New VAT Rules in UAE 2023: Comprehensive Guide 

Introduction:

Value Added Tax, that’s known as (VAT) is considered an indirect tax forced by the Federal Tax Authority (FTA) based on the general consumption of purchases and sales of goods and services for most countries around the world. That makes it one of the most important types of consumption taxes in the UAE.

This tax was first conducted on corporations and individuals in order to enhance the whole economy of the United Arab Emirates without depending on the oil companies revenues. That’s why VAT in UAE is used for financing public services, such as the infrastructure developments for schools, hospitals, and other facilities. So that these services can generate revenues for the UAE government.

For this reason, the UAE Ministry of Finance took some economic decisions to change the whole landscape tax rules for a leading global hub for businesses and investments.

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What are the changes in the UAE in 2023?

The new rules of VAT rate in UAE 2023 are implemented for better taxation through the governmental authorities for ensuring compliance with taxation requirements and avoiding penalties. As these changes were made to the UAE VAT Decree-Law to affect all businesses in the whole country, so that they must be obeyed by all businesses.

Although the UAE started to make significant changes since 2018, each year new laws are set for implementation to make lives easier for residents of Dubai. Here comes the most important enforced laws in Dubai.

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What are the tax laws in Dubai 2023?

These laws include but not limited to:

• Tourism taxes decrease: According to the Department of Culture and Tourism, the government announced different changes in fees in the tourism sector. That turns out to be implemented by September 1 2023, with 6% to 4% reduction in the governmental fee amendments in tourism. 

• Travel ban removal: According to the Dubai courts, there’s a new digital way to have the travel ban removed through the Dubai Public Prosecution new service that allows individuals to make an online payment for a court approval resulting in enjoying an automatic removal of their travel ban.

• UAE work permit extension: According to the Federal National Council (FNC), any employee registered under the employment system in the UAE, there are two-year work permits that are set to be extended to three years, starting from May 2023. As well this move is supposed to reduce the costs coming along with getting work permits. 

• Removal of grace period: According to the Federal Authority for Identity, Citizenship, Customs and Port Security (ICP) in Dubai, after the expiry of Dubai tourist visas, there will no longer be a 10-day grace period given for extending tourist visa visits starting from May 2023.

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Categorizing new VAT rules in UAE 2023

Answering the question of “What are the new VAT rules for 2023?”, there are 4 categories dividing the VAT rules changes in UAE for 2023, these categories are:

1. January 2023: The UAE VAT Rules on Statute of Limitation was announced in October 2022 and implemented in January 2023.
2. February 2023: The Federal Tax Authority (FTA) released regulations regarding a new VAT reporting requirement for the UAE taxpayers. Particularly, businesses that sell taxable goods with an annual sales of 100 million AED or less are subject to this obligation.
   
   As well as businesses that exceeded the 100 million AED at the end of 2022 fiscal year, they will be subjected to the new reporting requirement starting on July 1, 2023. 

3. March 2023: Starting from March 2023, there will be a voluntary disclosure for any VAT return errors to the Federal Tax Authority (FTA). Before this VAT rule, only errors that exceed 10,000 AED  were subjected to voluntary disclosure. 
4. June 2023: Based on the information provided by the applicants to the FTA for any query, or tax guidance for specific transactions, a tax clarification should be filed and applied by the applicant to the FTA for proceeding with different transactions needed for the applicant,

Now, it’s time to know the comprehensive new VAT rules in UAE 2023.

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What are the new VAT rules in UAE 2023?

There are various new VAT rules were implemented in the UAE in 2023, these rules are:

• Time Extension for a Tax Audit: The Tax authorities can’t typically obtain and audit tax returns for five years just after the end of the tax period whether on a monthly or quarterly basis. Although time extension can be audited for an additional four years. 
• Tax Evasion: That could be conducted for unlawful actions when someone avoids paying taxes for up to 15 years after the end of the tax period. That’s referred to Tax Evasion to take place.
• 0% rate for Exporters: If all of the goods or services offered by a specific company are zero-rated for the VAT. These companies can choose to request a VAT exemption. On the other hand, businesses that are already registered for the VAT but unaware of this rule, are required to keep up with VAT compliance obligations. That means even those who are registered have the option for VAT exemption.
• Retention payments: If there is a delay for more than a year between the progressive stages of providing goods and services, and filing the retention payment claims, the VAT will still need to be paid. With a specified date of supply after the day the goods or services are provided.
• Deemed supplies: The recipient company of particular goods or services could be eligible to fully recover credit on its purchases, that means under the new VAT laws, this company won’t be liable for the VAT after providing goods or services to related parties.

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New VAT rules in UAE 2023 for corporates

Corporate taxes are mainly for VAT registration in UAE that mandates businesses to obtain VAT registration legally if the total value of taxable supplies and imports per single fiscal year exceeds 375,000 AED. Also, it  can be voluntarily obtained if the total value exceeds 187,500 AED. Additionally, Businesses can complete the VAT registration process successfully through the FTA website.

Moreover, there are different types of tax supplies under VAT in the UAE depending on the nature of the goods or services. As well, the standard rate for supplies is 5% VAT that’s applied to these goods and services.

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Conclusion: Guarantee your taxation procedures success through one-way!

Considering the updated modifications to the VAT laws in UAE 2023, business owners should be aligned with the amendments done frequently by the FTA in the UAE. That’s why guaranteeing the success of taxation procedures with comparable VAT changes that are forced everyday, it’s necessary to go for a taxation agency that can shortcut all your business taxation efforts.

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FAQs:

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