In brief

The President of the United Arab Emirates, H.H. Sheikh Mohamed Bin Zayed Al Nahyan has issued the Federal Decree-Law No. (18) of 2022 (“the Amendment of VAT Law”) on September 26, 2022, to amend some provisions of the Federal Decree-Law No. 8 of 2022 on Value Added Tax (“the VAT Law”).

The Federal Decree-Law No. (18) has amended 25 existing articles and introduced a new article related to the Statute of Limitation. We have summarized all significant changes below.

Effective date

The amended provisions will become effective from 1 January, 2023.

Summary of the amended provisions

Amended Article Number

Summary of Amended Provisions

Article (1) – Definitions

  • The Amendment of VAT Law has introduced new definitions with reference to VAT Law key terms, including Relevant Charitable Activities, Pure Hydrocarbons, Tax Evasion, Tax Audit, Tax Assessment, Voluntary Disclosures, and Tax Procedures Law.
  • Most of these definitions are already known from Tax Procedures law, but  this amendmentallows them to be used in the amended articles of the VAT law.
  • The Amendment of VAT Law has a few minor additions/ clarifications/ language changes to the existing definitions e.g. added vocational activity to the definition of Business.

Article (5) – Supply of Goods

  • The Amendment of VAT Law clarifies that, among others, the supply of goods is also an entry into a contract between more than two parties entailing the transfer of Goods at a later time.

Article (7) – Other out-of-scope transactions

  • The Amendment of VAT Law introduced a new clause that allows the Executive Regulations to stipulate any other transactions that should be considered outside the scope of VAT.

Article (15) – Registration Exceptions

  • The Amendment of VAT Law has now allowed registered taxable persons to apply for registration exceptions (as a result of making only zero-rated supplies), unlike in the current version of VAT Law, where taxable persons could only apply for such exceptions at the time of registration.

Article (21) – Cases of Tax Deregistration

  • The Amendment of VAT Law has added Clauses (2) and (3) to the Article granting the Federal Tax Authority (“FTA”) the right to deregister any registered person shall it assume that the taxable person’s valid registration for VAT purposes may cause any harm to the tax system.
  • Further, it has added that the deregistration of taxable persons shall not forfeit the FTA’s right to claim any tax dues or administrative penalties.

Article (26) – Special Date of Supply

  • The determination of the date of supply in case of the contract with periodic payments or consecutive invoices (i.e. continuous supplies) was clarified.
  • It was now made explicitly clear that in the case where the date of supply was not triggered earlier (i.e. by the date of tax invoice, or date of payment, or payment's due date), the date of supply will be determined maximum on the date on which one year has passed from the date on which the goods or services are provided.

Article (27) – Place of Supply of Goods (continuous supply)

  • Clause 3(a) of Article (27) of the VAT Law currently explains three scenarios where the place of supply shall be inside the UAE while the supply includes exportation.
  • The Amendment of VAT Law has added a fourth scenario determining the place of supply inside the UAE, where Clause (1) of Article (26)  (i.e. continuous supply) applies and the ownership of the goods has been transferred inside the UAE.  

Article (30) – Place of Supply in Special Cases (transport-related services)

  • Clause 8 of Article (30) explains the special place of supply for transportation services (i.e. in the place where transportation starts).
  • The Amendment of VAT Law is in relation to the extension of the special place of supply rule to include transport-related services.
  • This amendment makes it clear that transport-related services, even if provided separately from transportation services (e.g. by different suppliers), would have the place of supply determined where transportation starts.
  • In the current version of the VAT legislation, the determination of the place of supply for transport related services was extended in a similar way by Article 22 of the Executive Regulations, but the wording requires a closer link between such services and the transportation services to which they relate.  

Article (33) – Place of residency (Agent/Principal)

  • The current Article 33 of the VAT Law defines the cases where an agent's place of residence shall determine the principal's place of residence.
  • The Amendment of the VAT Law has altered the wording to provide more clarity on this subject and to confirm the above.

Article (36) - Value of Supply and Deemed Supply for Related Parties

  • The Amendment of the VAT Law has not only changed the name of the Article but has also made it an overruling exception also to Article 37 of the VAT Law.
  • By this, the Amendment of VAT Law clarifies that where a deemed supply occurs between related parties, the value of supply would be determined by the market value.

Article (45) – Supply/Import of Goods and Services that are Subject to Zero Rate

  • Clauses (4),(5), (6), (12) and (14) of the Amendment of VAT Law have been extended to also include importation of goods and/or services in addition to the supply of goods and/or services that shall be zero-rated.
  • This includes the import of means of transportation, import of goods and services related to means of transportation, import of rescue aircraft or vessels, import of crude oil and natural gas, and import of related basic healthcare Goods.
  • Furthermore, the Amendment of VAT Law in Clause (8) stresses that the application of zero-rated VAT would be granted for investment precious metals only if they are supplied or imported for investment purposes.

Article (48) – Reverse Charge

In the current version of the VAT Law, clauses (3) and (5) of Article 48 explain the applicability of the reverse charge mechanism on the supply of any form of hydrocarbons.  

  • The Amendment of VAT Law narrows it down to only Pure Hydrocarbons now defined in the amended Article 1 of the VAT law.  
  • Other changes were made to Clause (4a) with regard to the provision of declaration of use of Pure Hydrocarbons for the production or distribution of any form of energy.
  • Further, Clause (8) has been added to Article 48, by which the Cabinet receives the right to issue a Decision to identify the other goods and services subject to the Reverse Charge Mechanism.

Article (55) – Recovery of Recoverable Input Tax in the Tax Period (Imports)

  • Clause (1) of the Article explains the two conditions that should be satisfied to recover input VAT. The first condition of the Article has been amended with the addition of the requirements to keep invoices and import documentation (i.e. for goods only) in the scenarios where input VAT is recovered as per the reverse charge mechanism applicable to the importation of goods or services.

Article (57) - Recovery of tax by Government Entities and Charities

  • The Amendment of VAT Law has made it clear that to recover the full input tax, it should be incurred for Sovereign Activities of Government Entities, and similarly, the input tax paid by the Charities should be incurred for the purposes of its relevant charitable activities.

Article (61) - Instances and Conditions for Output Tax Adjustments (additional case)


  • The VAT Amendment Law has added in Clause 1(e) that a taxable person shall adjust output tax after the date of supply not only if the tax was charged in error but also if the application of the tax treatment was incorrect (e.g., where it was treated as exempt/zero rated instead of taxable at 5%)

Article (62) – Mechanism for Output Tax Adjustment

  • The Amendment of VAT Law mentions that where the cases of issuing a tax credit note are triggered, a tax credit note must be issued within 14 days from the date on which any such cases occur, making it now aligned with the applicable timelines for issuance of the tax invoice.

Article (65) - Conditions and Requirements for Issuing Tax Invoices (obligation to pay VAT)

  • The Amendment of VAT Law added that not only when a person receives the VAT amount, but also when it issues a tax invoice in respect of VAT, it must pay such VAT amount to the FTA as the Tax Due amount.

Article (67) - Date of Issuance of Tax Invoice (for continuous supplies)

  • The Amendment of VAT Law also included a reference to Article 26 (i.e. continuous supplies) requiring the registrant to issue a tax invoice within 14 days as of the date of supply determined by it.  
  • Further, Clause (2) has been added to the article mentioning that the Executive Regulations shall determine the cases that are subject to periods other than what is mentioned (14 days).

Other Amended Articles: (13), (46), (74), (76), (77), (80), and (83).

  • In addition to the above 18 Articles that have been amended, His Highness has also approved amendments of 7 other articles, which upon our analysis, represent relatively minor amendments e.g. in wording.

Introduction of New Article 79 bis – Statute of Limitations

The FTA has also introduced a new Article via the Amendment of VAT Law (Article 79 bis) which sets out the following:

  • With certain exceptions, as specified below, the FTA may not conduct a Tax Audit or issue a Tax Assessment after the expiration of 5 years from the end of the relevant Tax Period.
  • The FTA may conduct a Tax Audit or issue a Tax Assessment after 5 years from the end of the relevant Tax Period if it notifies the taxable person of the Tax Audit before the expiration of the 5th  year, provided that the Tax Audit or issuance of Tax Assessment is completed within 4 years from the date of such a notice.
  • The FTA may conduct a Tax Audit or issue a Tax Assessment after the 5th year from the end of the relevant Tax Period only if the Audit or Assessment relates to a Voluntary Disclosure submitted during the 5th year from the end of the Tax Period, provided that the Tax Audit or Assessment is completed/issued within 1 year from the date of Voluntary Disclosure submission.
  • The article also permits amendment of the referred periods by virtue of a separate Cabinet Decision.
  • It should be noted that Voluntary Disclosures are not allowed to be submitted after 5 years from the end of the relevant tax period.
  • In cases of Tax Evasions or non-Tax Registrations, the FTA may conduct a Tax Audit or issue a Tax Assessment within 15 years from the end of the tax period in which the tax evasion occurred or from the date on which the taxable person was required to perform Tax Registration.


This addition of Article 79 bis raises particular concern for the registrants who have not yet claimed VAT refund for the periods reaching 5 years period. As a result of the above changes, it becomes clear that the FTA would not be permitted to audit the periods beyond five years which is an inseparable part of the VAT refund process.

KPMG has a team of experienced tax specialists that can help you assess your current tax position, advise on the appropriate tax treatment, prepare clarification requests, or represent you in front of the FTA as registered tax agents.

We are happy to discuss your specific circumstances with you and determine the way forward should you have any questions or concerns in this regard. Please get in touch with your usual KPMG contact or any of the tax professionals below.

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