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KSA VAT Law will be updated soon.

 

Article (1)
Definitions

In the application of the provisions of this Decision, the following words and expressions shall have the meanings assigned against each, unless the context requires otherwise:

State: United Arab Emirates.
Minister: Minister of Finance.
Authority: Federal Tax Authority.
Value Added Tax: A tax imposed on the import and supply of Goods and Services at each stage of production and distribution, including the Deemed Supply.
Tax: Value Added Tax (VAT).
GCC States: All countries that are full members of The Cooperation Council for the Arab States of the Gulf pursuant to its Charter.
Implementing States: GCC States that are implementing a Tax law pursuant to an issued legislation.
Goods: Physical property that can be supplied including but not limited to real estate, water, and all forms of energy as specified in this Decision.
Services: Anything that can be supplied other than Goods.
Standard rate: The Tax rate specified in Article (3) of the Decree-Law.
Import: The arrival of Goods from abroad into the State or receiving Services from outside the State.
Concerned Goods: Goods that have been imported, and would not be exempt if supplied in the State.
Concerned Services: Services that have been imported where the place of supply is in the State, and would not be exempt if supplied in the State.
Person: Natural or legal person.
Taxable Person: Any Person registered or obligated to register for Tax purposes under the Decree-Law.
Taxpayer: Any person obligated to pay Tax in the State under the Decree-Law, whether a Taxable Person or end consumer.
Legal Representative: The manager of a company or a guardian or custodian of a minor or incapacitated person, or any other Person appointed legally to represent another Person.
Tax Registration: A procedure according to which the Taxable Person or his Legal Representative registers for Tax purposes at the Authority.
Tax Registration Number (TRN): A unique number issued by the Authority for each Person registered for Tax purposes.
Registrant: The Taxable Person issued with a TRN.
Recipient of Goods: Person to whom Goods are supplied or imported.
Recipient of Services: Person to whom Services are supplied or imported.
Tax Return: Information and data specified for Tax purposes and submitted by a Taxable Person in accordance with a form prepared by the Authority.
Consideration: All that is received or expected to be received for the supply of Goods or Services, whether in money or other acceptable forms of payment.
Business: Any activity conducted regularly, on an ongoing basis and independently by any Person, in any location, such as industrial, commercial, agricultural, professional, service or excavation activities or anything related to the use of tangible or intangible property.
Exempt Supply: A supply of Goods or Services for Consideration while conducting Business in the State, where no Tax is due and no Input Tax may be recovered except according to the provisions of the Decree-Law.
Taxable Supply: A supply of Goods or Services for a Consideration by a Person conducting Business in the State, and does not include Exempt Supplies.
Deemed Supply: Anything considered a supply and treated as a Taxable Supply according to the instances stated in the Decree-Law.
Input Tax: Tax paid by a Person or due from him when Goods or Services are supplied to him, or when conducting an Import.
Output Tax: Tax charged on a Taxable Supply and any supply considered to be a Taxable Supply.
Recoverable Tax: Amounts that were paid and can be repaid by the Authority to the Taxpayer pursuant to the provisions of the Decree-Law.
Due Tax: Tax that is calculated and charged pursuant to the Decree-Law.
Payable Tax: Tax that is due for payment to the Authority.
Tax Period: The specified timeframe, for which Payable Tax shall be calculated and paid.
Tax Invoice: A written or electronic document in which the occurrence of a Taxable Supply is recorded with details pertaining to it.
Tax Credit Note: A written or electronic document in which the occurrence of any amendment to a Taxable Supply that reduces or cancels it is recorded and the details pertaining to it.
Government Entities: Federal and local ministries, government departments, government agencies, authorities and public institutions in the State.
Charities: Societies and associations of public welfare not aiming to make a profit that are listed within a decision issued by the Cabinet upon the recommendation of the Minister.
Mandatory Registration Threshold: An amount specified in this Decision that if exceeded by the value of Taxable Supplies or is anticipated to be exceeded, the supplier must apply for Tax Registration.
Voluntary Registration Threshold: An amount specified in this Decision that if exceeded by the value of Taxable Supplies or taxable expenses or is anticipated to be exceeded, the supplier may apply for Tax Registration.
Transport-related Services: Shipment, packaging and securing cargo, preparation of Customs documents, container management, loading, unloading, storing and moving of Goods, or any another closely related services or services that are necessary to conduct the transportation services.
Place of Establishment: The place where a Business is legally established in a country pursuant to its decision of establishment, in which significant management decisions are taken or central management functions are conducted.
Fixed Establishment: Any fixed place of business, other than the Place of Establishment, in which the Person conducts his business regularly or permanently and where sufficient human and technology resources exist to enable the Person to supply or acquire Goods or Services, including the Person’s branches.
Place of Residence: The place where a Person has a Place of Establishment or Fixed Establishment, in accordance with the provisions of the Decree-Law.
Non-Resident: Any person who does not own a Place of Establishment or Fixed Establishment in the State and usually does not reside in the State.
Related Parties: Two or more Persons who are not separated in economic, financial or regulatory aspects, where one can control the others either by Law, or through the acquisition of shares or voting rights.
Designated Zone: Any area specified by a decision of the Cabinet upon the recommendation of the Minister, as a Designated Zone for the purpose of the Decree-Law.
Export: Goods departing the State or the provision of Services to a Person whose Place of Establishment or Fixed Establishment is outside the State, including Direct and Indirect Export.
Direct Export: An Export of Goods to a destination outside of the Implementing States, where the supplier is responsible for arranging transport or appointing an agent to do so on his behalf.
Indirect Export: An Export of Goods to a destination outside of the Implementing States, where the overseas customer is responsible for arranging the collection of the Goods from the supplier in the State and who exports the Goods himself, or has appointed an agent to do so on his behalf;
Overseas Customer: A Recipient of Goods who does not have a Place of Establishment or Fixed Establishment in the State, does not reside in the State, and does not have a Tax Registration Number.
Voucher: Any instrument that gives the right to receive Goods or Services against the value stated thereon or the right to receive a discount on the price of the Goods or Services. Vouchers do not include postage stamps issued by the Emirates Post Group.
Capital Assets: Business assets designated for long-term use.
Capital Assets Scheme: A scheme by which initially recovered Input Tax is adjusted based on actual use during a specified time.
Administrative Penalties: Amounts charged to a Person by the Authority for a breach of the provisions of the Decree-Law and the Federal Law No. (7) of 2017 on Tax Procedures.
Tax Group: Two or more Persons registered with the Authority for Tax purposes as a single Taxable Person in accordance with the provisions of the Decree-Law.
Notification: Notification to the concerned Person or his Tax Agent or Legal Representative of decisions issued by the Authority through the means stated in the Federal Law No. (7) of 2017 on the Tax Procedures.
Tax Evasion: The use of illegal means by a Person resulting in lowering the amount of Due Tax, non-payment of the Due Tax or a refund of Tax that he does not have the right to have refunded under the Decree-Law.
Decree-Law: Federal Decree Law no. (8) of 2017 on Value Added Tax.
Title Two

Article (2)
Supply of Goods

1. A transfer of ownership of Goods or of the right to use them from one Person to another Person shall include for instance the following:
a. A transfer of ownership of Goods under a written or verbal agreement for any sale;
b. A transfer of ownership for a Consideration in a compulsory manner pursuant to the applicable legislations.
2. For the purposes of Clause (1) of this Article, a transfer of the right to use any assets shall not be treated as a supply of Goods unless the other Person is able to dispose of them as owner.
3. Entry into a contract between two parties causing the transfer of Goods at a later time shall be considered a supply of Goods where the agreement mentions a transfer or intention to transfer the ownership of Goods or a future transfer of ownership of Goods.
4. The following shall be considered a supply of Goods:
a. A supply of water.
b. A supply of real estate including sale and tenancy contracts.
c. A supply of all forms of energy, which includes electricity and gas, including biogas, coal gas, liquefied petroleum gas, natural gas, oil gas, producer gas, refinery gas, reformed natural gas, and tempered liquefied petroleum gas, and any mixture of gases, whether used for lighting, or heating, or cooling, or air conditioning or any other purpose.

Article (3)
Supply of Services

The supply of anything other than the supply of Goods shall be regarded as a supply of Services including any of the following:
a. The granting, assignment, cessation, or surrender of a right.
b. Making available a facility or advantage.
c. Not to participate in any activity, or not to allow its occurrence, or agree to perform any activity.
d. The transfer of an indivisible share in a good.
e. The transfer or licensing of intangible rights, for example rights of authors, inventors, artists, and rights in trademarks, and rights which the legislation of the State deems to be within such category.

Article (4)
Supply of More Than One Component

1. Where a Person made a supply consisting of more than one component for one price, the Person shall determine whether the supply constitutes a single composite supply or multiple supplies.
2. The phrase “single composite supply” means a supply of Goods or Services, where there is more than one component to the supply, and taking into account the contract and the wider circumstance of the supply.
3. A single composite supply shall exist in the following cases:
a. Where there is supply of all of the following:
1) A principal component.
2) A component or components which either are necessary or essential to the making of the supply, including incidental elements which normally accompany the supply but are not a significant part of it; or do not constitute an aim in itself, but are instead a means of better enjoying the principal supply.
b. Where there is a supply which has two or more elements so closely linked as to form a single supply which it would be impossible or unnatural to split.
4. A single composite supply may exist under Clause (2) of this Article if all of the following conditions are met:
a. The price of the different components of the supply is not separately identified or charged by the supplier.
b. All components of the supply are supplied by a single supplier;
5. Where a Taxable Person supplies more than one component for one price and the supply is not a single composite supply, then the supply of the components shall be treated as multiple supplies.

Article (5)
Exceptions related to Deemed Supply

1. The supply shall not be regarded as a Deemed Supply in any of the following instances:
a. Where the Input Tax on the relevant Goods or Services is not recovered.
b. Where the supply is exempted.
c. Where the refunded Input Tax on Goods and Services is amended according to the Capital Assets Scheme.
d. Where the value of the supply of Goods for each recipient, within a 12-month period, does not exceed AED 500, and the supply made is to be used as samples or commercial gifts.
e. Where the total of Output Tax payable on all Deemed Supplies for each Person for a 12-month period is less than AED 2,000.
2. For the purposes of Paragraphs (d) and (e) of Clause (1) of this Article, the 12-month period is a period preceding the end of the month in which the Person makes a supply referred to in either of those Clauses.

Article (6)
Application for Registration

For the purposes of mandatory or voluntary registration, the application for Tax Registration must contain such information as required by the Authority, and be submitted through the means specified by the Authority.

Article (7)
Mandatory Registration

1. The Mandatory Registration Threshold shall be AED 375,000 (three hundred and seventy-five thousand dirhams).
2. The Person required to register for Tax pursuant to the provisions of the Decree-Law must file a Tax Registration application with the Authority within (30) days of being required to register.
3. Where a Person does not file his Tax Registration application despite being required to, the Authority shall register that Person with effect from the date on which the Person first became liable to be registered for Tax and impose the necessary penalties in accordance with the Federal Law No. (7) of 2017 on Tax Procedures.
4. Where supplies made by a Person exceed, in accordance with the Decree-Law, the Mandatory Registration Threshold during the previous 12-months period, the Authority shall register the Person with effect from the first day of the month following the month in which the Person is required to register, whether or not he applies for Tax registration, or from such earlier date as agreed between the Authority and the Person.
5. Where a Person expects that his supplies, in accordance with the Decree-Law, will exceed the Mandatory Registration Threshold during the next (30) days, the Authority shall register him with effect from the date on which there are reasonable grounds for believing the Person will be required to register as specified in that Clause, whether or not he so notifies them of the liability to register for Tax, or from such earlier date as agreed between the Authority and the Person.
6. Where a Person is not a resident of the State and is required to register in accordance with the provisions of the Decree-Law, the Authority shall register him with effect from the date on which he started making supplies in the State, whether or not he so notifies them of the liability to register for Tax, or from such earlier date as agreed between the Authority and the Person.
7. A Taxable Person who has been late in registering for Tax according to the provisions of this Article is liable to account for and pay to the Authority the Due Tax on all Taxable Supplies and Imports made by him before registering.

Article (8)
Voluntary Registration

1. The Voluntary Registration Threshold shall be AED 187,500 (one hundred eighty-seven thousand five hundred dirhams).
2. Where a Person applied to register voluntarily in accordance with the provisions of the Decree-Law, the Authority shall register a Person with effect from the first day of the month following the month in which the application is made, or from such earlier date as may be requested by the Person and agreed by the Authority.
3. Where a Person applied to register voluntarily due to his expectation that his supplies under the provisions of the Decree-Law will exceed the Voluntary Registration Threshold during the next 30 days, he should be able to provide evidence of an intention to make Taxable Supplies or incur expenses which are subject to Tax in excess of the Voluntary Registration Threshold.
4. The Authority shall determine the evidence it may deem necessary to demonstrate eligibility for voluntary Tax Registration.
5. For the purpose of voluntary registration, the phrase “Taxable Expenses” means expenses which are subject to the standard rate and which are incurred in the State by a Person who has a Place of Residence in the State.
6. A Person may not register voluntarily unless he satisfies the Authority that he is carrying on a Business in the State.

Article (9)
Related Parties

1. For the purposes of Tax Group provisions, the definition of Related Parties shall relate to any two legal persons in instances such as:
a. One Person or more acting in a partnership and having any of the following:
1) Voting interests in each of those legal Persons of 50% or more;
2) Market value interest in each of those legal Persons of 50% or more;
3) Control of each of those legal Persons by any other means.
b. Each of Persons is a Related Party with a third Person.
2. Two or more Persons shall be considered Related Parties if they are associated in economic, financial and regulatory aspects, taking into account the following:
a. Economic practices, which shall include at least one of the following:
1) Achieving a common commercial objective;
2) One Person’s Business benefiting another Person’s Business;
3) Supplying of Goods or Services by different Businesses to the same customers.
b. Financial practices, which shall include at least one of the following:
1) Financial support given by one Person’s Business to another Person’s Business.
2) One Person’s Business not being financially viable without another Person’s Business.
3) Common financial interest in the proceeds.
c. Regulatory practices, which shall include any of the following:
1) Common management.
2) Common employees whether or not jointly employed.
3) Common shareholders or economic ownership.
2. For the purposes of this Article:
a. “Market value interest” in a legal Person shall be calculated as the percentage of the market value of shares and options a Person owns over total market value of all shares in the legal Person.
b. Any shareholding will be disregarded if there exists another agreement, which contradicts it. In that case, the shareholding will be treated as the adjusted value under that other agreement.

Article (10)
Registration as a Tax Group

1. A Tax Group shall select one of its registered members to act as the representative member of this Tax Group.
2. A request to register a Tax Group shall be made by the representative member of that Tax Group.
3. The Authority should make a decision regarding any application submitted for registration of two or more Persons as a Tax Group within the period of 20 business days starting with the day on which it was received by the Authority.
4. Where a request to form a new Tax Group is approved, the Tax Group registration shall be in effect according to the following:
a. From the first day of the Tax Period following the Tax Period in which the application is received;
b. From any date as determined by the Authority.
5. The Authority may refuse the application for registration as a Tax Group, in any of the following cases:
a. The Persons do not meet the requirements for Tax Group registration in accordance with the provisions of the Decree-Law and Article (9) of this Decision.
b. Where there are serious grounds for believing that if the registration as a Tax Group is permitted, it would enable Tax Evasion or significantly decrease Tax revenues of the Authority or increase the administrative burden on the Authority significantly;
c. Where any of the Persons included in the application is not a legal Person.
d. Where one of the Persons is a Government Entity specified under Article (10) and (57) of the Decree-Law and the other is not.
e. Where one of the Person is a Charity under Article (57) of the Decree-Law and the other is not.
6. The Authority may reject adding a Person to a Tax Group where that Person does not meet the requirements for Tax Group registration in accordance with the provisions of the Decree-Law or for the reasons mentioned under Clause (5) of this Article.
7. Where the Authority establishes that two or more Persons are in association as a result of their economic, financial and regulatory practices in Business, the Authority may register them as a Tax Group after considering the individual circumstance of each case, including the presence of the factors mentioned in Clause (2) of Article (9) of this Decision.
8. The Authority may only register a Person as part of a Tax Group under Clause (7) of this Article if the two following conditions are met:
a. The Person’s Business includes making Taxable Supplies or importing Concerned Goods or Concerned Services.
b. If all the Taxable Supplies or imports of Concerned Goods or Concerned Services of the Business by Persons carrying on the Business would have exceeded the Mandatory Registration Threshold.
9. The Authority may reject the application of registration as a Tax Group if there are serious grounds for believing that registering the Related Parties would significantly decrease Tax revenue.

Article (11)
Amendments to a Tax Group

1. The representative member appointed under Article (10) of this Decision may apply to the Authority to do any of the following:
a. Add another Person to become a member of the Tax Group.
b. Remove one of the members of that Tax Group.
c. Nominate another member of the Tax Group to be the representative member with the consent of the other member.
d. Deregister that Tax Group.
2. For the purposes of Clause (1) of this Article, the Authority may accept the request mentioned in the application from either:
a. The first day of the Tax Period following the Tax Period in which the application is received;
b. Any date as determined by the Authority.
3. Any Notification by the Authority, which is addressed to the representative member of any Tax Group shall be deemed to be served on the representative member and all other members of that Tax Group.

Article (12)
Effect of registration as a Tax Group

1. Registration of Persons as a Tax Group shall result in the following:
a. Any Business carried on by a member of the Tax Group shall be deemed to be carried on by the representative member and not by any other member of the Tax Group.
b. Any supply made by a member of the Tax Group to another member of the same Tax Group may be disregarded.
c. Any supply, taxable or otherwise, by a member of the Tax Group shall be deemed to be made by the representative member.
d. Any Import of Concerned Goods or Concerned Services by a member of the Tax Group shall be deemed to be an import by the representative member.
e. Any supply of Goods or Services to a member of the Tax Group from a Person who is not a member of the Tax Group is a supply to the representative member.
f. Any Output Tax charged by a member of the Tax Group shall be deemed to be charged by the representative member.
g. Any Input Tax incurred by a member of the Tax Group shall be deemed to be incurred by the representative member.
2. For the purposes of Clause (1) of this Article, all members of the Tax Group shall remain personally and jointly liable for any Payable Tax of the representative member.

Article (13)
Aggregation of Related Parties

1. Where two or more Persons are in association as a result of their economic, financial and regulatory practices in Business in accordance with Clause (2) of Article (9) of this Decision, and these Persons are not registered as a Tax Group and have artificially segregated their business, then the Taxable Supplies of each of the Persons shall be treated as aggregated for determining whether they both have exceeded the Mandatory Registration Threshold and Voluntary Registration Threshold.
2. Where the Business was not segregated artificially but the Authority considers that there is a Tax revenue loss due to segregation, the Authority may treat Taxable Supplies of each of the Persons as aggregated to determine whether the total of their taxable supplies exceeded the Mandatory Registration Threshold and Voluntary Registration Threshold.
3. Where any of the cases mentioned in Clause (1) and (2) of this Article applies, each of the Persons shall be treated as making Taxable Supplies made by the other Person and shall apply for Tax Registration if the Mandatory Registration Threshold has been exceeded pursuant to the provisions of the Decree-Law.

Article (14)
Tax Deregistration

1. The Registrant must apply to the Authority for de-registration in accordance with the cases mentioned in the Decree-Law, within (20) business days of the occurrence of any of them.
2. The Authority shall accept a Registrant’s application for deregistration where the two following conditions are met:
a. The Registrant stops making supplies referred to in Article (19) of the Decree-Law and does not expect to make any such supplies over the next 12-month period;
b. The value of supplies referred to in Article (19) of the Decree-Law made, or taxable expenses incurred, by the Registrant over the previous 12-months is less than the Voluntary Registration Threshold and the Authority is satisfied that his supplies, according to the provisions of the Decree-Law, or taxable expenses, expected over the next 30 days, are not expected to exceed the Voluntary Registration Threshold.
3. If the deregistration application is approved, the Authority shall cancel the Tax Registration of the Registrant with effect from the last day of the Tax Period during which the Registrant has met the conditions for deregistration or from such other date as may be determined by the Authority.
4. Where the Authority is satisfied that the conditions in Clause (2) above are met, and the Registrant has not applied for deregistration, the Authority shall deregister the Registrant with effect from the last day of the Tax Period in which the Authority became satisfied that the conditions have been met or from any other date determined by the Authority.
5. A Registrant shall not be deregistered unless he has paid all Tax and Administrative Penalties due and filed all Tax Returns as due under the Decree-Law and the Federal Law No. (7) of 2017 on Tax Procedures.
6. For the purposes of Clause (5) of this Article, any Goods and Services forming part of the assets of Business carried on by a Registrant shall be deemed to be supplied by him at a time immediately before ceasing to be a Registrant and any tax payable shall be included in the final tax return, unless the Business is carried on by an appointed trustee in bankruptcy pursuant to the Federal Law No (7) of 2017 on Tax Procedures.
7. Where a Registrant requests to be deregistered from Tax due to the reduction of his Taxable Supplies to less than the Mandatory Registration Threshold, the Authority will, if in agreement with the Registrant, cancel the Tax Registration with effect from:
a. The date requested by the Registrant in the application; or
b. The date on which the request is made if the Registrant did not indicate the preferred deregistration date.
8. Where the Authority has deregistered a Registrant from Tax, it shall notify that Registrant of the date on which deregistration takes effect within (10) business days of making the decision.

Article (15)
Deregistration of a Tax Group Registration or Amendment Thereof

1. The Authority must deregister a Tax Group if the following conditions are met:
a. If the Persons who are registered as a Tax Group no longer meet the requirements for registration as a Tax Group in accordance with the Decree-Law.
b. If there is no longer an association based on economic, financial and regulatory practices.
c. If there are serious grounds for believing that if the registration as a Tax Group is permitted to continue, it would enable Tax Evasion or would significantly decrease Tax paid to the Authority.
2. The Authority shall amend the composition of a Tax Group in any of the following circumstances:
a. A Person shall be removed from a Tax Group where the conditions in Clause (1) are met for that Person.
b. A Person shall be added to a Tax Group where the Authority establishes that a Person’s activities should be regarded as part of the Business carried out by a Tax Group in accordance with Clause (7) of Article (10) of this Decision.
3. The representative member of a Tax Group shall notify the Authority if any member of the Tax Group is no longer eligible to be part of the Tax Group, within 20 business days of the ceasing to be eligible.
4. Where the Authority decided to either deregister a Tax Group or amend a Tax Group registration, it shall give Notification of that decision and its effective date to the representative member within 10 business days of making such decision.
5. Where a Taxable Person is no longer a member of a Tax Group, the Authority shall issue it with a new individual Tax Registration Number or re-activate a Tax Registration Number that was assigned to it prior to joining a Tax Group, and it shall be treated as a Registrant immediately following the time when it left the Tax Group.

Article (16)
Exception from registration

1. A Taxable Person that wants to apply for an exception from Tax Registration on the basis that all of his supplies are zero rated, shall apply to the Authority in a manner and by means specified by the Authority.
2. The Authority shall review the exception from registration application and either accept the exception from Tax Registration or notify the Taxable Person that his application is rejected.
3. A Person excepted from Tax Registration must notify the Authority if he makes any supplies or Imports of Goods or Services that are subject to Tax at the standard rate.
4. A Person shall give the notice referred to in Clause (3) of this Article within not more than 10 business days of making the supply or import which is taxable at the standard rate.
5. Where the Person ceases to satisfy the requirement of being excepted from Tax Registration, he shall be required to register for Tax.

Article (17)
Registration when the Decree-Law Comes into Force

1. A Person who will be a Taxable Person on the date the Decree-Law comes into force, must apply for Tax Registration prior to the Decree-Law coming into effect as per the timelines as announced by the Authority.
2. The effective date of registration of the Taxable Person is 1 January 2018, if he so notifies them of the liability to Tax Registration under Clause (1) of this Article.
3. Where a Person has registered for Tax prior to the Decree-Law coming into effect, the Person shall be subject to the same rights and obligations as if the Tax Registration was processed after the Decree-Law has come into effect.

Article (18)
Liabilities due before Deregistration

Deregistration does not exempt the Person from his obligations and liabilities that were applicable under the Decree-Law while he was still a Registrant.

Article (19)
Due Tax at Date of Supply

For the purposes of Articles (25), (26) and (80) of the Decree-Law, where Tax is due because a payment is made or a Tax Invoice is issued in respect of a supply of Goods or Services, the Tax shall be due to the extent of the payment made or stated in the Tax Invoice, and the remainder of Due Tax on that supply shall be payable according to the provisions of the Decree-Law.

Article (20)
Place of Supply of Goods Delivered within the State

Where as part of a supply of Goods, those Goods are required to exit and re-enter the State in the course of being delivered from one location in the State to another location in the State, the Goods shall not be treated as exported or imported where all of the following conditions are met:
a. Where the exit from and re-entry into the State takes place in the course of a journey between two points in the State.
b. Where there is no significant break in transportation whilst outside of the State, and any break is limited to what is reasonably expected in the course of physically transporting Goods.
c. Where the Goods are not unloaded from the relevant means of transport whilst outside the State.
d. Where the Goods are not consumed, supplied, or subjected to any process whilst outside of the State;
e. Where the nature, quantity or quality of the Goods does not change as a result of exiting and re-entering the State.

Article (21)
Place of Supply of Services Related to Real Estate

1. For the purposes of the Decree-Law and this Decision, “real estate” includes as an example:
a. Any area of land over which rights or interests or services can be created.
b. Any building, structure or engineering work permanently attached to the land.
c. Any fixture or equipment which makes up a permanent part of the land or is permanently attached to the building, structure or engineering work.
2. A supply of Services is deemed to relate to a real estate where the supply of Services is directly connected with the real estate, or where it is the grant of a right to use the real estate.
3. A supply of Services directly connected with real estate includes:
a. The grant, assignment or surrender of any interest in or right over real estate.
b. The grant, assignment or surrender of a personal right to be granted any interest in or right over real estate.
c. The grant, assignment or surrender of a licence to occupy land or any other contractual right exercisable over or in relation to real estate, including the provision, lease and rental of sleeping accommodation in a hotel or similar establishment.
d. A supply of Services by real estate experts or estate agents.
e. A supply of Services involving the preparation, coordination and performance of construction, destruction, maintenance, conversion and similar work.

Article (22)
Place of Supply of Certain Transport Services

1. The place of the supply of each transportation service is the place where the supply of that transportation service commences, where a trip includes more than one stop and consists of multiple supplies in accordance with Clause (5) of Article (4) of this Decision.
2. The place of supply of Transport-Related Services shall be the same as the place of supply of the transportation service to which they relate.

Article (23)
Telecommunication and electronic services

1. “Telecommunication services” means delivering, broadcasting, converting or receiving any of the services specified below by using any communications equipment or devices that transmit, broadcast, convert, or receive such service by electrical, magnetic, electromagnetic, electrochemical or electromechanical means or other means of communication, including:
a. Wired and wireless communications.
b. Voice, music and other audio material.
c. Viewable images.
d. Signals used for transmission with the exception of public broadcasts.
e. Signals used to operate and control any machinery or equipment;
f. Services of an equivalent type which have a similar purpose and function.
2. “Electronic services” means Services which are automatically delivered over the internet, or an electronic network, or an electronic marketplace, including:
a. Supply of domain names, web-hosting and remote maintenance of programs and equipment;
b. The supply and updating of software;
c. The supply of images, text, and information provided electronically such as photos, screensavers, electronic books and other digitized documents and files;
d. The supply of music, films and games on demand;
e. The supply of online magazines;
f. The supply of advertising space on a website and any rights associated with such advertising;
g. The supply of political, cultural, artistic, sporting, scientific, educational or entertainment broadcasts, including broadcasts of events;
h. Live streaming via the internet;
i. The supply of distance learning;
j. Services of an equivalent type which have a similar purpose and function.
3. “Electronic marketplace” means a distribution service which is operated by electronic means, including by a website, internet portal, gateway, store, or distribution platform, and meets the following conditions:
a. Which allows suppliers to make supplies of electronic services to customers.
b. The supplies made by the marketplace must be made by electronic means.
Article (24)
Evidence for Certain Supplies Between the Implementing States
1. Where a Taxable Person makes a supply of Goods from the State to a Person who has a Place of Residence in another Implementing State, and the supply requires the Goods to be physically moved to that other Implementing State, the Taxable Person shall retain official and commercial evidence of Export of those Goods to that other Implementing State.
2. The Authority may require a Taxable Person who make supplies of Goods or Services to another Implementing State to collect, retain and provide any evidential information other than required under Clause (1) of this Article, by the means determined by the Authority.
3. The Customs Departments shall confirm the type and quantity of the exported goods with its exported documents.

Article (25)
Market Value

1. The phrase “similar supply”, in relation to a supply of Goods or Services, means any other supply of Goods or Services that, in respect of the characteristics, quality, quantity, functional components, materials, and reputation, is the same as, or closely or substantially resembles, that supply of Goods or Services.
2. The market value of a supply of Goods or Services at a given date is the Consideration in money which the supply would generally achieve if supplied in similar circumstances at that date in the State, being a supply freely offered and made between Persons who are not connected in any manner.
3. Where the market value of a supply of Goods or Services at a given date cannot be determined as mentioned under Clause (2) of this Article, the market value is the Consideration in money which a similar supply would achieve if supplied in similar circumstances at that date in the State, being a supply freely offered and made between Persons who are not connected in any manner.
4. Where the market value of any supply of Goods or Services cannot be determined as mentioned under Clauses (2) and (3) of this Article, the market value shall be determined by reference to the replacement cost of identical Goods or Services, with such supply being offered by a supplier who is not connected to the Recipient of Goods or Recipient of Services in any manner.

Article (26)
Apportionment of Single Consideration

For the purposes of Clause (4) of Article (34) and Article (47) of the Decree-Law, where the Consideration payable to the Taxable Person relates to both a supply of Goods or Services and matters other than the supply of Goods or Services, or to two different supplies of Goods or Services, then the Taxable Person must identify the portion of the Consideration that is the market value of each part according to the provisions of Article (25) of this Decision.

Article (27)
Price Excluding Tax

1. In the case of a Taxable Supply, the published prices shall be inclusive of Tax.
2. As an exception to Clause (1) above, the Taxable Person may declare prices as being exclusive of Tax in the following cases:
a. The supply of Goods or Services for Export.
b. Where the customer is a Registrant.
3. Where the declaration of prices as being exclusive of Tax applies according to Clause (2) of this Article, the price should be clearly identified as being exclusive of Tax.
4. As an exception of Clause (1) above, the Taxable Person shall declare the price as being exclusive of Tax in the following cases:
a. The supply of Concerned Goods or Concerned Services, which is subject to Clause (1) of Article (48) of the Decree-Law.
b. The supply of Goods subject to Tax in accordance with Clause (3) of Article (48) of the Decree-Law.
Article (28)
Discounts, Subsidies and Vouchers
1. The State shall not be treated as providing a subsidy to the supplier if the subsidy or part of it is a Consideration for a supply of Goods or Services to the State.
2. The value of supply may be reduced in the case of a discount if the following conditions are met:
a. The customer has benefited from the reduction in price.
b. The supplier funded the discount.
3. The value of a discount shall be the amount by which the Consideration is reduced.
4. The value of a discount shall not include the value of any Voucher used, and any such reduction will be ignored unless that Voucher was provided for no Consideration.
5. Where the Voucher was issued and sold by the Supplier for Consideration that is less than the value stated on the Voucher, the value of a discount shall be the difference between the value of the Voucher and the Consideration paid for that Voucher.
6. “Voucher” shall not include an instrument that gives the right to receive Goods or Services or the right to receive a discount on the price of the Goods or Services unless the monetary value for which the Voucher may be redeemed is identifiable at the time the Voucher is issued.

Article (29)
Accounting for Tax on the Margin

1. The Taxable Person may calculate Tax on any supply of Goods by reference to the profit margin in the following situations:
a. Where he made a supply of Goods mentioned in Clause (2) of this Article which were purchased from either:
1) A Person who is not a Registrant.
2) A Taxable Person who calculated the Tax on the supply by reference to the profit margin.
b. Where he made a supply of Goods for which Input Tax was not recovered in accordance with Article (53) of this Decision.
2. The Goods to which Clause (1) of this Article refers are Goods which have been subject to Tax before the supply which shall be subject to the profit margin scheme and those Goods are:
a. Second-hand Goods, meaning tangible moveable property that is suitable for further use as it is or after repair.
b. Antiques, meaning goods that are over 50 years old.
c. Collectors’ items, meaning stamps, coins and currency and other pieces of scientific, historical or archaeological interest.
3. A Taxable Person may not elect to calculate Tax by reference to the profit margin in respect of Goods referred to in paragraph (a) of Clause (1) of this Article if a Tax Invoice or other document is issued for that supply mentioning an amount of Tax chargeable on the supply.
4. The profit margin is the difference between the purchase price of the Goods and the selling price of the Goods, and the profit margin shall be deemed to be inclusive of Tax.
5. The Taxable Person must keep the following records in respect of supplies made in accordance with this Article:
a. A stock book or a similar record showing details of each Good purchased and sold under the profit margin scheme.
b. Purchase invoices showing details of the Goods purchased under the profit margin scheme. Where the Goods are purchased from Persons who are not Registrants, the Taxable Person must issue an invoice showing details of the Goods himself, including at least the following information:
1) The name, address and Tax Registration Number of the Taxable Person.
2) The name and address of the Person selling the Good.
3) The date of the purchase.
4) Details of the Goods purchased.
5) The Consideration payable in respect of the Goods.
6) Signature of the Person selling the Good or authorized signatory.
6. Where a Taxable Person has charged Tax in respect of a supply with reference to the profit margin, the Taxable Person shall issue a Tax Invoice that clearly states that the Tax was charged with reference to the profit margin, in addition to all other information required to be stated in a Tax Invoice except the amount of Tax.

Article (30)
Zero-rating the export of goods

1. The Direct Export shall be subject to the zero rate if the following conditions are met:
a. The Goods are physically exported to a place outside the Implementing States or are put into a customs suspension regime in accordance with GCC Common Customs Law within 90 days of the date of the supply.
b. Official and commercial evidence of Export or customs suspension is retained by the exporter.
2. An Indirect Export shall be subject to the zero rate if the following conditions are met:
a. The Goods are physically exported to a place outside the Implementing States or are put into a customs suspension regime in accordance with GCC Common Customs Law, within 90 days of the date of the supply under an arrangement agreed by the supplier and the Overseas Customer at or before the date of supply
b. The Overseas Customer obtains official and commercial evidence of Export or customs suspension in accordance with GCC Common Customs Law, and provides the supplier with a copy of this.
c. The Goods are not used or altered in the time between supply and Export or customs suspension, except to the extent necessary to prepare the Goods for Export or customs suspension.
d. The Goods do not leave the State in the possession of a passenger or crew member of an aircraft or ship.
3. For the purposes of this Article, a movement of Goods into a Designated Zone from a place in the State or a supply of Goods to a Designated Zone shall not be considered an Export of those Goods.
4. For the purposes of Clauses (1) and (2) of this Article:
a. “Official evidence” means Export documents issued by the local Emirate Customs Department in respect of Goods leaving the State.
b. “Commercial evidence” shall include any the following:
1) Airway bill.
2) Bill of lading.
3) Consignment note.
4) Certificate of shipment.
5. The evidence obtained as proof of Export, whether official or commercial, must identify the following:
a. The supplier.
b. The consignor.
c. The Goods.
d. The value.
e. The Export destination.
f. The mode of transport and route of the export movement.
6. The Authority may specify alternative forms of evidence according to the nature of the Export or the nature of the Goods being exported.
7. The Authority may extend the 90-day period mentioned in Clauses (1) and (2) of this Article, if the Authority has determined, after the supplier has applied in writing, that either of the following apply:
a. Circumstances beyond the control of the Supplier and the Recipient of Goods have prevented, or will prevent, the Export of the Goods within 90 days of the date of supply.
b. Due to the nature of the supply, it is not practicable for the supplier to Export the Goods, or a class of the Goods, within 90 days of the date of supply.
8. An Indirect Export would include a supply of Goods in a departure area of an airport or port to a passenger of an aircraft or a vessel if:
a. The Goods are intended to leave the State in the possession of the passenger.
b. The supplier has obtained and retained evidence, such as the details of the boarding pass of the passenger, that the passenger intends to leave for a destination outside the Implementing States.
9. If the Person required to Export the Goods in accordance with this Article does not do so within the period of 90 days or a longer period that the Authority has allowed under Clause (7) of this Article, Tax shall be charged on the supply at the rate that would have been due on the supply if it was made in the State.
10. For the purposes of this Article a supply of Goods shall be subject to the zero rate if Goods that would otherwise have been exported are destroyed or cease to exist in circumstances beyond the control of both the supplier and the Recipient of the Goods.
11. Customs Departments shall check to confirm the type and quantity of the exported goods with its export documents.

Article (31)
Zero-rating the Export of Services

1. The Export of Services shall be zero-rated in the following cases.
a. If the following conditions are met:
1) The Services are supplied to a Recipient of Services who does not have a Place of Residence in an Implementing State and who is outside the State at the time the Services are performed;
2) The Services are not supplied directly in connection with real estate situated in the State or any improvement to the real estate or directly in connection with moveable personal assets situated in the State at the time the Services are performed.
b. If the services are actually performed outside the Implementing States or are the arranging of services that are actually performed outside the Implementing States.
c. If the supply consists of the facilitation of outbound tour packages, for that part of the service.
2. For the purpose of paragraph (a) of Clause (1) of this Article, a Person shall be considered as being “outside the State” if they only have a short-term presence in the State of less than a month, or the only presence they have in the State is not effectively connected with the supply.
3. As an exception to paragraph (a) of Clause (1) of this Article, a supply of Services shall not be zero-rated, if the supply is made under an agreement that is entered into, whether directly or indirectly, with a Recipient of Services who is a Non-Resident, if all of the following conditions are met:
a. The performance of the Services is, or it is reasonably foreseeable that the performance of the Services will be, received in the State by another Person, including but not limited to, an employee or a director of the Non-Resident Recipient of Services.
b. It is reasonably foreseeable, at the time the agreement is entered into, that that other Person in the State will receive the Services in the course of making supplies for which Input Tax is not recoverable in full under Article (54) of the Decree-Law.
4. For the purposes of paragraph (c) of Clause (1) of this Article, services that consist of the “facilitation of outbound tour packages” means the services that a Taxable Person provides in packaging one or more tourism products and also services outside the Implementing States, including but not limited to such goods and services as accommodation, meals, transport, and other activities.

Article (32)
Zero-Rating Exported Telecommunications Services

1. The export of telecommunications services shall be subject to the zero rate in the following situations:
a. A supply of telecommunications services by a telecommunications supplier who has a Place of Residence in the State to a telecommunications supplier who has Place of Residence outside the Implementing States.
b. A supply of telecommunications services by a telecommunications supplier who has a Place of Residence in the State to a Person who is not a telecommunications supplier and who has Place of Residence outside the State for a telecommunications service that is initiated outside the Implementing States.
2. For the purposes of paragraph (b) of Clause (1) of this Article, the place where a supply is initiated shall be identified according to the following:
a. The place of the Person who commences the supply.
b. If paragraph (a) of this Clause does not apply, the Person who pays in return for the services.
c. If paragraphs (a) and (b) of this Clause do not apply, the Person who contracts for the purposes of the supply.
3. For the purposes of this Article, a “telecommunications supplier” means a Person whose main activity is the supply of telecommunications services.

Article (33)
Zero-rating international transportation services for Passengers and Goods

1. The supply of international transportation Services for Passengers and Goods and Transport-related Services shall be subject to the zero rate in the following cases:
a. Transporting passengers or Goods from a place in the State to a place outside the State.
b. Transporting passengers or Goods from a place outside the State to a place in the State.
c. Transporting passengers from a place in the State to another place in the State by sea or air or land as part of a supply of an international transport of those passengers if either or both the first place of departure, or the final place of destination, is outside the State.
d. Transporting Goods from a place in the State to another place in the State if the Services are supplied as part, or for the purpose, of the supply of Services of transporting Goods either from a place in the State to a place outside the State or from a place outside the State to a place in the State.
2. The following Goods and Services shall be zero-rated if they are supplied in respect of the transportation services of passengers or Goods to which either Clause (1) of this Article applies or which are treated as taking place outside the State:
a. The Goods which are supplied for use or consumption or sale by or on an aircraft or a ship.
b. The Services supplied during the supply of transportation services.
c. The Service of insuring, or the arranging of the insurance, or the arranging of the transport of passengers or Goods.
3. A supply of a postage stamp issued by Emirates Post Group shall be zero-rated where the postage stamp may only be redeemed for transportation of Goods to a place outside the State.

Article (34)
Zero-rating certain means of transport

The supply of the means of transport shall be subject to the zero rate in the following cases:
1. A supply of an aircraft that is designed or adapted to be used for commercial transportation of passengers or Goods and which is not designed or adapted for recreation, pleasure or sports.
2. A supply of a ship, boat or floating structure that is designed or adapted for use for commercial purposes and which is not designed or adapted for recreation, pleasure or sports.
3. A supply of bus or train that is designed or adapted to be used for public transportation of (10) or more passengers.

Article (35)
Zero-rating Goods and Services Supplied in Connection with Means of Transport

1. The Goods and Services related to the supply of the means of transport mentioned in Article (34) of this Decision shall be subject to the zero rate if they are any of the following:
a. Goods, except fuel or other oil or gas products, that are supplied in the course of operating, repairing, maintaining or converting means of transport in any of the following cases:
1) The Goods shall be incorporated into, affixed to, attached to or form part of those means of transport.
2) The Goods are consumable Goods that become unusable or worthless as a direct result of being used in the operation, repair, maintenance, or conversion process.
b. Services which are supplied directly in connection with means of transport referred to in Article (34) of this Decision for the purposes of operating, repairing, maintaining or converting those means of transport.
c. Services which are supplied directly in connection with parts and equipment of a means of transport referred to in Article (34) of this Decision for the purpose of repairing and maintaining those parts and equipment, provided that any of the following applies:
1) The services are carried out on board of the means of transport.
2) The part or equipment is removed for repair or maintenance, and is subsequently replaced in the same means of transport.
3) The part or equipment is removed for repair or maintenance, and is subsequently held in stock for the future use as spares in the same means of transport or another means of transport.
4) The part or equipment cannot be repaired and is exchanged for an identical part or equipment.

Article (36)
Zero-rating of precious metals

1. The supply or import of investment precious metals shall be zero-rated.
This is an unofficial translation
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2. The phrase “investment precious metals” means gold, silver and platinum that meet the following standards:
a. The metal is of a purity of 99 percent or more.
b. The metal is in a form tradeable in global bullion markets.

Article (37)
Residential buildings

1. The phrase “residential building” means a building intended and designed for human occupation, including:
a. Any building or part of a building that the person occupies, or that it can be foreseen that a person will occupy, as their principal place of residence.
b. Residential accommodation for students or school pupils.
c. Residential accommodation for armed forces and police.
d. Orphanages, nursing homes, and rest homes.
2. A “Residential building” does not include any of the following:
a. Any place that is not a building fixed to the ground and can be moved without being damaged.
b. Any building that is used as a hotel, motel, bed and breakfast establishment, or hospital or the like.
c. A serviced apartment for which services in addition to the supply of accommodation are provided.
d. Any building constructed or converted without lawful authority.
3. A building shall be considered as a residential building if a small proportion of it is used as an office or workspace by the occupants, if it includes garages and gardens used in conjunction with it, or it includes any other features that may be said to comprise part of the residential building.

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

1. The first sale or a lease of a building, or any part of a building, shall be zero-rated if the building was specifically designed to be used by a Charity and solely for a relevant charitable activity.
2. In Clause (1) of this Article, “relevant charitable activity” means an activity for the purpose other than for the purpose of profit or benefit to any proprietor, member, or shareholder of the Charity, and one which is undertaken by the Charity in the course or furtherance of its charitable purpose or objectives to carry out a charitable activity in the State as approved by the Ministry of Community Development, or under the conditions of its establishment as a charity under Federal or Emirate Decree, or as otherwise licensed to operate as a Charity by an agency of the Federal or Emirate Governments authorised to grant such licences.
Such charitable purposes and objectives include, for instance, advancing health, education, public welfare, religion, culture, science and similar activities.

Article (39)
Zero-rating Converted Residential Building

1. The first supply of a building, or any part of a building, which is converted to a residential building shall be subject to the zero rate provided that the supply takes place within 3 years of the completion of the conversion and the original building, or any part of it, was not used as a residential building and did not comprise part of a residential building within (5) five years prior to the conversion work commencing.
2. The presence of shared or common facilities, or dividing walls or similar features in a residential building should not cause the residential building to be considered or any part thereon as part of a pre-existing residential building.

Article (40)
Zero-rating Education Services

1. The supply of educational services shall be subject to the zero rate if the following conditions are met:
a. The supply of educational services is provided in accordance with the curriculum recognised by the federal or local competent government entity regulating the education sector where the course is delivered.
b. The supplier of the educational services is an educational institution which is recognised by the federal or local competent government entity regulating the education sector where the course is delivered.
c. Where the Supplier of educational services is a higher education institution, the institution is either owned by the federal or local government or receives more than 50% of its annual funding directly from the federal or local government.
2. A supply of Goods or Services made by educational institutions identified in Clause (1) of this Article shall be zero-rated where the supply is directly related to the provision of a zero-rated educational service.
3. Printed and digital reading material provided by educational institutions identified in Clause (1) of this Article and which are related to the curriculum of an education shall be zero-rated.
4. As an exception to Clause (2) of this Article, the following supplies shall not be zero-rated:
a. Goods and Services supplied by the educational institution referred to in Clause (1) that are made available to Persons who are not enrolled in the educational institution.
b. Any Goods other than educational materials provided by the educational institution referred to in Clause (1) that are consumed or transformed by the students undertaking the educational service for the purposes of education.
c. Uniforms or any other clothing which are required to be worn by the educational institution referred to in Clause (1), irrespective of whether or not supplied by the educational institutions as part of the supply of educational services.
d. Electronic devices in relation to educational services, irrespective of whether or not supplied by the educational institution referred to in Clause (1) as part of the supply of educational services.
e. Food and beverages supplied at the educational institution referred to in Clause (1), including supplies from vending machines or vouchers in respect of food and beverages.
f. Field trips, unless these are directly related to the curriculum of an education service and are not predominantly recreational.
g. Extracurricular activities provided by or through the educational institution referred to in Clause (1) for a fee additional to the fee for the education service.
h. A supply of membership in a student organisation.

Article (41)
Zero-rating Healthcare Services

1. The phrase “healthcare services” means any Service supplied that is generally accepted in the medical profession as being necessary for the treatment of the Recipient of the supply including preventive treatment.
2. A supply of healthcare services shall be zero rated on the condition that the supply shall:
a. Be made by a healthcare body or institution, doctor, nurse, technician, dentist, or pharmacy, licensed by the Ministry of Health or by any other competent authority.
b. Relate to the wellbeing of a human being.
3. ” Healthcare services” do not include any of the following:
a. Any part of a supply that relates to staying in or attending an establishment the principal purpose of which is to provide holiday accommodation or entertainment such that any healthcare service is incidental to the provision of the accommodation or entertainment.
b. Elective treatment for cosmetic reasons other than prescribed by a doctor or medical professional for treating or prevention of a medical condition.
4. A supply of Goods is zero-rated if it is a supply of:
a. Any pharmaceutical products identified in a decision issued by the Cabinet.
b. Any medical equipment identified in a decision issued by the Cabinet.
c. Any other Goods not covered by paragraphs (a) and (b) of this Clause which are supplied in the course of supplying a Person with zero-rated healthcare services that are necessary for the supply of such healthcare services.

Article (42)
Tax Treatment of Financial Services

1. For the purposes of this Article:
a. The phrase “debt security” means any interest in or right to be paid money that is, or is to be, owing by any Person, or any option to acquire any such interest or right;
b. The phrase “equity security” means any interest in or right to a share in the capital of a legal person, or any option to acquire any such interest or right;
c. The phrase “life insurance contract” means a contract lawfully entered into to the extent that it places a sum or sums at risk upon the contingency of the termination or continuance of human life, marriage, similar relationships permitted under applicable law, or the birth of a child.
d. The phrase “Islamic financial arrangement” means a written contract which relates to a supply of financing in accordance with the principles of Shariah.
2. Financial services are services connected to dealings in money (or its equivalent) and the provision of credit and include for instance the following:
a. The exchange of currency, whether effected by the exchange of bank notes or coin, by crediting or debiting accounts, or otherwise.
b. The issue, payment, collection, or transfer of ownership of a cheque or letter of credit.
c. The issue, allotment, drawing, acceptance, endorsement, or transfer of ownership of a debt security.
d. The provision of any loan, advance or credit.
e. The renewal or variation of a debt security, equity security, or credit contract.
f. The provision, taking, variation, or release of a guarantee, indemnity, security, or bond in respect of the performance of obligations under a cheque, credit, equity security, debt security, or in respect of the activities specified in paragraphs (b) to (e) of this Article.
g. The operation of any current, deposit or savings account.
h. The provision or transfer of ownership of financial instruments such as derivatives, options, swaps, credit default swaps, and futures.
i. The payment or collection of any amount of interest, principal, dividend, or other amount whatever in respect of any debt security, equity security, credit, and contract of life insurance.
j. Agreeing to do, or arranging, any of the activities specified in paragraphs (a) to (i) of this Clause, other than advising thereon.
3. The following financial services shall be exempted:
a. Activities under Clause (2) of this Article where they are not conducted in return for an explicit fee, discount, commission, and rebate or similar.
b. The issue, allotment, or transfer of ownership of an equity security or a debt security;
c. The provision or transfer of ownership of a life insurance contract or the provision of re-insurance in respect of any such contract.
4. Activities under Clause (2) of this Article shall be subject to tax where the consideration payable in respect of a supply of Services is an explicit fee, commission, discount, and rebate or similar.
5. Islamic finance products, being financial products under contract which are certified as Islamic Shariah compliant, which simulate the intention and achieve effectively the same result as a non-Shariah compliant financial product, will be treated in a similar manner as the equivalent non-Shariah financial product for the purpose of applying exemption from Tax.
6. Any supply made under an Islamic financial arrangement shall be treated in such a way as to give an outcome for the purposes of the Decree-Law and the decisions issued by the Authority, comparable to that which would be the case for their non-Islamic counterparts.
7. Where Article (31) of this Decision applies in respect of a supply of financial services, this supply should be treated as zero-rated.

Article (43)
Exemption of Residential Buildings

1. The supply of residential buildings is exempt, unless it is zero-rated, where the lease is more than (6) six months or the tenant of the property is a holder of an ID card issued by Federal Authority for Identity and Citizenship.
2. The period of tenancy referred to in Clause (1) of this Article shall be identified with reference to the contractual period of tenancy and shall not take into account any period arising from a right or option to extend the period of tenancy or renew the tenancy.
3. For the purposes of Clause (1) of this Article, a right of any party to terminate the lease early shall be ignored.

Article (44)
Exemption of Bare Land

The phrase “bare land” means land that is not covered by completed, partially completed buildings or civil engineering works.

Article (45)
Exemption of Local Passenger Transport Services

1. The supply of local passenger transport Services in a qualifying means of transport by land, water or air from a place in the State to another place in the State shall be exempt.
2. The phrase “qualifying means of transport” means:
a. A motor vehicle, including a taxi, bus, railway train, tram, mono-rail or similar means of transport, designed or adapted for transport of passengers.
b. A ferry boat, abra or other similar vessel designed or adapted for transport of passengers.
c. A helicopter or airplane designed or adapted for transport of passengers and approved for transport of passengers in accordance with Federal Law No. (20) of 1991 on Civil Aviation.
3. As an exception to Clause (1) of this Article, the Service of transporting of passengers from a place in the State to another place in the State shall not be considered a local passenger transport Service where the transport is by aircraft and constitutes “international carriage” as defined in the Warsaw International Convention for the Unification of Certain Rules Relating to International Carriage by Air 1929.
4. As an exception to Clause (1) of this Article, the transport of passengers shall not constitute a supply of local passenger transport Services where it is undertaken in the context of a pleasure trip where the manner in which the trip is held out indicates that its principal objective may reasonably be said to be sightseeing, or the enjoyment of catering services, or other forms of pleasure or entertainment.

Article (46)
Tax on Supplies of More Than One Component

For the purposes of the supply consisting of more than one component:
1. Where a supply is a single composite supply as provided in Article (4) of this Decision, the Tax treatment of the supply shall follow the Tax treatment of the principal component of the supply.
2. Where a supply consisting of multiple components is not a single composite supply, the supply of each component is to be treated as a separate supply.

Article (47)
General rules regarding Import of Goods

1. Without prejudice to the provisions of the Decree-Law and this Decision, Goods shall not be treated as imported into the State according to the following:
a. Where they are under customs duty suspension arrangements in accordance with the GCC Common Customs Law, and subject to providing a financial guarantee or a cash deposit equal to the value of the Due Tax if and when requested by the Authority, in the following cases:
1) Temporary admission
2) Goods placed in a customs warehouse.
3) Goods in transit.
4) imported Goods intended to be re-exported by the same Person.
b. Imported into a Designated Zone from a place outside the State.
2. Tax shall not be due on any Import of Goods where they are under an exemption from Customs duty under the following categories in accordance with the GCC Common Customs Law:
a. Goods imported by the military forces, and internal security forces.
b. Personal effects and gifts accompanied by travellers.
c. Used personal effect and household items transported by UAE nationals living abroad on return or expats moving to live in the UAE for first time.
d. Returned Goods.
3. Where a Person imported Goods to the State through another Implementing State the Tax will not be due on that Import, if the Authority establishes that Tax is due on the supply or transfer of Goods in that other Implementing State.
4. The Authority may specify procedures to be followed by Importers and Customs Departments in respect of the Import of Goods.

Article (48)
Calculation of Tax under the Reverse Charge Mechanism on import of Concerned Goods or Concerned Services

1. For the purposes of import of Concerned Goods, Clause (1) of Article (48) of the Decree-Law shall apply if the following conditions are met:
a. At the time of Import, the Taxable Person can demonstrate that they are registered for Tax.
b. The Taxable Person has sufficient details for the Authority to verify the Import and the Tax which shall be due on the Import and is able to provide these as required.
c. The Taxable Person has provided the Authority with its own Customs registration number issued by the competent Customs Department for that Import, such Customs Departments to verify the Import subject to the rules set by the Authority.
d. The Taxable Person has cooperated with, and complied with any rules imposed by, the Authority in respect of the Import.
2. Where the conditions mentioned in Clause (1) of this Article are not met, the Taxable Person shall account for Tax in respect of the Import in accordance with Clause (1) of Article 50 of this Decision.
3. Where a Taxable Person who has a Place of Residence in the State receives a supply of Goods or Services with a Place of Supply in the State, from a supplier who does not have a Place of Residence in the State and does not charge Tax on that supply, the supply shall be treated as being of Concerned Goods or Concerned Services subject to Clause (1) of Article (48) of the Decree-Law.
4. Where Clause (1) of Article (48) of the Decree-Law applies, the Taxable Person must:
a. Account for Tax on the value of the Concerned Goods or Concerned Services at the rate which would be applicable if the supply of the Concerned Goods or Concerned Services was made by a Taxable Person within the State.
b. Declare and pay the Due Tax in the Tax Return which relates to the Tax Period in which the Date of Supply for the Concerned Goods or Concerned Services took place.
5. Where a Taxable Person accounts for Due Tax in accordance Clause (1) of Article (48) of the Decree-Law, the Taxable Person shall keep the following documents relating to the supply:
a. The supplier’s invoice showing details and the Consideration paid for the Concerned Goods or Concerned Services.
b. In the case of Concerned Goods, a statement from the relevant Customs Department showing details and the value of the Concerned Goods.

Article (49)
Payments for Goods Transferred to another Implementing States

1. For the purposes of Clause (2) of Article (48) of the Decree-Law, the Taxable Person must make a payment of the Due Tax by using the payment method specified by the Authority.
2. Unless expressly approved by the Authority to defer the payment of Due Tax, the payment referred to in Clause (1) of this Article shall be made at the time or before the Import of the Goods as directed by the Authority.

Article (50)
Imports by Unregistered Persons

1. Where Concerned Goods are imported by a Person not registered for Tax or where the Taxable Person does not meet the conditions in Clause (1) of Article (48) of this Decision, Tax shall be paid to the Authority by or on behalf of the Person before the Goods may be released.
2. The Customs Departments shall cooperate with the Authority to ensure that Payable Tax on Import has been settled before releasing of Goods.
3. Tax referred to in Clause (1) of this Article must be settled using the payment method specified by the Authority.
4. For the purposes of Clause (1) of this Article, where a Person who is not registered for Tax imports Goods is using an agent who acts on behalf of the Person for the purposes of importing the Goods into the State and who is registered for Tax in the State, the agent shall be responsible for the payment of the Tax in respect of the Import of Goods.
5. The obligation on the agent under Clause (4) of this Article to pay Tax on behalf of another Person shall be met as part of the agent’s Tax Return and pay Tax as though he imported the goods himself.
6. An agent who has paid tax in accordance with Clause (4) of this Article shall not recover as Input Tax any Tax paid on behalf of another Person in accordance with obligations set out in this Article.
7. Where an agent has paid Tax on behalf of another Person is accordance with this Article, it shall issue a statement to that other Person which contains, at the minimum, all of the following details:
a. The name, address, and Tax Registration Number of the agent.
b. The date upon which the statement is issued.
c. The date of Import of the relevant Goods.
d. A description of the imported Goods.
e. The amount of Tax paid by the agent to the Authority in respect of the imported Goods.
8. The statement issued by the agent to a Person in accordance with this Article shall be treated as a Tax Invoice for the purposes of the documentation requirements in paragraph (a) of Clause (1) of Article (55) of the Decree-Law.

Article (51)
Designated zones

1. Any Designated Zone specified by a decision of the Cabinet shall be treated as being outside the State and outside the Implementing States, subject to the following conditions:
a. The Designated Zone is a specific fenced geographic area and has security measures and Customs controls in place to monitor entry and exit of individuals and movement of goods to and from the area.
b. The Designated Zone shall have internal procedures regarding the method of keeping, storing and processing of Goods therein.
c. The operator of the Designated Zone complies with the procedures set by the Authority.
2. Where the Designated Zone changes the manner of operating or no longer meets any of the conditions imposed on it that led to it being specified as a Designated Zone under the Cabinet Decision, it shall be treated as if being inside the State.
3. The transfer of Goods between Designated Zones shall not be subject to Tax if the following two conditions are met:
a. Where the Goods, or part thereof, are not released, and are not in any way used or altered during the transfer between the Designated Zones.
b. Where the transfer is undertaken in accordance with the rules for customs suspension according to GCC Common Customs Law.
4. Where Goods are moved between Designated Zones, the Authority may require the owner of the Goods to provide a financial guarantee for the payment of Tax, which that Person may become liable for should the conditions for movement of Goods not be met.
5. Where a supply of Goods is made within a Designated Zone to a Person to be used by him or a third person, then the place of supply shall be the State unless the Goods are to be incorporated into, attached to or otherwise form part of or are used in the production or sale of another Good located in the same Designated Zone which itself is not consumed.
6. The Place of supply of Services is considered to be inside the State if the place of supply is in the Designated Zone.
7. The Place of supply of water or any form of energy shall be considered to be inside the State if the place of supply is in a Designated Zone.
8. Goods located in a Designated Zone which the owner has not paid Tax on will be treated as Imported into the State by the owner if:
a. The Goods are consumed by the owner unless the Goods are incorporated into, attached to or otherwise form part of or are used in the production of another Good located in a Designated Zone which itself is not consumed.
b. The Goods are unaccounted for.
9. Any Person established, registered or which has a Place of Residence in a Designated Zone shall be deemed to have a Place of Residence in the State for the purposes of the Decree-Law.

Article (52)
Input Tax Recovery in Respect of Exempt Supplies

1. Supplies referred to in paragraph (c) of Clause (1) of Article (54) of the Decree-Law are the supplies of financial Services, where the place of supply of these Services is treated as outside the State and the Recipient of Services is outside the State at the time when the Services are performed.
2. For the purpose of Clause (1) of this Article a Person is “outside the State” even if they are present in the State, provided it is only a short-term presence in the State of less than a month, or that his presence is not effectively connected with the supply.
3. Any Tax paid by a Person in another Implementing State on the Import of Goods to the State through that Implementing State or on the supply of Goods to this Person in that Implementing State where the Goods are then transferred to the State, is recoverable in the State if the relevant Goods will be used or are intended to be used in accordance with Clause (1) of Article 54 of the Decree-Law and the following conditions are satisfied:
a. The Taxable Person keeps evidence that he has paid Tax in another Implementing State in respect of the relevant Goods.
b. The Taxable Person has not recovered the Tax paid in any other Implementing State.
c. The Taxable Person has complied with any additional reporting requirement that the Authority may specify.
4. Where the first supply of a residential building by a Taxable Person is by way of lease which is zero-rated in accordance with provisions of the Decree-Law, the Taxable Person may recover Input Tax in full in respect of that supply regardless of any future intention to make later exempt supplies in respect of that residential building.

Article (53)
Non-recoverable Input Tax

1. Input Tax shall be non-recoverable if it is incurred by a Person in respect of the following Taxable Supplies:
a. Where the Person is not a Government Entity as specified in a Cabinet Decision in accordance with Article (10) and (57) of the Decree-Law, and there is provision of entertainment services to anyone not employed by the Person, including customers, potential customers, officials, or shareholder or other owners or investors.
b. Where a motor vehicle was purchased, rented or leased for use in the Business and is available for personal use by any Person.
c. Where Goods or Services were purchased to be used by employees for no charge to them and for their personal benefit including the provision of entertainment services, except in the following cases:
1) where it is a legal obligation to provide those Services or Goods to those employees under any applicable labour law in the State or Designated Zone.
2) it is a contractual obligation or documented policy to provide those services or goods to those employees in order that they may perform their role and it can be proven to be normal business practice in the course of employing those people;
3) where the provision of goods or services is a deemed supply under the provisions of the Decree-Law.
2. For the purposes of this Article:
a. The phrase “entertainment services” shall mean hospitality of any kind, including the provision of accommodation, food and drinks which are not provided in a normal course of a meeting, access to shows or events, or trips provided for the purposes of pleasure or entertainment.
b. The phrase “motor vehicle” shall mean a road vehicle which is designed or adapted for the conveyance of no more than 10 people including the driver. A motor vehicle shall exclude a truck, forklift, hoist or other similar vehicle.
3. Provision of catering and accommodation services shall not be treated as entertainment services where it is provided by a transportation service operator, such as an airline, to passengers who have been delayed.
4. A motor vehicle shall not be treated as being available for private use if it is within any of the following categories:
a. a taxi licensed by the competent authority within the State;
b. a motor vehicle registered as, and used for purposes of an emergency vehicle, including by police, fire, ambulance, or similar emergency service;
c. a vehicle which is used in a vehicle rental business where it is rented to a customer.

Article (54)
Special cases of Input tax

1. The amount of Recoverable Tax that can be reclaimed by a Taxable Person in the Tax Period in relation to the supply of Goods or Services made to him, is the amount of Input Tax that relates to the portion of Consideration in respect of the supply that has been paid during that Tax Period.
2. For the purposes of paragraph (b) of Clause (1) of Article (55) of the Decree-Law, a Taxable Person shall be treated as having made a payment of Consideration for a supply to the extent that the Taxable Person
intends to make the payment before the expiration of six months after the agreed date for the payment for the supply.

Article (55)
Apportionment of Input Tax

1. Where there are quarterly Tax Periods, the Tax year shall be as follows:
a. Where a Taxable Person’s Tax Period ends on 31 January and quarterly thereafter, the Taxable Person’s Tax year shall end on 31 January of every year.
b. Where a Taxable Person’s Tax Period ends on last day of February and quarterly thereafter, the Taxable Person’s Tax year shall end on the last day of February of every year.
c. Where a Taxable Person’s Tax Period ends on 31 March and quarterly thereafter, the Taxable Person’s Tax year shall end on 31 March of every year.
2. Where the Tax Period is 12 months, the Tax year shall be the same as the Tax Period.
3. Where the Tax Period is 1 month, the Tax year shall be the total Tax Periods in the year ending on last day of the calendar year.
4. In any other case where Clauses (2) and (3) do not apply, the Authority shall specify the Tax year.
5. To determine the Input Tax that could be recoverable, the Taxable Person shall apportion Input Tax as follows:
a. Input Tax on supplies that wholly relate to supplies as specified in Clause (1) of Article (54) of the Decree-Law made by the Taxable Person shall be recoverable in full.
b. Input Tax that does not relate to supplies as specified in Clause (1) of Article (54) of the Decree-Law made by the Taxable Person shall not be recoverable unless provisions allow otherwise.
c. Input Tax that partly relates to supplies as specified in Clause (1) of Article (54) of the Decree-Law and partly not, shall be apportioned in accordance with Clause (6) of this Article and only that part that relates to supplies as specified in Clause (1) of Article (54) of the Decree-Law shall be recoverable.
6. The Input Tax that could be recoverable shall be calculated as follows:
a. The Taxable Person shall calculate the percentage of Recoverable Tax calculated by reference to Article (54) of the Decree-Law to the sum of Recoverable Tax and non-Recoverable Tax for the Tax Period.
b. The percentage calculated under paragraph (a) of this Clause shall be rounded to the nearest whole number.
c. The percentage calculated under paragraph (b) of this Clause shall be multiplied by the amount of Input Tax referred to in paragraph (c) of Clause (5) of this Article to establish the recoverable portion of that Input Tax.
7. The calculations referred to above shall be undertaken in respect of each Tax Period where Input Tax incurred relates to making Exempt Supplies or to activities that are not in the course of Business.
8. At the end of each Tax year the Taxable Person shall undertake the calculation mentioned in Clause (6) of this Article, but in respect of the entire Tax year just ended in the first Tax Period of its subsequent Tax year.
9. The Input Tax properly recoverable for the Tax year just ended as described in Clause (8) of this Article shall be compared to the Input Tax amount actually recovered in all the Tax Periods making up the Tax year, and an adjustment to the Recoverable Tax shall be made in the Tax Period mentioned in Clause (8).
10. If the difference in any Tax year between the Recoverable Tax as calculated under this Article and the Recoverable Tax which would arise if a calculation was made which reflects the actual use of the Goods and Services to which the Input Tax relates, exceeds AED 250,000 (two hundred fifty thousand dirhams), the Taxable Person shall, in the Tax Period referred to in Clause (8) of this Article, make an adjustment to the Input Tax in respect of the difference.
11. Where the application of the calculations mentioned in this Article would give a result which the Taxable Person considers would not reflect the actual extent to which the Input Tax relates to making Taxable Supplies, he may apply to the Authority to authorise the use of an alternative basis of calculation based on the list of accepted mechanisms issued by the Authority.
12. The Authority may accept that the Taxable Person may use an alternative mechanism of apportionment of input tax than that referred to in this Article from such future date and as per any further conditions as determined by the Authority.
13. The Taxable Person may only apply to change the alternative mechanism with effect from at least two Tax years after he was first approved to use it.
14. The Authority may request such information from the Taxable Person as it believes is necessary to make a decision regarding application made under Clause (11) of this Article.
15. If the Authority accepts the application made under Clause (11) of this Article, it shall issue a Notification to the Taxable Person setting out the alternative calculation method and conditions for using of such method.
Article (56)
Adjustment of Input Tax Post-Recovery
1. If Input Tax has been recovered because it was attributed to supplies as specified in Clause (1) of Article (54) of the Decree-Law but, before the consumption of the Goods or Services upon which that Input Tax
was incurred the Input Tax became not so attributable, then the Taxable Person shall be required to repay that Input Tax.
2. If Input Tax has not been recovered because it was not attributed to supplies specified in Clause (1) of Article (54) of the Decree-Law but, before the consumption of the Goods or Services upon which that Input Tax was incurred, the Input Tax became attributable to supplies as specified in Clause (1) of Article (54) of the Decree-Law, then the Taxable Person shall be able to recover Input Tax attributable to the use of the Goods or Services for making such supplies.
3. If Input Tax has been treated as subject to apportionment to calculate the Input Tax that could be recovered, but before the consumption of the Goods or Services upon which that Input Tax was incurred, the use of that Input Tax changes, then it shall be adjusted as follows:
a. If it becomes attributable to supplies as specified in Clause (1) of Article (54) of the Decree-Law then the Taxable Person shall be able to recover Input Tax not previously recovered to the extent that it is attributable to the use of the Goods or Services for making such supplies.
b. If it ceases to be attributable to any supplies specified in Clause (1) of Article (54) of the Decree-Law then the Taxable Person shall be required to repay that Input Tax.
4. The adjustments for change in use of Goods or Services under this Article shall be made only if all of the following conditions are met:
a. The change in use occurred within five years of the Date of Supply of the relevant Goods and Services.
b. The Taxable Person is not required to adjust the same Input Tax under mechanisms provided in Articles (55) and (57) of this Decision in which case those mechanisms will apply.

Article (57)
Assets Considered Capital Assets

1. A Capital Asset is a single item of expenditure of the Business amounting to AED 5,000,000 or more excluding Tax, on which Tax is payable and which has estimated useful life equal or longer than:
a. 10 years in case of a building or a part thereof.
b. 5 years for all Capital Assets other than buildings or parts thereof.
2. Items of stock, which are for resale, shall not be treated as Capital Assets.
3. Expenditure consisting of smaller sums which collectively amount to AED 5,000,000 or more shall be treated as a single item of expenditure of AED 5,000,000 or more for the purposes of this Article where the sums are staged payments for any of the following:
a. For the purchase of a building.
b. For the construction of a building.
c. In relation to an extension, refurbishment, renewal, fitting out, or other work undertaken to a building, except that where there is a distinct break between any such works being undertaken they shall be taken to be separate items of expenditure.
d. For the purchase, construction, assembly or installation of any goods or immovable property where components are supplied separately for assembly.

Article (58)
Adjustments under the Capital Assets Scheme

1. A Capital Asset eligible for the Capital Asset Scheme shall be monitored and the Input Tax incurred shall be adjusted, as required in accordance with the provisions of this Article, over a period of either (10) ten consecutive years for buildings or parts thereof or (5) five consecutive years for other Capital Assets, commencing on the day on which the owner first uses the Capital Asset for the purposes of its Business.
2. Notwithstanding Clause (1) of this Article, if a Capital Asset is destroyed, sold, or otherwise disposed of before the end of the period referred to in Clause (1) of this Article, the Capital Asset Scheme shall cease in respect of the asset in the Tax year in which the asset was destroyed, sold or disposed of.
3. The Tax year in which the Capital Asset is acquired shall be treated as Year 1 for the purposes of the Capital Asset Scheme.
4. A Taxable Person shall keep a Capital Asset register and record therein the Input Tax incurred on the Capital Asset in Year 1 (represented by “W” in this Article) as well as details of any adjustments made to the Input Tax calculations under this Article.
5. The Input Tax recovered on the Capital Asset in Year 1 after any adjustment that may be due under Article (58) of the Decree-Law shall be recorded together with the percentage that gave rise to that recovery (referred to as “X” in this Article).
6. At the end of each year from Year 2 onwards, the Taxable Person shall calculate the percentage of Recoverable Tax for that Capital Asset for that year in accordance with Article (58) of the Decree-Law (referred to as “Q” in this Article).
7. If Q is not equal to X, the Taxable Person shall perform the calculation described in Clauses (8) to (11) of this Article, and shall make an adjustment to his Input Tax.
8. The Taxable Person shall calculate an amount (referred to as “R” in this Article) as:
a. One tenth of W multiplied by Q if the Capital Asset is a building or a part thereof; or
b. One fifth of W multiplied by Q if the Capital Asset is not a buildings or a part thereof.
9. The Taxable Person shall calculate an amount (referred to as “Z” in this Article) as:
a. One tenth of W multiplied by X if the Capital Asset is a building or a part thereof.
b. One fifth of W multiplied by X if the Capital Asset is not a buildings or a part thereof.
10. Where R is more than Z, the Taxable Person shall increase his Input Tax by the difference.
11. Where R is less than Z, the Taxable Person shall reduce his Input Tax by the difference.
12. If the Capital Asset is disposed of by the Taxable Person in any year other than the final year or the Taxable Person deregisters from Tax and is required to account for tax on the asset as a Deemed Supply, the use to which the Capital Asset is deemed to have been put in any remaining years will be:
a. For making Taxable Supplies, where it is disposed of by way of a supply or Deemed Supply that is subject to Tax or would be subject to Tax were it to be made in the State.
b. For making Exempt Supplies, where it is disposed of by way of a supply that is exempt or would be exempt were it to be made in the State.
c. Not in the course of conducting Business, where is it disposed of by way of a transaction that is not deemed as supply in the course of Business, unless it is deemed as a supply according to the meaning provided in Clause (2) of Article (7) of the Decree-Law.
13. Where a Taxable Person transfers his Capital Assets as part of a transfer of his Business or a part thereof according to Clause (2) of Article (7) of the Decree-Law, or to become a member of a Tax Group, or to leave a Tax Group and immediately become a Taxable Person on a stand-alone basis, then the Tax year then applying shall end on the day the Taxable Person transfers the Business or part of the Business, or becomes or ceases to be part of a Tax Group. On the next day, the next Tax year shall commence with the owner of the Capital Assets.
14. Where a Person who registers for Tax has already owned a Capital Asset for the purpose of his Business before registration for Tax, Year 1 shall be deemed to have commenced on the date of first use by that Person.
15. For the purposes of Clauses (12) and (13) of this Article, any adjustments that may be required in respect of any such remaining years shall be included in the Tax Return relating to the Tax Period in which the Capital Asset is disposed of.
16. Any adjustments other than required under Clauses (12) and (13) of this Article shall be made in the Tax Period mentioned in Clause (8) of Article (55) of this Decision.

Article (59)
Tax invoices

1. A Tax Invoice shall contain all of the following particulars:
a. The words “Tax Invoice” clearly displayed on the invoice.
b. The name, address, and Tax Registration Number of the Registrant making the supply.
c. The name, address, and Tax Registration Number of the Recipient where he is a Registrant.
d. A sequential Tax Invoice number or a unique number which enables identification of the Tax Invoice and the order of the Tax Invoice in any sequence of invoices.
e. The date of issuing the Tax Invoice.
f. The date of supply if different from the date the Tax Invoice was issued.
g. A description of the Goods or Services supplied.
h. For each Good or Service, the unit price, the quantity or volume supplied, the rate of Tax and the amount payable expressed in AED.
i. The amount of any discount offered.
j. The gross amount payable expressed in AED.
k. The Tax amount payable expressed in AED together with the rate of exchange applied where the currency is converted from a currency other than the UAE dirham.
l. Where the invoice relates to a supply under which the Recipient of Goods or Recipient of Services is required to account for Tax, a statement that the Recipient is required to account for Tax, and a reference to the relevant provision of the Decree-Law.
2. A simplified Tax Invoice shall contain all of the following particulars:
a. The words “Tax Invoice” clearly displayed on the invoice.
b. The name, address, and Tax Registration Number of the Registrant making the supply.
c. The date of issuing the Tax Invoice.
d. A description of the Goods or Services supplied.
e. The total Consideration and the Tax amount charged.
3. If there are or will be sufficient records available to establish the particulars of a supply, a Taxable Person is not required to issue a Tax Invoice for the supply where the supply is a wholly zero-rated supply.
4. Where a Taxable Person is required to issue a Tax Invoice, the Tax Invoice must meet the requirements of Clause (1) of this Article.
5. As an exception to Clause (4) of this Article, the Taxable Person may issue a Tax Invoice that meets the requirements of Clause (2) of this Article in either of the following situations:
a. Where the Recipient of Goods or Recipient of Services is not a Registrant.
b. Where the Recipient of Goods or Recipient of Services is a Registrant and the Consideration for the supply does not exceed AED 10,000
6. A Taxable Person shall not issue separate Tax Invoices in respect of supplies where he makes more than one supply of Goods or Services to the same Person and those supplies are included on a summary Tax Invoice issued to the Recipient of Goods or Recipient of Services in the same calendar month as the Date of Supply of those supplies.
7. Where the Authority considers that there are or will be sufficient records available to establish the particulars of any supply or class of supplies, and that it would be impractical to require that a Tax Invoice be issued by the Taxable Person, the Authority may determine that, subject to any conditions that the Authority may consider necessary:
a. Any of the particulars specified in Clauses (1) or (2) of this Article shall not be contained on a Tax Invoice.
b. A Tax Invoice is not required to be issued in certain cases.
8. The Taxable Person may issue a Tax Invoice by electronic means provided that:
a. The Taxable Person must be capable of securely storing a copy of the electronic Tax Invoice in compliance with the record keeping requirements.
b. The authenticity of origin and integrity of content of the electronic Tax Invoice should be guaranteed.
9. Where a Recipient agrees to raise a Tax Invoice on behalf of a Registrant Supplier in respect of a supply of Goods or Services, that document shall be treated as if it had been issued by the supplier if the following conditions are met:
a. The Recipient of the Goods or Services is a Registrant.
b. The supplier and the Recipient agree in writing that the supplier shall not issue a Tax Invoice in respect of any supply to which this Clause applies.
c. The Tax Invoice shall contain the particulars required under Clause (1) of this Article.
d. The words “Tax Invoice raised by buyer” are clearly displayed on the Tax Invoice.
10. Where a Tax Invoice is issued pursuant to Clause (9) of this Article, any invoice issued by the Supplier in respect of that supply shall be deemed not to be a Tax Invoice.
11. Where an agent who is a Registrant makes a supply of Goods and 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, and provided that the principal shall not issue a Tax Invoice.
12. Where the Supply of Goods or Services is considered as supplied in an Implementing State, the Taxable Person must include the following additional particulars in the document issued:
a. The tax registration number of the Recipient of Goods or Services issued to him by the competent authority of the Implementing State in which the supply is treated as taking place.
b. A statement identifying the supply as between the State and an Implementing State.
c. Any other information specified by the Authority.

Article (60)
Tax Credit Note

1. The Tax Credit Note shall contain the following:
a. The words “Tax Credit Note” clearly displayed on the invoice.
b. The name, address, and Tax Registration Number of the Registrant making the supply.
c. The name, address, and Tax Registration Number of the Recipient where he is a Registrant.
d. The date of issuing the Tax Credit Note.
e. The value of the supply shown on the Tax Invoice, the correct amount of the value of the supply, the difference between those two amounts, and the Tax charged that relates to that difference in AED.
f. A brief explanation of the circumstances giving rise to the issuing of the Tax Credit Note.
g. Information sufficient to identify the supply to which the Tax Credit Note relates.
2. Where, on application by a Taxable Person, the Authority considers that there are or will be sufficient records available to establish the particulars of any supply or class of supplies, and that it would be impractical to require that a Tax Credit Note be issued by the Taxable Person, the Authority may determine any of the following, subject to any conditions that the Authority may consider necessary:
a. Any one or more of the particulars specified in Clause (1) of this Article shall not be contained on a Tax Credit Note.
b. A Tax Credit Note is not required to be issued.
3. The Taxable Person may issue a Tax Credit Note by electronic means provided that:
a. The Taxable Person must be capable of securely storing a copy of the electronic Tax Credit Note in compliance with the record keeping requirements.
b. The authenticity of origin and integrity of content of the electronic Tax Credit Note should be guaranteed.
4. Where a Recipient of Goods or Recipient of Services agrees to raise a Tax Credit Note on behalf of a Registrant Supplier in respect of a supply of Goods or Services, that document shall be treated as if it had been issued by the supplier if the following conditions are met:
a. The Recipient of Goods or Recipient of Services is a Registrant.
b. The Supplier and the Recipient of Goods or Recipient of Services agree that the Supplier shall not issue a Tax Credit Note in respect of any supply to which this Clause applies.
c. The Tax Credit Note shall contain the particulars required under Clause (1) of this Article.
d. The words “Tax Credit Note created by buyer” are clearly displayed on the Tax Credit Note.
5. Where a Tax Credit Note is issued pursuant to Clause (4) of this Article, any tax credit note issued by the supplier in respect of that supply shall be deemed not to be a Tax Credit Note.
6. Where an agent who is a Registrant makes a supply of Goods and Services for and on behalf of the principal of that agent, that agent may issue a Tax Credit Note in relation to that supply as if that agent had made the supply, and provided that the principal shall not issue a Tax Credit Note.
7. Where approval has been granted by the Authority under Clause (2) of this Article, that approval may be withdrawn at any time where the Authority considers that the conditions of that approval have not been met.

Article (61) Fractions of Fils

Where the Tax chargeable on a supply is calculated to a fraction of a Fils, the Taxable Person is permitted to round the amount to the nearest Fils on a mathematical rounding.
Title Fourteen
Tax Returns and Tax Periods

Article (62)
Length of tax period

1. The standard Tax Period applicable to a Taxable Person shall be a period of three calendar months ending on the date that the Authority determines.
2. As an exception to Clause (1) of this Article, the Authority may assign a Person or class of Persons a shorter or longer Tax Period where it considers that a non-standard Tax Period length is necessary or beneficial to:
a. Reduce the risk of Tax Evasion.
b. Enable the Authority to improve the monitoring of compliance or collection of Tax revenues.
c. Reduce the administrative burden on the Authority or the compliance burden on a Person or class of Persons.
3. Where a Taxable Person is assigned the standard Tax Period, he may request that the Tax Period ends with the month as requested by him, and the Authority may accept such request at its discretion.

Article (63)
Tax Periods in the Case of Loss of Capacity

1. Where a Person becomes an incapacitated Person, his current Tax Period will end on the day before the Person became incapacitated Person. A new Tax Period will commence on the day the Person became incapacitated Person in the name of the Legal Representative.
2. For the purposes of Clause (1) of this Article “incapacitated Person” means a Registrant who dies, or goes into liquidation or receivership, or becomes bankrupt or incapacitated.
3. The Legal Representative will, for the purposes of the new Tax Period referred to in Clause (1) and subsequent Tax Periods, be treated as the Registrant himself for the purposes of the Decree-Law and this Decision for the period of incapacitation.

Article (64)
Tax Return and Payment

1. A Tax Return must be received by the Authority no later than the 28th day following the end of the Tax Period concerned or by such other date as directed by the Authority.
2. A Person whose registration has been cancelled must provide a final Tax Return for the last Tax Period for which he was registered.
3. A Taxable Person shall settle Payable Tax in relation to a Tax Return using the means specified by the Authority so that it is received by the Authority no later than the date specified in Clause (1) of this Article.
4. Where Recoverable Tax for a Tax Period exceeds Due Tax for the Tax Period, the excess Recoverable Tax may be repaid to the Taxable Person in accordance with the relevant provisions in the Decree-Law and the Federal Law No. (7) of 2017.
5. A Tax Return must contain such details as the Authority may require and, at the minimum, allow for the following information to be included:
a. The name, address and the TRN of the Registrant;
b. The Tax Period to which the Tax Return relates.
c. The date of submission.
d. The value of Taxable Supplies made by the Person in the Tax Period and the Output Tax charged.
e. The value of Taxable Supplies subject to the zero rate made by the Person in the Tax Period.
f. The value of Exempt Supplies made by the Person in the Tax Period.
g. The value of any supplies subject to Clauses (1) and (3) of Article (48) of the Decree-Law.
h. The value of expenses incurred in respect of which the Person seeks to recover Input Tax and the amount of Recoverable Tax.
i. The total value of Due Tax and Recoverable Tax for the Tax Period.
j. The Payable Tax for the Tax Period.

Article (65)
Recovery of Excess Tax

If the Taxable Person has excess Recoverable Tax for a Tax Period and has made a request to the Authority by the means specified by the Authority to be repaid the amount of the excess, then the Authority shall repay the amount to the Taxable Person within the timelines and according to the procedures specified in the Federal Law No. (7) of 2017 on Tax Procedures.

Other Provisions Relating to Recovery
Article (66)
New residence

1. Where a Person owns or acquires land in the State on which he builds, or commissions the construction of, his own residence, he shall be entitled to make a claim to the Authority to repay the Tax on the expenses of constructing the residence.
2. For the purposes of Clause (1) of this Article:
a. The claim may only be made by a natural Person who is a national of the State.
b. The claim must relate to a newly constructed building to be used solely as residence of the Person or the Person’s family.
c. The claim may not be made in connection with a building that will not be used solely as a residence by the Person or the Person’s family, for example if it is to be used as a hotel, guest house, hospital or for any other purpose not consistent with it being used as a residence.
3. The refund claim under this Article must be lodged within 6 months from the date of completion of the newly built residence. For the purposes of this Clause, a newly built residence is considered completed at the earlier of the date the residence becomes occupied, or the date when it is certified as completed by a competent authority in the State, or as may otherwise be stipulated by the Authority.
4. A refund claim must be submitted to the Authority in such manner and containing such details as the Authority may stipulate.
5. Where the Authority has repaid Tax in accordance with this Article, and following the receipt of such repayment the Person breached the condition in paragraph (c) of Clause (2) of this Article, the Authority may require the Person to repay the amount of Tax that was recovered by him.
6. The categories of expenses on which the Person may claim a repayment of Tax under this Article are:
a. Services provided by contractors, including services of builders, architects, engineers, and other similar services necessary for the successful construction of residence.
b. Building materials, being goods of a type normally incorporated by builders in a residential building or its site, but not including furniture or electrical appliances.

Article (67)
Business visitors

1. The Authority shall implement a Businesses VAT Refund Scheme for Foreign Businesses to allow the repayment of Tax on expenses incurred in the State by a foreign entity which has no Place of Establishment or Fixed Establishment in the State or the Implementing State, and is not a Taxable Person.
2. For the purpose of this Article, a “foreign entity” is any Person that carries on a Business as defined in this Decision and is registered as an establishment with a competent authority in the jurisdiction in which he is established.
3. A foreign entity is not entitled to make a claim under the VAT Refunds for Foreign Businesses Scheme in the following cases:
a. If it makes supplies which have a place of supply in the State, unless the Recipient of Goods or Recipient of Services is obliged to account for the Tax on those supplies in accordance with Clause (1) of Article (48) of the Decree-Law.
b. If the Input Tax relates to Goods or Services for which the Tax is not recoverable in accordance with Article (53) of this Decision.
c. If the foreign entity is from a country that does not in similar circumstances provide refunds of value added tax to entities that belong to the State.
4. A foreign tour operator is not entitled to make a claim under the VAT Refunds for Foreign Businesses Scheme in connection with undertaking activities as a tour operator.
5. The claim for any refund shall be made on an electronic form as will be provided for the purpose by the Authority.
6. The claim form shall contain such particulars as may be required by the Authority including:
a. Name and address of the foreign entity.
b. Nature of activities of the foreign entity.
c. Details of the registration of the foreign entity with the competent authority in the country where it is established.
d. Description of reasons for incurring expenses in the State.
e. Description of activities undertaken in the State.
f. Details of expenses incurred in the State during the period of the claim.
7. The claim shall be accompanied by such documents or other evidence as may be required by the Authority.
8. The period of the claim shall be 12 calendar months.
9. The minimum claim amount of Tax that may be submitted under VAT Refunds for Foreign Businesses Scheme shall be AED 2,000.
10. As an exception to Clause (1) and Paragraph (c) of Clause (3) and Clause (8) of this Article, Businesses resident in any GCC State that is not considered to be an Implementing State according to the Decree-Law and this Decision, may submit an application for refund of Tax incurred on Goods and Services supplied to them in the State.

Article (68)
Tourist visitors

1. The Cabinet may issue a decision introducing the Tax Refunds for Tourists Scheme specifying the following:
a. The date on which the Scheme comes into effect.
b. The mechanism for tax refunds.
c. Limitations on claiming tax refunds.
d. Processes for any verifications to be undertaken under the Scheme.
e. Any other conditions or procedures that the Cabinet considers necessary for operation of the Scheme.
2. The following conditions shall apply to the Tax Refunds for Tourists Scheme:
a. The Goods which are subject to the Tax Refunds for Tourists Scheme must be supplied to an overseas tourist who is in the State during the purchase of the Goods from the supplier.
b. At the Date of Supply, the overseas tourist intends to depart from the State within 90 days from that date, accompanied by the Goods.
c. The relevant Goods are exported by the overseas tourist to a place outside the Implementing States within 3 months from the Date of Supply, subject to such conditions and verifications as may be imposed by the Authority.
3. The phrase “overseas tourist” means any natural Person who is not resident in any of the Implementing States and who is not a crew member on a flight or aircraft leaving an Implementing State.
4. The Authority may publish a list of Goods that shall not be subject to Tax Refunds for Tourists Scheme.

Article (69)
Foreign Governments

1. Where Tax is incurred by foreign governments, international organisations, diplomatic bodies and missions, or by an official thereof, the foreign governments, international organisations, diplomatic bodies and missions may submit a claim on a form issued by the Authority requesting repayment of the Tax charged.
2. The application of Clause (1) of this Article is subject to the following conditions:
a. Goods and Services are acquired exclusively for official use.
b. The country in which the relevant foreign government, international organisation, diplomatic body or mission is established or has its official seat excludes the same type of entities that belong to the State from the burden of any Tax in that country.
c. The refund claim is consistent with the terms of any international treaty or other agreement concerning the liability to tax of such a foreign government, international organisation, diplomatic body or mission.
d. The official of a foreign government, international organisation, diplomatic body or mission who benefits from the refund should not hold UAE Nationality or have a residence visa under the sponsorship of an entity other than the foreign government, international organisation, diplomatic body or mission itself, and should not carry out any Business in the State.

Article (70)
Transitional rules

1. For the purposes of paragraph (e) of Clause (1) of Article (80) of the Decree-Law, “acceptance by the Recipient of Goods” means the point at which the Recipient of Goods considers that the Supplier has completed his obligations to him.
2. Where Clause (1) of Article (80) of the Decree-Law applies, the Date of Supply shall be the effective date of the Decree-Law only in respect of the amounts of Consideration received or specified in the invoice issued before the Decree-Law came into effect.
3. In the case of Clause (3) of Article (80) of the Decree-Law, a supply shall be considered to have taken place in accordance with the following provisions:
a. For supplies to which Article (25) of the Decree-Law applies, the Date of Supply shall be determined in accordance with Clauses (1) to (6) of that Article.
b. For supplies to which Article (26) of the Decree-Law applies, the supply shall be treated as taking place in accordance with the rules in that Article.
4. For the purpose of Clause (3) of this Article, where the Date of Supply has been triggered in respect of a supply of a Good or a Service and the part of the supply of such Good or Service was before the Decree-Law coming into effect and partly after, the Date of Supply shall be treated as taking place after the Decree-Law comes into effect for that part of the supply actually taking place after that date.
5. A payment of Consideration before the date the Decree-Law comes into effect shall be disregarded in determining whether a supply takes place before that date if, or to the extent that, it appears to the Authority that it would not have been so made but for the Tax.
6. In the case of Clause (3) of Article (80) of the Decree-Law, the Consideration shall be treated as exclusive of Tax and the Recipient of Goods or Recipient of Services shall be obligated to pay the VAT in addition to the Consideration if all of the following conditions are met:
a. Where the Recipient of Goods or Recipient of Services is a Registrant.
b. Where the Recipient of Goods or Recipient of Services has the right to recover Input Tax incurred on the supply either in full or in part.
7. Clause (6) of this Article shall only apply if, before the date the Decree-Law comes into effect, the supplier requests from the Recipient of Goods or Recipient of Services to confirm the following:
a. Whether the Recipient of Goods or Recipient of Services is or expects to be a Registrant at the time the Decree-Law comes into effect.
b. The extent to which the Recipient of Goods or Recipient of Services expects to be able to recover Tax incurred on the supply.
8. Within 20 business days of receiving an information request under Clause (7) of this Article, the Recipient of Goods or Recipient of Services shall reply to the supplier in writing with the information requested.
9. The supplier may rely on the information provided as required by Clause (8) of this Article in determining the tax treatment of the supply. If the Recipient of Goods or Recipient of Services knowingly provides incorrect information that results in the Supplier having to treat the Consideration as inclusive of Tax, then the Recipient of Goods or Recipient of Services shall not be entitled to reclaim the Input Tax on that supply.
10. Where the Recipient of Goods or Recipient of Services has failed to provide the information in accordance with Clause (8) of this Article, the supplier may treat Consideration in respect of the supply as exclusive of Tax, and request the Recipient of Goods or Recipient of Services to pay Tax.
11. The supplier and the Recipient of Goods or Recipient of Services shall both retain the records of the request made under Clause (7) of this Article and the information provided under Clause (8) of this Article.
12. For the purposes of Clause (6) of this Article, where the Recipient of Goods or Recipient of Services ascertained that he can only recover Input Tax in part, the consideration for the supplies under the contract shall be treated as exclusive of Tax only to the extent of the Input Tax recovery percentage that the Recipient of Goods or Recipient of Services discloses to the Supplier under Clause (8), and the remaining portion of the consideration relating to the Supply should be treated as Tax inclusive.
13. In all cases, the Supplier shall remain responsible for calculation of Tax and payment to the Authority.
14. Where a Taxable Supply is treated as periodically or successively supplied, Tax shall not be charged on the portion of the Consideration that relates to a supply made before the date the Decree-Law comes into effect.
15. A GCC State shall be treated as an Implementing State according to the provisions of the Decree-Law and this Decision if the following conditions are met:
a. Where the GCC State treats the State similarly as an Implementing State in its published legislation.
b. Full compliance with the provisions of the Common VAT Agreement of the States of the Gulf Cooperation Council (GCC).

Article (71)
Record-keeping Requirements

1. Subject to Clause (2) of this Article, any records required to be kept in accordance with the provisions of the Decree-Law must comply with timeframes, limitations and conditions for retention of records as specified in the Federal Law No. (7) of 2017 on Tax Procedures and its Executive Regulations.
2. Any records related to a real estate required to be kept shall be held for a period of 15 years after the end of the Tax Period to which they relate.
3. In the case of a Government Entity that is listed by the Cabinet under Clause (2) of Article (72) of the Decree-Law, the Government Entity may:
a. Refuse the Authority’s request to take any records or a copy of the same from the premises of the Government Entity.
b. Put controls for the access of employees of the Authority to the records and the premises of the Government Entity.
4. Where the Authority holds any records that belong to a Government Entity listed by the Cabinet under Clause (2) of Article (72) of the Decree-Law, the records shall be held in such manner that they can only be accessed by the employees of the Authority that are specifically authorised to view the records of that Government Entity.

Article (72)
Record Keeping of the Supplies Made

1. The records of all Goods and Services supplied by the Taxable Person or on his behalf showing the Goods and Services, suppliers and their agents, shall be kept and retained in sufficient detail to enable the Authority to readily identify Goods and Services, suppliers, and agents.
2. Without prejudice to Article (78) of the Decree-Law, the Taxable Person who makes a Taxable Supply of Goods or Services in the State must keep records of the transaction to prove the Emirate in which the Fixed Establishment related to this supply is located.
3. As an exception to Clause (2) above, if the Taxable Person who makes a Taxable Supply of Goods or Services does not have a Fixed Establishment in the State, the Taxable Person must keep records of the transaction to prove the Emirate in which the Supply is received.

 

 

Article (1)
Definitions

State: United Arab Emirates
Minister: Minister of Finance
Authority: Federal Tax Authority
Value Added Tax: A tax imposed on the import and supply of Goods and Services at each stage of production and distribution, including the Deemed Supply.
Tax: Value Added Tax (VAT).
GCC States: all countries that are full members of The Cooperation Council for the Arab States of the Gulf pursuant to its Charter.
Implementing States: The GCC States that are implementing a Tax law pursuant to an issued legislation.
Goods: Physical property that can be supplied including real estate, water, and all forms of energy as specified in the Executive Regulation of this Decree-Law.
Services: Anything that can be supplied other than Goods.
Import: The arrival of Goods from abroad into the State or receipt of Services from outside the State.
Concerned Goods: Goods that have been imported, and would not be exempt if supplied in the State.
Concerned Services: Services that have been imported, where the place of supply is in the State, and would not be exempt if supplied in the State.
Person: A natural or legal person.
Taxable Person: Any Person registered or obligated to register for Tax purposes under this Decree-Law.
Taxpayer: Any person obligated to pay Tax in the State under this Decree-Law, whether a Taxable Person or end consumer.
Tax Registration: A procedure according to which the Taxable Person or his Legal Representative registers for Tax purposes at the Authority.
Tax Registration Number (TRN): A unique number issued by the Authority for each Person registered for Tax purposes.
Registrant: The Taxable Person who has been issued with a TRN.
Recipient of Goods: Person to whom Goods are supplied or imported.
Recipient of Services: Person to whom Services are supplied or imported.
Importer: With respect to importing Goods, it is the Person whose name is listed as the importer of the Goods on the date of Import for customs clearance purposes. With respect to Services, it is the Recipient of these Services.
Taxable Trader: A Taxable Person in the Implementing States, whose main activity is the distribution of water and all types of energy as specified in the Executive Regulation of this Decree-Law.
Tax Return: Information and data specified for Tax purposes and submitted by a Taxable Person in accordance with a form prepared by the Authority.
Consideration: All that is received or expected to be received for the supply of Goods or Services, whether in money or other acceptable forms of payment.
Business: Any activity conducted regularly, on an ongoing basis and independently by any Person, in any location, such as industrial, commercial, agricultural, professional, service or excavation activities or anything related to the use of tangible or intangible properties.
Exempt Supply: A supply of Goods or Services for Consideration while conducting Business in the State, where no Tax is due and no Input Tax may be recovered, except according to the provisions of this Decree-Law.
Taxable Supply: A supply of Goods or Services for a Consideration by a Person conducting Business in the State, and does not include Exempt Supply.
Deemed Supply: Anything considered as a supply and treated as a Taxable Supply according to the instances stipulated in this Decree-Law.
Input Tax: Tax paid by a Person or due from him when Goods or Services are supplied to him, or when conducting an Import.
Output Tax: Tax charged on a Taxable Supply and any supply considered as a Taxable Supply.
Recoverable Tax: Amounts that were paid and may be returned by the Authority to the Taxpayer pursuant to the provisions of this Decree-Law.
Due Tax: Tax that is calculated and charged pursuant to this Decree-Law.
Payable Tax: Tax that is due for payment to the Authority.
Tax Period: A specific period of time for which the Payable Tax shall be calculated and paid.
Tax Invoice: A written or electronic document in which the occurance of a Taxable Supply is recorded with details pertaining to it.
Tax Credit Note: A written or electronic document in which the occurance of any amendment to a Taxable Supply that reduces or cancels the same is recorded and the details pertaining to it.
Government Entities: Federal and local ministries, government departments, government agencies, authorities and public institutions in the State.
Charities: Societies and associations of public welfare not aiming to make a profit that are listed within a Cabinet Decision issued at the suggestion of the Minister.
Mandatory Registration Threshold: An amount specified in the Executive Regulation of this Decree-Law; if exceeded by the value of Taxable Supplies or is anticipated to be exceeded, the supplier shall apply for Tax Registration.
Voluntary Registration Threshold: An amount specified in the Executive Regulation of this Decree-Law; if exceeded by the value of Taxable Supplies or taxable expenses or is anticipated to be exceeded, the supplier may apply for Tax Registration.
Transport-related Services: Shipment, packaging and securing cargo, preparation of Customs documents, container management, loading, unloading, storing and moving of Goods, or any another closely related services or services that are necessary to conduct the transportation services.
Place of Establishment: The place where a Business is legally established in a country pursuant to the decision of its establishment, or in which significant management decisions are taken and central management functions are conducted.
Fixed Establishment: Any fixed place of business, other than the Place of Establishment, in which the Person conducts his business regularly or permanently and where sufficient human and technology resources exist to enable the Person to supply or acquire Goods or Services, including the Person’s branches.
Place of Residence: The place where a Person has a Place of Establishment or Fixed Establishment, in accordance with the provisions of this Decree-Law.
Non-Resident: Any person who does not own a Place of Establishment or Fixed Establishment in the State and usually does not reside in the State.
Related Parties: Two or more Persons who not separated on the economic, financial or regulatory level, where one can control the others either by Law, or through the acquisition of shares or voting rights.
Customs Legislation: Federal and local legislation that regulate customs in the State.
Designated Zone: Any area specified by a Cabinet Decision issued at the suggestion of the Minister, as a Designated Zone for the purpose of this Decree-Law.
Export: Goods departing the State or the provision of Services to a Person whose Place of Establishment or Fixed Establishment is outside the State.
Voucher: Any instrument that gives the right to receive Goods or Services against the value stated thereon or the right to receive a discount on the price of the Goods or Services. Vouchers do not include postage stamps issued by the Emirates Post Group.
Activities conducted with Sovereign Capacity: Activities conducted by Government Entities in their sole competent capacity, with or without Consideration.
Capital Assets: Business assets designated for long-term use.
Capital Assets Scheme: A scheme whereby the initially recovered Input Tax is adjusted based on the actual use during a specific period.
Administrative Penalties: Amounts imposed upon a Person by the Authority for breaching the provisions of this Decree-Law or Federal Law No. (7) of 2017 on Tax Procedures.
Administrative Penalties Assessment: A decision issued by the Authority concerning to Administrative Penalties due.
Excise Tax: A tax imposed on specific Goods.
Tax Group: Two or more Persons registered with the Authority for Tax purposes as a single taxable person in accordance with the provisions of this Decree-Law.

Article (2)
Scope of Tax

Tax shall be imposed on:
1. Every Taxable Supply and Deemed Supply made by the Taxable Person.
2. Import of Concerned Goods except as specified in the Executive Regulation of this Decree-Law.

Article (3)
Tax Rate

Without prejudice to the provisions of Title Six of this Decree-Law, a standard rate of 5% shall be imposed on any supply or Import pursuant to Article (2) of this Decree-Law on the value of the supply or Import specified in the provisions of this Decree-Law.

Article (4)
Responsibility for Tax

The Tax imposed shall be the responsibility of the following:
1. A Taxable Person who makes any supply stipulated in Clause (1) of Article (2) of this Decree-Law.
2. The Importer of Concerned Goods.
3. The Registrant who acquires Goods as stated in Clause (3) of Article (48) of this Decree-Law.

Article (5)
Supply of Goods

The following shall be considered a supply of Goods:
1. Transfer of ownership of the Goods or the right to use them to another Person according to what is specified in the Executive Regulation of this Decree-Law.
2. Entry into a contract between two parties entailing the transfer of Goods at a later time, pursuant to the conditions specified in the Executive Regulation of this Decree-Law.

Article (6)
Supply of Services

A supply of Services shall be every supply that is not considered a supply of Goods, including any provision of Services specified in the Executive Regulation of this Decree-Law.

Article (7)
Supply in Special Cases

As an exception to what is stated in Articles (5) and (6) of this Decree-Law, the following shall not be considered a supply:
1. The sale or issuance of any Voucher unless the received Consideration exceeds its advertised monetary value, as specified in the Executive Regulation of this Decree-Law.
2. The transfer of whole or an independent part of a Business from a Person to a Taxable Person for the purposes of continuing the Business that was transferred.

Article (8)
Supply of more than one component

The Executive Regulation of this Decree-Law shall specify the conditions for treating a supply made of more than one component for one price, whether such components are Goods or Services or both.

Article (9)
Supply via Agent

1. The Supply of Goods and Services through an agent acting in the name of and on behalf of a principal is considered to be a supply by the principal and for his benefit.
2. The Supply of Goods and Services through an agent acting in his name is considered to be a direct supply by the agent and for his benefit.

Article (10)
Supply by Government EntIites

1. A Government Entity is regarded as making a supply in the course of business in the following cases:
a. If its activities are conducted in a non-sovereign Capacity.
b. If its activities are in competition with the private sector.
2. A Cabinet Decision shall be issued at the suggestion of the Minister determining the Government Entities and their activities that are considered as conducted in a Sovereign Capacity and instances where its activities are considered not in competition with the private sector.

Article (11)
The Cases of Deemed Supply

The following cases shall be considered as Deemed Supply:
1. A supply of Goods or Services, which constituted the whole assets of a Taxable Person or a part thereof, but are no longer considered to be as such, provided that the supply was made without Consideration.
2. The transfer by a Taxable Person of Goods that constituted a part of his business assets from the State to another Implementing State, or from the Taxable Person’s business in an Implementing State to his Business in the State, except in the case where such transfer:
a. Is considered as temporary under the Customs Legislation.
b. Is made as part of another Taxable Supply of these Goods.
3. A supply of Goods or Services for which Input Tax may be recovered but the Goods or Services were used, in part or whole, for purposes other than Business, and such supply shall be considered as deemed only to the extent of the use for non-business purposes.
4. Goods and Services that a Taxable Person owns at the date of Tax Deregistration.

Article (12)
Exceptions for Deemed Supply

A supply is not considered as deemed in the following cases:
1. If no Input Tax was recovered for the related Goods and Services.
2. If the supply is an Exempt Supply.
3. If the recovered Input Tax has been adjusted for the Goods and Services pursuant to the Capital Assets Scheme.
4. If the value of the supply of the Goods, for each Recipient of Goods within a 12-month period, does not exceed the amount specified in the Executive Regulation of this Decree-Law, and the Goods were supplied as samples or commercial gifts.
5. If the total Output Tax due for all the Deemed Supplies per Person for a 12-month period is less than the amount specified in the Executive Regulation of this Decree-Law.

Article (13)
Mandatory Tax Registration

1. Every Person, who has a Place of Residence in the State or an Implementing State and is not already registered for Tax, shall register in the following situations:
a. Where the total value of all supplies referred to in Article (19) exceeded the Mandatory Registration Threshold over the previous 12-month period.
b. Where it is anticipated that the total value of all supplies referred to in Article (19) will exceed the Mandatory Registration Threshold in the next thirty (30) days.
2. Every Person, who does not have a Place of Residence in the State or an Implementing State and is not already registered for Tax, shall register for Tax if he makes supplies of Goods or Services, and where no other Person is obligated to pay the Due Tax on these supplies in the State.
3. The Executive Regulation of this Decree-Law shall specify the time limits that a Person has to inform the Authority about his liability to register for Tax and the effective date of Tax Registration.

Article (14)
Tax Group

1. Two or more persons conducting Businesses may apply for Tax Registration as a Tax Group if all of the following conditions are met:
a. Each shall have a Place of Establishment or Fixed Establishment in the State.
b. The relevant persons shall be Related Parties.
c. One or more persons conducting business in a partnership shall control the others.
2. The Executive Regulation of this Decree-Law will determine the instances where the Authority may reject the application to register a Tax Group.
3. Any Person conducting Business is not allowed to have more than one Tax Registration Number, unless otherwise prescribed in the Executive Regulation.
4. If Related Parties do not apply for Tax Registration as a Tax Group under Clause (1) of this Article, the Authority may assess their relation based on their economic, financial and regulatory practices in business and register them as a Tax Group if their relation was proved thereto according to the controls and Conditions specified by the Executive Regulation of this Decree-Law.
5. The Authority may deregister the Tax Group registration in accordance with this Article as per the conditions specified in the Executive Regulation of this Decree-Law.
6. The Authority may make changes to the Persons registered as a Tax Group by adding or removing Persons as requested by the Taxable Person or in accordance with the instances mentioned in the Executive Regulation.

Article (15)
Registration Exceptions

1. The Authority may except a Taxable Person from mandatory Tax Registration upon his request if his supplies are only subject to the zero rate.
2. Anyone excepted from Tax Registration according to Clause (1) of this Article shall inform the Authority of any changes to his Business that would make him subject to Tax under this Decree-Law pursuant to the time limits and procedures determined in the Executive Regulation of this Decree-Law.
3. The Authority shall have the right to collect any Due Tax and Administrative Penalties for the period of exception where that Taxable Person was not entitled to the exception.

Article (16)
Tax Registration of Governmental Bodies

Government Entities which shall be determined in a Cabinet Decision issued under Clause (2) of Article (10) of this Decree-Law, shall apply for Tax Registration and may not be Deregistered unless by a Cabinet Decision at the suggestion of the Minister.

Article (17)
Voluntary Registration

Any Person who is not obligated to apply for Tax Registration according to this Chapter may apply for Tax Registration in the following cases:
1. If he proves, at the end of any given month, that the total value of supplies referred to in Article (19) of this Decree-Law or the expenses which are subject to Tax and were incurred during the previous 12-month period, has exceeded the Voluntary Registration Threshold.
2. At any time that he anticipates that the total value of supplies stipulated in Article (19) of this Decree-Law or the expenses which are subject to Tax that will be incurred, will exceed the Voluntary Registration Threshold during the coming 30-day period.

Article (18)
Tax Registration for a Non-Resident

A Non-resident Person may not take the value of Goods and Services imported into the State to determine whether he is entitled to apply for Tax Registration if the calculation of Tax for such Goods or Services is the reponsibility of the Importer pursuant to Clause (1) of Article (48) of this Decree-Law.

Article (19)
Calculating the Tax Registration Threshold

To determine whether a Person has exceeded the Mandatory Registration Threshold and the Voluntary Registration Threshold, the following shall be calculated:
1. The value of Taxable Goods and Services.
2. The value of Concerned Goods and Concerned Services received by the Person unless covered by Clause (1) of this Article.
3. The value of the whole or relevant part of Taxable Supplies that belong to said Person if he has, wholly or partly, acquired a Business from another Person who made the supplies.
4. The value of Taxable Supplies made by Related Parties pursuant to the cases stated in the Executive Regulation of this Decree-Law.

Article (20)
Capital Assets

The supply of Capital Assets belonging to the Person shall not be taken into account to determine whether a Person in Business exceeds the Mandatory Registration Threshold or Voluntary Registration Threshold.

Article (21)
Tax De-Registration Cases

A Registrant shall apply to the Authority for Tax Deregistration in any of the following cases:
1. If he stops making Taxable Supplies.
2. If the value of the Taxable Supplies made over a period of (12) consecutive months is less than the Voluntary Registration Threshold and said Registrant does not meet the condition stipulated in Clause (2) of Article (17) of this Decree-Law.

Article (22)
Application for Tax De-Registration

A Registrant may apply to the Authority for Tax Deregistration if the value of his Taxable Supplies during the past (12) months was less than the Mandatory Registration Threshold.

Article (23)
Voluntary Tax De-registration

A Registrant under Article (17) may not apply for Tax Deregistration within (12) months of the date of Tax Registration.

Article (24)
Procedures, Controls and Conditions of Tax Registration and De-registration

The Executive Regulation of this Decree-Law shall determine the procedures, controls and conditions for Tax Registration, Tax deregistration and rejection of applications for Tax Registration and Deregistration as stipulated in this Title.

Article (25)
Date of Supply

Tax shall be calculated on the date of supply of Goods or Services, which shall be earlier of any of the following dates:
1. The date on which Goods were transferred, if such transfer was under the supervision of the supplier.
2. The date on which the Recipient of Goods took possession of the Goods, if the transfer was not supervised by the supplier.
3. Where goods are supplied with assembly and installation, the date on which the assembly or installation of the Goods was completed.
4. The date on which the Goods are Imported under the Customs Legislation.
5. The date on which the Recipient of Goods accepted the supply, or a date no later than (12) months after the date on which the Goods were transferred or placed under the Recipient of Goods disposal, if the supply was made on a returnable basis.
6. The date on which the Services were completed.
7. The date of receipt of payment or the date on which the Tax Invoice was issued.

Article (26)
Date of Supply in Special Cases

1. The date of supply of Goods or Services for any contract that includes periodic payments or consecutive invoices is the earliest of any of the following dates, provided that it does not exceed one year from the date of the provision of such Goods and Services:
a. The date of issuance of any Tax Invoice.
b. The date payment is due as shown on the Tax Invoice.
c. The date of receipt of payment.
2. The date of supply, in cases where payment is made through vending machines, shall be the date on which funds are collected from the machine.
3. The date of Deemed Supply of Goods or Services is the date of their supply, disposal, change of usage or the date of Deregistration, as the case may be.
4. The date of a supply of a voucher is the date of issuance or supply thereafter.

Article (27)
Place of Supply of Goods

1. The place of supply of Goods shall be in the State if the supply was made in the State, and does not include Export from or Import into the State.
2. The place of supply of installed or assembled Goods if exported from or imported into the State shall be:
a. In the State if assembly or installation of the Goods was done in the State.
b. Outside the State if assembly or installation of the Goods was done outside the State.
3. The place of supply of Goods that includes Export or Import shall be as follows:
a. Inside the State in the following instances:
1) If the supply includes exporting to a place outside the Implementing States.
2) If the Recipient of Goods in an Implementing State is not registered for Tax in the state of destination, and the total exports from the same supplier to this state does not exceed the mandatory registration threshold for said state.
3) The Recipient of Goods does not have a Tax Registration Number in the State, and the total exports from the same supplier in an Implementing State to the State exceeds the Mandatory Registration Threshold.
b. Outside the State in the following instances:
1) The supply includes an Export to a customer registered for Tax purposes in one of the Implementing States.
2) The Recipient of Goods is not registered for Tax in the Implementing State to which export is made, and the total exports from the same supplier to this Implementing State exceeds the mandatory registration threshold for said state.
3) The Recipient of Goods does not have a Tax Registration Number and the Goods are Imported from a supplier registered for Tax in any of the Implementing States from which import is made, and the total imports from the same supplier to the State do not exceed the Mandatory Registration Threshold.
4. Goods shall not be treated as exported outside the State and then reimported if such Goods are supplied in the State and this supply required that the Goods exit and then re-enter the State according to the instances specified in the Executive Regulation of this Decree-Law.

Article (28)
Place of Supply of Water and Energy

1. The supply of water and all forms of energy specified in the Executive Regulation of this Decree-Law through a distribution system, shall be considered as done in the Place of Residence of the Taxable Trader in case the distribution was conducted by a Taxable Person having a Place of Residence in the State to a Taxable Trader having a Place of Residence in an Implementing State.
2. The supply of water and all forms of energy specified in the Executive Regulation of this Decree-Law through a distribution system, shall be considered to have occurred at the place of actual consumption, if distribution was conducted by a Taxable Person to a Non-Taxable Person.

Article (29)
Place of Supply of Services

The place of supply of Services shall be the Place of Residence of the Supplier.

Article (30)
Place of Supply in Special Cases

As an exception to what is stipulated in Article (29) of this Decree-Law, the place of supply in special cases shall be as follows:
1. Where the Recipient of Services has a Place of Residence in another Implementing State and is registered for Tax therein, the place of supply shall be the Place of Residence of the Recipient of Services.
2. Where the Recipient of Services is in Business and has a Place of Residence in the State, and the Supplier does not have a Place of Residence in the State, the place of supply shall be in the State.
3. For the Supply of Services related to Goods, such as installation of Goods supplied by others, the place shall be where said Services were performed.
4. For the Supply of means of transport to a lessee who is not a Taxable Person in the State and does not have a TRN in an Implementing State, the place shall be where such means of transport were placed at the disposal of the lessee.
5. For the Supply of restaurant, hotel, and food and drink catering Services, the place shall be where such Services are actually performed.
6. For the Supply of any cultural, artistic, sporting, educational or any similar services, the place shall be where such Services were performed.
7. For the Supply of Services related to real estate as specified in the Executive Regulation of this Decree-Law, the place of supply shall be where the real estate is located.
8. For the Supply of transportation Services, the place of supply shall be where transportation starts. The Executive Regulation of this Decree-Law shall specify the place of supply for transportation Services if the trip includes more than one stop.

Article (31)
Place of Supply of Telecommunication and Electronic Services

1. For telecommunications and electronic Services specified in the Executive Regulation of the Decree-Law, the place of supply shall be:
a. In the State, to the extent of the use and enjoyment of the supply in the State.
b. Outside the State, to the extent of the use and enjoyment of the supply outside the State.
2. The actual use and enjoyment of all telecommunications and electronic Services shall be where these Services were used regardless of the place of contract or payment.

Article (32)
Place of Establishment

The Place of Residence of the supplier or Recipient of Services shall be as follows:
1. The state in which the Person’s Place of Establishment is located or where he has a Fixed Establishment, provided that he does not have a Place of Establishment or owns a Fixed Establishment in any other state.
2. The state in which the Person’s Place of Establishment is located or where he has a Fixed Establishment that is the most closely related to the supply if he has a Place of Establishment in more than one state or has Fixed Establishments in more than one state.
3. The state in which the usual Place of Residence of the Person is located if he does not have a Place of Establishment or a Fixed Establishment in any state.

Article(33)                                                                                                          The Agent

The Place of Residence of an agent shall be regarded as the Place of Residence of the principal in the following two cases:
1. If the agent regularly exercises the right of negotiation and enters into agreements in favor of the principal.
2. If the agent maintains a stock of Goods to fulfil supply agreements for the principal regularly.

Article (34)
Value of Supply

The value of supply of Goods or Services for Consideration shall be as follows:
1. If the entire Consideration is monetary, the value of the supply shall be the Consideration less the Tax.
2. If all or part of the Consideration is not monetary, the value of the supply is calculated as the overall monetary part plus the market value of the non-monetary part of the Consideration, and shall not include the Tax.
3. For Services received by the Taxable Person who is obligated to calculate the Tax in accordance with Clause (1) of Article (48) of this Decree-Law, the value of the supply shall be equal to the market value of the consideration without addition of the Tax on that supply.
4. If the Consideration is related to matters other than the supply of Goods or Services, the value of the supply shall be equal to the part of the Consideration that is related to such supply as stated in the Executive Regulation of this Decree-Law.
The Executive Regulation of this Decree-Law shall specify the rules to determine the market value.

Article (35)
Value of Import

The Import value of Goods consists of:
1. The customs value pursuant to Customs Legislation, including the value of insurance, freight and any customs fees and Excise Tax paid on the Import of the Goods. Tax shall not be included in the Value of the Supply.
2. If it is not possible to determine the value pursuant to Clause (1) of this Article, the value shall be determined based on alternate valuation rules stated in the applicable Customs Legislation..

Article (36)
Value of Supply for Related Parties

As an exception to Articles (34) and (35) of this Decree-Law, the value of the supply or Import of Goods or Services between Related Parties shall be considered equal to the market value if the following conditions are met:
1. The value of the supply is less than the market value.
2. If the supply is a Taxable Supply and the Recipient of Goods or Recipient of Services does not have the right to recover the full Tax that would have been charged to such supply as Input Tax.

Article (37)
Value of Deemed Supply

As an exception to Articles (34) and (35) of this Decree-Law, the value of the supply in the case of a Deemed Supply when the Taxable Person purchases Goods or Services to make Taxable Supplies but does not use those Goods or Services for that purpose, will be equal to the total cost incurred by the Taxable Person to make this Deemed Supply of Goods or Services.

Article (38)
Tax-Inclusive Prices

For Taxable Supplies, the advertised price shall include the Tax. Instances where prices do not include the Tax shall be determined by the Executive Regulation of this Decree-Law.

Article (39)
Value of Supply in case of Discount or Subsidies

When discounts are made before or after the Date of Supply or subsidies provided by the State to the supplier for that supply, the value of the supply shall be reduced in proportion to such discounts or subsidies.
The Executive Regulation of this Decree-Law shall specify the conditions and restrictions for calculating the Tax when the discount is made.

Article (40)
Value of Supply of Vouchers

The value of supply of a Voucher is the difference between the consideration received by the supplier of the Voucher and the advertised monetary value of the Voucher.

Article (41)
Value of Supply of Postage Stamps

The value of supply for postage stamps that allow the user to use postal services in the State shall be the amount shown on the stamp.

Article (42)
Temporary Transfer of Goods

If Goods are transferred temporarily from the domestic market into a Designated Zone or outside the State for completing the manufacturing or repair in order to re-import them into the State, the value of the supply when re-Imported shall be the value of the Services rendered.

Article (43)
Charging Tax based on Profit Margin

1. The Registrant may, in any Tax Period, calculate and charge Tax based on the profit margin earned on the Taxable Supplies as specified in the Executive Regulation of this Decree-Law and not based on the value of these supplies, and shall notify the Authority of the same.
2. The Executive Regulation of this Decree-Law shall specify the conditions to be met for the application of the provisions of this Article.

Article (44)
Supply and Import Taxable at Zero Rate

The supply and Import of Goods and Services specified in this Chapter made by a Taxable Person shall be a Taxable Supply subject to the zero rate.

Article (45)
Supply of Goods and Services that is Subject to Zero Rate

The Zero rate shall apply to the following Goods and Services:
1. A direct on indirect Export to outside the Implementing States as specified in the Executive A direct or indirect Export to outside the Implementing States as specified in the Executive Regulation of this Decree-Law.
2. International transport of passengers and Goods which starts or ends in the State or passes through its territory, including also services related to such transport.
3. 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.
4. Supply of air, sea and land means of transport for the transportation of passengers and Goods as specified in the Executive Regulations of this Decree-Law.
5. Supply of Goods and Services related to the supply of the means of transport mentioned in Clause (4) of this Article and which are designed for the operation, repair, maintenance or conversion of these means of transport.
6. Supply of aircrafts or vessels designated for rescue and assistance by air or sea.
7. Supply of Goods and Services related to the transfer of Goods or passengers aboard land, air or sea means of transport pursuant to Clauses (2) and (3) of this Article, designated for consumption on board; or anything consumed by any means of transport, any installations or addition thereto or any other use during transportation.
8. The supply or Import of investment precious metals. The Executive Regulation of this Decree-Law shall specify the precious metals and the standards based on which they are classified as being for investment purposes.
9. The first supply of residential buildings within (3) years of its completion, either through sale or lease in whole or in part, according to the controls specified in the Executive Regulation of this Decree-Law .
10. The first supply of buildings specifically designed to be used by Charities through sale or lease according to the controls specified in the Executive Regulation of this Decree-Law.
11. The first supply of buildings converted from non-residential to residential through sale or lease according to the conditions specified in the Executive Regulation of this Decree-Law.
12. The supply of crude oil and natural gas.
13. The supply of educational services and related Goods and Services for nurseries, preschool, elementary education, and higher educational institutions owned or funded by Federal or local Government, as specified in the Executive Regulation of this Decree-Law.
14. The supply of preventive and basic healthcare Services and related Goods and Services according to what is specified in the Executive Regulation of this Decree-Law.

Article (46)
Supply Exempt from Tax

The following supplies shall be exempt from Tax:
1. Financial services that are specified in the Executive Regulation of this Decree-Law.
2. Supply of residential buildings through sale or lease, other than that which is zero-rated according to Clauses (9) and (11) of Article (45) of this Decree-Law.
3. Supply of bare land.
4. Supply of local passenger transport.
The Executive Regulation of this Decree-Law shall specify the conditions and controls for exempting the supplies mentioned in the preceding clauses of this Article.

Article (47)
Supply of More Than One Component

The Executive Regulation of this Decree-Law will specify the controls to determine the tax treatment of any supply composed of more than one component for a single price, where each component is subject to a different tax treatment.

Article (48)
Reverse Charge

1. If the Taxable Person imports Concerned Goods or Concerned Services for the purposes of his Business, then he shall be treated as making a Taxable Supply to himself, and shall be responsible for all applicable Tax obligations and accounting for Due Tax in respect of these supplies.
2. As an exception to Clause (1) of this Article, in case the final destination of the Goods when entering the State is another Implementing State, the Taxable Person shall pay the Due Tax on Import of Concerned Goods pursuant to the mechanism specified by the Executive Regulation of this Decree-Law.
3. If a Registrant makes a Taxable Supply in the State to another Registrant of any crude or refined oil, unprocessed or processed natural gas, or any hydrocarbons, and the Recipient of these Goods intends to either resell the purchased Goods as crude or refined oil, unprocessed or processed natural gas, or any hydrocarbons, or use these Goods to produce or distribute any form of energy, the following rules shall apply:
a. the Registrant making the Supply shall not charge Tax on the value of the supply of the The Registrant making the Supply shall not charge Tax on the value of the supply of the Goods referred to in this paragraph.
b. The Recipient of the Goods shall calculate the Tax on the value of the Goods supplied thereto and shall be responsible for all applicable Tax obligations and for calculating the Due Tax in respect of such supplies.
4. The provisions of Clause (3) of this Article shall not apply in any of the following situations:
a. Where, before the Date of Supply, the Recipient of Goods has not provided a written confirmation to the supplier that his acquisition of the Goods is for the purpose of resale.
b. Where, before the Date of Supply, the Recipient of Goods has not provided a written confirmation to the supplier that he is a Registrant and the supplier has not verified the Tax Registration of the Recipient of Goods by means approved by the Authority.
c. Where the Taxable Supply would be subject to Tax at the rate of 0% in accordance with Clause (1) of Article (45) of this Decree-Law.
d. Where the Taxable Supply includes a supply of Goods or Services other than the Goods referred to in Clause (3) of this Article.
5. Where a Recipient of Goods of any crude or refined oil, unprocessed or processed natural gas, or any hydrocarbons confirms in writing to the supplier that he is a Registrant for the purposes of applying Clause (3) of this Article, the following shall appl:
a. The supplier shall not be liable for calculating the Tax in relation to the supply unless he was aware or supposed to be aware, that the Recipient was not a Registrant at the Date of Supply.
b. The Recipient shall be liable for the calculation of any Due Tax in respect of the supply.
6. If the supplier mentioned in paragraph (a) of Clause (5) of this Article is supposed to be aware that the Recipient of Goods was not registered at the Date of Supply, the supplier and the Recipient of Goods shall be jointly and severely liable for any Due Tax and relevant penalties in respect of the supply.
7. The Executive Regulation of this Decree-Law shall specify:
a. Conditions and instances where the mechanism in Clause (1) of this Article applies.
b. Additional obligations related to record keeping for Tax calculated according to the mechanism in Clause (1) of this Article.

Article (49)
Import of Concerned Goods

A person not registered for Tax shall pay Due Tax on Import of Concerned Goods from outside the Implementing States on the date of Import pursuant to the payment mechanism specified by the Executive Regulation of this Decree-Law.

Article (50)
Designated Zone

A “Designated Zone” that meets the conditions specified in the Executive Regulation of this Decree-Law shall be treated as being outside the State.

Article (51)
Transfer of Goods in Designated Zones

1. Goods may be transferred from one Designated Zone to another Designated Zone without any Tax becoming due.
2. The Executive Regulation of this Decree-Law shall specify the procedures and conditions for the transfer of Goods from and to a Designated Zone as well as the method of keeping, storing and processing such Goods therein.

Article (52)
Exceptions for Designated Zone

As an exception to Article (50) of this Decree-Law, the Executive Regulation of this Decree-Law shall specify the conditions under which the Business conducted within the Designated Zones will be regarded as being conducted in the State.

Article (53)                                                                                                        Due Tax for a Tax Period

The Payable Tax for any Tax Period shall be calculated as being equal to the total Output Tax payable pursuant to this Decree-Law and which has been done in the Tax Period less the total Recoverable Tax by said Taxable Person over the same Tax Period.

Article (54)
Recoverable Input Tax

1. The Input Tax that is recoverable by a Taxable Person for any Tax Period is the total of Input Tax paid for Goods and Services which are used or intended to be used for making any of the following:
a. Taxable Supplies.
b. Supplies that are made outside the State which would have been Taxable Supplies had they been made in the State.
c. Supplies specified in the Executive Regulation of this Decree-Law that are made outside the State, which would have been treated as exempt had they been made inside the State.
2. Where Goods are imported by a Taxable Person through another Implementing State and the intended final destination of those Goods was the State at the time of Import, then the Taxable Person shall be entitled to treat the Tax paid in respect of Import of Goods into the Implementing State as Recoverable Tax subject to conditions specified the Executive Regulation of this Decree-Law.
3. Where Goods were acquired by a Taxable Person in another Implementing State and then moved into the State, the Taxable Person shall be entitled to treat the Tax paid in respect of the Goods in the Implementing State as Recoverable Tax subject to the conditions specified in the Executive Regulation of this Decree-Law.
4. A Taxable Person shall not be entitled to recover any Input Tax in respect of Tax paid in accordance with Clause (2) of Article (48) of this Decree-Law.
5. The Executive Regulation of this Decree-Law shall specify the instances where Input Tax is excepted from being recovered.

Article (55)
Recovery of Recoverable Input Tax in the Tax Period

1. Taking into consideration the provisions of Article (56) of this Decree-Law, the Recoverable Input Tax may be deducted through the Tax Return relating to the first Tax Period in which the following conditions have been satisfied:
a. The Taxable Person receives and keeps the Tax Invoice as per the provisions of this Decree-Law, provided that the Tax Invoice includes the details of the supply related to such Input Tax, or keeps any other document pursuant to Clause (3) of Article (65) of this Decree-Law in relation to the Supply or Import on which Input Tax was paid.
b. The Taxable Person pays the Consideration for the Supply or any part thereof, as specified in the Executive Regulation of this Decree-Law.
2. If the Taxable Person entitled to recover the Input Tax fails to do so during the Tax Period in which the conditions stated in Clause (1) of this Article have been satisfied, he may include the Recoverable Tax in the Tax Return for the subsequent Tax Period.

Article (56)
Input Tax Paid before Tax Registration

1. A Registrant may recover Recoverable Tax incurred before Tax Registration on the Tax Return submitted for the first Tax Period following Tax Registration, which has been paid for any of the following:
a. Supply of Goods and Services made to him prior to the date of Tax Registration.
b. Import of Goods by him prior to the date of Tax Registration.
Provided that these Goods and Services were used to make supplies that give the right to Input Tax recovery upon Tax Registration.
2. As an exception to the provisions of Clause (1) of this Article, Input Tax may not be recovered in any of the following instances:
a. The receipt of Goods and Services for purposes other than making Taxable Supplies.
b. Input Tax related to the part of the Capital Assets that depreciated before the date of Tax Registration.
c. If the Services were received more than five years prior to the date of Tax Registration.
d. Where a Person has moved the Goods to another Implementing State prior to the Tax Registration in the State.

Article (57)
Recovery of Tax by Government Entities and Charities

A Cabinet Decision shall be issued at the suggestion of the Minister determining the Government Entities and Charities entitled to recover the full amount of Input Tax paid by them, except for:
1. Tax excluded from recovery as specified in the Executive Regulation of this Decree-Law.
2. Tax paid for Goods and Services used to perform exempt supplies.

Article (58)
Calculating the Input Tax that may be Recovered

The Executive Regulation of this Decree-Law shall specify the method in which the Input Tax that may be recovered is calculated, if Input Tax is paid for Goods or Services during a specific Tax Period to make supplies that allow recovery under Article (54) and others that do not allow recovery, or for activities conducted that are not in the course of doing the Business.

Article (59)
Conditions and Mechanism of Input Tax Adjustment

The Executive Regulation of this Decree-Law shall specify the conditions and mechanism for adjusting Input Tax in the following cases:
1. If the Taxable Person attributes the Input Tax, either fully or partially, to make Taxable Supplies, but changed the use, or the intended use, of those Goods or Services prior to making the Taxable Supplies.
2. If the Taxable Person attributes the Input Tax, either fully or partially, to make Exempt Supplies, or for activities that do not fall within the conduct of Business, but changed the use or the intended use of the those Goods or Services related to the Input Tax prior to making Exempt Supplies.

Article (60)
Capital Assets Scheme

1. If a Capital Asset is supplied or imported by a Taxable Person, the latter shall assess the period of use of such asset and make the necessary adjustments to the Input Tax paid pursuant to the Capital Assets Scheme.
2. A Taxable Person shall keep the records related to Capital Assets for at least ten years.
3. The Executive Regulation of this Decree-Law shall specify the following:
a. Capital Assets subject to the provisions of this Decree-Law and their estimated useful life.
b. The method of adjusting Capital Assets and the periods for which adjustments should be made.
c. Instances where the period for keeping records of Capital Asset records is extended.

Article (61)
Instances and Conditions for Output Tax Adjustments

1. A Registrant shall adjust Output Tax after the date of supply in any of the following instances:
a. If the supply was cancelled.
b. If the Tax treatment of the supply has changed due to a change in the nature of the supply.
c. If the previously agreed Consideration for the supply was altered for any reason.
d. If the Recipient of Goods or Recipient of Services returned them to the Registrant in full or in part and the Consideration was returned in full or in part.
e. If the Tax was charged in error.
2. Paragraph (e) of Clause (1) of this Article shall not apply where the place of supply was treated by the supplier at the Date of Supply as being subject to Clause (1) of Article (27), but, as a result of a movement of the Goods, it turned out that it should have been treated as a supply under paragraph (b)(1) of Clause (3) of the same.
3. In order to adjust the Output Tax any of the following conditions shall be met:
a. If the Output Tax amount charged on the supply stated in the Tax Invoice does not match the Tax that should actually be charged on the supply as a result of any of the events mentioned in Clause (1) of this Article.
b. If the Registrant submits a Tax Return for the Tax Period during which the supply occurred and an amount was incorrectly calculated as being the amount of Output Tax due for this supply as the result of any of the events mentioned in Clause (1) of this Article.

Article (62)
Mechanism for Output Tax Adjustment

The Output Tax shall be adjusted according to the following:
1. If the Output Tax due for the supply exceeds the Output Tax calculated by the Registrant, the Registrant shall issue a new Tax Invoice for the additional amount of Tax and calculate the additional Tax due for the Tax Period during which such an increase was identified.
2. If the Output Tax calculated by the Registrant exceeds the Output Tax which should have been charged on the supply, the Registrant shall issue a Tax Credit Note according to the provisions of this Decree-Law.

Article (63)
Adjustment due to the Issuance of Tax Credit Notes

Without prejudice to Clause (2) of Article (62) of this Decree-Law, if the Registrant issues a Tax Credit Note to correct Output Tax charged to the Recipient of Goods or Recipient of Services, the Tax stated in the Tax Credit Note shall be considered as:
1. A reduction of the Output Tax for the Registrant of this Tax Credit Note.
2. A reduction of the Input Tax by the Recipient of Goods or Recipient of Services for the Tax Period during which the Tax Credit Note was received.

Article (64)
Adjustment for Bad Debts

1. A Registrant supplier may reduce the Output Tax in a current Tax Period to adjust the Output Tax paid for any previous Tax Period if all of the following conditions are met:
a. Goods and Services have been supplied and the Due Tax has been charged and paid.
b. Consideration for the supply has been written off in full or part as a bad debt in the accounts of the supplier.
c. More than six (6) months has passed from the date of the supply.
d. The Registrant supplier has notified the Recipient of Goods and the Recipient of Services of the amount of Consideration for the supply that has been written off.
2. The registered Recipient of Goods or Recipient of Services shall reduce the Recoverable Input Tax for the current Tax Period related to a supply received during any previous Tax Period where the Consideration has not been paid and all of the following conditions are met:
a. The registered supplier reduced the Output Tax as stated in Clause (1) of this Article and the Recipient of Goods and the Recipient of Services has received a notification from the supplier of the Consideration being written off.
b. The Recipient of Goods and Recipient of Services received the Goods and Services and the relevant Input Tax was deducted.
c. The Consideration was not paid in full or in part for the supply for over (6) six months.
3. The reduction stated in Clause (1) and (2) shall be equal to the Tax related to the Consideration which has been written off according to paragraph (b) of Clause (1) of this Article.

Article (65)
Conditions and Requirements for Issuing Tax Invoices

1. A Registrant making a Taxable Supply shall issue an original Tax Invoice and deliver it to the Recipient of Goods or Recipient of Services.
2. A Registrant making a Deemed Supply shall issue an original Tax Invoice and deliver it to a Recipient of Goods or Recipient of Services if available or keep it in his records if there is no Recipient of Goods or Recipient of Services.
3. The Executive Regulation of this Decree-Law shall specify the following:
a. Data to be included in the Tax Invoice.
b. The conditions and procedures required to issue an electronic Tax Invoice.
c. Instances where the Registrant is not required to issue and deliver a Tax Invoice to the Recipient of Goods or the Recipient of Services.
d. Instances where other documents may be issued in place of the Tax Invoice as well as the conditions thereof and the data to be included therein.
e. Instances where another Person may issue a Tax Invoice on behalf of the registered supplier.
4. Any Person who receives an amount as Tax pursuant to any document issued by him shall pay this amount to the Authority even if it is not due.
Article (66)
Document of Supplies to an Implementing States
Without prejudice to Article (65) of this Decree-Law, each Registrant who supplies Goods or Services considered as supplied in any of the Implementing States, shall provide the Recipient of Goods and Recipient of Services with a document that includes all the information that must be included in the Tax Invoice and any other information as specified in the Executive Regulation of this Decree-Law, provided that this document is not labelled “Tax Invoice” and does not include any Tax charged.

Article (67)
Date of Issuance of Tax Invoice

The Registrant shall issue a Tax Invoice within 14 days as of the date of supply as stated in Article (25) of this Decree-Law.

Article (68)
Rounding on Tax Invoices

For the purpose of stating the Tax due on a Tax Invoice, the Executive Regulation of this Decree-Law shall specify the method of calculation and stating the total amount to be paid if the Tax is less than one fils of a UAE Dirham.

Article (69)
Currency Used on Tax Invoices

If the supply is in a currency other than the UAE Dirham, then for the purposes of the Tax Invoice, the amount stated in the Tax Invoice shall be converted into the UAE Dirham according to the exchange rate approved by the Central Bank at the date of supply.

Article (70)
Conditions and Requirements for Issuing Tax Credit Note

1. The Registrant shall issue an original Tax Credit Note when a reduction of Output Tax occurs in relation to any supply made by him according to Clause (2) of Article (62) of this Decree-Law and deliver the same to the Recipient of Goods or Recipient of Services.
2. When making a Deemed Supply, the Registrant shall issue an original Tax Credit Note when a reduction occurs to the Output Tax in relation to such supply according to Article (61) of this Decree-Law and shall keep the same in his records.
3. The Executive Regulation of this Decree-Law shall specify the following:
a. Basic data that should be included in the Tax Credit Note in instances where the Taxable Person is required to issue this Note.
b. The conditions and procedures required for the issuance of an electronic Tax Credit Note.
c. Instances where the Registrant is not required to issue and deliver a Tax Credit Note to the Recipient of Goods or the Recipient of Services.
d. Instances where other documents may be issued in place of the Tax Credit Note as well as conditions for the issuance of such document and the data to be included therein.
e.
f. Instances where another Person may issue a Tax Credit Note on behalf of the registered supplier.

Article (71)
Duration of Tax Period

The Executive Regulation of this Decree-Law shall specify the Tax Period for which the Taxable Person shall calculate and pay Tax as well as the exceptional circumstances in which the Authority may amend the Tax Period.

Article (72)
Submission of Tax Returns

1. The Taxable Person shall submit the Tax Return to the Authority at the end of each Tax Period within the time limits and according to the procedures specified in the Executive Regulation of this Decree-Law declaring all supplies made and received during that Tax Period.
2. A Cabinet Decision shall be issued upon the recommendation of the Minister, determining the Government Entities that may submit simplified Tax Returns to the Authority.

Article (73)
Payment of Tax

The Executive Regulation of this Decree-Law shall specify the time limits and procedures for payment of Tax stated as payable in the Tax Return according to the provisions of this Decree-Law.

Article (74)
Excess Recoverable Tax

1. With the exception of what will be stipulated in the Executive Regulation of this Decree-Law, the Taxable Person shall carry forward any excess of Recoverable Tax to the subsequent Tax Periods and offset such excess against Payable Tax or any Administrative Penalties imposed under this Decree-Law or Federal Law No. (7) of 2017 on Tax Procedures in subsequent Tax Periods until such excess is fully utilised, in the following cases:
a. If the Taxable Person’s Recoverable Input Tax set forth in this Decree-Law exceeds the Output Tax payable for the same Tax Period.
b. If the Tax paid to the Authority by the Taxable Person exceeds the Payable Tax according to the provisions of this Decree-Law, other than in the instance mentioned in paragraph (a) of Clause (1) of this Article.
2. If there remains any excess for any Tax Period after being carried forward for a period of time, the Taxable Person may apply to the Authority to reclaim the remaining excess. The Executive Regulation of this Decree-Law shall specify the time limits, procedures and mechanisms of returning any remaining excess to the Taxable Person.

Article (75)
Tax Recovery in Special Cases

The Authority may according to the conditions, restrictions and procedures specified in the Executive Regulations of this Decree-Law, return Tax paid for any supply received by or Import carried out by anyone of the following:
1. A A citizen of the State in respect of the Goods and Services related to the construction of a new residence that is not part of the Person’s Business.
2. A Non-Resident, who is not a Resident of an Implementing State and conducts a Business and is not a Taxable Person.
3. A Non-Resident, for Goods supplied to him in the State and that will be exported.
4. Foreign governments, international organisations, diplomatic bodies and missions according to treaties that the State is a party to.
5. Any Persons or classes listed in a Cabinet Decision issued at the suggestion of the Minister.

Article (76)
Administrative Penalties Assessment

Without prejudice to the provisions of Federal Law No. (7) of 2017 on Tax Procedures, the Authority shall issue an Administrative Penalty Assessment to the Person and notify the Person of the same within five (5) business days as of the date of issuance in any of the following cases:
1. Failure by the Taxable Person to display prices inclusive of Tax according to Article (38) of this Decree-Law.
2. Failure by the Taxable Person to notify the Authority of applying Tax based on the margin according to Article (43) of this Decree-Law.
3. Failure to comply with the conditions and procedures related to keeping the Goods in a Designated Zone or moving them to another Designated Zone.
4. Failure by the Taxable Person to issue the Tax invoice or an alternative document when making any Supply.
5. Failure by the Taxable Person to issue a Tax Credit Note or an alternative document.
6. Failure by the Taxable Person to comply with the conditions and procedures regarding the issuance of electronic Tax Invoices and electronic Tax Credit Notes.

Article (77)
Tax Evasion

If it is proven that a Person who is not a Registrant acquires Goods referred to in Clause (3) of Article 48 of this Decree-Law, claiming that he is a Registrant, he shall be considered as having committed Tax Evasion and shall be subject to the penalties provided for in Federal Law No. (7) of 2017 on Tax Procedures.

Article (78)
Record-keeping

1. Without prejudice to the provisions related to record-keeping stated in any other law, the Taxable Person shall keep the following records:
a. Records of all supplies and Imports of Goods and Services.
b. All Tax Invoices and alternative documents related to receiving Goods or Services.
c. All Tax Credit Notes and alternative documents received.
d. All Tax Invoices and alternative documents issued.
e. All Tax Credit Notes and alternative documents issued.
f. Records of Goods and Services that have been disposed of or used for matters not related to Business, showing Taxes paid for the same.
g. Records of Goods and Services purchased and for which the Input Tax was not deducted.
h. Records of exported Goods and Services.
i. Records of adjustments or corrections made to accounts or Tax Invoices.
j. Records of any Taxable Supplies made or received in accordance with Clause (3) of Article 48 of this Decree-Law, including any declarations provided or received in respect of those Taxable Supplies.
k. A Tax Record that includes the following information:
1) Due Tax on Taxable Supplies.
2) Due Tax on Taxable Supplies pursuant to the mechanism in Clause (1) of Article (48) of this Decree-Law.
3) Due Tax after the error correction or adjustment.
4) Recoverable Tax for supplies or Imports.
5) Recoverable Tax after the error correction or adjustment.
2. The Executive Regulation of this Decree-Law shall specify the following:
a. Time limits, restrictions and conditions for keeping the records listed in Clause (1) of this Article.
b. Restrictions and procedures regarding the maintenance of the confidentiality of the records that may be accessed by the Authority in the case of Government Entities mentioned under Clause (2) of Article (72) of this Decree-Law.

Articles (79)
Stating the Tax Registration Number

The Taxable Person or any other Person authorised in writing by him shall state the Tax Registration Number on each Tax Return, notification, Tax Invoice, Tax Credit Note, and any other document related to Tax or correspondence as required under this Decree-Law or said Federal Law No. (7) of 2017 on Tax Procedures.

Article (80)
Transitional Rules

1. If the supplier receives Consideration or part thereof or issues an invoice for Goods or Services before the Decree-Law comes into effect, the date of supply shall be the same as the effective date of the Decree-Law in the following instances if they occur after the effective date of the Decree-Law:
a. Transfer of Goods under the supervision of the supplier.
b. Placing the Goods at the recipient’s disposal.
c. The completion of assembly or installation of the Goods.
d. The issuance of the customs declaration.
e. The acceptance by the Reciepient of Goods of the supply.
2. If a contract has been concluded prior to the enforcement of this Decree-Law, regarding a supply to be wholly or partly made after the effective date of this Decree-Law, but such contract does not contain clauses related to Tax on the supply, it shall be treated as per the following:
a. The Consideration shall be considered inclusive of Tax if chargeable according to this Decree-Law.
b. Tax shall be calculated on the supply regardless of whether it has been taken into account when determining the Consideration for the supply.
3. The Executive Regulation of this Decree-Law shall set forth special provisions related to the implementation of this Decree-Law where a contract has been concluded before the effective date of the Decree-Law but the supply under the contract is wholly or partly made after the effective date of this Decree-Law.

Article (81)
Revenue Sharing

Tax revenues and Administrative Penalties set forth in the provisions of this Decree-Law shall be subject to sharing between the Federal Government and the Emirates Governments based on the provisions of Federal Decree-Law No. (13) of 2016 On the Establishment of the Federal Tax Authority.

Article (82)
Executive Regulation

The Cabinet shall issue the Executive Regulation of this Decree-Law at the suggestion of the Minister.

Article (83)
In case of absence of a special provision in this Decree-Law, the provisions of Federal Law No. (7) of 2017 on Tax Procedures shall be applied.

Article (84)
Cancellation of Conflicting Provisions
Any text or provisions contrary to or inconsistent with the provisions of this Decree-Law shall be abrogated.

Article (85)
Effective Date of this Decree-Law and its Application
This Decree-Law shall be published in the Official Gazette and shall come into effect as of January 1, 2018.
Khalifa bin Zayed Al Nahyan
President of the United Arab Emirates
Issued by us at the Presidential Palace in Abu Dhabi
On: 1 /12/1438 H.
Corresponding to: 23/ 8 /2017

 

Article 1
Definitions

The Council: The Gulf Cooperation Council.
Agreement: The Unified VAT Agreement for the Council States.
Tax: Value Added Tax (VAT) imposed on the import and supply of Goods and Services at each stage of production and distribution, including “Deemed Supplies”.
Member State: Any country that has full membership status in the Council in accordance with its Charter.
Council State Territory: All the territories of the Member States.
Local Law: The VAT Law (Regulation) and relevant legislation issued by each Member State.
Person: Any natural or legal person, whether public or private, or any other form of partnership.
Taxable Person: A Person that conducts an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT in accordance with the provisions of this Agreement.
Economic Activity: An activity that is conducted in an ongoing and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity.
Taxable Trader: A Taxable Person in any Member State whose main activity is the distribution of Oil, Gas, Water or Electricity.
Place of Business: The place where a business is legally established; or where its actual management center is located where key business decisions are made if different from the place of establishment.
Fixed Establishment: Any fixed location for a Business other than the Place of Business, in which the business is carried out and is distinguished by the permanent presence of human and technical resources in such a way as to enable the Person to supply or receive Goods or Services.
Place of Residence of a Person: The location where Place of Business or any other type of Fixed Establishment is. In the case of a natural person, if he does not have a Place of Business or Fixed Establishment, it will be his usual place of residence. If a Person has a Place of Residence in more than one State, the place of residence will be considered to be in the place most closely connected with the supply.
Resident Person: A person will be resident in a State if he has a place of residence therein.
Non-Resident Person: A person is not resident in a State if he has no Place of Residence therein.
Supplier: A Person who supplies Goods or Services.
Customer: A Person who receives Goods or Services.
Reverse Accounting (Charge): A mechanism by which the Taxable Customer is obligated to pay the Tax due on behalf of the Supplier and is liable for all the obligations provided for in the Agreement and the Local Law.
Related Persons: Two or more Persons; one of whom has supervisory or directive control over the others in such a way that he has administrative power that enables him to influence the business of the other Persons from a financial, economic or regulatory aspect. This includes Persons who are subject to the authority of a third Person that enables him to control their businesses from the financial, economic or regulatory aspect.
Supply: Any form of supply of Goods or Services for consideration in accordance with the cases provided for in the Chapter Two of this Agreement.
Deemed Supply: Anything that is considered a Supply in accordance with the cases provided for in Article 8 of this Agreement.
Input Tax: Tax borne by a Taxable Person in relation to Goods or Services supplied to him or imported for the purpose of carrying on the Economic Activity.
Unified Customs Regulation (Law): The Unified Customs Regulation (Law) of the GCC.
First Point of Entry: First customs point of entry through which Goods enter the Council Territory from abroad in accordance with the Unified Customs Law.
Final Destination Point of Entry: Customs point of entry through which Goods enter the Final Destination State within the GCC Territory.
Consideration: Everything collected or to be collected by the Taxable Supplier from the Customer or a third party against the Supply of Goods or Services inclusive of the VAT.
Exempted Supplies: Supplies on which no Tax is imposed and from which associated Input Tax is not deducted pursuant to the provisions of the Agreement and Local Law.
Taxable Supplies: Supplies on which Tax is charged in accordance with the provisions of the Agreement, whether at the basic rate or zero-rate, and from which associated Input Tax is deducted in accordance with the provisions of the Agreement.
Internal Supplies: Supplies of Goods or Services by a Supplier who resides in a Member State to a Customer who resides in another Member State.
Goods: All types of material property (material assets), including water and all forms of power including electricity, gas, lighting, heating, cooling and air conditioning.
Importation of Goods: The entry of Goods into any Member State from outside the Council Territory in accordance with the provisions of the Unified Customs Law.
Exportation of Goods: Supply of Goods from any Member State to the outside of the Council Territory in accordance with the provisions of the Unified Customs Law.
Competent Tax Authority: The relevant Government entity in each Member State responsible for the administration, collection and implementation of the Tax.
Deductible Tax: Input Tax that may be deducted from Tax due on Supplies for each Tax period in accordance with the Agreement and Local Law.
Capital Assets: Material and immaterial assets that form part of a business’s assets allocated for long-term use as a business instrument or means of investment
Tax Period: The period of time for which the Net Tax must be accounted.
Net Tax: Tax resulting from deducting the Deductible Tax in a Member State from the Tax due in that State within the same Tax Period. Net Tax may either be payable or refundable.
Mandatory Registration Threshold: The lower limit of the value of actual supplies at which the Taxable Person becomes obligated to register for Tax purposes.
Voluntary Registration Threshold: The lower limit of the value of actual supplies at which the Taxable Person may apply to register for Tax purposes.
Ministerial Committee: The Financial and Economic Cooperation Committee of the Council States

Article (2)
Scope of Tax

The Agreement shall come into effect in the Council Territory and Tax shall be imposed on the following transactions:
1.Taxable Supplies by a Taxable Person in the Member State Territory.
2.Receipt by a Taxable Customer of Goods or Services supplied to him by a Non-Resident and non-Taxable Person in the Member State in instances where Reverse Tax Mechanism applies.
3.Importation of Goods by any Person

Article (3)
Calculation of Time

Times and periods stipulated in the Agreement shall be calculated according to the Gregorian Calendar.

Article (4)
Tax Group

Each Member State may treat the Tax Group as a single Taxable Person in accordance with the rules and conditions put in place for that purpose. A Tax Group means two or more Corporate Persons who are Residents of the same Member State.

Article (5)
Supply of Goods

1.
A Supply of Goods means the transfer of ownership of such Goods or the right to dispose of the same as an owner.
2.
A Supply of Goods includes the following transactions:
a- assigning possession of Goods under an agreement that provides for the transfer of ownership of these Goods or the possibility of transferring the same at a date subsequent to the date of the agreement, which shall be no later than the date on which the Consideration is paid in full;
b- granting rights in rem deriving from ownership giving the right to use real estate;
c- compulsory transfer of ownership of the Goods for Consideration pursuant to a decision of the public authorities or by virtue of any applicable law.

Article (6)
Transporting Goods from One Member State to Another

1.
A Taxable Person who transports Goods forming part of his assets for the purposes of his business from the place where they are in a Member State to another place in another Member State shall be deemed to have made a Supply of Goods in the first State.
2.
A transportation of Goods as provided for in subsection 1 above shall not be considered a Supply of Goods in the first State if it was done for one of the following purposes:
a- to use the Goods in the other Member State temporarily within the conditions of temporary entry provided for in the Unified Customs Law;
b- where the transportation of goods is done as part of another Taxable Supply in the other Member State.

Article (7)
Supply of Services

Any Supply that does not constitute a Supply of Goods under this Agreement shall be considered a Supply of Services.

Article (8)
Deemed Supply

1.
A Taxable Person shall be deemed to have performed a Supply of Goods when disposing of Goods that form part of its assets in any of the following cases:
a- assignment of Goods, for purposes other than Economic Activity, with or without a Consideration;
b- changing the use of Goods to use for non-taxable Supplies;
c- retaining Goods after ceasing carrying on an Economic Activity; and
d- supplying Goods without Consideration, unless the Supply is in the course of business, such as samples and gifts of trivial value as determined by each Member State.
2.
A Taxable Person shall be deemed to have made a Supply of Services in any one of the following cases:
a- use by him of Goods that form part of his assets for purposes other than those of an Economic Activity; and
b- Supplying Services without Consideration.
3.
The provisions of this article shall apply if the Taxable Person has already deducted Input Tax related to the Goods and Services mentioned in this Article.
4.
Member States may determine the conditions and rules for the implementation of this Article.

Article (9)
Receiving Goods and Services

1.
If the Taxable Person in a Member State receives taxable Goods or Services from a Person who is a resident in another Member State, then he shall be deemed to have supplied these Goods or Services to himself and the Supply shall be taxable in accordance with the Reverse Charge Mechanism.
2.
If a Taxable Person residing in a Member State receives Services from a person who is not resident in the GCC Territory, then that Person shall be deemed to have supplied these Services to himself and the Supply shall be taxable according to the Reverse Charge Mechanism.

Article (10)
Supply of Goods without Transportation

The place of a Supply of Goods that occurs without transportation or dispatch thereof shall be the place where the Goods are located on the date they are placed at the Customer’s disposal.

Article (11)
Supply of Goods with Transportation

The place of a Supply of Goods that occurs with transportation or dispatch thereof by the Supplier or to the account of Customer shall be the place where the Goods are located when the transportation or dispatch commences.

Article (12)
Special Case of Internal Supplies with Transportation

1.
As an exception to the provisions of Article 11 of this Agreement, the place of supply for an Internal Supply of Goods with transportation or dispatch thereof from one Member State to another shall be in the State in which the transportation or dispatch of the goods terminates in the following cases:
a- if the Customer is taxable.
b- without prejudice to subsection 2 of this Article, if the Customer is not taxable and the Supplier is registered in the country where the Customer resides or is obligated to be registered.
2.
The place of an Internal Supply of Goods with transportation or dispatch thereof but without installation or assembly by a Supplier who is registered for Tax purposes in a Member State in favor of a Customer who is not registered for Tax purposes in another Member State shall be the place where the Goods are located on the date the transportation or dispatch begins, provided that the total value of the Supplies of that Supplier during any 12 months period does not exceed an amount of SAR 375,000 or its equivalent in GCC currencies, in the State to which the Supply is provided. In the event that the total value of the supplies exceeds this amount, this shall result in the Supplier registering in that State.
3.
If transportation of Goods from one Member State to another cannot be established through compliance with the obligations provided for in Article 6 of this Agreement and the Local Laws, the place of supply shall be where the Goods are located on the date the transportation or dispatch begins.
4.
In the event of a Supply of Goods that occurs without transportation or dispatch, and it is later established that transportation or dispatch of such Goods to a Member State took place in the circumstances provided for in subsection 1 of this Article, the State in which the transport or dispatch ends has the right to recover the Tax from the Member State where the transportation or dispatch started in accordance with the Automated Direct Transfer Mechanism in force with Customs or any other mechanism approved by the Ministerial Committee.

Article (13)
Internal Supplies to Non-Registered Persons

Each Member State has the right to claim from another Member State the tax paid if the value of the Supply exceeds the amount of SAR 10,000 or its equivalent in other currencies of the GCC to individuals and non-registered persons, and the settlement of Tax shall be according to the Customs Duties Automated Direct Transfer Mechanism applicable under the framework of the Customs Union of the GCC. The Ministerial Committee may propose any other mechanisms.
The Member State may also impose Tax on these supplies at its points of entry to such State if no evidence is presented that the Tax was paid in the other Member State.

Article (14)
Supply of Gas, Oil, Water and Electricity

As an exception to the provisions of Articles (10) and (11) of this Agreement:
1.
The place of supply for gas, oil and water through the pipeline distribution system and Supply of electricity by a Taxable Person who is established in a Member State to a Taxable Trader established in another Member State shall be the place where the Taxable Trader is established.
2.
The place of supply for gas, oil and water through the pipeline distribution system and Supply of electricity to a person who is not a Taxable Trader shall be the place of actual consumption.

Article (15)
Place of Supply of Services

The place of supply for Services provided by a Taxable Supplier shall be the place of the Supplier’s residence.

Article (16)
Place of Supply of Services between Taxable Persons

As an exception to the provisions of Article 15 of this Agreement, the place of supply for Services provided by a Taxable Supplier to a Taxable Customer shall be the place of Customer’s residence.

Article (17)
Conveyance Leasing Services

As an exception to the provisions of Article 15 of this Agreement, the place of supply for conveyance leasing Services between a Taxable Supplier and a Non-Taxable Customer shall be the location where these conveyances were placed at the Customer’s disposal.

Article (18)
Supply of Goods and Passenger Transportation Services

As an exception to the provisions of Article 15 of this Agreement, the place of supply of Services for the transportation of Goods and passengers and related Services shall be the place where transportation begins.

Article (19)
Supply of Real Estate Related Services

1.
Real Estate related Services shall mean those that are closely linked to real estate, including:
a- real estate experts and agent services;
b- granting the right to possess or use real estate;
c- services related to construction work;
2.
As an exception to the provisions of Article 15 of this Agreement, the place of supply of real estate related Services shall be where the real estate is located.

Article (20)
Supply of Wired and Wireless Telecommunication Services and Electronically Supplied Services

The place of supply for wired and wireless telecommunication Services and electronically supplied Services shall be the place of actual use of or benefit from these Services.

Article (21)
Supply of Other Services

The place of supply for the following Services shall be the place of actual performance:
a- restaurant and hotel Services and Services for the supply of food and beverages.
b- cultural, artistic, sport, educational and recreational Services.
c- services linked to transported Goods supplied from a taxable Supplier residing in a Member State to a non-taxable Customer residing in another Member State.

Article (22)
Place of Import

1.
The place of import for Goods shall be the State of the First Point of Entry.
2.
When Goods are placed under customs duty suspension under the Unified Customs Law immediately upon entry into the GCC Territory, then the place of import shall be in the Member State where these Goods were released from the duty suspension status.

Article (23)
Date of Tax Due on Supplies of Goods and Services

1.
Tax becomes due on the date of the supply of Goods or Services, the date of issuance of the tax invoice or upon partial or full receipt of the Consideration, whichever comes first, and to the extent of the received amount.
2.
The date of supply provided for in subsection 1 of this Article shall be as follows:
a- the date on which the Goods were placed at the Customer’s disposal in connection with supplies of Goods without transportation or dispatch;
b- the date on which transportation or dispatch of Goods began in connection with supplies of Goods with transportation or dispatch;
c- the date on which the assembly or installation of Goods was completed in connection with supplies of Goods with assembly or installation;
d- the date on which the performance of the service was completed;
e- the date of occurrence of any of the events referred to in Article 8 of this Agreement.
3.
As an exception to the provisions of subsections 1 and 2 of this Article, in connection with supplies of a repetitive nature leading to the repetitive issuance of invoices or payment of Consideration, the Tax is due on the payment date specified in the invoice or the date of actual payment, whichever comes first, and at least once in every period of 12 consecutive months.
4.
Each Member State may determine the date on which Tax becomes due with regard to supplies not referred to in the foregoing subsections of this Article.

Article (24)
Tax Due Date on Importation

Tax becomes due on the date of importing Goods into the Member State, subject to the provisions of Article 39 related to cases of Tax suspension upon importation and Article 64 related to the mechanism for paying Tax due upon importation.

Article (25)
Tax Rate

1.
Tax shall be applied at the basic rate of 5% of the Supply value or the value of Imports, unless this Agreement provides for an exemption or the zero-rate on such supplies.
2.
Without prejudice to the obligations provided for under this Agreement and the Local Laws, published prices in the local market for Goods and Services must include VAT.

Article (26)
Supply Value of Goods and Services

1.
The fair market value is the amount at which Goods or Services can be dealt in in an open market between two independent parties under competitive conditions determined by each Member State.
2.
The value of a Supply shall be the value of Consideration without the Tax and includes the value of the non-cash portion of the Consideration determined according to the fair market value.
3.
The value of the Supply shall include all the expenses imposed by the Taxable Supplier on the Customer, the fees due as a result of the Supply and all the Taxes including Excise Tax, but excluding VAT.
4.
In the case of Deemed Supply and transportation of Goods from one Member State to another, the Supply value shall be the purchase value or cost. If the purchase value or cost cannot be determined, then the fair market value shall apply.
5.
Each Member State shall determine the conditions and rules for adjusting the Supply value between Related Persons.
6.
The Supply value is reduced by the following amounts:
a- discounts in prices and deductions granted to the Customer;
b- the value of subsidies granted by the Member State to the Supplier;
c- amounts paid by the Taxable Supplier in the name of and to the account of the Customer; in this case, the Taxable Supplier may not deduct Tax paid on these expenses.
7.
If any of the components of the Supply value is expressed in a foreign currency, it shall be converted into the local currency based on the official exchange rate applied in the Member State on the Tax due date.
8.
Each Member State may determine the value of the Supply in certain cases not referred to in this Article.

Article (27)
Adjustment of Tax Value

A Taxable Person may adjust the value of the Tax imposed upon the happening of any of the following events at a date later than the Supply date:
1.
total or partial cancellation or rejection of a Supply;
2.
reduction of the Supply value;
3.
total or partial non-collection of the Consideration in accordance with the conditions applicable to bad debts in each Member State.

Article (28)
Value of Imported Goods

1.
The value of imported Goods will be the customs value determined in accordance with the Unified Customs Law plus Excise Tax, Customs duty and any other imposts apart from VAT.
2.
For Goods temporarily exported outside the GCC Territory for completion of manufacturing or repair thereof abroad, these Goods shall be taxed when reimported on the basis of value added to them as provided for in the Unified Customs Law.

Article (29)
State Rights to Exempt Certain Sectors or to Apply the Zero-Rate

1.
Each Member State may exempt or apply the zero-rate to the following sectors in accordance with the conditions and rules set by that Member State:
a- education;
b- health;
c- real estate; and
d- local transport.
2.
Each of the Member States may subject its oil, oil derivatives and gas sector to Tax at zero-rate in accordance with to the conditions and rules set by each Member State.

Article (30)
Exceptions to Tax Payment in Special Cases

Each Member State may exclude the following categories from paying Tax upon receipt of Goods and Services in that State, and each Member State may allow these Persons to reclaim Tax borne upon receipt of the Goods and Services in accordance with the conditions and rules determined by that Member State.
These categories include:
–
Government bodies designated by each State;
–
Charities and Public Benefit Establishments designated by each State;
–
Exempted companies under international event hosting agreements;
–
Citizens of the Member State when constructing their homes for private use;
–
Farmers and fishermen who are not registered for Tax.

Article (31)
Supply of Foodstuffs, Medicines and Medical Equipment

I: Foodstuffs:
All foodstuffs shall be subject to the basic Tax rate. Member States may apply the zero-rate on foodstuffs mentioned in a unified list of Goods approved by the Financial and Economic Cooperation Committee.
II: Medicines and Medical Equipment:
Medicines and medical equipment shall be subject to the zero-rate in accordance with unified controls proposed by the Committee of Ministers of Health and approved by the Financial and Economic Cooperation Committee.

Article (32)
Internal and International Transportation

The following transportation transactions shall be subject to Tax at zero-rate:
1.
Goods and passenger transport from one Member State to another and the supply of transport-related Services;
2.
International Goods and passenger transport from and to the GCC Territory and the supply of transport-related Services.

Article (33)
Supply of Conveyances

Each Member State may apply the zero-rate to the following supplies:
1.
Supply of sea, land and air conveyances allocated to the transportation of Goods and passengers for reward for commercial purposes;
2.
Supply of Goods and Services related to the supply of the conveyances mentioned in subsection 1 of this Article allocated to the operation, repair, maintenance or conversion any of these conveyances or for the requirements of the conveyances or their cargo or passengers;
3.
Supply of rescue airplanes, rescue boats and aid by land and sea and boats allocated to sea fishing.

Article (34)
Supplies to Outside the GCC Territory

1.
The following supplies shall be subject to the zero-rate:
a- the exportation of Goods outside the GCC Territory;
b- supply of Goods to a customs duty suspension situation as provided for in the Unified Customs Law and the supply of Goods within customs duty suspension situations;
c- re-exportation of moveable Goods that have been temporarily imported into the GCC Territory for repairs, refurbishment, conversion or processing as well as the Services added to these Goods.
d- supply of Services by a Taxable Supplier residing in a Member State for a Customer who does not reside in the GCC Territory who benefits from the service outside the GCC Territory in accordance with the criteria determined by each of the Member States, except for the cases provided for in Articles 17 to 21 of this Agreement that determine the place of supply as being in a Member State.
2.
The supply of Goods and Services out of the GCC Territory shall be subject to the zero-rate when such supply is exempt from Tax inside the Member State.

Article (35)
Supply of Investment Gold, Silver and Platinum

1.
For the purposes of this Article, Gold, Silver or Platinum shall be considered as an investment when it is at a purity level not less than 99% and tradable on the Global Bullion Exchange.
2.
The supply of investment gold, silver and platinum shall be subject to the zero-rate.
3.
The first supply after extraction of gold, silver and platinum shall be subject to the zero-rate.

Article (36)
Financial Services

1.
Financial Services performed by banks and financial institutions licensed under the laws in force in each Member State shall be exempt from Tax. Banks and financial institutions may reclaim Input Tax on the basis of the refund rates determined by each State.
2.
As an exception to subsection 1 of this Article, each State may apply any other tax treatment to financial Services.

Article (37)
Taxation of Supplies of Used Goods

Each Member State may determine the conditions and rules for the imposition of Tax on the supply of used Goods by the Taxable Person based on the profit margin.

Article (38)
Exemptions on Importation

The following shall be exempt from Tax:
1.
Importation of Goods if the supply of these Goods in the final destination country is exempted from Tax or subject to Tax at zero-rate.
2.
Importation of the following Goods that are exempted from customs duty under the Unified Customs Law:
a- diplomatic exemptions;
b- military exemptions;
c- Imports of used personal luggage and household appliances which are brought by citizens residing abroad and foreigners who are coming to reside in the country for the first time.
d- Imports of requisites for non-profit charity organizations if they are exempted from Tax under Article 30;
e- Imports of returned Goods.
3.
Personal luggage and gifts arriving accompanied by travellers as specified by the Member State.
4.
Requisites for people with special needs as specified by the Member State.

Article (39)
Suspension of Tax

Tax shall be suspended on imports of Goods that are placed under a customs duty suspension situation in accordance with the conditions and rules provided for in the Unified Customs Law. Each Member State has the right to link the suspension of Tax to the provision of security for the value of the Tax.

Article (40)
General Principle

1.
The Taxable Person is obligated to pay Tax due on taxable supplies of Goods and Services to the concerned Tax authority in the Member State where the place of supply is located.
2.
Any Person that states a Tax amount on any invoices issued by him becomes obligated to pay this Tax amount to the concerned Tax authority in the Member State where the place of supply is located.

Article (41)
Customer Obligated to Pay Tax According to the Reverse Charge Mechanism

1.
If the place of supply for Goods or Services is in a Member State where the Supplier is not a resident, then the Taxable Customer residing in that Member State shall be obligated to pay the Tax due.
2.
Tax due under subsection 1 of this Article shall be paid pursuant to a tax return or independently of it as determined by each Member State.

Article (42)
Person Obligated to Pay Tax in respect of Importation

The Person appointed or acknowledged as an importer pursuant to the Unified Customs Law shall be obligated to pay Tax due on imports.

Article (43)
Joint Liability

1.
A Person who willfully participates in violating any of the obligations provided for in this Agreement and the Local Law shall be jointly liable with the Person obliged to pay the Tax and any other amounts due as a result of the violation.
2.
Each Member State may determine other instances of joint liability other than those provided for in this Article.

Article (44)
Tax Deduction Principle

1.
The Taxable Person may deduct from the Tax due and payable by him in a Member State the value of deductible Tax borne in the same State in the course of making Taxable Supplies.
2.
The right to make a deduction arises when a Deductible Tax is due pursuant to this Agreement.
3.
A Customer who is obligated to pay Tax pursuant to the reverse charge mechanism may deduct deductible Input Tax related thereto provided that he has declared the Tax due under Article 41 (2) of this Agreement.
4.
Each Member State shall determine the terms and rules for Tax deduction.

Article (45)
Restrictions on Input Tax Deductions

Input Tax that has been borne cannot be deducted in either of the following cases:
1.
If it is for purposes other than Economic Activities as determined by each Member State;
2.
If it is paid on Goods that it is prohibited to deal in in the Member State according to applicable laws.

Article (46)
Proportional Deduction

1.
If Input Tax is related to Goods and Services used to make Taxable Supplies and non-Taxable Supplies, then Input Tax cannot be deducted save within the limits of the proportion referable to the Taxable Supplies.
2.
Each Member State may determine the methods of calculating the deduction rate and the conditions for treating the value of non-deductible Input Tax as zero.

Article (47)
Adjustment of Deductible Input Tax

1.
A Taxable Person must adjust the value of Input Tax deducted by him when receiving Goods or Services supplied to him if it is more or less than the value of the Input Tax deduction of which is available to him, as a result of changes in the determining factors for Deductible Tax, including:
a- cancellation or rejection of a Supply;
b- reduction of the Supply Consideration after the date of the Supply;
c- non-payment of the Supply Consideration, whether in whole or in part according to Article 27(3) of this Agreement;
d- changing the use of Capital Assets.
2.
The Taxable Person is not required to adjust the Input Tax in any of the following cases:
a- where the Taxable Person establishes loss, damage or theft of the supplied Goods in accordance with the conditions and rules applicable in each Member State.
b- where the Taxable Person uses the supplied Goods as samples or gifts of slight value as specified in Article 8 (1)(d) of this Agreement.

Article (48)
Conditions for Exercising the Right of Deduction

1.
For purposes of exercising the right of deduction, the Taxable Person must hold the following documents:
a- the Tax Invoice received pursuant to the provisions of this Agreement;
b- the customs documents proving that he imported the Goods in accordance with the Unified Customs Law.
2.
Each Member State may allow the Taxable Person to exercise the right of deduction in the event that a Tax Invoice is not available or does not meet the requirements provided for in this Agreement, provided that the value of Tax due can be established by any other means.

Article 49
The Right to Deduct Input Tax Paid Prior to the Date of Registration

1.
A Taxable Person may deduct Input Tax paid on Goods and Services supplied to him prior to the date of his registration for Tax purposes after meeting the following requirements:
a- Goods and Services are received for the purpose of making Taxable Supplies;
b- Capital Assets were not fully depreciated before the date of registration;
c- Goods were not supplied prior to the registration date;
d- Services were received within a specific period of time prior to the date of registration as determined by each Member State;
e- the Goods and Services are not subject to any restriction related to the right to make a deduction stated in this Agreement.
2.
For the purposes of applying this Article, Input Tax shall be deductible for Capital Assets in accordance with the net book value of the assets as on the date of registration as specified by each Member State.

Article 50
Mandatory Registration

1.
For the purposes of implementing this Agreement, a Taxable Person shall be obliged to register if :
a- he is resident in any Member State;
b- the value of his annual supplies in that Member State exceeds or is expected to exceed the Mandatory Registration Threshold.
2.
The Mandatory Registration Threshold shall be SAR 375,000 (or its equivalent in the GCC State currencies). The Ministerial Committee has the right to amend The Mandatory Registration Threshold after it has been in force for three years.
3.
A non-resident of a Member State shall be required to register in that State regardless of his business turnover if he is obliged to pay Tax in that State under this Agreement. Registration can be done directly or through the appointment of a tax representative with the consent of the concerned Tax authority. The tax representative shall take the place of the Non-Resident Person in all its rights and obligations provided for in this Agreement, subject to the provisions of Article 43(2) of this Agreement.
4.
A Taxable Person who makes only zero-rated supplies may request to be excluded from the Mandatory Registration requirement for Tax purposes in accordance with the conditions and rules determined by each Member State.

Article 51
Voluntary Registration

1.
A Person who is not required to be registered under Article 50(1) of this Agreement who resides in any Member State may request to be registered therein, provided that the value of his annual supplies is not less than voluntary registration threshold.
2.
A Member State may allow the registration provided that the annual expenses of a person who is not obliged to register in that State exceed the Voluntary Registration Threshold in accordance with the conditions and rules determined by that State.
3.
The Voluntary Registration Threshold is 50% of the Mandatory Registration Threshold.

Article 52
Calculating the Value of Supplies

1.
For the purposes of applying the provisions of this Agreement, the value of annual supplies is calculated on the basis of any of the following:
a- total value of supplies – excluding exempted supplies – made by the Taxable Person at the end of any month plus the previous eleven months;
b- total value of supplies – excluding exempted supplies – expected to be made by the Taxable Person at the end of any month plus the following eleven months in accordance with the criteria and period determined by each Member State.
2.
Total value of supplies consists of the following:
a- the value of Taxable supplies except for the value of Capital Assets Supply;
b- the value of Goods and Services supplied to the Taxable Person who is obliged to pay Tax pursuant to the provisions of this Agreement;
c- the value of Internal Supplies the place of supply of which is in a Member State other than the State where the Taxable Supplier resides and these supplies would have been taxable in the State where the Supplier resides had the place of supply been located in that State.
3.
Each Member State may determine the conditions and rules for the aggregation of the business revenue of Related Persons who conduct similar or related activities and register each of them mandatorily on the basis of the total business revenue.

Article 53
Tax Identification Number (TIN)

When registering for Tax purposes in any of the Member States, each Member State shall allocate a TIN for the Taxable Person provided that The Ministerial Committee shall determine the controls for issuing the TIN.

Article 54
Deregistration

1.
A Taxable Person who is registered for Tax purposes must apply for deregistration in any of the following cases:
a- cessation of carrying on of the Economic Activity;
b- cessation of Taxable Supplies;
c- if the value of the Taxable Person’s supplies falls below the Voluntary Registration Threshold pursuant to the provisions of Article (51) of this Agreement.
2.
The Taxable Person may apply for deregistration if the total annual revenue of its business falls below the Mandatory Registration Threshold but exceeds the Voluntary Registration Threshold.
3.
For the purposes of applying items (b) and (c) of the first and second paragraphs of this Article, each Member State may determine a minimum period to keep the Taxable Person registered for Tax purposes as a condition of deregistration.
4.
Each Member State may determine the conditions and rules necessary to reject an application for the deregistration of a Taxable Person or to deregister him in cases other than those provided for in the first and second paragraphs of this Article.
5.
The Tax Authority shall notify the Taxable Person of his deregistration and the effective date of the same.

Article 55
Issuance of the Tax Invoice

1.
The Taxable Person must issue a Tax Invoice or similar document in the following cases:
a- Supply of Goods or Services including a Deemed Supply as provided for in Article 8 of this agreement;
b- Full or partial receipt of Consideration prior to the supply date.
2.
Each Member State may except the Taxable Person from issuing the invoices provided for in to this Article for exempted supplies, provided these do not pertain to Internal Transactions between Member States.
3.
Subject to the provisions of Article 56 of this Agreement, each Member State may allow the Taxable Person to issue summary tax invoices; each including all the supplies of Goods and service made in favour of a single Customer that were taxable over a period of one month.
4.
For the purposes of applying this Agreement, the Member States must accept the invoices in form, whether issued on paper or electronically, in accordance with the conditions and procedures determined by each Member State.

Article 56
Contents of the Tax Invoice

1.
Each Member State must determine the contents of the Tax Invoice and the period within which it must be issued, provided that The Ministerial Committee shall determine the minimum details required to be included in the tax invoice. Each Member State may allow for the issuance of simplified invoices in accordance with the conditions and rules determined by it.
2.
Tax invoices can be issued in any currency, provided that the value of the Tax is written in the currency of the Member State where the place of supply is located based on the official currency exchange rate in force in that State as on the Tax due date.

Article 57
Amendment of Invoices (Credit Notes)

A Taxable Person who adjusts the Supply Consideration must include this adjustment in a document (credit or debit note “Tax Invoice”) correcting the original Tax Invoice. This document shall be treated in the same way as the original Tax Invoice according to the procedures determined by each Member State.

Article 58
Special Provisions

1.
A taxable Customer who receives Goods or Services supplied to him from a Taxable Supplier may issue Tax Invoices provided that the Supplier consents and the Tax Invoice is marked as a self-issued invoice with the approval of the concerned Tax authority. In this event, a self-issued invoice shall be treated as an invoice issued by the Supplier.
2.
A Taxable Person may engage the assistance of others to issue Tax Invoices on his behalf with the approval of the concerned Tax authority and provided that all the obligations provided for in this Agreement and the Local Law are fulfilled.

Article 59
Retention Period for Tax Invoices, Records and Accounting Documents

Without prejudice to any longer period stipulated under the laws of the Member State, Tax Invoices, books, records and accounting documents shall be retained for a period not less than five years from the end of the year to which the invoices, books, records and accounting documents relate. This period shall be extended to fifteen years for the retention of Tax Invoices, books, records and documents pertaining to real estate.

Article 60
Tax Period

Each Member State must determine its own tax period or periods, and provided that no tax period shall be less than one month.

Article 61
Submission of Tax Returns

Each Member State shall determine the periods, conditions and rules for submission of Tax Returns by a Taxable Person for each tax period, provided that The Ministerial Committee shall determine the minimum data required to be included in the tax return.

Article 62
Amending the Tax Return

Each Member State shall determine the conditions and rules that allow a Taxable Person to amend a Tax Return that has already been submitted.

Article 63
Payment of Tax

Each Member State shall determine the periods, conditions and rules for payment of Net Tax due by the Taxable Person.

Article 64
Payment of Tax on Imports

1.
Tax due on imported Goods shall be paid at the First Point of Entry and deposited in a special tax account, and transferred to the final Destination State according to the Customs Duties Automated Direct Transfer Mechanism in force within the framework of the GCC Customs Union; the Ministerial Committee may propose any other mechanisms.
2.
Each Member State may, in accordance with the conditions and rules determined by it, allow a Taxable Person to defer payment of Tax due on Goods imported for the purposes of the Economic Activity and to declare the same in his Tax Return. Tax due that has been deferred and declared shall be deductible according to the provisions of this Agreement.

Article 65
Tax Refunds

Each Member State shall determine the conditions and rules for allowing a Taxable Person to request a refund of net deductible Tax or request to carry it forward to subsequent tax periods.

Article 66
Tax Refunds for Persons residing in the GCC Territory

Taxable Persons in any Member State may request the refund of Tax paid in another Member State in accordance with the conditions and rules determined by the Financial and Economic Cooperation Committee.

Article 67
Tax Refunds for Non-Residents in the GCC Territory

Each Member State may allow Persons who are not resident in the GCC Territory to request tax refunds for Taxes paid in it if all the following requirements are met:
1.
the Non-Resident Person does not supply Goods or Services for which it is required to pay Tax in any Member State;
2.
the Non-Resident Person is registered for Tax purposes in his country of residence, if such country applies a VAT system or a similar tax system;
3.
the Tax is borne by a Person who is not resident in any Member State for the purposes of his Economic Activity.

Article 68
Tax Refunds for Tourists

1.
Each Member State may apply a Tax Refund system for tourists pursuant to the conditions and rules determined in its Local Law.
2.
For the purpose of applying this Article, a tourist shall be defined as any natural person who meets all of the following requirements:
a- he is not a resident of the GCC Territory;
b- he is not a crew member on the flight or aircraft leaving a Member State.

Article 69
Tax Refunds for Foreign Governments, International Organizations and Diplomatic Bodies and Missions

1.
Each Member State shall determine the conditions and rules for granting foreign governments, international organizations and diplomatic, consular and military bodies and missions the right to reclaim Tax borne for Goods and Services in the Member State in application of international treaties or the condition of reciprocity.
2.
Each Member State may apply the zero-rate to supplies of Goods and Services in favor of foreign governments, international organizations, and diplomatic, consular and military bodies and missions within the conditions and rules determined by each State.

Article 70
Exchange of Information

1.
The tax authorities in the Member States shall exchange information relevant to the implementation of the provisions of this Agreement, or information related to the administration or enforcement of Local Laws related to VAT.
2.
Without prejudice to the provisions of international conventions to which the Member State is a party, the information obtained by the tax authority shall be treated as confidential information in the same manner as the information obtained under the domestic laws of that authority, and shall be disclosed only to persons or authorities (including the courts and administrative authorities) concerned with Tax assessment, collection, implementation, or bringing judicial claims or determining appeals relating thereto or supervising the above. Such persons or authorities may not use the information obtained save for those purposes, and may disclose such information in judicial proceedings in public courts or in judicial decisions. Notwithstanding the foregoing, the information obtained by the tax authority may be used for other purposes when the laws of both States permit its use for such other purposes, and the tax authority in the providing State allows such use.
3.
The provisions of subsections 1 and 2 shall not in any case be interpreted in a way that obliges any Member State to do the following:
a- to implement administrative procedures that breach regulations and administrative practices in that State or in another Member State.;
b- to provide information which is not obtainable under the regulations or the normal administration directives of that State or in another Member State;
c- to provide information which would disclose any secret relating to trade, business, or industry, or commercial or professional secrets, or commercial operations, or information the disclosure of which may be contrary to public policy (public order).
4.
If a member State requests Information under this Article, the other Member State must use its own procedures to collect the required information notwithstanding that that other State may not require it for its own tax purposes. The obligation set out in the preceding sentence is subject to the restrictions provided for in subsection 3. However, under no circumstances shall these restrictions be interpreted as allowing any Member State to decline to provide information on the sole ground that it has no local interest therein.
5.
Under no circumstances shall the provisions of subsection 3 be interpreted as allowing any contracting State to decline to provide information on the sole ground that such information is held by a bank or other financial institution, or by an authorized person or person acting under a power of attorney, or a person acting in a fiduciary capacity or that this information is related to ownership interests of any person.

Article 71
Electronic Service Systems

1.
Each Member State shall create an electronic Services system for the purposes of complying with requirements related to Tax. The GCC Secretariat General shall take the necessary measures to establish a tax information center, and to operate a central website or electronic system to follow up the information related to Internal Supplies and the exchange of this information between the concerned Tax authorities in the Member States; provided that the website or electronic system of the tax information center must include at least the following information:
a- the TIN for both the Supplier and the Customer;
b- the number and date of the Tax Invoice;
c- a description of the transaction;
d- the consideration for the transaction.
2.
If the information recorded by each of the Supplier and the Customer corresponds, each of them shall be given a confirmation number that must be retained for Tax audits performed by the concerned Tax authority and for the purpose of ascertaining that this information corresponds with that provided in Tax returns and other relevant information provided pursuant to the provisions of this Agreement.
3.
The system must be reliable and secure and must not allow the Supplier or the Customer access to any information other than that to which they are permitted to have access.
4.
The concerned Tax authority in each Member State shall have a right of access to the information related to Internal Supplies between Taxable Persons registered for Tax purposes.
5.
The System shall allow the follow-up of proof of transfer of Goods to the country of Final Destination.

Article 72
Cooperation between Member States

1.
The Member States may, upon a proposal from the Secretary General of the Gulf Cooperation Council to the Ministerial Committee, take the necessary measures related to administrative cooperation among them, especially in the following areas:
a- exchange of information needed to determine Tax accuracy based on the request of each Member State;
b- agreeing to synchronized auditing procedures and participating in audits performed by any Member State pursuant to the approval of the concerned States.
c- assisting in the collecting of Tax and taking the necessary procedures related to collection.
2.
Subject to the provisions of international agreements to which the Member State is party, each Member State shall obligate its employees not to disclose or use information they receive in the course of their work from another Member State for any other purposes not related to their functions. Each Member State may determine the penalties that apply in the event of violation.

Article 73                                                                                                    Transitional Provisions

Each Member State must provide in its Local Law transitional provisions dealing with the following areas at least:
1.
Tax is due on supplies of Goods and Services and on imports of Goods as from the date the Local Law comes into effect in the Member State.
2.
Each Member State shall determine timelines for registering Taxable Persons obliged to register on the date the Local Law comes into effect.
3.
Notwithstanding any other provision in this Agreement, should an invoice be issued or Consideration paid before the date of application of the Local Law or prior to the registration date and the Supply occurred after such date, then each Member State may ignore the date of the invoice or payment and consider the Tax due date to be the date of the Supply.
4.
Notwithstanding any other provision in this Agreement, should an invoice be issued or Consideration paid before the date on which the Local Law comes into force or prior to the registration date and the Supply occurs after such date, then each Member State may ignore the date of the invoice or payment and treat the Tax due date as being the date of the Supply
The provisions of subsection 3 of this Article shall apply to Internal Supplies between a Taxable Supplier residing in a Member State and a Customer in another Member State.
5.
With regard to continuing supplies that are partially performed before the date on which the Local Law comes into force or before the registration date and partially after such date, then Tax shall not be due on the part performed before the date of coming into force or of the registration.

Article 74
Objections and Appeals

Each Member State shall determine the conditions and rules for objecting to decisions of the concerned tax authority. This includes the right of recourse to the competent local courts in each Member State.

Article 75                                                                                                            Closing Provisions

Interpretation
The Ministerial Committee shall have jurisdiction to consider matters related to the application and interpretation of this Agreement and its decisions shall be binding on the Member States.

Article 76
Dispute Resolution

The Member States will work to settle any dispute which may arise between them concerning this Agreement amicably, and they may, upon agreement, if such amicable settlement is not possible pursuant to the foregoing, submit the dispute to arbitration in accordance with the rules of arbitration to be agreed upon.

Article 77
Amendments

This Agreement may be amended upon the approval of all the Member States and based on the proposal of any of these States. The coming into force of the amendment shall be subject to the same procedures provided for in Article 79 of this Agreement.

Article 78
Coming Into Force

This Agreement shall be approved by the Supreme Council and ratified by the Member States in accordance with their constitutional process.
1.
The Agreement shall come into effect as from the lodging of the second State’s confirmation document with the Secretary General of the GCC Council.
2.
Each Member State shall take domestic measures to issue its Local Law with the aim of implementing the Agreement. This includes laying down the required policies and procedures to implement the Tax in such manner as does not conflict with the provisions of this Agreement.
3.
Each Member State that has not implemented its Local Law shall be treated as being outwith the scope of this Agreement until such time as its Local Law comes into force.
This Agreement is executed in Arabic in the city of Riyadh on ……. corresponding to …… in one original to be kept at the GCC General Secretariat and a certified conformed copy of the same shall be provided to each Member State that is a party in this Agreement.
State of the United Arab Emirates
…………………………………
The Kingdom of Bahrain
…………………………………
The Kingdom of Saudi Arabia
…………………………………
Sultanate of Oman
…………………………………
State of Qatar
…………………………………
State of Kuwait