The UAE Federal Tax Authority (FTA) has published Public Clarification VATP015 on the key considerations for a transaction to qualify as a transfer of business in the UAE. As a transfer of business is outside the scope of VAT, qualified transactions will have implications for both the seller and the buyer.

Although Public Clarifications merely reflect the view of the FTA (from the inception of VAT, e.g. 1 January 2018) and are not binding, they provide useful guidance on how the FTA interprets the legislation1.

Asset sale vs share sale

It is important to differentiate between a sale of shares and a sale of assets from a VAT perspective.

While a sale of shares is not subject to VAT, a sale of assets is, in principle, subject to VAT at the standard rate of 5%, unless:

  • the zero rate applies (for example, for medical equipment);
  • an exemption applies (for example, the sale of bare land);
  • the sale takes place between members of the same VAT group; or
  • the sale of assets qualifies as a transfer of business that is outside the scope of VAT.

Transfer of business

The FTA has now clarified its view on the three conditions required for a sale of assets to qualify as a transfer of business.

  1. The assets must constitute a business (as a whole or part).
  2. The transfer of assets must be made to a taxable person.
  3. The buyer must intend to continue the business.

To view the full article along with other tax-related developments across the GCC, please click here or the Download article button below.

1Under Federal Decree-Law No. (8) of 2017, the transfer of whole or an independent part of a Business from a Person to a Taxable Person for the purposes of continuing the Business that was transferred is considered outside the scope of VAT.

To speak to us in relation to any tax issues in the Middle East, please feel free to contact one of the lawyers below, or your usual Baker McKenzie contact.


Reggie Mezu is a Senior Special Counsel in Baker McKenzie Habib Al Mulla, based in Dubai. He has practiced tax for nearly 30 years in the Middle East, Africa and Europe, including in the UAE for 15 years. Reggie regularly advises clients on tax planning, corporate structuring, cross-border transactions, double tax treaties, reform and development of fiscal frameworks, general advice, and most recently, the new value added tax (VAT) regime in the Gulf region.


Bastiaan Moossdorff is a Senior VAT Adviser in Baker McKenzie Habib Al Mulla, based in Dubai. He specializes in indirect tax and has practiced indirect tax for more than 7 years in the Netherlands, the UK, the UAE and the KSA. Bastiaan has multi-jurisdictional and multi-disciplinary academic qualifications in law, accountancy and taxation.


Laya Aoun-Hani is a senior associate in the Corporate & Commercial practice of Baker McKenzie Habib Al Mulla, based in Dubai. She specialises in corporate and commercial transactions, including joint ventures, distribution agreements, company structuring and restructuring, mergers and acquisitions, employment and all related matters. Laya also has particular experience in all compliance and VAT matters.

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