The UAE Federal Tax Authority (FTA) has recently issued guidance addressing certain value added tax (VAT) matters. These are summarized as follows:
This guidance clarifies the treatment of compensation-type payments, including that where a payment is not consideration for a supply, no VAT is due. Some of the main points include:
- A contractual payment to compensate for losses (liquidated damages), such as pre-agreed payments for damages due to termination of a …