UAE VAT Law. All Simplified For Your Better Understanding.


The final account and the general budget has been prepared already and certain rules are set ahead In the Declaration of Federal Law No. 8 of 2011. Which Is having a programme based classification & consists of a unified structure of accounts. The cabinet declares the rules according to the suggestions from the minister.


 UAE VAT Law Federal Law No. 1 of 2011 defines 
The Public Revenue as follows:

Federal taxes, Fees & Returns, Fees received by the state for services provided, the share contributed by each Emirate in the annual Budget of the Federal Government, the Government Revenues received from its own properties, money received as fine payments & Return Of Investment (ROI) of the state.


The UAE VAT Law No. 8 of 2017 regarding VAT describes the following:
  • The TAX scope
  • Rate
  • Responsibility for TAX
  • Supply of Goods & Services in all circumstances
  • Supply In special cases
  • Supply of more than one component
  • Supply via agent
  • supply by Government entities 
  • Deemed supply
Also, the UAE VAT Law states the deregistration & the TAX registration, with mandatory TAX registration.

The UAE VAT Law also states the TAX group, registration exemptions, TAX registration & optional registration.

The UAE VAT Rules concerning to supplies also Includes the following:

  • Date of Supply 
  • Place of Supply of Goods
  • Place of Supply of Water & Energy
  • Place of supply In special cases
  • Supply of Electronic services & Telecommunications

The UAE VAT Law also outlines:

  • The residence of the supplier
  • Place of establishment
  • Place of residence of an agent
  • The value of supply of Goods or Services
  • The value of Import
  • The value for supplies for the related parties
  • TAX Inclusive prices
  • The value of deemed supply
  • The value of supply In cases of discount on payments
  • The value of supply of vouchers
  • the value of supply of postage stamps
  • The temporary transfer of Goods
  • The Profit margins 
  • Charging TAX based on the Profit margin earned

In addition, the new UAE VAT law states the following:

  • The Zero rates of Supply & Exemption
  • Zero-rated subjected Goods & Services 
  • Supply exempted from TAX
  • Single & mixed supply
  • Specific obligations to account for TAX Including reverse charge
  • Import of concerned  Goods
  • Designated zones
  • Transfer of Goods In designated zones 
  • Exceptions for designate zones

The UAE VAT Law also summarizes the following:

  • The calculation  of due TAX
  • Recoverable Input TAX
  • Capital assets scheme
  • Adjustment of TAX after the supply date
  • Capital assets scheme
  • TAX Invoice
  • TAX credit notes
  • TAX periods
  • TAX returns
  • Reclaiming of TAX
  • TAX recovery

The UAE VAT Law also stipulates:

  • The provisions of TAX recovery
  • Violations & Penalties
  • TAX evasion
  • General provisions
  • Closing provisions

The UAE VAT law No. 7- 0n Excise TAX

The UAE VAT Law on Excise TAX sets the foundations for:

  • TAX procedures
  • TAX Implementation
  • TAX rates
  • TAX obligations
  • TAX exemption cases
  • TAX registration (procedure/ rules/ cancellation)
The UAE VAT Law also specifies TAX procedures to be Implemented For each designated area.

Also the Rules & Regulations with regards to cases of transfer of selective goods within designated zones.

The general framework of calculation of  TAX & TAX deductions.

The UAE VAT Law also stipulates;

  • TAX declarations
  • TAX payment mechanisms 
  • TAX evasion
  • Penalties

The UAE VAT Law No. (7)- for TAX 

This Law was added To UAE VAT Law for TAX procedures, Which will definitely become a foundation for UAE TAX Systems.

The role of Federal TAX Authority (FTA) is clearly mentioned In regulating the administration & Collection of TAX.

The UAE VAT Law No. 13 concerning the establishment of the FTA

Considering this UAE VAT Law the FTA can assign an authority to their name, and the authority is headquartered in Abu Dhabi. 

The authority Is the one who Is In charge of collecting federal taxes & fines, also they are assigned In distributing TAX generated revenues and applying the TAX -related procedures.

The authority Is chaired by the Minister of Finance and the other members are to be decided by the cabinet resolution, based on a chairman nomination.

They are exempted from taxes also they have an Independent annual budget.

The UAE VAT Law No. 20 concerning mortgaging of movable properties as security for debts (2016)

This UAE VAT Law regulates mortgaging of moveable properties.

The UAE VAT Law states the type of properties that may enlist for security.

The UAE VAT Law enables the provision to establish a security register for publicity.

The security Interest against publicity & consequences & The right to track the pledged property resulting from publicity and priority Is covered by chapter 6.

The UAE VAT Law regulates the pledgee's rights to:

  • Inspect the pledged property
  • Take provision of the pledged property
In addition to the points, It Is an Important last step of referral.

The UAE VAT Law No. 1- Concerning additional appropriations

This Ministry of Finance under this Law will be assigned to take all legal, financial and accounting procedures Initiative by making the necessary transfers.

The UAE VAT Law No. 5- Concerning linking the General Federal Budget 

This Law Is Implemented In accordance with the provisions of the Federal Law by Decree No. 8 concerning the rules of preparation of the General Budget and final accounts.

This Law will also Include Revenue & Expenditure forecasts for the Federal Budget and the supplementary Budgets of autonomous Federal Entities. 

The necessary Transfers made by the Ministry of Finance are authorized for:

  1. Supporting initiatives launched by the cabinet with the goal of enhancing federal entity performance
  2. Providing for actual expenditure of abolishing the two-stream system (literary section and science section) in public schools
  3. Providing for actual expenditure of the Ministry of Foreign Affairs (MOFA) headquarters outside the UAE
  4. Providing for actual expenditure of the Ministry Of Higher Education & Scientific Research with respect to currency exchange differences

The UAE VAT Law No. 6- Concerning approving additional appropriations for the General Federal Budget

This Law will approve additional appropriations for the General Budget.

This Law will also provide for Increasing the expenditure and revenue forecasts of a number of autonomous entities.

The UAE VAT Law No. 1- Concerning state General Revenues

This Law states the Public Revenues which assign the Ministry of Finance with the responsibility of collecting Federal Public Revenues.

Public Revenues defined in Article 2 of the Law Is as follows:

  • Federal Taxes, fees & returns
  • The share contributed by each Emirate In the annual Budget of the Federal Government.
  • Fees received by the state for services provided
  • Money received from fines payment
  • Return on Investments (ROI) of the state
  • The government revenues received from Its own properties
The approval of cabinet and the Federal national council and the justification of the supreme council, the Law stipulates that the cabinet or Its delegate shall Impose Federal fees or proceeds Its virtue.

Also, the Law permits the cabinet to remit all or part of Debts & Claims of the Government at Its own discretion. (By a reasoned decision and after consulting MoF)

Collecting Public Revenues according to the mechanism specified by the minister shall be competent under Law for MoF.

No Federal entity Is entrusted With collecting Public revenues may for any reason or under any title whatsoever deduct any amount of his money.

Also, when collecting Public Revenues no Federal entity may6 add any fees for the benefit of any local authority.

These entities will deliver revenues collected to MoF according to the executive regulations Implementing the Law.

MoF can open a bank account for the Federal entities to deposit Public Revenues collected.

The Law Is assigned stating that Federal entities should draw up annual plans to develop revenues in coordination with MoF.

The UAE VAT Law No. 8- Concerning the rules of preparation of the General Budget and final account of Federal entities

It Is Included with 74 articles across 10 chapters based on the cabinet approval and the ministry proposal.

Chapter two clearly states the General Budget as the financial programme of the federal government which Is used to achieve economic and social development.

Optimal distribution and efficient use of resources for the expenses are to be spent by Federal authority.

According to this judgement, a special Budget for Federal service authorities may be assigned, presenting these authorities will do the following;
  • The unified structure of the government accounts
  • Submitting Its Budgets to MoF for approval within the Budget Law
The declaration also permits that all Federal authorities may be assigned to prepare a draft by virtue of a cabinet resolution that shall determine the Budget which estimates both Revenue & Expenditure.

The declaration of Federal Law determines that a fiscal year consists of 12 months, starting on 1st January and ending on 31st of December.

MoF competencies regarding the Budget

The declaration specified MoF competencies In respect of the General Budget Is as follows:

  1. Prepare & Follow-up the Implementation 
  2. Prepare Draft Law for linking the General Budget
  3. Prepare Draft resolution of the medium-term Budget plan
  4. Prepare Draft Law of the Consolidated Final Account
  5. Prepare the Framework of medium-term expenditures for the Federal entities 
  6. Also by preparing the necessary feedback when required
  7. Follow-up on the Implementation of the General Budget and Submitting reports on It
  8. Establishing rules for Payment, Collecting revenues, Managing Bank accounts, asset accounts, liability accounts and Investment projects.
  9. Opening Zero-based accounts for Federal entities to get funds for their annual Budgets.

The declaration stipulates that all federal entities shall coordinate with MoF to achieve the following requirements:

  1. Comply with the strategic objectives approved by the cabinet
  2. Obtain  the cabinets prior approval of any amendments, without exceeding the funds
  3. Implement the systems & procedures of planning & analyzing objectives, programmes, activities & capital projects according to the rules
  4. Ensuring efficient and effective management of financial resources

This UAE VAT Law also stipulates the cabinet to perform the following:

  • Establish the rules of Budget classification
  • Developing of unified structure of accounts
  • Also, classification of them Into preparing. Implementation & report submitting
  • Include the Primary & Secondary programmes as Expenditure & Revenues

Programme Identifying and Revenue & Expenditure Forecasts

In this Law, Each Federal authority determines Its programmes, plans & KPI's according to the strategic plan approved by the Cabinet within the Budget cap.

Authorities should submit their Inertial forecasts for revenue and expenses designed to chapters, line Items, agreed programmes & activities, along with performance measures and Efficiency Indicators.

It also assigns MoF to prepare the Budget of any Federal entity that does not submit Its draft Budget on time after notifying that entity.

The Budget will be drawn up according to the programmes and funds of the entity for the current year, as well as the variables, updates and strategic plan.

This Law declaration states 6 conditions to propose new capital projects based on long-term capital spending plans in coordination with the MoF & Ministry of Public Works.

It also assigns MoF to explain estimated expenditures according to the Budget cap with Federal entities.

MoF will estimate and Include Federal Government emergency cash reserve.

Steps of Issuing Budget Law

According to the declaration Of Federal Law, also upon the completion of previous steps. The following are carried out by MoF:
  • Will prepare the annual Draft Budget Law.
  • Will Draft resolution of the medium-term plan
  • submit both Drafts to the cabinet for discussing and prepares them In approved final version
  • Enables FNC to discuss and provide feedback on the draft
  • Also submits FNC's feedback to the Supreme Council

Document Retention for 10 years

In the Law, MoF manages state funds, opens and closes bank accounts as per rules set by the minister,

Every Federal entity is obliged by Law to keep complete e-files and documents that will verify budget Implementation, Performance measures and Reports as per rules and deadlines set by MoF.

This entity will also submit periodical financial reports to MoF as per Instructions Issued In this way.

It will also provide MoF with the financial data as requested.

The Implementation of General Budget and Independent Budgets to demonstrate the financial performance of the relative Federal entities are submitted by MoF to the cabinet.

Resolutions and Suggestions Incurring Financial Burdens on the General Budget of the Federal Government should be submitted to MoF.

The feedback should be provided by MoF before submitting to the cabinet.

It also stipulates all the documents and records related to each fiscal year shall be kept for at least 10 years.

The Federal decree No. (9)- The Federal Bankruptcy Law

The Federal Bankruptcy Law Identifies different ways to avoid bankruptcy cases & the liquidation of debtor's assets. 

This UAE VAT Law also Includes:

  • Consistent out-of-court financial restructuring
  • Composition procedures
  • Financial restructuring
Also, the potential to secure new loans under the terms set by law.

The Law specifies the role of the 'committee on Financial Restructuring'.

The cabinet of the UAE decides the number of members and entities that will represent the committee.

Also, will administer the committee's law and Its procedures.

The committee is responsible for:

  • Overseeing the procedures of any consensual out-of-court financial restructure
  • Preparing an approved list of Bankruptcy experts
  • Appointing trustees In Financial Restructuring procedures
  • Who will be available for all court proceedings
Also, the committee Is also responsible for establishing as well as maintaining a national electronic database.

This Is applicable for those Individuals who have had bankruptcy rulings against them.

The UAE VAT Law Is also Implemented on:

  • Companies that were established under commercial company Law
  • Companies that were not established under commercial company Law
  • Semi or fully owned companies by the Federal or local government
  • Companies & Institutions established In Free Zones
  • Companies not having provisions to regulate composition procedures

UAE VAT Law No.3- Amendments concerning the regulation of the telecommunications sector

General Authority for Regulating the Telecommunications sector Is the competent body to manage the telecommunications sector In the state, the UAE VAT Law amends.

The authority will exercise Its Functions & Powers under the provisions of this Federal Law by order.

The exclusive privilege of undertaking Telecommunications shall still be bestowed to Etisalat corporation.

All the Power, Competency & Functions still remain to Etisalat Corporation.

UAE VAT Law no. 1- Concerning the public revenues of the state

In the UAE VAT Law, this Law shall regulate public revenues of the state from sources of revenues.

Most prominently Public Revenues of the state, which comprises the following:

  1. Fees received by the state for services provided
  2. Federal taxes, fees and returns
  3. Return on Investments (ROI) of the state.
  4. The government revenues received from its own proprieties
  5. Money received from fines payment
  6. The share contributed by each emirate in the annual budget of the state
The MoF is assigned to collect Public Revenues according to the mechanism specified by the mechanism.

MoF will open bank accounts for the federal entities to deposit public revenues collected.

The UAE VAT Law also comprises many other provisions regulating public revenues of the state.

UAE VAT Law No.1- concerning regulating Industrials affairs

All Industrial projects In the UAE are regulated by the UAE VAT Law No. 1, projects which meet specific requirements set forth In the article are exempted.

Also, an Industry advisory committee shall be established to examine Issues relating to Industrial projects.

All Industrial projects should be In compliance with this Law or It will be regarded as the violation of the provisions.

The UAE VAT Law No. 2- Concerning the General Federal Budget

The UAE VAT Law covers everything related to revenues and expenditure of the General Budget.

Also, the UAE VAT Law provides the estimate for the expenditure & revenue of the number of authorities and entities, with the expenditure & revenue of the federal budget.

The UAE VAT Law No. 6- Concerning credit Information

This UAE VAT Law will regulate the request, gathering, preservation, analysis, categorisation, use, circulation & protection of Credit Information.

The central bank has set restrictions on the gathering, preserving and the analyzing of Credit Information.

Credit Information report should be considered confidential & only be used for the activities of the company.

The violators of the Law or reveals the credit Information/ breaches the confidentiality will be sentenced to Imprisonment for at least 2 years with a 50,000 AED shall be collected as a minimal fine.

The UAE VAT Law No. 9- Concerning money laundering crimes

This UAE VAT Law has been passed with the purpose of amending certain provisions of the UAE VAT Law No.4 on anti-money laundering.

The articles that have been amended is as follows:

1, 2, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 18, 20, 23.

The UAE VAT Law No. 7- Concerning copyrights & neighbouring rights

This UAE VAT Law will provide protection to inventors of the works and the holders of the neighbouring rights.

The UAE VAT Law defines author rights which Include the following:

  • The right to protest against alteration of the work if the alteration leads to distortion or mutation
  • The right of writing the work in his name
  • The right to determine first publication of the work
  • The right to withdraw his work from circulation

The performers and their general successors enjoy a literary right, which is not assignable or prescribable, but authorises them to do the following:

  • The right to suspend any distortion, mutilation, modification or derogation action, which would be prejudicial to their status
  • The right of having the performance in their names whether living or recorded

The law properly covers all substantive issues pertaining to author’s rights and neighbouring rights.

The UAE VAT Law No. 8- Concerning the financial free zone

A financial Free Zone shall only be established by federal declaration.

The following are concerned:

  • The Free Zone Is only responsible for the obligations arising from the conduct of Its board
  • They are to be subjected to UAE VAT Law regarding the criminalization of money laundering
  • This Is also subjected with the exception of federal civil & commercial laws
  • The licensing standards of companies and other obligations are laid on them

The UAE VAT Law No. 5- Concerning nurseries

A nursery is an adequate location designated for children's care up until the age of four years, which Includes: 

  • Nursery pertaining or annexed to school
  • The provisions are applied to nurseries established by International agencies In the UAE
  • The nurseries which Are limited to the education of the children pertaining to one state
  • A nursery shall be established In view of caring for children & raising them to prosper
  • The owner and the persons working In a nursery must rely on the terms set by UAE VAT Law

The UAE VAT Law No. 7- Concerning the establishment of Emirates Development Bank

A Bank should be established as a public joint-stock company entirely owned by the government under the name Emirates Development Bank.

The bank needs to carry out many functions. which Includes:
  • Supporting Industrial projects
  • Participate In the Implementation
  • Development & support od developing projects In the state
The shall keep an authorised capital of AED 10,000,000,000.

The board of directors will take care of the management of the bank.

Also, a cabinet resolution will be used on the appointment and specification of the benefits.

The UAE VAT Law No. 14- Concerning the mandates of ministers & power of ministers

According to declaration, 

The name of the Ministerial Council for Services will be replaced with the Ministerial Development council.

It also amends certain orders of ministries & power of ministers, certain general & final provisions.

The UAE VAT Law No. 4- Concerning the establishment of the Emirates Investment Authority (EIA)

The EIA shall:
  • Be established as a public authority reporting directly to the cabinet
  • Be the only body In charge of Investment of the funds allocated for Investment which the cabinet for the stated purpose.
  • Have a board of directors constituted of not less than five and not more than seven members
  • Be the deemed public funds owned by the state
The UAE VAT Law by Decree No. 13 amends certain provisions of UAE VAT Law No. 4. Articles amended are as follows: (1, 2, 4, 13, 14, 24, and 27).

The UAE VAT Law No. 8- Concerning the rules for preparation of the General Budget and Final accounts

The Budget Is the financial programme of the federal government, which Is used to achieve economic and social development.

Efficient use of resources In accordance with the federal strategy & the optimal distribution checks the expenditure & revenues are balanced.

The federal entities shall be required to deposit revenues collected into the unified treasury account.

The necessary steps for the preparation of next years draft budget during the third month of the present fiscal year.

The Federal entities will be told to submit their Inertial forecasts for their revenues and expenditures.

The UAE VAT Law also states the rules of approving.

They Includes:
  • Adjusting & Implementing the General Budget
  • Overseeing the Implementation of the General Budget 
  • Managing the final accounts
The declaration of the UAE VAT Laws also provides special provisions for the Budgets of the autonomous federal entities.

The UAE VAT Law No.28- Concerning the formation of the UAE cabinets

This declaration simply stipulates the formation of the UAE cabinet.

Common VAT Agreement of the states of the GCC

The VAT is in line with the existing Unified Economic Agreement between GCC countries.

The agreement that aims to develop economic ties to coordinate & standardize economic, financial & monetary policies. 

The unified VAT agreement will include:

  1. Definitions and general provisions
  2. Supplies within the Scope of the Tax
  3. Place of Supply
  4. Tax due date
  5. Calculation of Tax
  6. Exceptions
  7. Exceptions on importation
  8. Persons who are Obligated to Pay Tax
  9. Deduction of Tax
  10. Obligations
  11. Special Treatments of Tax Refunds
  12. Exchange of Information among member states
  13. Transitional provisions
  14. Objections and appeals
  15. Closing provisions
Closer integration will help to strengthen the GCC and continue working towards the establishment of a unified regional economy.

The Excise Tax agreement of the GCC states

As part of the objectives of The GCC, a policy designed to strengthen regional cooperation.

This Is the Tax on certain products that are considered to be harmful to human health. 

The unified Excise Tax agreement Includes:

  1. Definition and general provisions
  2. Imposition of tax
  3. Payment of Taxes
  4. Tax Refund
  5. Exemptions
  6. Compliance requirements
  7. Information Exchange and Cooperation among States
  8. Penalties and Tax Evasion
  9. Concluding provisions
Closer integration will help to strengthen the GCC and continue working towards the establishment of a unified regional economy. Also Read about Hyper Hike In Petrol Price In UAE!!
UAE VAT Law. All Simplified For Your Better Understanding.  UAE VAT Law. All Simplified For Your Better Understanding. Reviewed by Hredanth.k on February 17, 2018 Rating: 5
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