UAE VAT Update – New VAT Public Clarification on Temporary Zero-rating of Certain Medical Equipment
The Federal Tax Authority recently replaced the Public Clarification VATP023 on Temporary Zero-rating of Certain Medical Equipment with the new Public Clarification VATP025 as supplementary guidance to the Cabinet Decision No. 9/12 O of 2020 on the temporary application of VAT at the 0% rate on certain supplies and imports of medical equipment dated 1 September 2020.
The Public Clarification extended Temporary Zero-rating of Certain Medical Equipment as per the said Cabinet Decision up to 31 December 2021.
The medical equipment to which the temporary zero-rating rules apply is the personal protective equipment used for the protection from Covid-19 as follows:
- Medical face masks
- Half filtered face mask (UAE.S EN 149)
- Non-Medical “community” face mask made from textile (UAE.S 1956)
- Single-use gloves (UAE.S ISO 374-2); and
- Chemical disinfectants and antiseptics intended for use on the human body, but excluding detergents, cosmetics, and personal care products (UAE.S EN 1276, EN 1650, and EN 14476:2013+A2).
Following the release of the Public Clarification, a supply of above-listed medical equipment can be subject to zero-rating relief where the date of supply takes place, and the medical equipment is delivered to the recipient or placed at the recipient’s disposal in the period from 1 September 2020 to 31 December 2021.
Where a supplier charged VAT at 5% on a supply that was eligible for zero-rating relief under the cabinet decision, the supplier may issue a credit note to refund the overcharged VAT, provided the recipient is identifiable. However, if the recipient is not identifiable, the supplier must report the VAT collected in the respective VAT return.
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