UAE VAT Amendments and FTA Public Clarification Overview

• The FTA issued VAT Public Clarification VATP046 explaining amendments to the UAE VAT Decree-Law made by Federal Decree-Law No. 16 of 2024 (effective 30 Oct 2024) and Federal Decree-Law No. 16 of 2025 (effective 1 Jan 2026), and setting out its audit position.
• The “Non-Resident” definition was narrowed: a person is treated as resident if it has a place of establishment or fixed establishment in the UAE, even if it does not own the premises. The FTA indicates that employees regularly working from a UAE client’s premises, together with the technology they use, can create a fixed establishment.
• New VAT e-invoicing concepts were introduced: “Electronic Invoicing System,” “Electronic Invoice,” and “Electronic Credit Note.” An electronic invoice/credit note is only treated as a tax invoice/credit note if the relevant Executive Regulation requirements are met; e-invoices are not automatically valid VAT tax invoices.
• Input tax recovery was tightened: where an electronic invoice is required or has been issued under the e-invoicing system, the taxable person must hold the tax invoice in electronic invoice format to recover input tax. A paper or PDF copy will not be sufficient in that case.
• Registrants within the e-invoicing system must issue and transmit tax invoices and credit notes electronically. New/updated penalty provisions confirm consequences for failure to issue tax invoices, tax credit notes, or other required documentation.

Source: alvarezandmarsal.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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