Businesses that are obliged to Value Added Tax (VAT) in the United Arab Emirates. It is a must precisely to identify the location of the supply of goods or services. The place of supply establishes whether the service is made inside or outside of the UAE. Identifying the place of supply can be hard for business owners. The location of supply varies depending on the goods and services. A VAT consultancy in Dubai can be very helpful in this case. To learn more about identifying the place of supply in the UAE under VAT, and how best VAT consultants in Dubai can be beneficial, continue reading this blog.
Identifying the Location of the Goods Supply
The place of supply of goods, as defined by the UAE VAT Law. If the supply was made in UAE. This does not cover imports or exports into or out of the UAE. If installed or assembled goods are exported from or imported into the United Arab Emirates, their place of supply will be:
- If the goods were assembled or installed in the United Arab Emirates.
- If the goods were assembled or installed outside of the United Arab Emirates.
Location of Goods Supply, Including Import and Export
A). Within the State Under the Following Conditions:
Exporting to a location outside of the Implementing States is part of the supply.
- In an Implementing State, the recipient of the goods is not registered for taxes in the state of destination, and the cumulative number of exports from the same supplier to this state does not above the state’s required registration level.
- The cumulative exports from the same supplier in an Implementing State to the State exceed the Mandatory Registration Threshold B, and the Recipient of Goods does not have a Tax Registration Number (TRN) in the State.
B). Outside the State Under the Subsequent Conditions
One of the Implementing States’ tax registrants is one of the recipients of the supply.
- The cumulative exports from the same supplier to this Implementing State exceed the state’s mandatory registration threshold, and the Recipient of the Goods is not a tax registrant in the Implementing State to which the export is made.
- The goods are imported from a provider who is registered for tax in any of the Implementing States; furthermore, the total amount of imports from the same supplier to the State does not surpass the Mandatory Registration Threshold. The recipient of the goods does not have a TRN.
Site of Supply in Certain Situations
- If the supplier does not have a place of residence in the UAE. The recipient of the services is a business entity with a place of residence in the UAE, then the UAE will be the location of supply.
- When it comes to services associated with commodities, the location of performance is the place of supply.
- The site of supply for the provision of transportation means to a lessee who is not subject to UAE taxation and does not possess a TRN in the Implementing State should be the location where the transportation means are made available to the lessee.
- If the recipient of services resides in another Implementing State and is registered as a taxpayer there, the place of supply will be the recipient’s place of residence.
- The location of supply for food and drink catering, hotel, and restaurant services will be where the services are provided.
- The location of supply for any kind of cultural, artistic, athletic, educational, or related services will be the location where the services were provided.
- The location of the real estate will serve as the point of supply for services related to real estate.
- The starting point of the transportation will serve as the place of supply for the transportation services.
Location of Water and Energy Supplies
When establishing the location of the energy and water supply, the following criteria are applicable:
If the goods are distributed to a Taxable Trader who resides in an Implementing State from a Taxable Person who resides in the UAE, then the supply of water and all forms of energy through a distribution system will be considered as performed in the Taxable Trader’s place of residence.
If water or any other type of energy is supplied through a distribution system and is given to a non-taxable person by a taxable person, it will be deemed to have happened at the location of real consumption.
Location of Telecommunication and Electronic Service Provider
To the degree that the supply is used and enjoyed in the United Arab Emirates, the place of supply for electronic and telecommunication services will be in the country. To the extent that the supply is used and enjoyed outside of the UAE, it will, nevertheless, be provided there. Regardless of the location of the contract or the mode of payment, the real use and enjoyment of all electronic and telecommunications services will occur where these services are utilized.
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FAQs
What is out of scope supply under UAE VAT?
Out-of-scope supplies aren’t required to be reported within regular VAT returns submitted for every tax period, unlike Standard-rated, zero-rated, and exempt supplies. Businesses that exclusively supply outside of their areas of responsibility are likewise excluded from UAE VAT registration.
What is exempted supply in UAE VAT?
Exempt supplies refer to ‘supply of goods or services for consideration while conducting business in the State, where no tax is due, and no Input Tax may be recovered except according to the provisions of the Decree-Law’.
What goods are outside the scope of VAT?
Charges levied by the government, such as MOT testing, and tolls on bridges that are owned by the state, are outside the scope of VAT. Wages paid to employees are also outside the scope of VAT.