The UAE Ministry of Finance announced on Saturday that key provisions of the Value Added Tax (VAT) law have been amended, introducing new exemptions designed to stimulate economic growth and support charitable initiatives.
Among the changes, three services that were previously subject to a 5% VAT rate will now be exempt. These include investment fund management services, certain services related to virtual assets, and in-kind donations between charitable organizations and government entities. The move is aimed at encouraging investment and reducing the financial burden on charitable entities, while also aligning with the country’s broader economic goals.
One of the most notable amendments concerns in-kind donations between government entities and charities. Under the new regulations, donations valued at up to Dh5 million within a 12-month period will be exempt from VAT. This change allows charitable organizations to fully benefit from the goods and services they receive, thereby enhancing their ability to serve communities.
In addition to the new VAT exemptions, the Federal Tax Authority has been granted increased authority to de-register taxpayers in specific cases. This move is intended to tighten tax compliance and ensure that businesses adhere to the country’s tax laws.
The Ministry of Finance said that these amendments are part of ongoing efforts to refine the UAE’s tax environment. The changes aim to strike a balance between boosting tax revenues and creating a more attractive investment climate, ultimately enhancing the ease of doing business in the country.
Younis Haji Al Khoori, Undersecretary of the Ministry of Finance, emphasized the government’s commitment to continuously improving the business landscape. “The Ministry is committed to coordinating with relevant stakeholders from both the public and private sectors and working to update our regulations to enhance the UAE’s business environment,” Al Khoori said.
He added that these amendments would help minimize misunderstandings in applying the law and simplify tax procedures for businesses in line with international best practices. The ultimate goal, he said, is to contribute to an improved quality of life for all residents.
The updated regulations follow the GCC Unified VAT Agreement and draw on past experiences, challenges faced by businesses, and recommendations from various stakeholders. The amendments also align specific provisions with the Federal Decree-Law No. 18 of 2022, which previously revised parts of the UAE’s VAT framework.
