Is VAT charged on property management fees?

of the Board of Directors of the Federal Tax Authority, - the approval of the Board of Directors of the ،وعلى موافقة مجلس إدارة الهيئة االتحادية للضرائب - Federal Tax Authority, :قررت ما يلي has decided the following: 1. Where a Taxable Person provides or transfers في حال قام الخاضع للضريبة بتوفير أو نقل ملكية عقد.1 the ownership a life insurance/reinsurance فإن الخدمات،تأمين أو إعادة التأمين على الحياة contract, Services connected with that contract المرتبطة بذلك العقد ستعامل على أنها تُشكّل جزءا ً من shall be treated as forming part of the Exempt توريد التأمين على الحياة المُ عفى من ضريبة القيمة Supply of life insurance for Value Added Tax شريطة أن تكون تلك الخدمات ضرورية،المضافة (“VAT”) purposes, provided that such Services لتقديم ذلك التوريد ومتصلة اتصاالً مباشرا ً بتوفير عقد are necessary for making that supply, are وأن،التأمين أو إعادة التأمين على الحياة أو نقل ملكيته directly in connection with the provision or يُشكّل المقابل المستحق دفعه عن الخدمات جزءا ً ال transfer of ownership of the life يتجزأ من إجمالي المقابل المستحق دفعه بموجب عقد insurance/reinsurance contract, and that the وذلك وفقا ً ألحكام،التأمين أو إعادة التأمين على الحياة Consideration payable for those Services forms ) من الالئحة التنفيذية لقانون ضريبة القيمة42( المادة an integral part of the total Consideration .المضافة payable under the life insurance /reinsurance contract, in accordance with the provisions of Article 42 of the VAT Executive Regulation. 2. The exemption from VAT shall only apply to the يطبق اإلعفاء من ضريبة القيمة المضافة على الخدمات.2 Services referred to in Clause 1 above where the ) أعاله فقط في حال كانت1( المشار إليها في البند fees and charges relating to such Services are الرسوم والتكاليف المتعلقة بها مُ درجة ضمن قسط included within the insurance premium payable التأمين المستحق دفعه مقابل توفير عقد التأمين أو إعادة in respect of the provision of the life insurance/reinsurance contract, and no separate Consideration is charged for those Services. 2 وال يتم فرض أي مقابل منفصل،التأمين على الحياة .نظير تلك الخدمات

these documents on behalf of the Management Entity. The Management Entity is required to report the يتعّين على جهة اإلدارة التصريح عن المبالغ المُ ستلمة (بدل amounts received (in the form of service charges or الخدمات أو غير ذلك) باإلضافة إلى مبلغ ضريبة القيمة otherwise) and the related VAT amount in Box 1b .ب) من إقرارها الضريبي/1( المضافة في الخانة رقم of its VAT return. The Management Entity is entitled, under ) من المادة1( يحق لجهة اإلدارة بموجب الفقرة (أ) من البند ّ Article 54(1)(a) of the Decree-Law,7 to recover VAT استرداد ضريبة القيمة المضافة7) من المرسوم بقانون54( paid in respect of goods and services acquired to المدفوعة فيما يتعلق بالسلع والخدمات التي تمّ اقتناؤها من manage the Jointly Owned Real Property, provided شريطة استلم واالحتفاظ بفواتير،أجل إدارة العقار المُ شترك the it obtains and retains valid tax invoices .ضريبية صحيحة مو ّجهة إليها addressed to the Management Entity. According to Article 25(1)(j) of the Tax Procedures ) من قانون25( ) من المادة1( وفقا ً للفقرة (ي) من البند Law,8 the Management Entity, as a VAT registrant, بصفتها مسجّ لة، تخضع جهة اإلدارة،8اإلجراءات الضريبية is liable for any penalties which may arise as a ألية غرامات قد تنشأ نتيجة قيامها،لضريبة القيمة المضافة result of submitting incorrect tax returns, including بما في ذلك الحاالت،بتقديم إقرارات ضريبية غير صحيحة instances where VAT was not declared on service التي لم يتمّ فيها اإلقرار عن ضريبة القيمة المضافة على fees charged to owners. .رسوم الخدمات التي يتمّ استيفاؤها من المالكين According to Table 1 – Penalty 10 of the Appendix ) – المُ رفق10( ) – الغرامة رقم1( بموجب الجدول رقم to Cabinet Resolution 40,9 two penalties apply in مبلغ: يت ّم فرض غرامتان9،)40( بقرار مجلس الوزراء رقم this case; that is a fixed penalty (AED 3,000 for the )5,000() درهم عن المرة األولى و3,000( ثابت )بقيمة first time and AED 5,000 in the case of repetition) درهم في حال التكرار)؛ وعقوبة نسبية في حال حصول جهة and a percentage-based penalty if the اإلدارة على ميزة ضريبية نتيجة تقديم إقرار ضريبي غير Management Entity enjoyed a tax benefit as a وفي حال أدّ ى اإلقرار الضريبي غير الصحيح إلى.صحيح result of submitting an incorrect return. If the 10)9( فقد ت ُطبّق الغرامة رقم،عدم سداد الضريبة المستحقة incorrect tax return resulted in unpaid tax due, 10 Penalty 9 may also apply. 6/9 .ًفي تلك الحالة أيضا

Article 54 - Recoverable Input Tax 1. The Input Tax that is recoverable by a Taxable Person for any Tax Period is the total of Input Tax paid for Goods and Services which are used or intended to be used for making any of the following: a. Taxable Supplies. b. Supplies that are made outside the State which would have been Taxable Supplies had they been made in the State. c. Supplies specified in the Executive Regulation of this Decree-Law that are made outside the State, which would have been treated as exempt had they been made inside the State. 2. Where Goods are imported by a Taxable Person through another Implementing State and the intended final destination of those Goods was the State at the time of Import, then the Taxable Person shall be entitled to treat the Tax paid in respect of Import of Goods into the Implementing State as Recoverable Tax subject to the conditions specified the Executive Regulation of this Decree-Law. 3. Where Goods were acquired by a Taxable Person in another Implementing State and then moved into the State, the Taxable Person shall be entitled to treat the Tax paid in respect of the Goods in the Implementing State as Recoverable Tax subject to the conditions specified in the Executive Regulation of this Decree-Law. 4. A Taxable Person shall not be entitled to recover any Input Tax in respect of Tax paid in accordance with Clause 2 of Article 48 of this Decree-Law. 5. The Executive Regulation of this Decree-Law shall specify the instances where Input Tax is excepted from being recovered. Article 54 (bis)22 1. The Authority shall reject the deduction of the Recoverable Input Tax if it is established to the Authority that the supply subject to the deduction was part of a supply or a chain of supplies related to Tax Evasion, and the Taxable Person was aware of this relation upon deducting the Recoverable Input Tax. 2. The Authority may reject the deduction of the Recoverable Input Tax if it is 22 Article added as per Federal Decree-Law No. 16 of 2025. Federal Decree-Law No. 8 of 2017 and its amendments – As published by the Ministry of Finance 26 established to the Authority that the supply subject to the deduction was part of a supply or a chain of supplies related to Tax Evasion, and the Taxable Person should, based on circumstances of the supply, have been aware of this relation. 3. For the purposes of applying the provisions of Clause 2 of this Article, the Taxable Person shall be considered to have been required to be aware that the supply was part of a supply or a chain of supplies related to Tax Evasion, if he did not verify the validity and integrity of the supplies he receives before deduction of Input Tax, in accordance with the measures, procedures and conditions determined by the Authority in this regard.