Here are some of the special VAT rules that we need to be aware of:-

Cut off period

When VAT is introduced companies should also take special care to decide whether a product or supply sold fall under which period, post or prior VAT. Special rules will be applied here to decide whether these supplies will be taxable.For example, when goods are delivered after VAT introduction and the payment was received before the introduction, VAT will still have to be charged. Another example is when the contract is completed before the introduction of VAT but the supply is wholly or partly made after the introduction will have to still charge VAT.

Bad debt relief

Many companies are concerned about that fact that they might have to pay VAT on sales that might later become a bad debt. However, the Ministry of Finance has released in bad debt relief will be provided. The companies can reduce their output liability by the amount of VAT was written off. There will, however, be certain conditions and limitations in the rules, which will be more clear when the MOF releases more information.

Margin Scheme

When second-hand goods are purchased from a non VAT registered user by a VAT registered user, purely for the purpose of resale, the VAT registered user can include the VAT on the profit margin. That is VAT can be accounted to the difference between the purchase price and selling price. More information on this rule is yet to be received.

VAT Grouping

There are many companies in UAE that have sister concerns and are worried on how to account for VAT separately. Businesses that satisfy certain conditions under the legislation can file for VAT returns as a group. This might help simplify the accounting for VAT with many related or associate parties.

Partial Exemption

It is understood that input tax that relates to exempt supplies cannot recover VAT. However, there might be expenses born by some businesses that might be relating to both VAT taxable supplies and VAT non-taxable supplies. In such cases, the businesses will have to apportion input tax between the two supplies. Later the business can recover the input tax allocated to the VAT taxable supplies.


We, at msi Alnoman and Ravi, are qualified to assist you through every step for your business. Our thorough knowledge in this field is ideal to guide your business, minimizing risk, to benefit your business.

Stay posted to know more about other VAT rules.To find more information on VAT you can visit the following:–

  1. Ministry of Finance
  2. Introduction to VAT
  3. Understanding VAT
  4. What do we need to when VAT comes into effect?