The UAE VAT Update – VAT Administrative Exception
The Federal Tax Authority (“FTA”) has recently updated a VAT Administrative Exception Guide.
What is VAT Administrative Exception?
The UAE VAT Law specifies administrative requirements, which, in general, should be fulfilled by all UAE VAT-registered businesses and individuals, despite the size of the business, volume of transactions, or any other unique aspects of the business.
Often many businesses find it challenging to comply with these administrative requirements resulting in a potential risk of penalties during an audit by FTA.
However, as per the VAT Administrative Exception mechanism, VAT-registered businesses and individuals may apply for concessions/exceptions from UAE VAT Law requirements in respect of the following:
- Tax Invoices and Tax Credit Notes
- Length of the Tax Period
- Stagger
- Extension of the time of Export of goods
What’s new?
The updated mechanism provides a new category of VAT Administrative Exception relating to “Evidence to prove export of goods.”
According to the updated Guide, VAT-registered businesses and individuals may submit a request to approve the use of an alternative form of evidence to prove the Export of goods.
Who may apply?
Any VAT-registered business or individual who can justify the FTA with actual reasons/circumstances for which the request for usage of an alternative form of evidence may apply for an administrative exception in this scenario.
What the outcome of this VAT Exception?
According to UAE VAT Law, the Export of goods shall be subject to the zero-rating relief if the following conditions are met:
- The Goods are physically exported to a place outside the Implementing States or are put into a customs suspension regime in accordance with GCC Common Customs Law within 90 days of the date of the supply.
- The official and commercial evidence of Export or customs suspension is retained by the exporter.
“Official evidence” means Export documents issued by the local Emirate Customs Department in respect of Goods leaving the State.
“Commercial evidence” shall include any the following:
- Airwaybill
- Bill of lading
- Consignment note
- Certificate of shipment
If the application for VAT Administrative Exception is approved, the Tax Payer will have official permission from the FTA to use of an alternative form of evidence export documents to be able to consider this Export as zero-rated supply.
The alternative form of evidence export documents may be any of the following:
- Proforma invoice
- Export Invoice
- Packing List
- Sales Contract
- Insurance Certificate, etc.
How can we help?
Rethink as an entity provides VAT advisory, optimization, registration, implementation, compliance, and training services in Bahrain, UAE, KSA, and the GCC.
Our team is here to guide you through the VAT Administrative Exception process and liaise with FTA in obtaining an exception.
Our team of senior qualified tax advisors, finance experts, and tax accountants will ensure timely and cost-effective VAT services.
Based on our local and international experience, we understand that VAT is a complex tax and will certainly suffer numerous changes in the upcoming years. Rethink’s VAT services are aimed to suit both basic and complex returns for SMEs and larger enterprises.
Who are we?
Re/think is a boutique accounting, audit, advisory, regulatory compliance, and tax advisory firm with offices in Dubai, Abu Dhabi (ADGM) and Bahrain focused on providing businesses of varying sizes with timely, proactive, and customized business solutions from start-up and early development to the latest stages of a business lifecycle
Author
Mariia Hordiichuk
Assistant Tax Manager
