The exports of goods and services is one of the mandatory categories subject to
zero-rating as per the dispositions of the Agreement.
The UAE has implemented the zero-rating of this category in Arts. 30 and 31 of the
Regulations, respectively, and subject to the conditions specified in these articles.
The first condition for zero-rating of exported goods is that the goods are physically
exported to a place outside the MEMBER STATES or put into a customs suspension
regime within 90 days of being supplied and that the supplier keeps or obtains
evidence that the goods have left the country. (Art. 30(1) of the Regulations).
The article makes a distinction between direct and indirect export, depending on
whether the transport is arranged by the supplier or by the recipient. This distinction
is relevant because the additional conditions to the two above that determine the
zero-rated treatment are different.
In addition to the conditions above, the following additional conditions apply to
indirect exports: (Art. 30(2) of the Regulations).
- The overseas customer obtains evidence of export and provides it to the
supplier
- The goods are not used or altered between the time they were supplied and
exported
- The goods are not a possession of a crew member of a ship or aircraft when
they leave the UAE.
The evidence to be provided consists of “official evidence” such as export
documents issued by Customs; and “commercial evidence” such as an invoice
with details of the recipient of the goods including where they are delivered and
transport documents evidencing the consignment of the goods to the final
destination. THE AUTHORITY can request alternative evidence. (Art. 30(4) of the
Under some exceptional circumstances beyond the control of the supplier and the
recipient, THE AUTHORITY has the power to extend the 90-day limit for export to
treat the supply as zero-rated. Where the supplier fails to export the goods within
90 days or the granted extended period, the supply will be treated according to its
VAT liability as if it was supplied in the UAE. (Art. 30(9) of the Regulations)
With regards to services, Art. 31 of the Regulations prescribes the conditions for
zero-rating as follows:
A.
- The services must be provided to a person who is non-resident in the GCC and
is physically outside the UAE when the services are performed. A person is also
treated as being outside the UAE if that person has a short-term presence in
the UAE of less than a month and his presence is not connected with the
supply. (Art. 31(2) of the Regulations).
- The services are not supplied directly in connection with real estate situated in
the UAE or any improvement to the real estate directly in connection with
moveable personal assets situated in the State at the time the services are
performed.
For example, the following two scenarios are not considered as “outside the State” for the purpose of the paragraph of Clause (1) of Article 31 of the Regulations:
- When a person stays in the UAE for a month or more, regardless of whether his
presence in the UAE is effectively connected with the supply or not.
- When a person stays in the UAE for less than a month but his presence in the UAE is
effectively connected with the supply.
B.
If the services are actually performed outside the Implementing States or are the
arranging of services that are actually performed outside the Implementing States.
C.
If the supply consists of the facilitation of outbound tour packages, for that part of
the service.
THE AUTHORITY has issued Public Clarification on “Zero-rating of export of services”
(VATP019) to explain the conditions of zero rating under Arts. 31(1) and 31 (2) of the
As outlined in Art. 31(3) of the Regulations, the zero-rating of the supply is
disallowed if, when a contract between the supplier and the overseas recipient
was entered into, it was foreseeable that the services would be effectively
received by another person, including but not limited to, an employee or a
director of the Non-Resident Recipient of Services in the UAE and they are not
used in making taxable supplies.
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