Is your business in UAE registered for VAT? Make sure you’re fully aware of the different VAT rates which are applicable to the transactions of your business, particularly for sales of services. Regulations for Value Added Tax in UAE differ depending on what you are selling, who you are selling to, and where your business is located.

1. VAT & Supply of Services in UAE
https://vatregistrationuae.com/2021-vat-guide-supply-services/

2. Int.
 Is your business in UAE registered for VAT? Make sure
you’re fully aware of the different VAT rates which are
applicable to the transactions of your business,
particularly for sales of services.
 Regulations for Value Added Tax in UAE differ
depending on what you are selling, who you are selling
to, and where your business is located.

3. TheVATratefor
supplyofservices
intheUAE
 Treatment and applicability of VAT in UAE on supplies of
services differ depending on several factors.This includes
the location of the recipient, the location of a supplier, and
the place of supply.
Standard rate
 UAE executive regulations mandate VAT registered
suppliers to charge the standard rate of five percent VAT
for local supplies of products and services in UAE.
 Take note: businesses that are registered in UAE with the
Federal Tax Authority are required in paying the standard
rate for VAT on certain notified services.The reserve
charge basis is applicable for such including importation
of services from other VAT-implementing GCC member
countries and other countries outside the GCC states.
 Businesses are allowed in reclaiming VAT as input tax if no
extra taxation is reclaimable or payable for the transaction.

4. Zero-rated
 Certain types of services are included in the Federal
Tax Authority’s list of zero-rated services under UAE
VAT regulations. Zero-rated supplies of services as of
2021 are as follows:
 Exported telecommunications services
 All export of services outside VAT-implementing GCC
states
 International transportation services intended for
goods and passengers, including all other kinds of
transport-related services
 Healthcare services
 Education services

5. Exemptfrom
VAT
 The supply of a certain number of financial services is
considered exempt from VAT in UAE as they’re outside
the scope of VAT.This includes late payment fees,
interest income generated from a bank deposit, and
forex profit and loss realized.

6. Howdoesplaceof
residenceaffect
VATtreatmentfor
services?
 UAE businesses registered for VAT in UA E are only entitled in applying zero rates for VAT
on services that are supplied if the recipient’s establishment is outside of UAE. Public
Clarification issued by the FTA, VATP019, sets out the criteria that are to be considered to
determine the establishment should there be uncertainty with regards to whether a supply
for a service is a UAE or foreign establishment. They are as follows:
 Which establishment is a supply’s contractual recipient;
 Which establishment is benefiting from a supply;
 Which establishment is going to receive the notice, then make a payment for a supply;
 Which establishment has provided instructions to a supplier;
 If the services are in relation to business carried out by a recipient through the
establishment that’s in a different country
 A business outside the UAE that is a recipient of a supply of service won’t be considered
outside of the UAE when it creates a temporary presence within the country. This is for at
least one month during the time a service was performed, relating to a supply that was or
being made.
 VATP019 also provides some examples whereby a person may be considered as outside
UAE only when presented in UAE was short term or less than one month. The presence
should also not be connected effectively with a supply of a service.

7. Howcana
business
determinethe
applicabilityof
zero-ratingfor
services?
 With the recent release of the FTA Public Clarification, businesses are expected to
carefully consider whether or not criteria for zero-rating for VAT are satisfied. They are
also to ensure appropriate supporting evidence e.g. tax invoice is maintained. Businesses
that have a high volume of transactions overseas often have trouble in determining zero-
rating applicability for the supply of services. FTA has seen overseas transactions to be
effective in presenting a challenge. To help VAT-registered businesses, the following
questions are to be considered:
 If the overseas customer has a presence within the UAE, is the local presence connected
directly or in a way with a supply that is made?
 Is the UAE-registered business aware if an overseas customer has some sort of presence
within the UAE and is the presence longer than a month?
 Does the onboarding process of the UAE-registered business identify whether the
customer has a UAE presence?
 Does the contract standing contemplate the situation wherein VAT may be chargeable
either now or for the future?
 Is the UAE-registered business allowed in charging VAT alongside the value of a supply
of service and would the recipient of the supply be obliged in paying it?
 Businesses that supply services to customers that are overseas should review their
arrangements carefully. This is to make sure that the correct treatment for VAT is applied.
Businesses, to this end, are to explore the expanding procedures for customer
identification and amend contracts as they see fit.
 For assistance in complying with your VAT obligations in UAE, contact us here in VAT
Registration UAE today!

8. ContactUs
 WhatsApp (Messaging Only): +971 52 6922588
 WhatsApp & Phone: +971 55 4828368
 Landline: +971 4 2500251 (9AM - 7PM GMT+4 - Monday
to Friday)
 For Consultation: consultant@farahatco.com
 For Sales Enquiries: sales@vatregistrationuae.com