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  • TAX Alert : Temporary VAT Zero-rating for Certain Medical Supplies

TAX Alert : Temporary VAT Zero-rating for Certain Medical Supplies

28 December 2020

Temporary VAT zero-rating for certain medical supplies related to COVID control and prevention - Public Clarification by the FTA

On 1 September 2020, a Cabinet Decision was issued to allow temporary VAT zero-rating for the supply and importation of certain medical supplies. The Federal Tax Authority has now issued a public clarification setting out the practical application of this relief. The clarification is summarized below.

Scope of the relief

The relief applies to the following goods:

  • Medical face masks (of Approved Standards 14683 and UAE.S ASTM F2100)
  • Half filtered face masks (UAE.S EN 149)
  • Non-medical ‘community’ face masks made from textile (UAE.S 1956)
  • Single use gloves (UAE.S ISO 374-2)
  • Chemical disinfectants intended for use on the human body but excluding detergents, cosmetics and personal care products (UAE.S EN 1276, EN 1650, and EN 14476:2013+A2

The zero-rate will apply if:

  • The date of supply of the goods, and the date the goods are delivered to the recipient or placed at the disposal of the recipient, falls in the period 1 September 2020 to 28 February 2021
  • The goods are imported during the period 1 September 2020 to 28 February 2021

Any supplies or importations falling outside these dates will be subject to VAT at 5%.

Retrospective effect

The Cabinet Decision is effective from 1 September 2020. As a result, any supplier that has charged VAT at a rate of 5% on any goods that were eligible for zero-rating under the temporary relief, can now issue a credit note to refund the VAT overcharged, provided the supplier is aware of the identity of the recipient.  No credit note, or adjustment of the VAT charged, is possible where the identity of the customer is not known – for example, this may be the case with retail sales.

This relief will be helpful in the fight against COVID-19. However, it is important that the rules are applied correctly and businesses that supply this type of goods should study the rules carefully.  The BDO tax team will be pleased to help if you require further information or assistance with this, or with any other matter related to VAT. 

The publication may be accessed here: Temporary VAT zero-rating for certain medical supplies