Goods
The agreement’s definition of goods and services is adopted in
the UAE’s VAT Law and Regulations. Art. 1 of the Regulations defines
goods as “physical property that can be supplied”
The supply of goods is the transfer of ownership of the right to dispose of goods under
an agreement. The supply of goods also covers the conclusion of an agreement
for the transfer of goods in future. The definition of supplies of goods includes the
supply of water and all forms of energy such as electricity, gas (natural gas and
biogas), lighting, heating, cooling and air conditioning; and the supply of real
estate including sale and tenancy contracts. (Art. 2 of the Regulations with
reference to Art. 5(1) and (2) of the VAT Law).
Services.
Services are defined in Art. 1 of the Regulations as anything that can be supplied
other than goods. Supplies of services include, among others, the granting or
assignment of a right; transfer of shares in an asset, transfer of licensing
or intangible rights such as copyrights etc. (Art. 3 of the Regulations).
The place of supply rules are different for goods and services in the UAE, so the
distinction between goods and services is important. The place of supply of goods,
with exceptions, is the UAE where the supply takes place in the UAE; the place of
supply of services is where the supplier is resident. The place of residence is where
the person’s place of establishment is located or where he has a
fixed establishment. (Art. 32 of the VAT Law).
Place of establishment is defined as the place where a business is legally
established in a country or where significant management decisions and
management functions are taken and conducted, and the fixed establishment is any
fixed place of business, other than the place of establishment, in which the person
conducts his business regularly or permanently and where sufficient human and
technology resources exist to enable the person to supply or acquire goods or
services, including the person’s branches.
There are also important distinctions between goods and services in the pre-
registration input tax rules. Input VAT incurred on services prior to registration can
be recovered on services received in the 5 years before registration (Art. 56 of the
VAT Law). There is no time restriction on the recovery of pre-registration input tax
on goods.
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