Tax Updates, United Arab Emirates – June 2022

FTA issued clarification on gold making charges

The Federal Tax Authority (FTA) in UAE has recently issued a public clarification – VATP029 on Gold Making Charges confirming that the suppliers of the gold jewellery are required to pay VAT on the making charges. This clarification only applies to gold and products consisting mostly of gold, that do not qualify for zero-rating. These goods are collectively referred to as “Gold Items”.

Public Clarification on Missing or deficient Excise Goods released

The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published an Excise Tax Public Clarification (EXTP007) on Excise goods that are deficient or missing and the process for the destruction of Excise goods within a Designated Zone (DZ).

As per the clarification, the FTA needs to be notified of the deficiency or shortage within 30 days of discovering the deficiency through a declaration along with supporting documents. An approval from competent authority is also required to be provided in case of destruction of goods that were expired and can be destroyed only on sanction from the FTA.

The scenarios of deficiency, procedure for filing the Declaration and the requirements of supporting documents have been detailed in the clarification. It has also been clarified that there is no ability under the Executive Regulation for businesses to secure relief on products which have been subject to excise tax previously but are then considered as ‘wastage’.

FTA issued clarification regarding time limit for claiming refund of VAT by tourists

FTA in its Decision No. 4 of 2022 has decided that the operator of the Tax Refunds for Tourist Scheme shall set a one-year time limit for tourists to claim the refund of Value Added Tax through bank card or by cash, from the date of verification of the refund request.

Ministry of Economy released circular in connection with AML/CFT Compliance for Licensed Real estate brokers and agents

The UAE Ministry of Economy has on 24 June 2022 released Circular No. 05/2022 instructing all real estate brokers and agents to inter alia submit a ‘Real Estate Transaction Report’ (“REAR”) via the Financial Intelligence Unit’s (“FIU”) goAML platform in following circumstances:

Cash transaction equal to or exceeding AED 55, 000

Method of payment is virtual asset

In case of funds used for transaction has been converted from a virtual asset.

Chilean Senate Approves Tax Treaties with United Arab Emirates, alongwith India and the Netherlands

On 8 June 2022, the Chilean Senate (upper house of Congress) approved the laws for the ratification of the pending tax treaties with the United Arab Emirates along with India and the Netherlands. The laws were approved by the Chamber of Deputies (lower house) on 3 March 2022.

The income tax treaty between Chile and the United Arab Emirates was signed on 31 December 2019. The treaty will enter into force once the ratification instruments are exchanged and will generally apply from 1 January of the year following its entry into force.

Corporate Tax