FTA clarified liability for VAT

According in the Statement, the Federal Tax Authority clarified that according to Federal Decree-Law No. (8) of 2017 on VAT and the Executive Regulations;

  • the only case where consumers are directly responsible for paying VAT on received services that are delivered fully or partially after VAT went into effect, is where the contract, issued before Jan 1, states the amount due is exclusive of tax.

Suppliers will be liable for VAT in two cases: If contract states that the amount received against the good or service is inclusive of VAT; or if contract issued to the consumer did not refer to VAT.

The Federal Tax Authority (FTA) has clarified the criteria that determine whether it is the supplier or end-consumer that bears the cost of the VAT on goods and services set to be delivered fully or partially in 2018, but had been contracted before the implementation of VAT.

Ahmad Al Zaabi, acting director of consumer protection at Dubai Economy, clarify the rules. According to his statement last January, “The agreement should state that the fee applicable does not include VAT or any of the tax concerned, and specify that the merchant reserves the right to charge VAT or any other tax that may be implemented in the country at any point during the agreement period,”

The UAE introduced a 5% VAT on 1st January and last month called on businesses who have yet to register for VAT to do so to avoid fines and legal proceedings.


Source: The National

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