Generally, supplies of goods and services that take place within UAE for VAT purposes are subject to VAT with five percent as the standard rate or zero percent if considered zero-rated, unless they fall within the UAE scope of VAT section.

1. VAT Treatment for UAE
Transportation
HTTPS://VATREGISTRATIONUAE.COM/VAT-TREATMENT-UAE-
TRANSPORTATION/

2. Int.
Generally, supplies of goods and services that take place within UAE for VAT purposes are
subject to VAT with five percent as the standard rate or zero percent if considered zero-rated,
unless they fall within the UAE scope of VAT section.

3. What is the VAT treatment for local
transportation services in UAE?
The supplies of passenger transport services as well as goods, within UAE, either by air, land, or
water are considered rated. They are only exempt or applied with the standard rate of 5 percent
VAT if the suppliers are licensed or regulated by relevant bodies in UJAE.
For instance, a customer utilizes a third-party company for delivery or picking up food and
delivering it. A charge is made onto the customer for the food delivery and it will at zero rates
for the purpose of VAT.

4. What are the local transportation services
that don’t qualify for zero-rating?
The following services don’t qualify for zero-rating for the purpose of VAT in the UAE:
The provision of rental vehicles without a driver;
The provision of drivers without vehicles;
A transportation service that is provided for leisure or sightseeing. The service can include a bus tour, limousine, or any
similar that is provided with a professional driver in order to bring passengers on an agreed sightseeing trip, the
transportation by boat either unscheduled or scheduled onto an island that caters to guests and tourists primarily, and a
boat-restaurant;
Food-delivery services are provided by the same persons supplying food. This is due to the supply of goods, as well as
transport services both being considered as one composite supply wherein supply of a good is the transaction’s main
supply while transport service is ancillary to the main supply.
Transportation service that is ancillary to the main taxable supply at the standard rate for goods and services
Private transportation intended for the transport of a group of people while under contract. School buses, shuttle
buses, and buses are used in transporting workers or staff members from their place of residence to the workplace. For
shuttle buses, they are not qualified for zero-rating if they are used in transporting hotel guests from a hotel to any place
in UAE including malls, parks, airports, museums, and all other tourist places. In such a case, the standard rating will
apply.

5. What is the VAT treatment for public
transportation in UAE?
Public transportation refers to any motor vehicle which is used in transporting goods and at least ten people and
is made available to the general public without imposing restrictions for access to a certain group of people.
Supply of means of public transportation is zero-rated if it meets all of the conditions for being recognized as
public transportation, which is as follows:
The means of payment is through ticket issuance, card scanning, payment booth
Branding both within and outside UAE for the means of transportation indicates that vehicles are for public
transportation and without any exclusivity to a certain group of individuals
Branding explains the affiliation of means of transport that is provided by the government body of a specific
emirate
Means of transportation are qualified legally as being used as means of public transportation. This means they
have passed all of the necessary tests and checks set by local authorities of the concerned emirate prior to being
approved for utilization of UAE residents and tourists
Means of transport allows any third party in placing advertising materials within or outside the means of public
transportation themselves

6. What is the VAT treatment for UAE
international transport?
International transportation services for goods and passengers are taxable but are considered zero-rated. This is
applicable if the place of supplies for international transportation services were being supplied with the use of
qualified means of transport. For services with a place of supply that is outside UAE, it will be outside UAE VAT
scope. International transportation services are provided in a way that’s other than qualified means of
transportation that are taxable at a five percent standard rate.
Executive Regulations on UAE VAT issued by the local government had set a list of supplies that are either directly
or indirectly being associated with supplies of international transportation for goods and passengers. The supplies
include seat allocations, food and beverages, luggage check-in, priority boarding, seat upgrades, overweight or
additional luggage charges, and provision of entertainment and internet connection onboard in which a separate
VAT charge for a supply of transportation service has been made for any of the aforementioned supplies.
VAT that is paid on costs that are related to means of transport for providing international transportation services
can be recovered in full with the normal submissions of VAT reports or regular VAT return filing in UAE.
If you want further clarifications, speak with regulated tax agents in Dubai from VAT Registration UAE today!

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