July 2019 / United Arab Emirates

On 27 June 2019, the UAE Cabinet published a decision listing activities eligible for up to 100% foreign ownership in the UAE. A total of 122 economic activities across 13 sectors were specified to be eligible for up to 100% foreign ownership including agriculture, manufacturing, renewable energy, e-commerce, transportation, arts, construction and entertainment. The decision also provides investors with an opportunity to acquire various shares in a number of economic activities including the production of solar panels, power transformers, green technology and hybrid power plants. The decision also provides that foreign ownership will be allowed in sectors such as:

• transport and storage: including e-commerce transport, supply chain, logistics and cold storage for pharmaceutical products;
• hospitality and food services;
• information and communications; and
• scientific and technical activities including laboratories for research and development in biotechnology.

Local governments will determine the ownership percentage of foreign investors in these activities. Further developments will be reported as they occur.

On 26 May 2019, the Federal Tax Authority (FTA) published a new decision (Decision No. 7 of 2019) on tax invoices and tax credit notes. The decision is effective retroactively from 1 January 2018 and supersedes Decision No.3 of 2018. The new decision states the following:

• in the case where tax invoices or tax credit notes are required to be issued for different supplies, the taxable person may issue a single document that displays the wording as "Tax Invoice/Tax Credit Note"; and
• the tax invoices or tax credit notes need not include the physical address of the supplier or the recipient if the respective mailing addresses are stated in the invoices and credit notes.

The Federal Tax Authority (FTA) recently released the VAT administrative exceptions user guide and the form for requesting an exception with the authority on specific matters. The VAT administrative exceptions can be requested by applicants registered with the FTA. The exceptions are grouped into 5 categories, namely tax invoices, tax credit notes, length of the tax period and stagger and extension of time for export of goods. The user guide provides detailed requirement criteria in respect of each exception category. The request may be submitted through the registrant's authorized signatory, appointed tax agent or appointed legal representative. The guideline specifically states that tax advisors who are not tax agents are not permitted to submit any VAT administrative exception request on behalf of a registrant. The main contents of the form are as follows:

• applicant details;
• reason for VAT administrative exception;
• details of authorized signatory; and
• declaration and date of submission.

The registrants are required to submit the exception request by email along with supporting documents to specialexceptions@tax.gov.ae FTA will respond to the request within 20 to 40 business days according to the exception category. The final response to the request will be sent by email within 5 business days of the decision being made. The VAT Administrative Exception request form is made available in VAT section of the FTA portal.

The Federal Tax Authority recently issued a new decision which reduces the daily limit of VAT refunds for tourists. Accordingly, the daily limit of VAT refunds for tourists is reduced from AED 10,000 to AED 7,000. The requirement to purchase goods from the same taxable person with a minimum value of AED 250 is still applicable. The taxable person must also be registered with the Merchant Tourist Refund Scheme. The new decision is applicable as of 1 June 2019.

The Federal Tax Authority (FTA) has recently issued a public clarification on importation of goods by agents on behalf of VAT registered persons. When a VAT registered importing agent imports goods on behalf of the VAT registered owner of the goods, the VAT amount is automatically pre-populated in Box No. 6 of the VAT return of the importing agent. The clarification highlights the adjustments to be made in the VAT return of both the importing agent and the owner of the goods to enable the recovery of the VAT on importation from the actual owner of the goods. The importing agent is required to make a negative adjustment in Box No. 7 of the VAT return to nullify the pre-populated value of the imported goods whereas the VAT registered owner of the goods needs to make a positive adjustment in Box No. 7 of the VAT return to include the value of goods imported on behalf by the importing agent. The owner is thus entitled to recover the import VAT as per normal input VAT recovery procedure in Box No.10 of the VAT return. The clarification requires the owner and the importing agent to enter into a written agreement to make the above adjustments and such agreement is to be retained as record evidence in addition to customs documentation. The clarification also states that if the owner and the importing agent do not wish to make such adjustments, the importing agent would need to issue a statement to the owner as prescribed in Article 50(7) of the VAT executive regulations. This statement needs to contain the following details:

• the name, address, and tax registration number of the agent;
• the date upon which the statement is issued;
• the date of import of the relevant goods;
• a description of the imported goods; and
• the amount of tax paid by the agent to the authority in respect of the imported goods.

Such statement from the importing agent is considered as a tax invoice for the owner of the goods to recover the input tax in Box No. 7 of the VAT return.