A person liable to pay VAT due on a transaction to the Federal Tax Authority (‘FTA’) would normally going to be the supplier, but it may also be the recipient of goods or services i.e. customer in certain cases, such customer may or may not be registered taxable person otherwise.
Article 4 of Federal Decree – Law No.(8) of 2017 on Value Added Tax (‘VAT’) deals with the responsibility to pay the tax to the FTA. In this blog, I have tried to explain the same.
A.Basic rule – Scenarios where supplier is liable to pay VAT
“A Taxable Person who makes any supply stipulated in Clause (1) of Article (2) of this Decree-Law.” [Article 4(1)]
“Every Taxable Supply and Deemed Supply made by the Taxable Person.” [Article 2(1)]
VAT is payable by every taxable person who makes taxable supply and/or deemed supply.
Taxable supply is a a supply of Goods or Services for a Consideration by a Person conducting Business in the State, and does not include Exempt Supply.
B. Special rule – Scenarios where recipient is liable to pay VAT
“2.The Importer of Concerned Goods.
3. The Registrant who acquires Goods as stated in Clause (3) of Article (48) of this Decree-Law.” [Article 4(2) & (3)]
Under following transactions recipient or customer would be liable to pay VAT to the FTA:
- Taxable person importing taxable goods or taxable services [Article 48(1) read with Art
- Importer of taxable goods, even if unregistered
- Taxable person purchasing from another taxable person in UAE any crude or refined oil, unprocessed or processed natural gas, or any hydrocarbons, and the Recipient of these Goods intends to either resell the purchased Goods as crude or refined oil, unprocessed or processed natural gas, or any hydrocarbons, or use these Goods to produce or distribute any form of energy.
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