Place of Supply UAE VAT for Services: Rules, Exceptions & GCC Guidelines

 Place of Supply UAE VAT: Default Rule for Services

The default rule for determining the place of supply of services in VAT is that the place of supply will be the place of residence of the supplier.

For example: Ali Designers, whose registered place of business is in Abu Dhabi, supplies fashion designing services to Rooh Fashions, a registered apparel manufacturer in Dubai.

Here, the place of residence of the supplier is UAE and hence, the place of supply of service will be UAE and UAE VAT @ 5% will be applicable on the supply.

Note that where the supplier has multiple potential places of residence (e.g. the business is incorporated in one country and has branches in other countries), the place of residence will be the place that is most closely connected with the supply being made.

For example: Where a UAE branch of a UK company provides services under the contract signed by the UAE branch, the supply will be most closely connected with the UAE branch and the place of supply will be UAE.

Exceptions to Place of Supply Rules Under UAE VAT

In the case of supply of services, there are certain exceptions to the default rule for determining the place of supply. These are:

Scenario	Place of supply
Services supplied to a person in another GCC VAT implementing State who is a registrant	Recipient’s State
Services received by a business resident in UAE from a person who is resident outside the GCC VAT implementing States	UAE

a.Place of Supply for Services Provided to GCC VAT-Registered Businesses

When services are supplied to a person in another GCC VAT implementing State, who is a registrant, the place of supply will be the recipient's State.

For example: Ali Designers, whose registered place of business is in Abu Dhabi, supplies fashion designing services to Salala Apparel, a registered apparel manufacturer in Saudi Arabia.

Here, the recipient is a registrant in a GCC VAT implementing State. Hence, the place of supply will be Saudi Arabia.

b. Place of Supply for Imported Services Received by UAE Businesses

When services are received by a business resident in UAE from a person who is resident outside UAE, the place of supply will be UAE.

For example: Ali Designers, whose registered place of business is in Abu Dhabi, receives accounting services from Ridhi Accountants, resident in India.

Here, as the services are received from a person resident outside UAE, the place of supply of the service will be UAE. UAE VAT will be applicable, which Ali Designers has to pay, on reverse charge basis.

In addition to the above exceptions, there are certain specific rules to determine the place of supply of certain types of supplies.

A ready reckoner of these specific rules is given below. We will see detailed explanation of each of these place of supply rules in our upcoming articles.

Services supplied	Place of supply
Services related to goods, such as the installation of goods	Where the service is performed
Supply of a means of transport to a lessee who is not a taxable person in UAE and is not registered for VAT in any GCC VAT Implementing State	Where the means of transport is placed at the disposal of the customer
Supply of restaurant, hotel, and catering services	Where the service is performed
Supply of cultural, artistic, sporting, educational or similar services	Where the service is performed
Supply of services related to real estate	Where the real estate is located
Supply of transportation services	Where the transportation starts
Supply of telecommunications services or electronic services	Where it is used and enjoyed

Hence, the default rule for place of supply of services in VAT is that the place of supply will be the place of residence of the supplier. However, there are certain exceptions to this rule in the case of certain specific types of supplies.