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10 January 2018 UAE Tax Authority releases key clarifications relating to VAT implementation On 9 January 2018, the Federal Tax Authority of the United Arab Emirates (UAE) published two key pieces of legislation relating to the recent implementation of Value Added Tax (VAT) in the country. The first piece of legislation addresses designated zones for VAT purposes and the other addresses zero-rating for the healthcare sector. This Decision provides absolute certainty as to which of the existing free trade zones in the UAE are to be so designated for VAT purposes. This has important implications for the VAT treatment of goods and services supplied into, within and out of these zones.
This Decision provides suppliers, customers and consumers of healthcare services with confirmation as to which of their supplies and purchases qualify for this special relief. In the application of the provisions of this Decision, the following words and expressions shall be defined as follows, unless the context requires otherwise: Medications: Every product containing a substance(s) which achieves the intended objective in or on the human body via biological effect, which is produced, sold or offered for use in cases relating to diagnosing, treating, healing, relieving or preventing diseases, or renewing, correcting or rehabilitating the function of body organs. Medical equipment: A medical product containing a substance, device, instrument, motor, implant, detector or system, including its accessories and operating software, which achieves the intended objective in or on the human body without medicinal, immunological or metabolic effect, which is produced, sold or offered for use in cases relating to diagnosing, treating, relieving, controlling or preventing diseases, injury or disability. In the case of both Decisions, the legislation has been given retrospective effect from 1 January 2018. Therefore, the VAT treatment applied by affected businesses to transactions that have taken place over the preceding nine days may now need to change. Further information and analysis of the implications of these two pieces of legislation will be addressed in future Alerts.
Document ID: 2018-5110 |
