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UAE Issues VAT Guidance On Exported Services

by Jason Gorringe, Tax-News.com, London

24 July 2020


The United Arab Emirates' Federal Tax Authority has released VAT Public Clarification no. 019, clarifying the rules surrounding the zero-rating of exported services.

The guidance is intended to explain the FTA's interpretation of domestic VAT law relating to the residency and location of the recipient of services and specifically the conditions that must be satisfied in order for a supply of services cross-border to be zero-rated.

Under Article 31(1)(a)(1) of the Executive Regulation on VAT, a supply may only be zero-rated where the recipient of services does not have a place of residence in an Implementing State (one of the Gulf Cooperation Council states that has introduced VAT in line with the regime in the UAE) and is outside the UAE at the time the services are performed.

The guidance highlights that the UAE does not recognize any other state as an "Implementing State" for the purposes of VAT. Therefore, the zero rate will apply where the recipient does not have a place of residence in the UAE.

According to the guidance, in determining whether these conditions are met, the supplier must consider all available facts in order to identify the residency status and the location of the recipient. Where the recipient has multiple establishments, the supplier must also determine which establishment of the recipient is most closely related to the supply.

The 11-page Public Clarification, released in English and Arabic, provides the FTA's views regarding the interpretation of these two conditions and includes examples.

TAGS: United Arab Emirates | tax | value added tax (VAT) | mining | law | Gulf Cooperation Council | services | Tax

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