VAT Application on Export of Services outside the GCC Territory

Tally Solutions | Updated on: December 13, 2021

Under VAT in UAE, services are defined as anything that can be supplied other than goods. When a service is provided to a person whose place of establishment or fixed establishment is outside the UAE, it becomes an export of service. The GCC (Gulf Cooperation Council) comprises of the States of UAE, Saudi Arabia, Bahrain, Kuwait, Oman and Qatar. In this article, let us understand the treatment of export of services from UAE to countries outside the GCC territory.

Export of services to outside the GCC Territory

The export of services to countries outside of the GCC territory will be zero rated under VAT in UAE. This means that no tax is applicable on export and the supplier can claim the input tax credit on the inputs used to provide the exported service.

However, certain conditions need to be fulfilled for the export of service from UAE to a country outside the GCC territory to qualify as a zero rated supply. These are:

1. The recipient of the service should not have a place of residence in a GCC State and should be outside UAE at the time the services are performed

This means that the recipient of the service should not have a place of establishment or a fixed establishment in any GCC State and should be outside UAE at the time when the service is performed. Even if the recipient has a short term presence of less than a month in UAE or their presence in UAE is not effectively connected with the supply, the recipient qualifies as being outside UAE at the time when the service is performed.

2. The services should not be directly connected with real estate or moveable personal property

The services exported from UAE to the outside of the GCC territory should not be supplied directly in connection with the following:

Real estate situated in UAE or any improvement to real estate in UAE.
Moveable personal property situated in UAE at the time the services are performed.

Hence, similar to the treatment of export of goods from UAE to outside the GCC territory, export of services to outside the GCC territory is zero rated . However, the above 2 conditions need to be satisfied for the export of service to qualify as a zero rated supply. Taxpayers should take note of these requirements to ensure that their export of services is zero rated under VAT in UAE.