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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 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.
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 input tax credit on the inputs used to provide the exported service.
However, certain conditions need to be fulfilled for an export of service from UAE to a country outside the GCC territory to qualify as a zero rated supply. These are:
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.
The services exported from UAE to outside of the GCC territory should not be supplied directly in connection with the following:
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 an export of service to qualify as a zero rated supply. Tax payers should take note of these requirements to ensure that their export of services are zero rated under VAT in UAE.