EXPO 2020 Dubai and Impact of UAE VAT in Business Transaction

EXPO 2020 Dubai and Impact of UAE VAT

EXPO 2020 Dubai and Impact

Expo 2020 Dubai, the international business exhibition is going to be hosted in Dubai from 20th October to 10th April 2021.

In this connection, a lot of questions that might arise in the mind of prospective participants of the 2020 Expo. This article provides a comprehensive understanding of the impact of UAE VAT on the 2020 Expo.

Let us have a detailed discussion:

Who are the official participants of 2020 Expo?

Countries and intergovernmental organizations which have received and accepted the official invitation from the State to participate in the Expo 2020 Dubai engaged in a non-commercial capacity as an exhibitor. To date, around 190 nations from across the world have confirmed their participation.

What is Bureau Expo 2020 Dubai?

The Bureau Expo 2020 Dubai established by virtue of Decree No 30 of 2014 issued by the Ruler of Dubai shall be the governing body for the refund scheme.

Are transactions associated with Expo 2020 Dubai subject to UAE VAT? If yes, how will it affect the participants of Expo 2020 Dubai with the provisions of UAE VAT?

As the Expo 2020 will be held in Dubai, i.e. UAE mainland; all the provisions of the UAE VAT Law that are applicable to a mainland company will also be applicable to the official participants.

Therefore, every official participant:

  1. should register for VAT if the value of their taxable supplies or import (for commercial or non-commercial purposes) in the UAE exceeds or anticipated to exceed the mandatory threshold limit i.e. AED 375,000/-
  2. those who are registered for VAT should issue proper tax invoice against taxable supplies effected at the Expo 2020 Dubai
  3. VAT Return Filing on a periodic basis as prescribed should be submitted to the Federal Tax Authority (FTA)
  4. should also comply and subject to all other provisions of UAE VAT

Since 2020 Expo Dubai is primarily a business exhibition, the exhibition space or presentation is used, or intended to be used, for non-commercial or official purposes and not for making a taxable supply.

As per Article 54 of the Federal Decree-Law no 8 of 2017 on Value Added Tax a person may only recover VAT incurred in the UAE on Goods and Services, where the Goods and Services are used or intended to be used for making taxable supplies. Where incurred expenses do not relate to any taxable supplies made by the person, VAT is not recoverable.

However, the Federal Tax Authority the Governing Authority for UAE VAT, has announced some relaxations to the official participants of 2020 Expo Dubai in relation to VAT.

In this regard, the Federal Tax authority has published the following guidelines;

  1. Cabinet Decision No. (1) of 2019 on the Refund of Value Added Tax Paid on Goods and Services Connected with Expo 2020 Dubai dated 6 January 2019 (Decision) and;
  2. User Guide for Official Participants dated on 21 March 2019(user guide).

 Recoverability of Input VAT by official participants
The official participants of the 2020 Expo are eligible to recover the input tax paid on the following expenses;

Table I

Operating expenses Other expenses
Goods and Services relating to the actual operation of the office of the Official Participant, provided that the value of each Good or Service for which a claim is made is not less than AED 200.

 

Goods and Services in direct connection with the construction, installation, alteration, decoration and dismantlement of their exhibition space
Import of Goods for personal use of the Official Participant’s Section Commissioner-General, Section Staff and the Beneficiaries Goods and Services in direct connection with the operation of their exhibition space and any presentation within the Expo 2020 site
The above inputs can be recovered subject to the condition that the official participant must be in possession of a Certificate of Refund Entitlement issued by the Bureau

How to recover the input?

  • Where the Official Participant is not registered for UAE VAT, the refund applications can be made through the Bureau by submitting a special refund application to the Bureau.
  • Where the Official Participant is registered for VAT, it may reclaim VAT via its UAE VAT return.

 Relaxation from tax liability in respect of imports

 Article 48 of the Federal Decree-Law No 8 of 2017 on Value Added Tax provides that  if the Taxable Person imports taxable Goods or Services for the purposes of his Business, then he shall be treated as making a Taxable Supply to himself, and shall be responsible for all applicable Tax obligations and accounting for Due Tax in respect of these supplies.

However, in respect of imports made by official participants, they can be relieved from import VAT by using the special TRN (Tax Registration Number) allocated to the Bureau, in coordination with the Bureau, provided they hold a Certificate of Refund Entitlement. Where the special TRN is used the official participants should not include such goods in any refund application.

 Is it possible for an official participant who is using more than 20% of the presentation space for doing commercial and non-official purpose to get Certificate of Refund entitlement?

 In order to claim the refund of VATincurred on other expenses mentioned in Table I above, an official participant should possess Certificate of Refund Entitlement. However, if the official participant is using more than 20% of the presentation space for doing commercial and non-official purposes, then it is not eligible to apply for the Certificate of Refund Entitlement. Therefore, they cannot claim the refund of VAT incurred on the other expenses mentioned in Table I above.

How Emirates Chartered Accountants Group can support you?

Our well-learned and qualified indirect tax team will ensure VAT compliances while participating in the 2020 Expo are fulfilled.

We will support you with respect to the following:

  1. 2020 Expo Dubai trade license application and Emirates ID in case of applicant’s representative
  2. Registration for VAT with the Federal Tax Authority
  3. Support in filing the periodic VAT return and refund application
  4. Compliance support in filing the Certificate of refund entitlement
  5. Regular communication and follow up with the Bureau on your behalf
  6. Providing you with latest updates in UAE VAT that are relevant to 2020 Expo
  7. Deregistration for VAT after completion of 2020 Expo

Our Tax Services

For Tax Services in Dubai:
Mr. Pradeep Sai
sai@emiratesca.com
+971 – 556530001
For Tax Services in Abu Dhabi:
Mr. Navaneeth
nav@emiratesca.com
+971 – 558892750
For Tax Services in Northern Emirate (Sharjah, Ajman, RAK, Fujairah)
Mr. Praveen
praveen@emiratesca.com
+971 – 508873115
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