On 30 September 2024, the UAE issued Federal Decree-Law No. (16) of 2024, which amends specific provisions of Federal Decree-Law No. (8) of 2017 on Value Added Tax (VAT). The decree came into effect on 30 October 2024. The main amendments introduced by this decree to the VAT Law include:

1. Electronic billing system:

Article (4) bis has been added to the law, which requires all taxpayers to move to an electronic invoicing and tax credit notification system. This amendment comes within the framework of the state’s efforts to enhance transparency in financial transactions, simplify tax audit procedures, and achieve higher efficiency in tax revenue management. The new system is expected to reduce tax evasion, improve tax compliance, and support a sustainable business environment in the UAE.

2. Settlement of bad debts:

Article (64) of the law has been amended to more clearly define the procedures and conditions to be met for the settlement of output tax related to bad debts. These amendments aim to simplify the procedures followed in such cases and provide greater flexibility to companies in dealing with bad debts, thereby improving companies’ cash flow and minimizing administrative burdens.

3. Record retention periods:

Article (78) has been amended to specify a more extended retention period for accounting records and commercial books, in line with international record-keeping standards. This amendment enhances transparency and accountability, facilitates tax audits, and ensures the ability to reconstruct financial transactions at any time. It also contributes to protecting the rights of all concerned parties, including shareholders, creditors, and tax authorities.

4. Inclusion of the tax registration number:

Article (79 bis) has been added to the law, which requires all taxpayers to include their tax registration number in all official correspondence and documents related to tax transactions. This amendment enhances tax compliance, facilitates audits and follow-ups, and achieves an effective electronic link between all concerned parties. This measure is expected to reduce tax evasion, improve tax information management, and support transparency in financial transactions.

5. Limitation period for tax claims:

Article (79 bis) has been added to define the limitation periods for tax claims clearly. This amendment provides legal certainty to taxpayers and clearly defines the duration of tax liability, which contributes to reducing tax disputes and promoting stability in the business environment. It is also in line with recognized international practices in the field of taxation.

6. Other amendments:

The amendments also included comprehensive revisions to the wording of several legal articles, aiming to enhance the clarity of legal texts and simplify procedures. These amendments make it easier for taxpayers to understand their rights and duties and minimize the need for legal experts to interpret the provisions of the law. Thus, they enhance confidence in the tax system and encourage voluntary compliance.

In conclusion, the substantial amendments to the UAE VAT Law emphasize the UAE’s commitment to enhancing the efficiency of the tax system and simplifying procedures. By clarifying tax obligations, streamlining administrative procedures, and enhancing transparency, these amendments seek to create a more attractive business environment for investment and promote confidence in the tax system.