1. Overview
1.1 Short brief
VAT was introduced with effect from 1 January 2018 in the UAE. As a general consumption tax on the supply of goods and services, it applies to supplies made within the territorial area of the UAE.
It is common in the UAE for persons to build and operate Mosques. These activities generally do not constitute the carrying on of a business and input tax may not be recovered under the normal VAT recovery rules.
The FTA may return VAT paid on any supply or import incurred by a person, or class of persons, listed in a Cabinet Decision.1 Cabinet Decision No. 82 of 2022 on the Refund of Input Tax Incurred on the Construction and Operation of Mosques was issued on 16 August 2022, and provides for a special refund mechanism for eligible persons constructing and/or operating a Mosque, provided certain conditions are met. For purposes of this Decision, the term “Mosque” is defined as the space allocated for prayers and also includes the Mosque’s yard, entrances, annexures, and facilities.
1.2 Purpose of this guide
This document contains guidance about the requirements of and process to recover input tax incurred on the construction and operation of Mosques.
1.3 Who should read this document?
This document should be read by persons constructing and/or operating/maintaining a Mosque in the UAE. It is intended to be read in conjunction with other relevant guidance published by the Federal Tax Authority (“FTA”).
1.4 Status of the document
This guide is issued in accordance with Article 73 of the Executive Regulation and provides general guidance concerning the application of the VAT legislation in respect of the special refund mechanism related to the construction and operation of Mosques in the United Arab Emirates.
This guide does not deal with all the legal details associated with VAT and is not intended for legal reference. This guide should be read in the contexts of the appropriate legislation and other guidance provided on the matter.
For details in respect of the general operation of VAT, refer to the Taxable Person Guide – Value Added Tax which is available on the FTA’s website. If you have additional questions on the recovery of input tax incurred on the construction and operation of Mosques, please contact us on info@tax.gov.ae.
1.5 Legislation
In this guide,
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- Federal Decree-Law No 8 of 2017 on Value Added Tax and, its amendments, is referred to as “Decree-Law”
- Cabinet Decision No. 52 of 2017 on the Executive Regulations of the Federal Decree-Law No. 8 of 2017 on Value Added Tax and its amendments is referred to as “Executive Regulation”
- Cabinet Decision No. 82 of 2022 on Refund of Input Tax Incurred on the Construction and Operation of Mosques is referred to as “Cabinet Decision No. 82”.
- Ministerial Decision No. 162 of 2022 on the Determination of Timelines and Frequency of Submission of Refund Requests for Input Tax Incurred on the Construction and Operation of Mosques is referred to as “Ministerial Decision No. 162”.