VAT HAS FINALLY ARRIVED Updates and news 10 January 2018 VAT was finally implemented in the United Arab Emirates on 01 January 2018. At the time of implementation many businesses were still unready and there were several areas of the VAT law that had not been confirmed. In this note we highlight the main areas which are still unclear. We also summarise some of the key announcements from the Federal Tax Authority in final days before the end of the year and in the first two weeks of the new tax. Designated Zones The VAT law provides for certain fenced areas to be treated as ‘outside the State’ for VAT purposes. Cabinet Decision No. (59) of 2017 was published on 9 January 2018 on the FTA’s website providing a list of fenced areas which has been designated as Designated Zones. The implementation date of the decision is back dated to 1 January 2018. The list of Designated Zones are as follows: Abu Dhabi Free Trade Zone of Khalifa Port Abu Dhabi Airport Free Zone Khalifa Industrial Zone Dubai Jebel Ali Free Zone (North-South) Dubai Cars and Automotive Zone (DUCAMZ) Dubai Textile City Free Zone Area in Al Quoz Free Zone Area in Al Qusais Dubai Aviation City Dubai Airport Free Zone Sharjah Hamriyah Free Zone Sharjah Airport International Free Zone Ajman Ajman Free Zone Umm Al Quwain Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port 2 Umm Al Quwain Free Trade Zone on Sheikh Mohammed Bin Zayed Road Ras Al Khaimah RAK Free Trade Zone RAK Maritime City Free Zone RAK Airport Free Zone Fujairah Fujairah Free Zone FOIZ (Fujairah Oil Industry)

VAT HAS FINALLY ARRIVED Updates and news 10 January 2018 Pharmaceutical Products and Medical Equipment The law provides a zero-rate relief for certain medicines and medical equipment identified in a ‘Decision by the Cabinet’. Cabinet Decision No. (56) of 2017 was published on 9 January 2018 on the FTA’s website confirming that the supply of Medications and Medical Equipment (defined in the decision) registered with the Ministry of Health and Prevention, or imported with its permission or approval, shall be subject to tax at zero rate. The implementation date of the decision is back dated to 1 January 2018. Note: Cabinet Decisions pertaining to Charities, Tourist Refund Scheme, Government Bodies and Sovereign activities have yet to be issued. Commercial Property Just a few days into the new tax the FTA announced that a person buying a commercial property has to register with the FTA and pay the VAT amount directly to the FTA. A user guide has been issued setting out the steps to be followed.  As yet the FTA has not specified the impact this will have on developers – for example the liabilities and responsibilities the developer will have. KSA not an ‘Implementing State’ The UAE has made several unofficial announcements that the Kingdom of Saudi Arabia will not be treated as an Implementing State for the purposes of international trade. This would mean that goods and services exported to, and imported from, KSA will be treated in the same way as imports and exports from the rest of the world. As yet, a formal announcement has not been made but is expected. Provisional TRNs for VAT registration As of 31 December 2017, the FTA has released provisional TRNs for pending registration applications. These provisional TRN’s are to enable system configurations and for the raising of tax invoices. The provisional TRN is subject to approval and additional information may still be requested. The registration certificate would only be issued on final approval.