UAE: Export of goods under VAT regime

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As per Article (2) of Federal Decree-Law No.(8) of 2017 on Value Added Tax (herein after VAT Decree), VAT would be applicable where a taxable supply is being made by a taxable
person. Wherein taxable supply means supply of goods or services for a consideration by a person conducting business in the State i.e. in the UAE.

Further, Article (27) of VAT Decree determines place of supply (PoS) of goods, other than water & electricity and the relevance of the same is wherein PoS is in UAE only in that case VAT would be applicable on the supply of goods otherwise not.

Different possible scenarios and implication under VAT Decree are discussed below:

1.Export of goods outside implementing state – for eg exports to India

  • PoS would be UAE
  • Zero rated supply
  • Eligible for recovery of input tax paid on purchase

2.Export of goods to unregistered recipient in implementing state and total value of supplies to that state is less than mandatory registration threshold for said state  – for eg supply to unregistered person in KSA and during the year total supply value is only SR 100,000/-

  • PoS would be UAE
  • Normal tax i.e. 5%
  • Eligible for input tax credit

3.Export of goods to unregistered recipient in implementing state and total value of supplies to that state is more than mandatory registration threshold for said state  – for eg supply to unregistered person in KSA and during the year total supply value is only SR 400,000/-

  • PoS would not be UAE
  • Not covered within the meaning of taxable supply
  • Eligible for recovery of input tax paid on purchase

4. Export of goods to a registered person in an implementing state – for eg exports to registered person in KSA

  • PoS would not be UAE
  • Not covered within the meaning of taxable supply
  • Eligible for recovery of input tax paid on purchase

5. Export of goods which requires installation or assembly outside the State

  • PoS would not be UAE
  • Not covered within the meaning of taxable supply
  • Eligible for recovery of input tax paid on purchase

Hope the same would be beneficial to you.

Disclaimer: Above views are generic in nature and should not be treated as opinion and relied upon. For any view taken or business conducted based on what is written in this blog and website – author, his team and his organisation shall not be held liable.

2 comments

  1. If a supply is not covered within the meaning of taxable supply, it will not be reported in tax return as per my understanding.
    How can we claim input tax on purchase of such supplied item as its supply has not been reported?

  2. I am not sure if FTA has released tax return format or not? …. to my understanding as the law is having provision of refund, it seems very likely that return format will have all the fields to capture data.

    In case if you have return format available with you, do email me at gaurav@jgarg.com and we can plan to discuss the same.

    Thanks

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