In the wake of the novel corona virus, countries had to redefine their ways and operations to effectively deal with the pandemic. Many changes and modifications were made in several laws to especially facilitate the paramedical staff so they can play their crucial role in trying to save lives. Although the UAE levies VAT (FTA Issue Vat Clarification) on imports of all items, a public clarification was issued for zero-rating certain medical equipment so they can be instantly provided to hospitals for use.
This article describes this VAT clarification and its importance in combating the COVID-19.
Zero-rating Certain Medical Equipment
The FTA Issue Vat Clarification on medical equipment and FTA already has a Cabinet Decision no. 56 of 2017 in effect that pertains to the medications or medical equipment that are subject to zero taxes. However, in the wake of the COVID-19, the FTA made some modifications to the existing Cabinet Decision to make the supply of necessary medical equipment quick for the paramedical staff and first responders. This is the Cabinet Decision no. 9/12 O of 2020 and was issued on 1 September 2020. This Cabinet Decision temporarily applies zero-rating certain medical equipment and imports of certain medical supplies. The Ministry of Health has issued a supporting decision on 6 December 2020, titled the Ministerial Decision no. 380 of 2020. This decision highlights the equipment and supplies that are subject to this waiver of VAT. It is important to note that this Cabinet Decision is a temporary one and effective until 31st of December 2021.
Equipment Subject to Zero-rating
The equipment that falls under the category of zero-rating certain medical equipment is the protective equipment used by the doctors, nurses, and other paramedical staff in hospitals and clinics. Some of this equipment are the ones that were not originally a part of the Cabinet Decision no. 56 of 2017. This includes medical face masks. Other equipment that are subject to 0% VAT are:
- Partially filtered face masks
- Textile-made face masks for non-medical, community use
- Single-use gloves
- Antiseptics and disinfectants for use on the human body. It is to be noted that this does not include cosmetic-grade and personal use products or detergents.
Non-Applicability of Zero-Rating
Some conditions must be met to qualify an import or supply as zero-rated. The Ministerial Decision outlines that the exemption of VAT does not apply to medical equipment if it is delivered or imported outside the prescribed period of 1st of September 2020 to 31st of December 2021. In such a case, the supplier or importer is subject to payment of 5% VAT on this equipment.
Refund of VAT Paid
In case VAT has been paid on a medical supply or equipment, and the supply or import has occurred within the mentioned timeline, the supplier is eligible for a VAT refund. The supplier is required to issue and deliver a tax credit note to the recipient of the supply.
However, if a supplier cannot identify the recipient of the supply for issuing and delivering the tax credit note, the supplier must account for the collected VAT in the tax return relating to the tax period in which the supply was made.
Conclusion
The corona virus has had a huge impact on the well-being of people. Many lives were lost and millions suffered. The UAE is the world’s transit and thus faced unprecedented consequences. However, the immediate and efficient legislation in this respect has led to early and effective management of the virus, which in turn has aided in its containment.
BS Auditing of Accounts has a team of skilled professionals who keep all Emiratis up to date with all VAT laws and clarifications. We provide easy interpretation of laws for better understanding and abiding.
Feel free to contact us:
• Office # 0641, Tamani Arts Offices, Business Bay, P.O. Box 111390, Dubai, UAE
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*DISCLAIMER:
This document is only for clarification. It does not intend to issue any law on its own. Any mistake in the article, misplacement of Decision number, etc. is purely unintentional and a result of pure human error. BS Auditing is in no way liable to any legal proceeding in this regard.
