VAT Impact on Marine Sector Transactions UAE Guide

Understanding VAT on Marine Industry Transactions in UAE

The UAE’s coastal position has made the marine industry a major part of its business world. Companies in the UAE often deal with shipping, vessel management, and marine services. Each transaction in the marine sector may face different VAT treatments, depending on what’s involved. You need to understand how the law applies to goods, services, and transport in this sector.

Examples of Marine Sector Transactions

Marine sector transactions may include:

Transport of goods and passengers
Supplying goods or services to commercial vessels
Supplying goods or services to recreational vessels
Management or documentation (packing, loading, storage, unloading)
Repair and maintenance of vessels
Supplying vessels for transport, recreation, or rescue
Any other service for vessel operation

Each type of transaction has a different VAT impact.

When Are Marine Transactions Zero-Rated for VAT?

Certain marine services and transport qualify for zero-rated VAT:

International transport of goods or passengers starting or ending in the UAE
Local transport provided as part of international trips
Services related directly to international transport

Example:
Company “A” owns a vessel transporting goods from the UAE to the UK. The revenue from this transport counts as zero-rated in Company “A”’s VAT return.

Which Marine Transactions Are Standard Rated?

Some transactions in the marine sector must be taxed at the standard rate (5% in UAE):

Local transport of goods in a vessel
Local support services linked to that transport
Local passenger transport for recreation or sightseeing

Example:
Company “B” rents out boats to tourists in Dubai Marina. The rental income from these boats, used for entertainment, is taxed at the standard rate.

Are Any Marine Transactions VAT Exempt?

A few passenger transport services may be exempt:

Transport of passengers in a “qualifying vessel” within the UAE (like ferries or abras)
If the vessel is used for entertainment or sightseeing, VAT applies at the standard rate

It’s important to check each trip’s purpose to decide the right VAT treatment.

What’s Outside the Scope of UAE VAT in Marine?

Some marine transactions don’t fall under UAE VAT law:

Transport of goods or passengers where the trip starts and ends outside the UAE
Services tied only to those foreign trips

No VAT is due for these activities in the UAE.

VAT on Supplying Goods and Services to Vessels

VAT on supplies to vessels depends on how the vessel operates:

If you supply to a vessel on an international route, that supply is zero-rated
If you supply to a vessel used locally for recreation, VAT applies at the standard rate

Example:
Company “C” supplies food to a ship going from UAE to UK (zero-rated). If “C” sells food to a local sightseeing boat, VAT applies at 5%.

How Mubarak Al Ketbi (MAK) Auditing Helps in Marine Sector VAT

Mubarak Al Ketbi (MAK) Auditing guides companies through all marine sector VAT needs. The expert team can:

Advise on tax registration and compliance
Set up proper VAT bookkeeping
Help with VAT reporting for marine transactions
Review contracts and invoices for correct VAT treatment
Give solutions for complicated marine tax situations

The firm’s knowledge spans shipping, logistics, repairs, and support services in the UAE marine sector.

How Mubarak Al Ketbi (MAK) Auditing Can Help You

If you want to steer your business clear of tax trouble, you should work with Mubarak Al Ketbi (MAK) Auditing for marine VAT compliance. The team can help you with: