Amendments to the value-added tax “regulation” to support investment funds, donations, and virtual assets

The Ministry of Finance announced the approval of the Council of Ministers, by its Resolution No. (100) of 2024, to amend some provisions of the executive regulations of Federal Decree Law No. (8) of 2017 regarding value-added tax.

The Ministry confirmed, in a press statement yesterday, that these amendments reflect the Ministry’s ongoing efforts to improve the tax environment in the country, in order to achieve a balance between collecting tax revenues, enhancing the investment climate, and attracting more companies and investors to the country.

The Undersecretary of the Ministry of Finance, Younis Haji Al-Khouri, said: “We confirm the Ministry’s commitment to coordinating with the concerned parties from the public and private sectors, and working to update the regulations in a way that enhances the business climate in the country, and we look forward to these changes contributing to reducing any misunderstanding or incorrect application of the law, to “As well as facilitating procedures for those subject to tax in accordance with the best international standards to improve the quality of life of community members.”

Amendments were made to some articles in the executive regulations of the Value Added Tax Law, coinciding with developments in application, market need, and stakeholder views on tax policies, in addition to aligning the provisions of the executive regulations with the amendments contained in the law.

The Cabinet’s decision, issued to amend the executive regulations of Federal Decree Law No. (8) of 2017 regarding value-added tax, includes important amendments, part of which aims to reconcile some provisions of the regulation with the amendments set forth in Federal Decree Law No. (18) of 2022 amending the Decree-Law. Federal No. (8) of 2017 regarding value-added tax, while the other part of the amendments aims to activate the legislative policy of updating some provisions of the executive regulations.

The amendments include exempting investment fund management services from value-added tax, to stimulate growth in the investment management and investment funds sector in the country, and enhance its attractiveness as a leading investment center, and exempting specific services related to virtual assets from value-added tax, within the framework of supporting innovation and advanced financial technology as a leading center. For investment and virtual assets.

It also includes the exception of in-kind donations between charitable and government agencies whose value does not exceed five million dirhams during a period of 12 months from the provisions of the legal supply, so that the donors can recover the value-added tax resulting from those in-kind donations, in accordance with the provisions of the value-added tax law, which is a step aimed at To reduce the burdens on these entities and enhance their societal role. In addition, the amendments include enhancing tax compliance by granting the Federal Tax Authority the power to cancel tax registration in specific cases, in order to maintain the integrity of the tax system and enable efficient tax administration.