VAT Liability – Export of Services
A supply of services shall be zero rated if all of the following conditions are met:
- The services are supplied to a recipient who does not have a place of residence in a GCC State and who is outside of UAE at the time the services are performed, and
- The services are not supplied directly in connection with: real estate situated in the UAE or any improvement to the real estate or moveable personal property situated in the UAE at the time the services are performed.
Services may also be zero rated where:
- The services are actually performed outside the GCC or are the arranging of services that are actually performed outside the GCC;
- The supply consists of the facilitation of outbound tour packages
For the purpose of this rule, “outside the UAE” includes a short term presence in the UAE (less than 1 month), or a presence that is not effectively connected with the supply.
VAT Liability – Export of Goods
The export of goods outside the GCC is zero-rated when the following conditions are met:
- Direct Export – the supplier is responsible for arranging transport:
- the goods are physically exported outside GCC or put into a customs suspension regime within three months of the date of supply; and
- official or commercial evidence of transport is retained by the exporter
- Indirect Export – the overseas customer arranges for the collection of goods from the supplier in UAE, who exports the goods himself or via an agent:
- the goods are physically transported outside GCC or put into a customs suspension regime by the overseas customer within three months of the date of the supply; and
- official or commercial evidence of transport is provided by the overseas customer to the supplier; and
- the goods are not used or altered in the time between supply and export; and
- the goods do not leave the State in the possession of a passenger or crew member of an aircraft or a ship;
The following supplies relating to the international transport of goods are subject to VAT at 0%:
- The services, including transport-related services, of transporting goods from a place in the UAE to a place outside the UAE or vice-versa
- This includes transport through the UAE where either the origin or the final destination of the goods is outside the UAE
- Services supplied during the supply of transport services e.g. handling the goods
- Insuring, arranging the insurance or arranging the transport of goods
Exporters generally make wholly zero rated supplies (outside the GCC) or outside the scope supplies (to VAT registered businesses in the GCC). Their input tax incurred on costs is likely to exceed output tax declared on sales. As a result, exporters will normally be in a repayment position i.e. they may be due a net refund of VAT from the FTA. Exporters can make a claim for repayment of the input tax via the VAT return and the FTA will approve refund claims or notify the taxable person of a rejection of the refund claim within 20 business days. The FTA will also notify the taxable person if the consideration of the claim will take longer than 20 business days.