taxable supplies to embassies
A company X makes taxable a supplies with vat to an Embassy in UAE. Embassy has asked the company not to charge vat as they are exempt from UAE vat. what should company X do on this case? what is the treatment of vat in case of diplomatic Embassies in UAE. please explain . Thanks
Replies
Dear Amit, as per Article 69 of the VAT Executive Regulations, diplomatic bodies are entitled to VAT refund on the expenses incurred in UAE. Company X should maintain its position as taxable and suggest the embassy to claim VAT refund. It can refer to the following FTA link https://www.tax.gov.ae/en/vat/refunds/what-to-expect
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Hi Amit, there is no specific exemption granted to supplies made to diplomatic embassies. Further, Article 69 of the Executive Regulations specifically allows diplomatic bodies to claim refund of VAT paid on expenses incurred within the UAE. Accordingly, Company X should be required to charge VAT on supplies made to such embassies and the embassy should be eligible to claim refund of the same.
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