Executive summary

The United Arab Emirates (UAE) Cabinet (Cabinet) released decisions No. 25 and No. 26, dated 22 May 2018, relating to the application of value added tax (VAT) on gold and diamonds and the refund of VAT paid on services provided in exhibitions and conferences respectively. In addition, the UAE Federal Tax Authority (FTA) released decision No. 3 of 2018, dated 20 May 2018, on Tax Invoices.

This Alert summarizes these decisions.

Detailed discussion

Application of VAT on gold and diamonds between VAT-registered taxpayers in the state

1. Where a supplier makes a supply of goods¹ to a registered recipient in the state for the purpose of re-sale or manufacture by that recipient, the following rules shall apply:

• The supplier will not be liable for calculating and declaring the VAT in relation to the supply, in cases where the recipient declares in writing the below:
  • The acquisition of the goods is for the purpose of resale or use to produce or manufacture of goods.
  • The recipient is registered on the date of supply.
  • The recipient shall calculate VAT on the value of the goods supplied to the recipient.
• The recipient of the goods shall be responsible to calculate VAT on the value of the goods supplied, the tax obligations related to the supply and calculation of the Tax Due in respect of such supplies.

2. The provisions of clause (1) shall not apply in the following situations:

• Where the supplier was aware or should have been aware that the recipient is not registered.
• Where the supplier has not verified that the recipient is registered with the FTA in accordance with the written declaration.
• Where the taxable supply is zero rated in accordance with clauses (1) and (8) of Article 45 of the Federal Decree No. 8 (the UAE VAT Law).

3. Where the supplier was aware or should have been aware that the recipient was not registered for tax purposes at the date of supply, the supplier and recipient shall be jointly and severally liable for the due tax and related penalties.

Decision No. 25 is effective as of 1 June 2018.

Refund of VAT paid on services provided in exhibitions and conferences

The FTA may refund VAT to a supplier of Exhibition and Conference Services² (referred to as "Services") if all the following conditions are met:

• The supplier requests a refund of VAT related to the Services on the supplier's VAT return for the same tax period in which the supply of such Services have occurred.
• The refund request shall be equal to or less than the VAT charged on the supply of Services.
• The Recipient of the Services does not have a place of establishment or a fixed establishment in the UAE.
• The recipient of the Services is not registered or required to register in the UAE.
• The recipient of the Services has not paid the VAT to the supplier.
• The supplier of Services shall obtain a written confirmation from the recipient that the latter does not have a place of establishment or a fixed establishment in the UAE and is not registered or required to register in the UAE.

Decision No. 26 is effective as of the date of its issuance on 22 May 2018.

Tax invoices

Where a registrant makes a supply to another person such that a tax invoice or credit note is required to be issued, such tax invoice or credit note may not include the physical address of the recipient of goods or services where the mailing address was included on the tax invoice.

The decision only relates to content of the tax invoice or credit note and does not impact the place of supply.

Decision No. 3 is effective respectively as of 1 January 2018 until amended by a subsequent decision.

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ENDNOTES

¹ Gold, diamonds and any products where the principal component is gold or diamond.

² Exhibition and Conference Services: Grant of the right to access, attend or participate in an exhibition or conference or the grant of the right to occupy space for the purpose of conducting an Exhibition or Conference.

Exhibition: Any event held for no longer than seven days, to display of present goods or services in accordance with a permit issued from the competent government entity.

Conference: Any formal meeting held, for no longer than seven days, attended by people with a shared interest, in accordance with a permit issued from the competent government entity.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young Middle East, Dubai

• David Stevens, EY VAT Implementation Leader
  david.stevens@ae.ey.com
• Nicola Butt
  nicola.butt@ae.ey.com
• Marc Collenette
  marc.collenette@ae.ey.com
• Engela Wiid
  engela.wiid@ae.ey.com
• Martin Lazaroff
  martin.lazaroff@ae.ey.com
• Mark McKay
  mark.mcKay@ae.ey.com
• David Betton
  david.betton@ae.ey.com
• Anthony Brown
  anthony.brown@ae.ey.com
• Javier Pardo
  javier.pardo@ae.ey.com
• Athar Fahim
  athar.fahim@ae.ey.com

Ernst & Young Middle East, Abu Dhabi

• James W Bryson
  james.bryson@ae.ey.com
• Sana Azam
  sana.azam@ae.ey.com
• Gordan Rotkvic
  gordan.rotkvic@ae.ey.com

Ernst & Young LLP, Middle East Tax Desk, Houston

• Gareth Lewis
  gareth.lewis1@ey.com

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ATTACHMENT

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