UAE VAT UPDATES

A concise, up-to-date overview of the UAE VAT changes relevant for 2025, including the Executive Regulation amendments (effective 15 Nov 2024) and the FTA’s 2025 Public Clarification (VATP040).

Last Update: October 7, 2025

1. What changed (at a glance)

Cabinet Decision No. 100 of 2024 amended 34 articles with 35+ changes; effective 15 Nov 2024 (some provisions retroactive to 1 Jan 2018).
FTA Public Clarification VATP040 (14 Mar 2025) explains and interprets the amendments, adding practical examples and compliance guidance.
Key areas impacted: new definitions (e.g., business day, virtual assets), composite vs. multiple supplies, exports documentation and presence rules, input VAT recovery and fixed recovery rate option, fund management services exemption, and changes touching designated zones and intra-group matters.

2. New / clarified definitions

“Business day”, “standard rate”, and “virtual assets” now defined to guide timing and financial services treatment.
Virtual assets (e.g., crypto/NFT-like instruments) are brought squarely into the VAT framework; trading/ conversion may be treated as exempt financial services (conditions apply), affecting input VAT recovery.

3. Supplies & place of supply – composite vs. multiple supplies

Clearer tests to decide when a single composite supply exists vs. multiple supplies, reducing misclassification risk.
Review contracts/bundles (maintenance + parts, software + support, real estate packages) and align invoicing accordingly.

4. Exports & documentary requirements

Zero-rated exports now require stricter proof and presence documentation.

Stricter documentation to support zero-rating of exports of goods and services.
Service exports: reinforced presence/place-of-supply conditions, including a 30‑day presence test over a rolling 12-month period for recipients.
Ensure timely retention of customs exit evidence and service-export substantiation.

5. Input VAT recovery & apportionment (important)

Revised rules for input VAT recovery (including short tax years and tax groups).
Option to apply for an FTA‑approved fixed recovery rate instead of period‑by‑period pro‑rata calculations.
Tightened wording in some recovery clauses (e.g., “and” vs “or”) narrows entitlement—recheck policies.
Certain employee medical insurance may be recoverable when conditions are met.

6. Sector highlights

Fund management: management services for qualifying UAE‑licensed funds may be VAT‑exempt—reassess input VAT apportionment.
Real estate: broader clarification on disposals/ transfers treated as supply of goods; revisit residential vs commercial splits and adjustments.
Digital / e‑services: confirm customer location, presence rules, and treatment for virtual assets.

7. Designated zones & free zones (VAT)

Goods movements between designated zones can be outside scope where strict conditions are met; services generally remain taxable.
Map supply chains and documentation to preserve intended VAT treatment.

8. Compliance actions for 2025

Update VAT manuals, invoicing formats, and export documentation checklists.
Revisit input VAT policies and consider applying for the fixed recovery rate.
Refresh ERP/Tax codes for composite vs multiple supplies.
Train finance/ops on new tests and evidence requirements.
Schedule a VAT health check aligned to 2025 changes.

Key references (for your team)

FTA Public Clarification VATP040 (14 Mar 2025)
Cabinet Decision No. 100 of 2024 (effective 15 Nov 2024)
FTA VAT Guides & User Manuals (EmaraTax)

How We Can Help

With new VAT regulations and FTA clarifications taking effect, ensuring full compliance in 2025 is critical. At MP Elites Consulting, our VAT specialists help businesses review their supply chains, documentation, and input recovery policies — ensuring accurate VAT treatment and risk-free compliance under the updated rules.