🥇VAT Application on Export of Services Outside GCC Countries
Introduction to VAT and Export of Services
The UAE government started VAT on 1st January 2018. This new rule helped the government collect money to build and improve the country. The standard VAT rate is 5% for most goods and services. The VAT law in the UAE says that services are anything supplied that is not goods.
When a UAE business offers a service to someone who lives or works outside the UAE, it is called export of services. This article explains how VAT applies when you export services to places outside the GCC. The GCC includes UAE, Saudi Arabia, Kuwait, Qatar, Bahrain, and Oman.
VAT Rules for Services Exported Outside GCC
When you export services outside the GCC countries, you must follow special VAT rules. Services exported to countries outside the GCC are zero-rated under UAE VAT law. This means:
- You don’t charge VAT on the exported service.
- You can claim input tax credit for costs related to providing those services.
- You must meet two main conditions to apply the zero-rate.
The Two Main Conditions
1. The recipient must not live or be based in any GCC country.
If your client lives, is registered, or has a business in any GCC country, you can’t treat the service as a zero-rated export.
- If your client is in UAE for less than a month and their visit is not related to your service, you can still use the zero rate.
- Example: If you provide marketing advice to a company’s head office in Europe, and they have no branch in the UAE, you can treat it as zero-rated.
2. The exported service must not relate to real estate or moveable personal property in the UAE.
- If the service is about real estate or property in UAE, you can’t use zero-rate.
- For example, helping to manage a building in Dubai would not be zero-rated.
- The rule also covers things like cars or machines physically in the UAE when you provide the service.
Why Is Zero-Rating on Exported Services Important?
Zero-rating is important because:
- It keeps UAE companies competitive in the world market.
- It makes UAE service providers more attractive to clients outside the GCC.
- It helps UAE businesses recover input VAT for costs linked to those services.
Important Points to Remember for Exporting Services
If you want to export services outside GCC countries and apply the zero rate, always remember:
- Make sure the client is not a resident of the UAE or any other GCC country.
- Prove your service doesn’t connect to any UAE property or moveable goods.
- Keep documents that prove you meet these conditions.
- File your VAT return with the correct zero-rating for exported services.
- Contact a tax expert if you are not sure about the rules.
Steps to Apply Zero-Rate on Export of Services
Here’s how UAE businesses should apply the zero-rate:
- Check if the client is outside the GCC and has no presence in UAE.
- Confirm your service isn’t about UAE real estate or goods.
- Get proof and keep records (like contracts and emails).
- File your VAT return with the zero-rate category.
- Ask experts if you’re not sure.
🥇How Mubarak Al Ketbi (MAK) Auditing Can Help with Export VAT
Mubarak Al Ketbi (MAK) Auditing is here to support businesses with VAT on exported services. Our team gives expert advice about VAT, export, tax filing, accounting, payroll, and audits. We help you stay safe, avoid mistakes, and recover your VAT. We always say, “Don’t let the grass grow under your feet”—let’s get your VAT right the first time!
For More Information, Contact Us:
- Visit our office at Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates.
- WhatsApp or call: +971 50 276 2132.
- Mubarak Al Ketbi (MAK) Auditing helps with VAT, exports, tax filing, and compliance.
- We help you keep your VAT records correct for zero-rated exports.
- Reach out for audits, accounting, payroll, or financial consulting.
