The Ministry of Finance has revealed that the UAE Cabinet has endorsed Decision No. 100 of 2024, which introduces modifications to specific sections of the Executive Regulations of Federal Decree-Law No. 8 of 2017 concerning Value Added Tax (VAT). These changes include the exemption of VAT on investment fund management services to foster growth in the investment management sector and enhance the UAE's appeal as a top investment destination. Moreover, certain services linked to virtual assets will be exempt from VAT, supporting innovation in financial technology and positioning the UAE as a significant hub for virtual asset investment.
The updates also include an exemption for in-kind donations between charitable and government entities, up to Dh5 million over a 12-month period, from the legal supply provisions. This allows donors to reclaim the VAT incurred on these donations in line with VAT law, easing the financial strain on these entities and bolstering their social contributions. Additionally, the amendments bolster tax compliance by granting the Federal Tax Authority the power to de-register taxpayers in certain scenarios, ensuring the integrity of the tax system and enhancing tax administration efficiency.
The Ministry underscored that these amendments are part of its continuous efforts to improve transparency within the tax regime and ensure full compliance with UAE tax legislation. It also emphasized that the changes aim to balance tax revenue collection with boosting the investment climate and attracting more businesses and investors to the country. Younis Haji Al Khoori, Undersecretary of the Ministry of Finance, stated: “The Ministry is dedicated to collaborating with stakeholders from both the public and private sectors to update our regulations, thereby enhancing the UAE's business environment.” He added, “We believe these amendments will help reduce misunderstandings or incorrect applications of the law and simplify procedures for taxpayers, aligning with international best practices and ultimately improving the quality of life for all.”
The amendments were crafted in line with international best practices, considering the GCC Unified VAT Agreement, past experiences, challenges faced by the business community, and stakeholder recommendations. In response to ongoing economic transformations, the Ministry of Finance has implemented tax plans and programs in alignment with international best practices to address emerging challenges and strengthen support for the business sector, promoting economic growth. Consequently, amendments have been made to certain articles in the Executive Regulations of the VAT Law, reflecting the latest implementation developments, market needs, and stakeholder feedback on tax policies.
The Cabinet Decision amending the Executive Regulations of Federal Decree-Law No. 8 of 2017 on Value Added Tax introduces substantial changes. Some amendments aim to align certain provisions of the Regulations with those in Federal Decree-Law No. 18 of 2022, which also amended Federal Decree-Law No. 8 of 2017. Other amendments are designed to update specific provisions within the Executive Regulations in accordance with legislative policy.
