UAE Announces Significant VAT Amendments to Boost Investment Climate

The UAE has effected major changes to its Value Added Tax regime that it hopes to improve its investment climate and attract more firms. Some of these amendments are as follows: Regarding the correction of these amendments, these amendments are part of the ongoing reform process in the country’s tax system, namely: Key exemptions and necessary new rules aimed at stimulating economic development and harmonizing with the norms and standards of the International Convention.

Key VAT Amendments
The Ministry of Finance has revealed Cabinet Decision no 100 of 2024, which entails some changes on the Executive Regulations of Federal Decree-Law No. 8 Of 2017 on VAT. These changes have bearing where the UAE has been keen in making changes that seeks to enhance transparency in the tax system while at the same time supporting those in the public as well as private domain. Key highlights include:

Investment Fund Exemptions: VAT relief will apply to services in connection with management of investment funds with the intention of encouraging investment and expanding the UAE’s role as an investment destination.

Virtual Assets: Some of the services offer virtual assets will be relieved from VAT. This action is targeted to spur innovation and finance technology and place the UAE as a key global hub for virtual asset investment.

Charitable Donations: Goods and services donated by one charitable organisation to another or delivered by a charitable body to the government and vice versa with a value not exceeding AED 5 million in any twelve month period will be VAT zero-rated. This change will let the donors reclaim VAT with the cuts in financial pressures that improving charitable operations.

Enhancing people’s compliance with their tax obligations, and the management of those obligations.
The Federal Tax Authority will now have the right to delist those taxpayers satisfying certain conditions same to the regulation of efficient tax administration. The Ministry underlined that these changes are the steps toward the reform of the UAE tax system and improvement of transparency while reducing the risks of possible confused about the legislation.

The proposed amendments to the Value Added Tax laws are consistent with global standards and the GCC Unified VAT Agreement He said this whilst considering previous encounters and issues encountered by the business sector.