UAE amends VAT law, introduces new tax exemptions
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The Ministry of Finance announced significant changes to the UAE's Value Added Tax (VAT) law, following amendments approved by the UAE Cabinet. These changes include VAT exemptions on three critical services: investment fund management, certain services related to virtual assets and in-kind donations between charitable and government entities.
Previously taxed at 5%, these services will now be exempt from VAT, a move aimed at promoting investment, stimulating economic growth and easing the financial burden on charitable organizations. In-kind donations, specifically between government entities and charities valued up to Dh5 million within a 12-month period, will also benefit from this exemption, enabling these organizations to make better use of the goods they receive.
The amendments are part of broader efforts to streamline the tax environment in the UAE, ensuring that the regulations remain favorable for businesses and investors. To further tighten tax compliance, the Federal Tax Authority has been granted the power to de-register taxpayers in certain situations.
Younis Haji Al Khoori, Undersecretary of the Ministry of Finance, emphasized the importance of these changes in aligning with international best practices, as well as their role in simplifying tax procedures. He said, "The Ministry is committed to coordinating with relevant stakeholders from both the public and private sectors and working to update our regulations to enhance the UAE's business environment".
The Cabinet's amendments to the Executive Regulations of Federal Decree-Law No. 8 of 2017 on VAT are designed to address past challenges faced by the business community and take into account feedback from stakeholders. They also align with provisions in Federal Decree-Law No. 18 of 2022, which previously amended the original VAT law.
These changes mark another step in the UAE's ongoing efforts to refine its tax system, balancing the collection of revenues with the goal of boosting the nation's investment climate.
