INSIGHTS

Composite Supply — New Clarity for 2025 The updated VATP040 provides long-awaited clarity on how to treat mixed and composite supplies under UAE VAT Law, especially for sectors like retail, telecom, and real estate. Defines “principal” vs. “ancillary” supplies with practical case examples. Clarifies that bundled services follow the VAT

Clean Your Books Before the FTA Does Businesses should now align contracts, pricing, and invoicing with the VATP040 interpretations before the next FTA audit cycle. Reassess all packages and combo offers for correct VAT treatment. Update ERP systems to automatically map principal and ancillary items. Train accounting staff on crypto

Crypto Assets — VAT Finally Speaks For the first time, VATP040 gives concrete treatment for crypto asset transactions — a major update for fintech and payment platforms. Defines “virtual asset” and its use in taxable supplies. Clarifies that exchanging crypto for fiat may be exempt, but crypto-for-goods/services is taxable. Outlines

The UAE’s Federal Tax Authority has issued the December 2025 VAT Administrative Exceptions Guide, refining how and when businesses may apply for administrative flexibility under the VAT Law and its Executive Regulation. This update clarifies processes, introduces stricter evidence rules, and aligns exception applications with recent Tax Procedures reforms.  What Changed

When Two Supplies Become One VATP040 strengthens the “single supply” test, preventing businesses from artificially splitting or merging transactions to alter VAT impact. Introduces economic reality test — “Would the customer see this as one product?” Reaffirms that artificial separation of supplies can trigger penalties. Highlights bundled offers (e.g., hotel