Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

November 2, 2022

UAE amends VAT Decree Law

  • The United Arab Emirates (UAE) Ministry of Finance (MOF) announced the issuance of Federal Decree Law No. 18 of 2022 amending Federal Decree Law No. 8 of 2017 relating to Value Added Tax (VAT).

  • The amendments allow an extension to the general statute of limitation of five years and specify a time limit for the issuance of tax invoices and tax credit notes.

  • The amendments also cover provisions with respect to the applicability of domestic reverse charge, valuation of related party supplies, and documents required for input tax recovery.

  • Businesses should assess how the amendments impact their operations and review historical tax and reporting positions (e.g., via health checks or mock audits).

Executive summary

On 28 October 2022, the UAE MOF announced the issuance of Federal Decree Law No. 18 of 2022 (Amended Decree Law) amending Federal Decree Law No. 8 of 2017 (Decree Law). The amendments were published on the same date by the Federal Tax Authority (FTA) on its website The amendments will be effective from 1 January 2023.

The key changes include, but are not limited to, an extension to the general statute of limitations, inclusion of time limits for the issuance of tax invoices and tax credit notes, changes to the applicability of domestic reverse charge provisions, amendment of existing terminology, as well as the introduction of new terminology.

Detailed discussion

VAT was introduced in the UAE on 1 January 2018. It is the first time that the Decree Law has been amended. Several amendments are clarificatory in nature and others indicate a change in tax position(s). Broadly, these amendments give rise to both technical and administrative implications as outlined below.

Statute of limitations for UAE VAT

  • A new article, Article 79 (bis), Statute of Limitations, has been added to the Amended Decree Law to allow the FTA an additional four years to undertake an audit providing that it has issued a notice for audit or assessment before the expiration of the general statute of limitations of five years.

  • Further, Article 79 (bis) allows the FTA an additional one year to undertake an audit if a voluntary disclosure (VD) is filed by the taxpayer during the fifth year from the end of the relevant tax period.

  • The UAE Cabinet has discretionary powers to further amend the statute of limitation periods noted above.

  • Article 79 (bis) also states that a VD cannot be filed after five years from the end of the relevant tax period.

Time limit to issue a tax invoice and/or a tax credit note

  • The time limit for the issuance of a valid tax invoice of 14 days from the date of supply (Article 67 of the Decree Law) has been extended to supplies that include periodic payments or consecutive invoices. Previously, there was no such time limit for the issuance of a tax invoice under these circumstances.

  • Article 62 of the Amended Decree Law now introduces a time limit of 14 days for the issuance of a valid tax credit note. Previously, there was no such time limit for the issuance of a tax credit note.

Value of deemed supply for a related party

  • Pursuant to the amendments to Article 36 of the Decree Law, a deemed supply made to a related party should be equal to the market value (not total cost incurred), where the recipient is unable to recover input tax in full.

Input tax recovery

  • Article 55 of the Amended Decree Law now outlines the documents required to support the recovery of input tax (including pre-VAT registration input tax) on the importation of goods and/or services.
  • Article 57 of the Amended Decree Law now clarifies that the input tax paid by government entities, incurred for the purposes of sovereign activities and input tax paid by charities incurred for the purposes of charitable activities should be eligible for recovery.

Place of supply provisions

  • Article 27 of the Decree Law has been amended to state that the place of supply of goods that includes import or export, should be considered as in the UAE, where the transfer of title takes place in the UAE.
  • Article 30 of the Amended Decree Law extends the application of the place of supply of services to transport-related services. This was previously covered under Article 22(2) of the Executive Regulations. Similarly, the zero-rating conditions as per Article 45 of the Decree Law with respect to international transport of passengers and goods has been extended to cover transport-related services. The definition of transport-related services remains unchanged.
  • Article 33 of the Amended Decree Law states that the place of residence of the principal shall be deemed to be that of the agent where certain conditions are met. Prior to this amendment, the words “principal” and “agent” appeared to be used interchangeably in the Decree Law.

Registration exception and deregistration

  • Article 15 of the Decree Law concerning a registration exception has now been extended to cover persons already registered for UAE VAT.
  • Article 21 of the Decree Law concerning deregistration has been amended to empower the FTA to deregister a taxpayer for reasons other than those mentioned in the Decree Law. The related “controls and conditions” are likely to be outlined in the amended Executive Regulations which are expected to be released soon.

Applicability of domestic reverse charge

  • The term “hydrocarbons” under Article 48 of the Decree Law has been replaced with the term “Pure Hydrocarbons.”
  • Furthermore, the term “Pure Hydrocarbons” has been defined to mean “Any kind of different pure combinations of a chemical equation made only of hydrogen and carbon (CXHY).”
  • As such, the domestic reverse charge provisions will apply to “Pure Hydrocarbons” that fall within the new definition as opposed to “Hydrocarbons” of any kind.

Definitions under Article 1 of the Amended Decree Law

Certain terms are defined for the first time under the Amended Decree Law:

  • Relevant charitable activity
  • Tax evasion
  • Tax audit
  • Tax assessment
  • VD
  • Tax Procedures Law

Import of certain supplies

Article 45 of the Amended Decree Law now includes the “import” of the following supplies which may be zero rated (subject to prescribed conditions):

  • Means of transport for passengers and goods

  • Aircraft or vessels designated for rescue and assistance by air or sea

  • Crude oil and natural gas

  • Health care services, and related goods and/or services


Businesses should review the Amended Decree Law to determine the impact of the amendments on their business operations and their readiness on or before 1 January 2023. Further, the amendments with respect to the extension of the statute of limitations provide an impetus for businesses to review their historical tax and reporting positions (e.g., via health checks or mock audits), and voluntarily disclose any errors within the prescribed time limit, before they are notified of an audit or assessment.


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

EY Consulting LLC, Dubai

Ernst & Young Middle East (Abu Dhabi Branch)

EY LLP (United States), Middle East Tax Desk, New York


The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.


Copyright © 2024, Ernst & Young LLP.


All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.


Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.


"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.


Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or Please refer to the privacy notice/policy on these sites for more information.

Yes, I accept         Find out more