Glossary: VAT in the United Arab Emirates (Federal Decree-Law No. 8 of 2017)

Glossary: VAT in the United Arab Emirates

Federal Decree-Law No. 8 of 2017 – Value Added Tax

 

The Country
 The United Arab Emirates.

 

Finance Minister
 The UAE’s Minister of Finance, responsible for matters related to VAT and financial regulations.

 

Federal Tax Authority (FTA)
 The authority that manages VAT in the UAE. It handles registrations, return filings, tax collections, and enforcement.

 

Value Added Tax (VAT)
 An indirect tax charged on the import and supply of goods and services at each stage of production or distribution, including cases treated as deemed supplies.

 

Tax
 In this law, the term “Tax” means VAT.

 

GCC Countries
 All nations that are members of the Gulf Cooperation Council under its official charter.

 

Implementing GCC Countries
 GCC member states that have introduced VAT through their own legislation.

 

Goods
 Physical items that can be supplied, including real estate, water, and all types of energy, as detailed in the Executive Regulation.

 

Services
 Anything supplied that is not classified as goods.

 

Import
 The entry of goods into the UAE from abroad, or the receipt of services from outside the UAE.

 

Relevant Goods
 Imported goods that would not be exempt if supplied within the UAE.

 

Relevant Services
 Imported services where the place of supply is the UAE, provided they are not exempt if supplied inside the UAE.

 

Person
 A natural or legal individual.

 

Taxable Person
 Any person who is registered or required to register for VAT under this law.

 

Taxpayer
 A person responsible for paying VAT in the UAE. This may be a taxable person or the end consumer.

 

VAT Registration
 The process where a taxable person or their legal representative registers with the FTA for VAT purposes.

 

Tax Registration Number (TRN)
 A unique number given by the FTA to every registered person.

 

Registered Person
 A taxable person who has been issued a TRN.

 

Goods Recipient
 The individual or entity to whom goods are supplied or imported.

 

Services Recipient
 The individual or entity to whom services are supplied or imported.

 

Importer
 For goods, the person whose name is listed as the importer on customs documents at the time of import. For services, it refers to the recipient of those services.

 

Taxable Trader
 A taxable person in an implementing GCC state whose primary business is the supply of water and energy as specified in the Executive Regulation.

 

VAT Return
 The form submitted to the FTA by a taxable person, showing details of taxable transactions for a given period.

 

Consideration
 Anything received or expected to be received for a supply of goods or services, whether in money or another form of payment.

 

Business
 Any activity carried out on a regular and independent basis, including commercial, industrial, agricultural, professional, service-related, or property-related work, whether tangible or intangible.

 

Exempt Supply
 A supply of goods or services made for consideration where no VAT is charged and input tax cannot be reclaimed, except as provided under this law.

 

Taxable Supply
 A supply of goods or services made for consideration in the UAE, excluding exempt supplies.

 

Deemed Supply
 Transactions that are treated as taxable supplies under specific provisions of this law.

 

Input Tax
 VAT paid or payable by a person when acquiring goods or services, including imports.

 

Output Tax
 VAT charged on taxable supplies, including deemed supplies.

 

Recoverable Tax
 VAT amounts that can be reclaimed by the taxpayer from the FTA under the law.

 

Due Tax
 The tax calculated and imposed as per this law.

 

Payable Tax
 The tax amount that must be paid to the FTA.

 

Tax Period
 The specific period defined for calculating and paying VAT due.

 

Tax Invoice
 An official document, either paper or electronic, that records details of a taxable supply.

 

Tax Credit Note
 A written or electronic document issued when a taxable supply is reduced, amended, or cancelled, showing the updated details.

 

Government Entities
 Federal or local ministries, government departments, agencies, and public institutions in the UAE.

 

Charitable Organizations
 Non-profit welfare societies or associations included in a Cabinet Decision based on the Finance Minister’s recommendation.

 

Mandatory Registration Threshold
 The turnover amount set in the Executive Regulation. If a business’s taxable supplies exceed or are expected to exceed this value, it must register for VAT.

 

Voluntary Registration Threshold
 The amount defined in the Executive Regulation. If exceeded by taxable supplies or expenses, a business may choose to register voluntarily.

 

Transport Services
 Services related to shipping, packaging, securing cargo, preparing customs paperwork, container handling, loading, unloading, storage, or other activities needed to carry out transportation.

 

Place of Business Establishment
 The official place where a business is legally set up in a country, where major management or decision-making activities are carried out.

 

Fixed Business Establishment
 A fixed place of business, other than the main place of establishment, where a person regularly operates with sufficient staff and resources. This includes branches.

 

Place of Residence
 The place where a person has either a place of establishment or a fixed establishment, as defined in this law.

 

Non-Resident
 A person who does not have a place of establishment or fixed establishment in the UAE and does not normally reside there.

 

Related Parties
 Two or more persons who are not independent at the economic, financial, or regulatory level, where one controls the other by law, shareholding, or voting rights.

 

Customs Legislation
 Federal and local laws that govern customs procedures in the UAE.

 

Designated Zones
 Specific areas named by a Cabinet Decision based on the Finance Minister’s proposal, treated under special VAT rules.

 

Export
 Goods leaving the UAE or services supplied to a person whose place of establishment is outside the UAE.

 

Voucher
 An instrument granting the right to receive goods or services at the stated value or to receive a discount. This does not include postage stamps issued by Emirates Post Group.

 

Activities conducted with Sovereign Capacity
 Activities carried out by government entities in their official capacity, with or without consideration.

 

Capital Assets
 Business assets intended for long-term use.

 

Capital Assets Adjustment Scheme
 A scheme for adjusting input VAT initially reclaimed, based on how the asset is actually used over a defined period.

 

Administrative Penalties
 Amounts charged by the FTA when a person breaches provisions of this law or the Federal Law on Tax Procedures.

 

Administrative Penalty Decision
 A ruling issued by the FTA regarding the penalties payable.

 

Excise Tax
 A separate tax levied on certain specified goods.

 

Tax Group
 Two or more persons registered together with the FTA as a single taxable entity in line with this law.