A Guide to the VAT Treatment of Export of Goods from the UAE
As per the regulations of VAT in the UAE, the export of goods is generally treated as zero-rated. Taxable persons may think that the determination of VAT treatment of export of goods is a straightforward scenario. However, most business owners fail to realise that the export of goods will be zero-rated only when it meets certain conditions and requirements as per the UAE VAT Law and its Executive Regulations.
For better tax compliance, it is essential for businesses to understand when the export of goods can be considered zero-rated. VAT consultants in Dubai can help you understand more about the VAT treatment for the export of goods. Keep reading to get deeper insights on the VAT treatment of export of goods from the UAE:
When Can You Treat the Export of Goods as Zero-Rated?
As per Article 45 of the Federal Decree-Law No. 8 of 2017 on Value Added Tax, any direct or indirect export of the goods from the UAE or other GCC implementing states to outside the states will be treated as zero-rated, if it meets the conditions specified in the executive regulation of the UAE VAT Law. Consult with VAT consultants in Dubai for more insights on this.
What are Direct and Indirect Exports?
Understanding the definitions of direct and indirect exports is essential to accurately decipher the conditions for determining the VAT treatment of export of goods in the UAE. Direct exports are the export of goods to a location outside of the Implementing States, where the supplier is responsible for arranging transport or appointing an agent to do so on his behalf.
Indirect exports are the export of goods to a location outside of the Implementing States, where the overseas customer is responsible for arranging the collection of the Goods from the supplier in the UAE and who exports the Goods himself, or has appointed an agent to do so on his behalf. Tax agents in Dubai can help you better understand the differences between the two types of exports.
What Are the Conditions for Zero-Rating a Direct Export?
The Direct Export shall be subject to zero rates if the following conditions are met:
- The goods must be moved to a location outside the Implementing States or put into a customs suspension regime as per the GCC Common Customs Law within 90 days of the date of the supply.
- The exporter must retain the official and commercial evidence of Export or customs suspension
What Are the Conditions for Zero-Rating an Indirect Export?
An Indirect Export shall be subject to zero rates if the following conditions are met:
- The goods must be physically exported to a destination outside the Implementing States or placed under a customs suspension regime as per the GCC Common Customs Law, within 90 days of the date of the supply under an arrangement agreed by the supplier and the Overseas Customer at or before the date of supply
- The Overseas Customer is required to get official and commercial evidence of Export or customs suspension in line with GCC Common Customs Law and provide the supplier with a copy of the same
- The goods should not be used or modified during the period between supply and export or custom suspension except to the extent necessary to prepare the Goods for export or customs suspension.
- The goods should not leave the UAE in the possession of a passenger or crew member of an aircraft or ship.
Movement of Goods between Designated Zones
There are more than 45 active free zones in the UAE and some of them are categorized as Designated Zones for the purpose of VAT. Designated zones are treated as being outside the UAE for the purpose of VAT for certain supplies of goods. However, the movement of goods into a Designated Zone from a place in the UAE or a supply of goods to a Designated Zone will not be treated as an export of those goods. Tax agents in Dubai can advise you on the Bat treatment of supplies made in the Designated Zones.
Consult with the Best VAT Consultants in Dubai, UAE
Taxable persons that deal with the export of goods need to understand the conditions for zero-rating export of goods from the UAE. However, business owners unaware of these rules may wrongly determine the VAT rate for the export of goods. VAT consultants in Dubai such as Jitendra Chartered Accountants (JCA) can help you accurately determine the tax treatment of your exports.
JCA is one of the leading VAT consultants in Dubai with more than 20 years of experience. JCA has a team of highly qualified and experienced tax experts who can help you assess your current tax position, advise on the appropriate tax treatment, prepare clarification requests, or represent you in front of the FTA as registered tax agents in the UAE. You can call us to discuss your specific tax requirements with JCA and determine the way forward.