What is export of goods under UAE VAT ?
Under VAT, the treatment of export of goods, i.e. movement of goods from UAE to a person located outside UAE, depends upon whether the recipient is located in a GCC VAT implementing State or not. Let us understand each of these scenarios and their treatment under VAT in UAE.
Types of exports
When goods are exported from UAE to a non-GCC VAT implementing State, the export can be of 2 types :
- Direct exports
- Indirect exports
Direct exports are exports where the supplier is responsible for arranging the transportation of goods or appoints an agent to do so on his behalf.
Indirect exports are exports where the recipient is responsible for arranging the collection of goods from the supplier in UAE and who exports the goods himself, or has appointed an agent to do so on his behalf.
Direct export to a non-GCC VAT implementing State
A direct export to a non-GCC VAT implementing State will be a zero rated supply, provided the following conditions are met :
- The goods should be physically exported or put into a customs suspension regime within 90 days from the date of supply.
- Official and commercial evidence of the export or customs suspension should be retained by the exporter.
Indirect export to a non-GCC VAT implementing State
An indirect export to a non-GCC VAT implementing State will be a zero rated supply, provided the following conditions are met :
- The goods are physically exported or put into a customs suspension regime within 90 days from the date of supply under an arrangement agreed by the supplier and recipient on or before the date of supply.
- The recipient should obtain official and commercial evidence of the export or customs suspension and should provide the supplier with a copy of the same.
- The goods should not be used or altered in the time between supply and export or customs suspension, except to the extent necessary to prepare the goods for export or customs suspension.M
- The goods should not leave UAE in the possession of a passenger or crew member of an aircraft or ship.
- The recipient should not have a Place of Establishment or Fixed Establishment in UAE, should not reside in UAE and should not have a Tax Registration Number in UAE.
Hence, both direct and indirect exports from UAE to non GCC VAT implementing states qualify as zero rated supplies, provided the conditions laid down for each are met. In this respect, the conditions to be fulfilled for zero rating of direct and indirect exports are different and must be noted. Tax payers should ensure that these conditions are fulfilled in order for the export to qualify as a zero rated supply.