis Exclusion – A Permanent Safe Harbour for Non-Material UAE Entities 

The application of the De Minimis Exclusion allows the Filing Constituent Entity in the UAE to elect for Top-up Tax to be deemed zero if specific conditions are satisfied. These include: 

Eligibility for De Minimis Exclusion: 

  • The Top-up Tax for UAE-based Constituent Entities can be reduced to zero for a FY if: 
    • The Average Pillar 2 Revenue is less than EUR 10 million. 
    • The Average Pillar 2 Income or Loss is either a loss or less than EUR 1 million. 
    • This is an annual election, meaning it must be made each FY. 

Are there any exceptions to the rule? 

  • The election does not apply to Stateless Constituent Entities (entities with no jurisdictional residence) with their financials excluded from the calculation for the de minimis exclusion. 

Transitional CBCR Safe Harbour

For FYs that begin before 1 January 2027 and end before 1 July 2028, an MNE Group can elect for the Jurisdictional Top-up Tax of the UAE to be deemed as zero if: 

  1. De minimis test: The MNE Group reports Total Revenue of less than EUR 10 million and Profit (loss) before Income Tax of less than EUR 1 million in the UAE on its Qualified Country-by-Country Report (“CBCR”) for the FY. 
  2. Simplified ETR test: The MNE Group has a Simplified ETR that is equal to or greater than 16% (for FYs that begin in 2025) and 17% (for FYs that begin in 2026) in the UAE. The Simplified ETR is calculated by dividing the Jurisdiction’s Simplified Covered Taxes by its Profit (Loss) Before Income Tax as reported on the MNE Group’s Qualified CBCR; or 
  3. Routine Profits test: the MNE Group’s Profit (loss) before Income Tax in the UAE is equal to or less than the SBIE amount, for entities reported in the UAE in the CBCR. 

Initial Phase of MNE Group’s International Activity

  1. As part of a transitional measure and to create a tax environment conducive to economic growth, during the initial phase of an MNE Group’s international activity, the Top-up Tax shall be reduced to zero, provided that none of the ownership interests of the Entities located in the UAE are held by a parent entity subject to a Qualified Income Inclusion Rule in another Jurisdiction.  

  2. An MNE Group is in the initial phase of its international activity if, for a FY: (a) it has Constituent Entities in no more than six Jurisdictions; (b) the sum of the Net Book Values of Tangible Assets of all Constituent Entities located in all jurisdictions other than the reference Jurisdiction does not exceed EUR 50 million. 

Top-ups Tax Registration, Return Filing, and Payment

  1. A UAE Entity that is subject to Top-up Tax under these rules and any Designated Filing Entity will be required to register with the Federal Tax Authority. The manner and timeline of this registration is still to be confirmed. 
  2. Each Constituent Entity and JV (including JV subsidiaries) located in the UAE shall file the Top-up Tax Return to the Federal Tax Authority within 15 months after the end of the Reporting financial year. 
  3. However, for the first financial year, the Top-up Tax return shall be filed within 18 months after the end of the first applicable FY. 
  4. The relevant UAE constituent entity must pay any Top-up Tax due in UAE Dirhams. This payment shall be made at the time of filing the Top-up Tax return (i.e. 15 months after the FY or 18 months after the transitional year). 

In light of recent developments, it is essential for MNEs with operations in the UAE to start preparing for the upcoming regulations, as these could have a substantial impact on taxes and compliance requirements. To assist MNEs in navigating the Pillar 2 readiness journey, we at FAME Advisory DMCC have crafted a phased approach that includes: 

  • Conduct high-level initial impact assessments of how the new rules could affect the MNE’s operations. 
  • Review the shareholding structure, identify jurisdictions with the greatest and least impact, and plan accordingly. 
  • Critically assess existing and alternative supply chains, analyzing how the new rules could impact tax costs, cash flow, profitability, and financial statements. 
  • Provide training to in-house teams on these changes and address any required adjustments to IT systems for effective data collection. 

Search

Recent Insights

March 4, 2025

VAT Treatment of Crypto Mining in the UAE 

UAE VAT Decree Law (28) 2022 Tax Procedures
February 20, 2025

Litagation Overview Under UAE VAT Federal Decree-Law No. (28) of 2022 on Tax Procedures

Best of 2024: Fame's insights on Corporate Tax, VAT, & More
January 6, 2025

Best of 2024: FAME’s Year in Review

Tax treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax
November 20, 2024

MoF Amends Tax Treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax

Tax Procedures for Private Clarifications: UAE Corporate Tax
November 19, 2024

Tax Procedures for Private Clarifications: UAE Corporate Tax

Real Estate Investment for Natural Persons
October 27, 2024

UAE Corporate Tax – Real Estate Investment for Natural Persons

Best of 2024: FAME’s Year in Review

Best of 2024: Fame's insights on Corporate Tax, VAT, & More

Insights

Home Tag Archives: Insights
Best of 2024: Fame's insights on Corporate Tax, VAT, & More

As 2024 comes to an end, it’s not just another year we are celebrating – it’s a decade of Taxcellence. Over the last 10 years, FAME Advisory has been on a journey of growth, innovation, and unwavering commitment to excellence. This year has been particularly significant, with new regulations shaping the landscape of corporate taxation in the UAE.

From VAT amendments to tax groups and wealth planning, we have covered a wide array of topics to support businesses in staying ahead. Out of all our contributions, these seven articles have stood out as the most impactful in 2024:

1. Corporate Tax Registration on EmaraTax: The Complete Guide

  • This article is a one–stop guide for everything about Corporate Tax Registration. In this piece, we have covered everything from the foundational basics, steps and procedures, and common mistakes, to the expected timeline of registration on the EmaraTax portal.

2. VAT Penalties and Fines in UAE: Cabinet Decision No. (49) of 2021 Impact

  • A vital read for UAE businesses, that discusses the VAT amendments which came in effect after Cabinet Decision no. (49) of 2021. Here, the changes that led to reduction in VAT penalties and fines compared to previous legislation, since these amendments, are highlighted. A comparative Analysis of the penalties that were applicable previously and the new penalties, helping businesses in the UAE understand the regulatory shifts and its potential impact on their operations. 

3. UAE Corporate Tax Group: Pros, Cons, and Considerations

  • FAME delved into one of the most deliberated subjects, a Tax Group in the UAE. This article outlined a careful analysis of UAE CT treatment to a Tax Group. A thorough analysis of the consideration’s businesses must keep in mind when deciding whether or not to form a tax group, along with its benefits and limitations. 

4. Determining a Non-Resident Person’s Nexus in UAE for Corporate Tax Purposes

  • This article dealt with determining a non-resident person’s nexus in UAE. It focused on the treatment of non-resident persons under the UAE Corporate Tax Law. A crucial read for international businesses and foreign investors, the article clarified the special treatment these individuals may receive under UAE Corporate Tax Regulations.
Does lack of information hinder your business's growth? Stay vigilant with knowledge that helps you comply.
Learn More Today!

5. Navigating Estate Succession in the UAE: Options for Non-Muslim Expatriates

  • This article provided non-Muslim expatriates in UAE with the requisite clarity on estate succession in the UAE. It detailed on the available platforms for their Will registration, particularly essential owing to the fact that the absence of a Will leaves the distribution of their estate to be done under Shariah law, which may not align with their preferred means of distribution. This article highlighted various registration options and their benefits for expatriates seeking flexibility in estate planning. 

6. Qualifying Public Benefit Entity: Registration and Exemption under UAE Corporate Tax

  • This article provided non-Muslim expatriates in UAE with the requisite clarity on estate succession in the UAE. It detailed on the available platforms for their Will registration, particularly essential owing to the fact that the absence of a Will leaves the distribution of their estate to be done under Shariah law, which may not align with their preferred means of distribution. This article highlighted various registration options and their benefits for expatriates seeking flexibility in estate planning. 

7. Tax Loss Relief under UAE’s Corporate Tax Law: Key Factors

  • Startups and businesses may experience temporary losses in their tenures. During these phases, they can benefit from Tax Loss relief under the UAE Corporate Tax Law. In this article we have explored the key factors businesses need to consider and understand to take full benefit of tax loss relief, ensuring optimal financial strategy during challenging periods. 

A Look Ahead with Gratitude 

Taxation in the UAE continues to evolve, and staying informed has never been more important. These articles reflect just a fraction of the guidance we have been proud to provide to help businesses and professionals navigate these changes with confidence. 

As we celebrate 10 incredible years, we want to take a moment to thank you for being a part of this journey. Your trust and support have been instrumental in helping us reach this milestone. Stay tuned for more insights, updates, and highlights from our anniversary celebrations. Here is to the next decades of Taxcellence together! 

Want to grow your business in the UAE? Take the next steps in your journey with us.
Contact Us Now!

Search

Recent Insights

March 4, 2025

VAT Treatment of Crypto Mining in the UAE 

UAE VAT Decree Law (28) 2022 Tax Procedures
February 20, 2025

Litagation Overview Under UAE VAT Federal Decree-Law No. (28) of 2022 on Tax Procedures

UAE Introduces Domestic Minimum Top-up Tax for MNEs
February 11, 2025

UAE Introduces Domestic Minimum Top-up Tax for MNEs

Tax treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax
November 20, 2024

MoF Amends Tax Treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax

Tax Procedures for Private Clarifications: UAE Corporate Tax
November 19, 2024

Tax Procedures for Private Clarifications: UAE Corporate Tax

Real Estate Investment for Natural Persons
October 27, 2024

UAE Corporate Tax – Real Estate Investment for Natural Persons

MoF Amends Tax Treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax

Tax treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax

Insights

Home Tag Archives: Insights
Tax treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax

The Ministry of Finance has issued Ministerial Decision No. 261 of 2024, which repeals the earlier Ministerial Decision No. 127 of 2023 and is effective retrospectively from June 1, 2023. This decision provides clarity on the tax treatment of Unincorporated Partnerships, Foreign Partnerships, and Family Foundations under the UAE Corporate Tax Law.

Key Highlights:

  • Presently, a Foundation is a taxable person under the UAE Corporate Tax Law wherein the Foundation on its own is liable for tax liabilities. A Foundation can also elect to be treated as an Unincorporated Partnership wherein the beneficial owners/ founders will be subject to tax on behalf of the Foundation (Unincorporated Partnership). With the introduction of this Decision, a Juridical Person can also elect to be treated as an Unincorporated Partnership if the Juridical Person is wholly owned and controlled by such Foundation which is treated as an Unincorporated Partnership.
    • Juridical Persons owned by foundations which are not operating companies but merely own properties, earn rental income or manage investments – such as Single Family Offices (SFO), Real Estate Investing Company, etc. can now opt to be treated as Unincorporated Partnerships. In this case, the income of such entities is deemed to be earned directly by the founder or council members in their individual capacity, resulting in the same tax treatment as personal income.
    • Property-owning companies and SFOs stand to benefit from this decision, as their income would have otherwise been taxable.
  • Foreign Partnerships are now treated as tax transparent in the UAE provided they are treated as transparent in their home jurisdiction. This eliminates the need for individual partners to verify their tax status with the FTA, simplifying procedures for international businesses.
  • This development aligns Family Foundations with the UAE’s Corporate Tax framework, enhancing their utility in wealth management and offering strategic tax advantages.

This amendment reinforces the UAE’s appeal as a global business and investment hub. Entities and stakeholders should review their structures to ensure compliance with the updated regulations. These changes present significant opportunities for businesses operating in or interacting with the UAE tax regime.

For personalized guidance on how these updates may impact your business, feel free to connect with us.

How will the new tax treatment of Foundations and Partnerships impact your business? Let us help you optimize your tax strategy under these new regulations.
Learn More Today!
Picture of Bijal

Bijal

Bijal is a legal and tax compliance expert with over five years of experience in the UAE. She specializes in indirect tax reviews, corporate tax, and company secretarial compliance for multinational corporations. Bijal excels in preparing management accounts and securing UAE tax residency certificates. Currently focused on the proposed UAE Corporate Tax framework, she provides strategic advice for corporate restructuring and cross-border transactions, making her an essential resource for businesses navigating UAE Corporate Tax.

Search

Recent Insights

March 4, 2025

VAT Treatment of Crypto Mining in the UAE 

UAE VAT Decree Law (28) 2022 Tax Procedures
February 20, 2025

Litagation Overview Under UAE VAT Federal Decree-Law No. (28) of 2022 on Tax Procedures

UAE Introduces Domestic Minimum Top-up Tax for MNEs
February 11, 2025

UAE Introduces Domestic Minimum Top-up Tax for MNEs

Best of 2024: Fame's insights on Corporate Tax, VAT, & More
January 6, 2025

Best of 2024: FAME’s Year in Review

Tax Procedures for Private Clarifications: UAE Corporate Tax
November 19, 2024

Tax Procedures for Private Clarifications: UAE Corporate Tax

Real Estate Investment for Natural Persons
October 27, 2024

UAE Corporate Tax – Real Estate Investment for Natural Persons

Tax Procedures for Private Clarifications: UAE Corporate Tax

Tax Procedures for Private Clarifications: UAE Corporate Tax

Insights

Home Tag Archives: Insights
Tax Procedures for Private Clarifications: UAE Corporate Tax

On 18th November 2024, the Federal Tax Authority (FTA) published a Corporate Tax (CT) Guide on “Tax Procedures for Private Clarifications”, aiming to provide general guidance to taxpayers on when and how to file for a Private Clarification.

The objective of this guide is to provide clarity on ways and means to file a Private Clarification and in what circumstances a Private Clarification can be filed and rejected by the FTA.

The key highlights of the Guide are outlined below:

What are Private Clarifications?

Private Clarifications are clarifications issued by the FTA in the form of documents that are stamped and signed by the Director General or his delegate/representative, in relation to specific tax technical matters. These documents are issued to a specific taxpayer, according to the Clarification request submitted on EmaraTax and the documents attached to the request

Eligibility Criteria

There are two types of eligibility criteria to consider, firstly whether the relevant person is eligible to submit a Clarification Request and secondly whether the specific request is eligible to be considered under the Clarification Process.

Eligible Persons

  • The person seeking clarification on a tax matter of uncertainty may apply for a Clarification. In the case of a tax group, only the representative member of that tax group is permitted to request the Clarification, i.e., none of the other tax group members are allowed to submit a Clarification request.
  • Tax Agents and Legal Representatives: The person’s (or tax group’s) tax agent or legal representative may apply on behalf of the person. Note that only a tax agent registered with the FTA for the specific tax type the request relates to may submit the Clarification Request on behalf of the person.
  • Tax Affairs of Another Person: Clarifications will only address the tax matters of uncertainty of the Applicant and not the tax affairs of any other person. In exceptional cases, more than one person may submit a joint Clarification Request.

Eligible Matters

The taxpayer (or its authorised signatory, tax agent, legal representative, or the representative member / parent company of the specific tax group) may only submit a Clarification Request if the following requirements are met:

  • The request relates to federal taxes or relevant penalties
  • The request clearly indicates the relevant tax type the request relates to
  • The request relates to tax legislation as applied to the facts and circumstances of the taxpayer (or in exceptional cases, taxpayers) submitting the request, i.e., the Clarification issued by the FTA is not applicable to a third party
  • The request contains all the relevant information the FTA needs to consider for deciding on the correct tax treatment of the subject of the request.
Ensure if You’re Eligible for Private Clarifications? We can streamline the process for you.
Contact us now!

Grounds for Rejection

Cases Where the Applicant is Not Eligible to Submit the Clarification Request

The Clarification Request is submitted by:

  • A person representing the Applicant (e.g., the authorised signatory) but the relevant proof of authorisation is not provided.
  • A tax agent but the request does not include the taxpayer’s details, such as the taxpayer’s name and Tax Reference Number (TRN).
  • A natural person is reflected as the Applicant, but the Clarification Request pertains to a juridical person.
  • A member of the relevant tax group other than the representative member / parent company of that tax group.
  • The Applicant requests a Clarification relating to Corporate Tax but is not registered for Corporate Tax. The only exception is where the Clarification Request relates to registration.

Out of Scope Cases

The FTA will reject Clarification Requests submitted for the following, as these fall outside the scope of the Clarification Process:

  • Administrative Exceptions
  • Payment of administrative penalty in instalments
  • Waiver of administrative penalty
  • Use of a special apportionment method
  • Commercial Activity Certificate
  • Tax Residency Certificate (TRC), unless the request relates to whether a person is eligible to apply for a TRC
  • Tax Assessment Review
  • Reconsideration
  • IT System issues/queries
  • Advance Pricing Agreements

Cases of Incomplete or Incorrect Clarification Requests

A Clarification Request may also be rejected wherein the request for a Clarification Form is not correctly completed or is incomplete.

Cases that Do Not Represent a Tax Matter of Uncertainty

The FTA may reject a Clarification Request if the specific tax matter was already previously clarified.

Tax Audits and Assessments Cases

The FTA may reject Clarification Requests if:

  • A tax assessment on the same specific tax matter was previously issued to the same Applicant.
  • The Applicant is subject to a Tax Audit, Assessment or Inspection by the FTA, and the subject matter of the Clarification Request is related to the matter under Tax Audit, Assessment, or Inspection.

Other Cases

 The FTA may also reject Clarification Requests for the below:

  • The Clarification Request is based on a hypothetical scenario that has not been seriously considered by the Applicant.
  • The Clarification Request relates to more than one tax but is not in respect of the same specific tax matter
  • The Clarification Request addresses issues that the FTA suspects may constitute Tax Planning, Tax Avoidance or Tax Evasion, General Anti-Abuse Rules, or similar provisions under double taxation agreements.

Clarification Process

Submitting the Clarification Request

The Applicant can save draft versions of the request. However, the request must be submitted within 40 business days from the date the Applicant initiated the request mechanism on EmaraTax, otherwise the request will be closed.

Withdrawal of a Clarification Request

Applicants are allowed to withdraw their Clarification Request and also avail a refund if the request is withdrawn within two business days from the date the request was submitted or else the request fee would be forfeited.

Issuance of Clarifications

The FTA will issue Clarifications related to Indirect Taxes (i.e., Excise Tax and VAT) within 50 business days from the date the Clarification Request was received. If further information was requested, the Clarification will be issued within 50 business days from the date the further information was received.

In the case of Corporate Tax, Clarifications will be issued within 60 business days from the date the request was received. If further information was requested, the Clarification will be issued within 60 business days from the date the further information was received.

Facing Issues Filing for Private Clarifications? Let us help you with the filing process and make the most of the EmaraTax portal.
Get in touch today!
Picture of Bijal

Bijal

Bijal is a legal and tax compliance expert with over five years of experience in the UAE. She specializes in indirect tax reviews, corporate tax, and company secretarial compliance for multinational corporations. Bijal excels in preparing management accounts and securing UAE tax residency certificates. Currently focused on the proposed UAE Corporate Tax framework, she provides strategic advice for corporate restructuring and cross-border transactions, making her an essential resource for businesses navigating UAE Corporate Tax.

Search

Recent Insights

March 4, 2025

VAT Treatment of Crypto Mining in the UAE 

UAE VAT Decree Law (28) 2022 Tax Procedures
February 20, 2025

Litagation Overview Under UAE VAT Federal Decree-Law No. (28) of 2022 on Tax Procedures

UAE Introduces Domestic Minimum Top-up Tax for MNEs
February 11, 2025

UAE Introduces Domestic Minimum Top-up Tax for MNEs

Best of 2024: Fame's insights on Corporate Tax, VAT, & More
January 6, 2025

Best of 2024: FAME’s Year in Review

Tax treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax
November 20, 2024

MoF Amends Tax Treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax

Real Estate Investment for Natural Persons
October 27, 2024

UAE Corporate Tax – Real Estate Investment for Natural Persons

UAE Corporate Tax – Real Estate Investment for Natural Persons

Real Estate Investment for Natural Persons

Insights

Home Tag Archives: Insights
Real Estate Investment for Natural Persons

On 24 October 2024, the Federal Tax Authority (‘FTA’) published a Corporate Tax (‘CT’) Guide on “Real Estate Investment for Natural Persons”, aiming to provide general guidance on the taxation of Natural Persons in case of income from real estate investments under the Corporate Tax Law.

The objective of this guide is to provide clarity on taxation aspects with respect to what constitutes business income and what forms part of personal income from real estate investments.

The key highlights of the Guide are outlined below:

This guide addresses the tax implications for natural persons under Article 2(2)(c) of Cabinet Decision (‘CD’) No. 49 of 2023 in relation to Real Estate Investment and the income derived from it. Further, the CD defines Real Estate Investment as “Any investment activity conducted by a natural person related to, directly or indirectly, the sale, leasing, sub-leasing, and renting of land or real estate property in the State that is not conducted, or does not require to be conducted through a Licence from a Licensing Authority.” Accordingly, the gross amount of income, and related expenditure, derived by a natural person from Real Estate Investment is excluded from CT.

Natural persons shall be subject to CT only when the total Turnover derived from Business or Business Activities conducted by a natural person exceeds AED 1 million within a Gregorian calendar year.

Scope of Land or Real Estate Property

Real Estate means any of the following:

  • Any area of land over which rights or interests or services can be created.
  • Any building, structure or engineering work attached to the land permanently or attached to the seabed.
  • Any fixture or equipment that makes up a permanent part of the land or is permanently attached to the building, structure or engineering work or attached to the seabed.

Real Estate property can include the following:

  • Residential Property
  • Furnished Holiday Homes
  • Commercial Property
  • Showrooms
  • Warehouses and Storage Rooms
  • Parking Lots and Garages, etc.

Further, Land can include any of the below:

  • Agricultural Land
  • Industrial Land
  • Residential Land, etc.

Location of Land or Real Estate Property

The land or real estate property for investment purposes could be located in the UAE and/ or outside of the UAE.

Does Not Require to be Conducted through a Licence

  • The phrase “required to be conducted” is to be understood covering the situation where a License is required but it has not been obtained. Accordingly, lack of a valid License does not mean that the investment activity will be outside the ambit of CT.
  • Such activity would be considered a Business or Business Activity and the income derived from it would be subject to CT (subject to meeting the relevant Turnover threshold) even if the natural person does not have the required Licence.

Jointly Owned Land or Real Estate Property

  • In the case of co-ownership of land or real estate property by multiple persons, the income derived from Real Estate Investment activity must be allocated to each owner.
  • Where the owner is a natural person, their allocated income will be out of scope of CT if they do not conduct the Real Estate Investment activity through a Licence (or require a Licence to do so).
Confused about how jointly-owned real estate affects your tax situation? Our team ensures compliance and enhances your investment outcomes.
Contact Us Now

Sole Establishments and Sole Proprietorships

  • A sole establishment or sole proprietorship is a Business which is owned and conducted by a natural person on his/ her own account and in their own name
  • In such situations, the natural person and the sole establishment/ sole proprietorship are the same Person as opposed to a single-owner company which has its own legal personality where the owner and the company are separate Persons.

Taxable Business and Excluded Real Estate Investment

  • A natural person may own land or real estate property in a non-business capacity and also operate a Business or Business Activity requiring a Licence.
  • A natural person should be able to clearly demonstrate the basis for separating real estate income earned in a non-business capacity from their other Business or Business Activities to benefit from the exclusion.
  • The real estate income earned in a non-business capacity can benefit from the Real Estate Investment exclusion. If a person has (or requires) a Licence for a Business or Business Activity, and those activities can clearly be distinguished from the Real Estate Investment activities, then the Real Estate Investment exclusion may still be available in relation to those Real Estate Investment activities.
  • On the other hand, if based on the facts, the land or the real estate property or any related income from it, forms part of the Business or Business Activity, and this is conducted or is required to be conducted through a Licence, then any income would fall outside the definition of Real Estate Investment and, therefore, be within the scope of CT.

Apportionment of expenditure

  • Expenditures related to Real Estate Investment may be shared between activities falling within the Real Estate Investment exclusion and activities falling within other Business or Business Activities.
  • Shared costs, such as general overheads must be allocated indirectly using a fair and consistent apportionment method to ensure each activity accurately reflects its share of expenses. These methods can be applied to factors such as headcount, floor space, usage, time spent, or any other measurable and reasonable basis.

General Anti-Abuse Rule

If a real estate transaction or arrangement is entered into with the main purpose of obtaining a CT advantage, such as the Real Estate Investment exclusion, and this lacks commercial substance as well as is inconsistent with the intention of the CT Law, the FTA can require the relevant income to be treated as Taxable Income.

Confused about how the new Corporate Tax Regime impacts your Real Estate Investments? We can navigate the taxation complexities to help you maximize your returns.
Get in Touch Now
Picture of Bijal

Bijal

Bijal is a legal and tax compliance expert with over five years of experience in the UAE. She specializes in indirect tax reviews, corporate tax, and company secretarial compliance for multinational corporations. Bijal excels in preparing management accounts and securing UAE tax residency certificates. Currently focused on the proposed UAE Corporate Tax framework, she provides strategic advice for corporate restructuring and cross-border transactions, making her an essential resource for businesses navigating UAE Corporate Tax.

Search

Recent Insights

March 4, 2025

VAT Treatment of Crypto Mining in the UAE 

UAE VAT Decree Law (28) 2022 Tax Procedures
February 20, 2025

Litagation Overview Under UAE VAT Federal Decree-Law No. (28) of 2022 on Tax Procedures

UAE Introduces Domestic Minimum Top-up Tax for MNEs
February 11, 2025

UAE Introduces Domestic Minimum Top-up Tax for MNEs

Best of 2024: Fame's insights on Corporate Tax, VAT, & More
January 6, 2025

Best of 2024: FAME’s Year in Review

Tax treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax
November 20, 2024

MoF Amends Tax Treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax

Tax Procedures for Private Clarifications: UAE Corporate Tax
November 19, 2024

Tax Procedures for Private Clarifications: UAE Corporate Tax

UAE Corporate Tax – Transfer Pricing Disclosure Form 

UAE Corporate Tax Transfer Pricing Disclosure Form

Insights

Home Tag Archives: Insights
UAE Corporate Tax Transfer Pricing Disclosure Form

The Federal Tax Authority (FTA) has recently updated the Corporate Tax (CT) return form, particularly concerning the Transfer Pricing Disclosure Form (TP Disclosure Form). Now, taxable persons must disclose transactions with Related Parties and Connected Persons in the TP Disclosure Form. 

With the introduction of Corporate Tax in the UAE, the TP Disclosure Form is a crucial element of CT Returns. It ensures transparency in related party transactions and plays a significant role in determining a Taxable Person’s tax liabilities. 

It is worthwhile to note that it is an integral part of the CT Return process and these additional details are considered as part of the TP disclosure form.  It is not a separate stand-alone form to be filled and filed but one of the segments/components of the CT return form. 

In the TP Disclosure form, FTA seeks the following information to be provided by the Taxpayer:

Are You Prepared for Accurate Disclosures? Start your benchmarking for the TP Disclosure Form.
Get in Touch Now!

Related Party Transactions Reporting Schedule Requirements

  • Legal Full Name of the Related Party (RP)
  • Transaction Type with RP
  • Country of Tax Residence of the related party
  • Corporate Tax TRN of RP
  • Gross Value of Transaction with RP in AED
  • TP method adopted (TNMM, CUP, CPM, RPM)
  • Arm Length Value (shall be determined from the benchmarking conducted during the tax period)
  • Tax Adjustment (Difference of Income/expense & Arm Length Value)
Need to Ensure Corporate Tax Compliance? Our team can streamline your Transfer Pricing requirements.
Contact Us Now!

Payments/ Benefits to Connected Persons Reporting Requirements

  • Full Name of the Connected Person (CP)
  • Corporate Tax TRN of CP
  • Payment made or benefit provided to CP
  • Description of payment or benefit provided to CP
  • Actual value of payment or benefit to be provided in AED
  • Market value of payment or benefit (shall be determined from the benchmarking conducted during the tax period)
  • Tax Adjustment (Difference of Income/expense & Arm Length Value)

This comprehensive disclosure form aims to ensure compliance with the newly introduced UAE corporate tax law, allowing the tax authorities to evaluate the arm’s length nature of related party transactions effectively.  Since the details required are many, we would urge Corporate not to take the TP compliance lightly.  Unless one has carried out a Benchmarking exercise, one will not be able to complete and fill in the above details or will not have sufficient documentation to justify the market value or arm’s length value for the transaction and this needs to be done for each of the related party / connected person transactions. 

Note: Accurate and complete disclosure is essential to remain compliant and avoid penalties. TP form is an integrated part of the CT Return and is required to be submitted along with the CT Return. Therefore, failure to submit the TP form/ CT Return would lead to a penalty of:

  • AED 500 per month for the first 12 months
  • AED 1,000 per month from the 13th month onwards
Seeking Guidance for Your Corporate Tax Return? Avail expert advice to simplify your Corporate Tax and Transfer Pricing compliance.
Reach Out Today!
Picture of Bijal

Bijal

Bijal is a legal and tax compliance expert with over five years of experience in the UAE. She specializes in indirect tax reviews, corporate tax, and company secretarial compliance for multinational corporations. Bijal excels in preparing management accounts and securing UAE tax residency certificates. Currently focused on the proposed UAE Corporate Tax framework, she provides strategic advice for corporate restructuring and cross-border transactions, making her an essential resource for businesses navigating UAE Corporate Tax.

Search

Recent Insights

March 4, 2025

VAT Treatment of Crypto Mining in the UAE 

UAE VAT Decree Law (28) 2022 Tax Procedures
February 20, 2025

Litagation Overview Under UAE VAT Federal Decree-Law No. (28) of 2022 on Tax Procedures

UAE Introduces Domestic Minimum Top-up Tax for MNEs
February 11, 2025

UAE Introduces Domestic Minimum Top-up Tax for MNEs

Best of 2024: Fame's insights on Corporate Tax, VAT, & More
January 6, 2025

Best of 2024: FAME’s Year in Review

Tax treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax
November 20, 2024

MoF Amends Tax Treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax

Tax Procedures for Private Clarifications: UAE Corporate Tax
November 19, 2024

Tax Procedures for Private Clarifications: UAE Corporate Tax

The UAE Ministry of Finance cancels Economic Substance Regulations

UAE Ministry of Finance Cancels Economic Substance Regulation

Insights

Home Tag Archives: Insights
UAE Ministry of Finance Cancels Economic Substance Regulation

The UAE Ministry of Finance cancels Economic Substance Regulations

With the Introduction of Federal UAE CT Law, the UNITED ARAB EMIRATES MINISTRY OF FINANCE issued Ministerial Decree No. (239) of 2023 on the Reconstitution of the Standing Committee to Follow Up the Implementation of Economic Substance Requirements

Consequently, The Ministry of Finance, with the approval of council of ministers have issued Cabinet Resolution No. (98) of 2024 (the resolution) amending some provisions of Cabinet Resolution No. (57) of 2020 concerning the Determination of Economic Substance Requirements – The Economic Substance Regulations

The Economic Substance Regulations (ESR)

The UAE introduced Economic Substance Regulations to honor the UAE’s commitment as a member of the OECD Inclusive Framework on BEPS, and in response to a review of the UAE tax framework by the EU which resulted in the UAE being included on the EU list of non-cooperative jurisdictions for tax purposes (EU Blacklist). The issuance of the Economic Substance Regulations on 30 April 2019 (the Regulations), and the subsequent release of the Guidance on the application of the Regulations on 11 September 2019, was a requirement for the removal of the UAE from the EU Blacklist on 10 October 2019.

On 30 April 2019, the Cabinet of Ministers of the United Arab Emirates (“UAE”) issued Cabinet Resolution No. 31 of 2019 Concerning Economic Substance Regulations (“Resolution 31”). On 10 August 2020 amendments were introduced to Resolution 31 by the Cabinet of Ministers by way of Cabinet of Ministers Resolution No. 57 of 2020.

The Regulations required UAE onshore and free zone companies and certain other business forms that conduct any of the defined “Relevant Activities” to maintain and demonstrate an adequate “economic presence” in the UAE relative to the activities they undertake (“Economic Substance Test”).

Is your business prepared for the latest ESR regulatory updates in the UAE? Ensure your business documentation is in order.
Get in Touch Now!

Cabinet Resolution No. (98) Of 2024 

The new resolution defines the period for applicability of the Economic substance Regulations (ESR). It provides information on the Fiscal years for which ESR compliance were required to be met and also confirms the cessation of Economic substance Regulation in the UAE.  

It cancels the requirements for UAE entities falling under the Scope of ESR (Licensees) to submit Economic substance notification and Economic substance Report for financial years ending after 31 December 2022. 

Article I and Article II of the Cabinet Resolution No. (98) of 2024 are discussed below in details 

Article I – Applicability of Cabinet Resolution No. (57) of 2020

A new article No. (2) bis – Scope of Application shall be added to the aforementioned Cabinet Resolution No. (57) of 2020

As highlighted above, The Ministry of Finance has restricted the scope of application of Cabinet Resolution No. (57) of 2020 only until the fiscal year ending on 31/12/2022. Accordingly, the provisions of this resolution shall apply to the fiscal years commencing from 01/01/2019 to the fiscal year ending on 31/12/2022 – The ESR Period

Will the Entities need to file ESR Notification and Report on for FY starting on or after 01 January 2023?

The UAE Entity that meets the definition of Licensee post the ESR Period- starting on or after 01 January 2023- will no longer be required to comply with the ESR reporting obligations or demonstrate adequate substance in the UAE. We can conclude that ESR regime in the UAE stands cancelled from financial years starting on or after 01 January 2023

For the ESR filings that have been already submitted by Licensees for Financial years falling after the ESR Period – a further clarification is expected from the authorities

ESR filings done for applicable ESR period – 01/01/2019 to 31/12/2022, can be assessed by the National Assessing Authority – FTA. ESR Audit for the effective period has already been started by FTA for quite a sometime now (Refer our detailed article on ESR AUDIT)

Therefore, Entities should maintain proper documentation and be prepared for ESR Audits for ESR period 01/01/2019 to 31/12/2022.

Article II – Administrative fines stand cancelled

So, what happens to the administrative penalty for non-compliance levied on any financial years commencing after the ESR Period? The decision clarifies that such administrative penalties will be cancelled by FTA and the amounts collected will be refunded

The procedure to apply for refund in this regard is expected by the authorities

Key Takeaways

  • Scope of Cabinet Resolution No. (57) of 2020 concerning the Determination of Economic Substance Requirements shall remain applicable only for fiscal years commencing from 01/01/2019 to the fiscal year ending on 31/12/2022. The ESR regime in the UAE has been withdrawn for Financial Years starting after 31/12/2022
  • The Entities should maintain the proper documentation with regards to ESR submissions done for effective ESR period – FY starting on or after 01/01/22019 till Financial Year ending on or before 31st December 2022 as FTA may conduct ESR Audit
  • To that effect, administrative fines imposed post this effective period shall be ineffective and the authority shall refund the fines paid by the Licensees for fiscal year ending after December 31, 2022. All the grievances filed for fiscal year ending after December 31, 2022 shall be ended. If your entity being a licensee has filed any appeal request or paid any fines pertaining to fiscal years ending after December 31, 2022, such entity shall be eligible for refund towards fines paid and their grievances filed with National Assessing Authority shall be cancelled

With the End of ESR Period, the UAE Entities can now focus on UAE CT Regime and clarifications from the Authority are expected for administrative procedures post ESR Period for Administrative penalties Levied or already paid and ESR Filings done for Post ESR Period 

Have you checked your eligibility for refunds after the ESR update? Act now to secure your refund
Reach Out Now!
Picture of Bijal

Bijal

Bijal is a legal and tax compliance expert with over five years of experience in the UAE. She specializes in indirect tax reviews, corporate tax, and company secretarial compliance for multinational corporations. Bijal excels in preparing management accounts and securing UAE tax residency certificates. Currently focused on the proposed UAE Corporate Tax framework, she provides strategic advice for corporate restructuring and cross-border transactions, making her an essential resource for businesses navigating UAE Corporate Tax.

Search

Recent Insights

March 4, 2025

VAT Treatment of Crypto Mining in the UAE 

UAE VAT Decree Law (28) 2022 Tax Procedures
February 20, 2025

Litagation Overview Under UAE VAT Federal Decree-Law No. (28) of 2022 on Tax Procedures

UAE Introduces Domestic Minimum Top-up Tax for MNEs
February 11, 2025

UAE Introduces Domestic Minimum Top-up Tax for MNEs

Best of 2024: Fame's insights on Corporate Tax, VAT, & More
January 6, 2025

Best of 2024: FAME’s Year in Review

Tax treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax
November 20, 2024

MoF Amends Tax Treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax

Tax Procedures for Private Clarifications: UAE Corporate Tax
November 19, 2024

Tax Procedures for Private Clarifications: UAE Corporate Tax

UAE VAT Amendments: Cabinet Decision No. 100

Insights

Home Tag Archives: Insights

The FTA has introduced an amendment to the Executive Regulations of the UAE VAT law through cabinet decision no.100 of 2024 which is amending cabinet decision no 52 of 2017. 

These changes will be effective from 15th November 2024 (unless otherwise specified in the article of this decision) 

Key Amendment’s and their implications are discussed below

Financial Services

Article 1 includes definition of Virtual Asset. Virtual Asset are defined as “Digital representation of value that can be digitally traded or converted and can be used for investment purposes and does not include digital representations of fiat currencies or financial securities”. 

Article 42- Tax Treatment for financial service

Article 42(2) has been amended to include the following within the definition of financial services,

  • Providing investment fund management services independently for a fee, for funds licensed by a competent authority in the state, including but not limited to managing fund operations and managing investments for the benefit of the fund or on its behalf and monitoring and improving fund performance;
  • Transferring ownership of virtual assets, including virtual Currencies;
  • Conversion of Virtual Assets;
  • Keeping and managing Virtual assets and enabling control over them

Article 42(3) exempt following financial services from VAT retrospectively from 1st Jan 2018,

  • Transferring ownership of virtual Assets, including virtual currencies.
  • Conversion of Virtual Assets

Impact– It brings clarity to the taxation of virtual assets. Investment fund management services, virtual currencies considered as exempt financial services from VAT.  

Another important amendment is introducing exceptions for the supply effective from 1st January 2023: 

  • Transfer of ownership or disposal rights of government building between government entities 
  • Transfer of ownership or disposal of real estate asset between government entities 
  • Above also covers the right to use or exploit those assets. 

Impact – Significant impact for government entities transactions like transfer, lease of these assets will no longer considered to be supply hence such transactions are not subject to VAT. 

Article 5 – Exceptions related to Deemed Supply

Exceptions related to Deemed Supply, now has extended to the following supply as well:

Where both the Supplier and Recipient are either government entity or charitable organization then, up to AED 250,000 for each supplier within 12-month period are also falls under exception to deemed supply.

Impact –  Encouraging activities between government entities and/or charitable organizations without the burden of VAT. 

Article 14 – Tax Deregistration

Clause 9 has been added which states that deregistration does not absolve a Person from having to comply with the provisions of the Decree-Law and this Decision, including filing another Tax Registration application when the Tax Registration requirements are met.

Article 14 (bis) – Tax Deregistration to Protect the Integrity of the Tax System (Newly Added Provision) 

The Authority may deregister a Person for Tax if the Authority determines that maintaining such Tax Registration may prejudice the integrity of the Tax system, provided any of the following conditions is met; 

  • The Registrant no longer meets the Tax Registration requirements  
  • The Registrant has not submitted tax deregistration application to the Authority, or the Registrant has initiated a Tax deregistration application with the Authority but has not completed such application

 Article 29-Profit Margin Scheme 

In a further effort to clarify VAT calculations, Article 29 has defined “Purchase Price” will include all costs and fees incurred when purchasing goods. 

Impact – Clarified that for calculation of profit margin under the scheme, whole cost associated with the acquisition of goods are considered.  

Are you prepared for the FTA’s new VAT Amendments? Let FAME Advisory provide you with tailored insights and support.
Get in Touch Now!

Proof for Export of Goods

Article 30 – Zero-rating the export of goods 

FTA Specifies the documents which are required for Zero rating the export of goods. The FTA has clarified that any of the following documents would be acceptable to prove the export as zero-rated supply, 

  • A Custom declaration and commercial evidence proving the export 
  • A Shipping certificate and official evidence proving the export 
  • A Custom declaration providing the custom suspension if the goods are under custom suspension 

The clarification provided by FTA for “official evidence” and “commercial evidence” 

Official Evidence  

A certificate of export issued by the custom in the state or a clearance certificate issued by those authorities or the competent authorities (Exit Certificate) in the state regarding the goods leaving the state after verifying that the goods have left the state, or a document or clearance certificate certified by competent authorities in the destination country indicating that the goods have entered it. 

 

Commercial Evidence  

A document issued by shipping or air transport companies or agents proving the transportation and departure of goods from the state to outside the state, including any one of the following documents: 

  • Airway Bill or Air cargo manifest 
  • Bill of lading or Sea cargo manifest 
  • Land transport bill or Land cargo manifest  

In amended provision the term “Shipping certificate” has been clarified which states that certificate issued by shipping or air transport companies or agents equivalent to commercial evidence if it is not available. 

Summary 

Documents required for Zero rating the export of goods (Till 15th November 2024) 

Business must require all the documents mentioned below for export of goods 

Options
Particulars
Option 1
Exit Certificate, Custom declaration, Airway bill or bill of lading
Option 2
Custom declaration providing the custom suspension if the goods are under custom suspension

Documents required for Zero rating the export of goods (From 15th November 2024) 

Business can retain documents based on any of the following option for export of goods 

Options
Particulars
Option 1
Custom declaration and Bill of lading or Airway Bill
Option 2
Exit Certificate or Entry certificate of destination country and shipping certificate
Option 3
Custom declaration providing the custom suspension if the goods are under custom suspension

Impact – These clarity helps the exporter to understand the process and documents require for business applying zero rate on exports.  

Article 31- Zero-Rated Services 

Amendments have also been made regarding the zero-rating of specific services. Services listed in clauses 3 to 8 of Article 30, and Article 31 of the VAT Decree Law will be subject to the standard rate of VAT if the place of supply is within the UAE, even if they are considered exports of service. 

Key Services Affected 

  • Installation Services: Related to goods supplied by others, taxed at the place where the service is performed. 
  • Transport Services: Provided to lessees who are not taxable persons, taxed where the means of transport are made available. 
  • Hospitality Services: Restaurant, hotel, and catering services are taxed at the location of service performance. 
  • Cultural and Educational Services: Taxed where the services are performed. 
  • Real Estate Services: Taxed based on the location of the real estate. 
  • Transportation Services: Taxed where the transportation begins. 
  • Telecommunications and Electronic Services: Taxed based on where the services are enjoyed. 

Clarifications on Repair and Maintenance Services 

Article 35(1)(b) further clarifies VAT treatment for repair, maintenance, and conversion services for means of transport: 

  • Repair Services: If performed onboard the means of transport. 
  • Maintenance Services: Includes inspection, testing, cleaning, and similar services if carried out onboard. 
  • Conversion Services: Should maintain compliance with conditions of Article 34 on post-conversion.

Impact –  These clarifications provide a clear understanding of VAT treatment for these specific services, facilitating better compliance and planning for businesses involved in the transport sector. 

Article 38- Zero-rating of Buildings Specifically Designed to be Used by Charities 

The definition of “Relevant Charitable Activity” has been deleted.  

Article 46- Tax on Supplies of More than One Component 

When supplies don’t have a principal component, VAT treatment will be based on overall nature of the supply. 

Impact – These changes provide clarity on how to treat composite supplies in VAT 

What impact will the recent VAT changes have on your operations? Understand these amendments with us.
Reach Out Today!

Input VAT Recovery on Health Insurance for dependent

Article 53 – Non-Recoverable Input tax  

Allow recovery of input VAT for health insurance, including enhanced health insurance for employees and their dependents within the limit of one spouse and three children under the age of 18. 

Nature of Expense
Input tax recovery (Till 15th November 24)
Input tax recovery (After 15th November 2024)
Employee Health Insurance
Yes, business can recover input VAT
Yes, business can recover input VAT
Dependent Health Insurance (Within limit specified)
No, business can’t recover VAT Input tax
Yes, business can recover input VAT

Impact– This amendment relieves businesses, as it allows them to recover VAT on the insurance of dependents. 

Article 55-Apportionment of Input Tax

Tax year for the following cases has been amended:

  • where a Taxable Person applies for Tax deregistration, the Tax year shall end on the last day such Person was a Taxable Person,
  • where a member joins a Tax Group, the Tax year shall end on the last day before joining the Tax Group, or
  • where a member leaves a Tax Group, the Tax year shall end on the last day such Person was a member of the Tax Group.

If the tax year is shorter than twelve months, the limit of AED 250,000 mentioned in clause 11 shall be proportionate to the length of such tax period.

Article 58-Adjustments under the capital Assets Scheme

Clause 17 is included in the article which states that the first tax year for a self-developed capital asset is the year it is first used.

Article 59- Tax Invoices

  • The timeline for issuing Tax invoices has been changed in specific scenarios, such as simplified and tax invoices.
  • If the tax invoice is a simplified tax invoice (invoice amount up to AED 10,000), the registrant must issue the simplified tax invoice on the date of supply itself.
  • Business has 14 days to issue the tax invoices (invoice amount over AED 10,000) from the end of the calendar month that includes the date of supply.
  • Where an agent who is a Registrant makes a supply of Goods or Services for and on behalf of the principal of that agent, that agent may issue a Tax Invoice in relation to that supply as if that agent had made the supply, provided that the principal shall not issue a Tax Invoice, subject to:
    • The agent retaining sufficient records in such a manner as to determine the name, address and Tax Registration Number of the principal supplier,
    • The principal supplier retaining sufficient records in such a manner as to determine the name, address and Tax Registration Number of the agent
  • The Authority may specify the cases in which a Tax Invoice must be issued, even if one of the cases provided for simplified tax invoice of this Article applies.

Impact – These updates aim to streamline compliance and reduce penalties

Article 69 – Foreign Governments

The VAT refund request for foreign governments, international organisations, diplomatic bodies and missions must submit within 36 (thirty-six) months from the date the official incurred such Tax or during any other period specified under the provisions of any international treaty or other agreement in force in the State

Impact – This amendment introduced a timeline for foreign governments for applying for VAT refund.

These changes enhance clarity and flexibility for businesses across various sectors. It is an ideal time to review your VAT practices and ensure compliance with the new regulations. 

With the recent amendments to the VAT law, it’s crucial to reassess your VAT practices. FAME Advisory can help you navigate the implications.
Contact Us Today!
Picture of Udit

Udit

Udit Chokshi is a Taxpert, helping businesses all across the UAE in getting tax audit-ready, streamlining their VAT and accounting processes, and shield them against tax evasion. Being an active listener, Udit absorbs and understands the client’s problem and situation and communicates the facts and solutions honestly.

Search

Recent Insights

March 4, 2025

VAT Treatment of Crypto Mining in the UAE 

UAE VAT Decree Law (28) 2022 Tax Procedures
February 20, 2025

Litagation Overview Under UAE VAT Federal Decree-Law No. (28) of 2022 on Tax Procedures

UAE Introduces Domestic Minimum Top-up Tax for MNEs
February 11, 2025

UAE Introduces Domestic Minimum Top-up Tax for MNEs

Best of 2024: Fame's insights on Corporate Tax, VAT, & More
January 6, 2025

Best of 2024: FAME’s Year in Review

Tax treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax
November 20, 2024

MoF Amends Tax Treatment of Unincorporated Partnership, Foreign Partnership, and Family Foundation under UAE Corporate Tax

Tax Procedures for Private Clarifications: UAE Corporate Tax
November 19, 2024

Tax Procedures for Private Clarifications: UAE Corporate Tax