2025 Year in Review of FTA Decisions & Policy Changes
1. Reverse Charge Mechanism on Precious Metals and Stones
Cabinet Decision No. 127 of 2024, effective 15 February 2025, introduces a reverse charge mechanism for supplies of precious metals and stones, shifting VAT accounting responsibilities to the recipient.
2. Clarification on Real Estate Transactions
Public Clarification VATP040, issued on 14 March 2025, elucidates that any transfer of real estate ownership qualifies as a supply of goods for VAT purposes, requiring the value to be stated as a single composite supply.
3. VAT Treatment of Cryptocurrency Mining
The FTA clarified that:
- Mining for personal use is not subject to VAT.
- Mining services provided to UAE clients are taxable at 5%.
- Services to non-resident clients may qualify for 0% VAT under specific conditions.
4. Mechanism for Correcting VAT Return Errors
Decision No. 8 of 2024, effective 1 January 2025, introduces a new mechanism allowing taxpayers to correct errors in VAT returns without affecting the due tax, provided corrections do not change the tax liability.
5. E-Invoicing Implementation and Penalties
- The FTA has mandated that all VAT-registered businesses must issue invoices and credit notes in electronic format. This move is part of the UAE’s transition to a fully digitized VAT compliance system.
- Non-compliance may result in administrative penalties, including fines for failure to issue e-invoices or e-notes as required.
- Businesses are advised to upgrade their invoicing systems and ensure readiness ahead of enforcement.
6. Public Clarification on VAT Executive Regulation Amendments (VATP040)
- It provides detailed guidance on changes to the UAE VAT Executive Regulations effective from November 15, 2024.
- It clarifies that any transfer of real estate resulting in the transfer of ownership rights qualifies as a supply of goods for VAT purposes.
- It emphasizes that the value of a ‘single composite supply’ must be stated as a single price.
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