The place of supply is where a transaction is considered to have occurred for VAT purposes. It is determined differently for goods and for services.
Place of supply will determine whether a supply is made in the UAE or outside the UAE for VAT purposes:
- If the supply is treated as made outside the UAE: no UAE VAT will be charged
- If the supply is treated as made in the UAE: VAT may be charged
Goods: Basic rule – the place of supply is the location of goods when the supply takes place.
Specific rules:
- Domestic supplies. No movement of goods outside of the UAE, for example Abu Dhabi supplier supplies the goods to the buyer in Dubai. Subject to the applicable VAT rate in the UAE – standard or zero rated.
- Exports to outside the GCC. For example UAE to UK. Place of supply is still UAE, but the supply is treated as zero rated.
- B2B Import into UAE. Place of supply is still the UAE. The recipient accounts for VAT under the reverse charge mechanism except where goods will be re-exported to another GCC State.
Where goods are transported into the UAE, but the intention is that these goods will be transferred by the importer into another GCC State, the place of supply is still the UAE but the importer must pay import VAT without using the reverse charge and cannot recover this VAT. However, the import VAT should be recoverable in the GCC State to which the goods are transferred.
Where import VAT was recovered in the UAE under the expectation that goods would not be transferred to another GCC State, but at a later date they are moved to another GCC State, the taxpayer will be required to repay the import VAT by treating the transfer as deemed simply subject to VAT.
- B2B Exports to GCC. Place of supply is the other GCC State, provided the customer is registered for VAT in that GCC State, and the goods are exported outside the UAE. That transfer is out of scope for the UAE VAT.
Services: Basic rule – the place of supply is where the supplier has the place of residence.
Specific rules:
- Place of supply of services supplied to recipients who are VAT registered in another GCC State is that other GCC State.
- Place of supply of services supplied by a person that is not resident in the UAE to a business that is resident in the UAE is the UAE.
- Place of supply of services relating to the installation of goods is where the service is performed.
- Place of supply of restaurant, hotel and catering services is where they are performed.
- Place of supply of real estate is the location of the real estate.
- Place of supply of transport services is where the transport begins.
- Place of supply of means of transport to a person not registered for VAT in the GCC is where the goods are put at the disposal of the recipient
- Place of supply of telecommunications and electronic services is where the services are actually used and enjoyed by the recipient.
- Place of supply of cultural, artistic, sporting, educational or similar services is where they are performed.