VAT has been introduced with effect from 1 January 2018 in the UAE. As a general consumption tax on the supply of goods and services, its effects must be understood by charities in the UAE in two contexts:
- its application to the activities of all charities; and
- the approach that should be taken by charities in the UAE when determining the amount of VAT on costs (i.e. input tax) which they are eligible to reclaim, specifically where they are engaged in both business and non-business activities (for example, such as where they provide goods or services without charging for these).
In particular, certain charities in the UAE will be treated as designated charities. Where designated in that manner, designated charities will be entitled to recovery of VAT under a special regime.
This document contains guidance about the characteristics of a charity which must be present in order for it to qualify as a designated charity for VAT purposes.
In addition, this document provides guidance for charities seeking to understand which of the se...