VAT Administrative Exceptions
Value Added Tax in UAE is giving opportunity to taxpayers to apply administrative exceptions in certain circumstances where the standard VAT Law is difficult or not able to follow. This relief helps the taxable persons in the UAE to explain the difficulty to comply with the administrative requirements under UAE VAT. In this article, we are going to understand the options available for taxable persons under VAT administrative exceptions.
The Federal Tax Authority has published a detailed guide on the VAT administrative exceptions. Keep in mind that the VAT administrative exception can be availed only by the person who is registered and obtained the Tax Registration Number (TRN) under UAE VAT.
Let us make questions and demystify the VAT administrative exceptions.
Can you change your tax invoice details prescribed by the authority or not issue a tax invoice?
As per Article 59(7) of VAT Executive Regulations, the authority has prescribed a minimum of details that shall be included while making the tax invoices. A taxable person can submit an application to FTA either not to mention the mandatory details in the tax invoice or not to issue tax invoices in certain cases.
Such application shall have a detailed explanation from the taxable person regarding the difficulties in mentioning all the details in the tax invoices as prescribed by the authority or the genuine reason for not issuing tax invoices. Even if the authority approves the application, the taxable person must keep sufficient records relating to the supplies provided.
Can you change the details of your Tax Credit Note prescribed by the authority or not to issue a Tax Credit Note?
Similar to tax invoices, the tax credit notes also have the minimum detail requirements prescribed by the authority (Article 60(2) of VAT Executive Regulations). A taxable person can apply to the Federal Tax Authority not to follow the mandatory details in the tax credit note and/or not to issue the tax credit note. After approval from the FTA, the taxable person shall keep sufficient records of the supplies made and credit notes issued.
Can you change the length of the Value Added Tax filing period?
As we all know, under the VAT Law, the registered person shall submit the VAT returns on a quarterly basis. The exception to this is the Tax Registration Number obtained on an exception basis. There are many differences between obtaining a tax number based on an exception and normal situations Read here. The length of a tax period is explained in Article 62(2) of the VAT Executive Regulations.
FTA allows the taxable person to apply for a different tax period. In this case, FTA considers only the below categories to apply for a change of tax period from 3 months to 6 months (bi-annual VAT return period).
- Individuals: Individuals like property owners and freelancers can apply for a change of VAT filing period to 6 months. FTA will consider the application and review the number of invoices issued in the last 12 months, the amount of VAT paid in the last 12 months, and the amount of taxable supplies in the last 12 months.
- Businesses who always have a refund position: There are many companies that are always in the VAT refund position after VAT return filing. Example: A trading company that purchases locally and exports. Such businesses can apply for a 6-month VAT period, subject to the condition that in the previous 12 months, they were in a refund position. While applying, the company shall explain and confirm that they do not expect to change the business model and move from a refund position to a tax payment position.
- Small and Medium Enterprises (SMEs) who receive funding from the government can apply for a different VAT period, and the authority will review the taxable supplies and tax paid in the previous 12 months.
- SMEs without government funding: Any SMEs that have taxable supplies less than AED 9 million in the previous 12 months can apply for a 6-month VAT period. The authority will review tax paid, taxable supplies, and fines paid in the previous 12 months before approving such requests.
Can you change your Stagger for VAT return filing?
At the time of approval of VAT registration, FTA issues the VAT certificate along with the staggers for VAT filings (Article 62 of VAT Executive Regulations). Example: - VAT certificate approved with effect from 1 August 2024, and the stagger is as below: -
- First Stagger: 01 August 2024 to 31 October 2024
- Second Stagger: 01 November 2024 to January 2025
- Third Stagger: 01 February 2025 to April 2025
- Fourth Stagger: 01 May 2025 to 31 July 2025
If a VAT-registered person is required to change the stagger to a different one, an application can be submitted to FTA. The registered person shall give a reason for requesting a different stagger.
Can you request a different format for evidence to prove the export of goods?
A taxable person shall keep proof of exit of goods from the UAE (Article 30 of VAT Executive Regulations). This is part of VAT compliance, and the exit documents are required to be submitted to FTA at the time of submitting the VAT refund application. The business can apply for keeping the export exit documents in a different format by explaining the hindrance in keeping the standard documents.
FTA may approve the different format submitted by the taxable person or suggest a different format to substantiate the exit of goods.
Can you request FTA extend the export period from 90 days for the goods that are in the customs suspension regime?
Goods that are imported to the UAE for re-export purposes can suspend the customs payment subject to conditions, and one of the conditions is that the goods shall be exported within 90 days from the date of import or supply (Article 30 of the VAT Executive Regulations). A registrant can request FTA to extend the period from 90 days, explaining the situation preventing them from exporting the goods within 90 days.
Where to make an application for the above administrative exceptions under UAE VAT?
The application shall be made in the Emaratax portal on the FTA website of the concerned registrant.
Timeline for considering the VAT administrative exception application?
Once the application is made, FTA may consider the application within 40 business days if the application is related to tax invoices, tax credit notes, length of tax period, stagger change, and evidence to prove the export of goods. In case the application is relating to an extension of time for the export of goods, the application may be considered in 20 business days.
To learn more about VAT Administrative Exceptions A detailed Guide, book a free consultation with one of the Flyingcolour team advisors.
Disclaimer: The information provided in this blog is based on our understanding of current tax laws and regulations. It is intended for general informational purposes only and does not constitute professional tax advice, consultation, or representation. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the information contained in this blog.