output tax<\/a>, whether they can recover input tax on goods and services they no longer hold, and what triggers a registration or deregistration obligation with the Federal Tax Authority (FTA). If they get any of these wrong, they face consequences such as under-declared VAT, unrecoverable input tax, or heavy penalties. <\/p>\n\n\n\nThis blog explains the important updates introduced by Cabinet Decision No. 100 of 2024 to the VAT Executive Regulations. It covers changes to deemed supply rules, registration processes, and valuation methods in a simple and easy-to-understand way. <\/p>\n\n\n\n
How is the value of supply calculated under UAE VAT? <\/h2>\n\n\n\n
The value of a supply is the amount on which VAT is calculated. It is not always simply the invoice amount. The rules vary depending on the nature of the consideration and the relationship between the parties. <\/p>\n\n\n\n
Monetary consideration <\/strong><\/h3>\n\n\n\nWhere payment is in cash or its equivalent, the value of the supply is the amount received, excluding VAT itself. <\/p>\n\n\n\n
Non-monetary consideration <\/strong><\/h3>\n\n\n\nWhere part or all of the consideration is non-monetary, for example, in a barter arrangement, the value of supply is the monetary amount received plus the market value of the non-monetary element, excluding VAT. FTA Public Clarification VATP042, issued April 2025, specifically confirmed that barter transactions carry the same VAT treatment as supplies made for monetary consideration. <\/p>\n\n\n\n
Discounts <\/strong><\/h3>\n\n\n\nWhere a discount is agreed and applied before the date of supply, the value of supply is the net amount after discount. The discount must be genuine and reflected in the transaction at the time of supply, not applied retrospectively. <\/p>\n\n\n\n
Related party transactions <\/strong><\/h3>\n\n\n\nWhen a supply occurs between related parties, such as a parent company and its subsidiary outside a VAT group, the supply’s value is determined by the open market value at the time of the transaction. This prevents artificial undervaluation between connected parties. <\/p>\n\n\n\n
Imported goods <\/strong><\/h3>\n\n\n\nFor imported goods, the value of supply includes the cost of the goods, insurance, freight, customs duty, and excise duty. All these elements form part of the taxable base on which 5% VAT is applied. <\/p>\n\n\n\n
Deemed supplies <\/strong><\/h3>\n\n\n\nFor deemed supplies, the value is either the supply’s replacement cost or the actual cost of acquiring it. Cabinet Decision No. 100 of 2024 clarified how these values are determined for deemed supply purposes, particularly in relation to gifts and assets held at the time of deregistration. <\/p>\n\n\n\n\n \n
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