Page 38 - Focus Group

The Insurance VAT guide while analyzing policy to provide those services or goods to
the above exception in respect of recovery those employees in order that they may perform
of input VAT on health insurance provided their role and it can be proven to be normal
to employees and their dependents, has business practice in the course of employing
clarified on a limitation on recovering input those people;
VAT. It is stated that although there may 3. where the provision of goods or services is a
be contractual relation between employer deemed supply under the provisions of the
Decree-Law
and employee to provide goods/services,
however what is equally important is that it Para 2.1.5 of the said guide was rephrased to state
must assist such that deemed supplies are
employees in generally subject to VAT at
order to perform the standard rate but can
their role. The also be subject to VAT at zero
fact that health rate. While deemed supplies
insurance for subject to VAT at standard
dependents is rate was a known concept,
not required however additional clarity
to enable was provided in the form of
emplo y ees deemed supplies can also be
subject to VAT at zero rate.
perform their On perusal of VAT Return User
role was clearly stated which suggests that Guide, the section pertaining to zero-rated supplies
such provision is to be considered narrowly. does not cover disclosure to be made for deemed
Hence, one may say that all the legs of the supplies which are zero rated. Accordingly, this
condition must be clearly fulfilled and be turns out to be additional clarification provided by
able to demonstrate, namely - contractual FTA.
obligation, performance of role and normal On the above backdrop, a careful reading of all
business practice. public clarifications and VAT guides is important

2. .Referring to Charities VAT Guide updated in apart from UAE VAT Decree Law and Regulations.
April 2020, additional clarity was provided by Taxpayers and Tax advisors should not restrict
FTA on the provision pertaining to deemed themselves to only refer the guide which they
supplies. believe is relevant for their specific industry/subject.
c. Where Goods or Services were purchased to be As Arthur C. Aufderheide once said, “All knowledge
used by employees for no charge to them and for is connected to all other knowledge. The fun is in
their personal benefit including the provision of making the connections.”
entertainment services, except in the following
cases:

1. where it is a legal obligation to provide those
Services or Goods to those employees under any
applicable labour law in the State or Designated
Zone.
2. it is a contractual obligation or documented

Disclaimer:
This article and/or write ups and/or any of its content shall not be treated as opinion and/or advice in any circumstances of the author(s) and/ or the Chapter. Reader’s to apply their best
judgement in the best interest of their requirement and should seek a formal opinion on any issue.

38 TAX JOURNAL 2020 The Institute of Chartered Accountants of India (Dubai) Chapter NPIO