GCC Indirect Tax Weekly Digest
December 22, 2020
FTA publishes Cabinet Decision and VAT Public Clarification on temporary zero-rating of PPE for COVID-19
The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published a Cabinet Decision and Value Added Tax (VAT) Public Clarification on the temporary zero-rating of personal protective equipment (PPE) used for protection from COVID-19.
Cabinet Decision No. (9/12 O) of 2020 dated 1 September 2020 sets out that the supply or import of COVID-19 PPE specified by the Ministry of Health and Prevention (MOHAP) is zero-rated for six months from the date of the Decision (i.e. between 1 September 2020 and 28 February 2021).
It should be noted that this temporary zero-rating provision applies separately from existing zero-rating provisions for medications and medical equipment.
The Cabinet Decision states that if the date of import, supply, delivery, or placement at the recipient’s disposal takes place after this period, the PPE will be subject to VAT at the standard rate of 5% in the tax period in which the date of supply occurs.
VAT Public Clarification
VAT Public Clarification VATP023 sets out in further detail the provisions of the above Cabinet Decision and the MOHAP criteria for PPE to be included in scope.
The medical equipment subject to temporary zero-rating include:
- Medical face masks not previously zero-rated;
- Half filtered face masks;
- Non-medical “community” face masks made from textile;
- Single-use gloves; and
- Chemical disinfectants and antiseptics intended for use on the human body (excluding detergents, cosmetics, and personal care products).
Suppliers who have charged VAT at 5% on supplies eligible under the temporary zero-rating provision, and who are aware of the identity of the recipient, are required to issue and deliver a tax credit note to refund the VAT charged on the supply. The supplier may then reduce their output tax by this VAT amount.
If the supplier is not aware of the identity of the recipient, they must account for the VAT charged on their VAT return for the tax period in which the supply was made.
This digest is for information purposes only and should not be construed as advice. It does not necessarily cover every aspect of the topics with which it deals. You should not act upon the contents of this alert without receiving formal advice on your particular circumstances.