The previous article discussed determining the place of supply for goods. This article examines how to determine the place of supply when exporting goods from the UAE under VAT Registration.
Export of goods can be categorized into two groups when determining the place of supply:
Export to a non-GCC country that has implemented VAT
Export to a GCC country that has implemented VAT
Place of supply for exports to non-GCC countries with VAT
Non-GCC countries with VAT include GCC member states without VAT and countries outside the GCC. When goods are exported from the UAE to a non-GCC country with VAT, the place of supply is the UAE. Therefore, UAE VAT applies to the supply.
For example, Jehan & Co, a registered dealer in Abu Dhabi, supplies 10 monitors to a customer in India at AED 500 each. Since the recipient is outside the GCC, the place of supply is the UAE and UAE VAT applies. Export to a non-GCC country with VAT Registration is zero-rated under UAE VAT if certain conditions are met. Refer to the article on exporting goods to non-GCC countries with VAT dubai for the zero-rating conditions. So this is a zero rated supply.
Place of supply for exports to GCC countries with VAT
When exporting goods from the UAE to a GCC country with VAT, the place of supply depends on whether the recipient is registered for VAT Registration in that country. If the recipient isn’t registered, the supplier’s total export value to that country versus the mandatory registration threshold determines the place of supply. Exports to GCC countries with VAT fall into three scenarios:
Recipient is registered for VAT in the GCC member state
Recipient isn’t registered and the supplier’s exports don’t exceed the mandatory registration threshold
Recipient isn’t registered and the supplier’s exports exceed the mandatory registration threshold
Let’s examine the place of supply and VAT dubai liability for each scenario:
Is the beneficiary registered in a GCC member state for VAT? Is supplier’s export value above mandatory registration threshold? Place of supply? Who pays VAT? Example
Yes Not applicable Destination state Recipient Jehan & Co in Abu Dhabi exports monitors to a registered dealer in Saudi Arabia. Place of supply is Saudi Arabia. Recipient pays Saudi VAT.
No No UAE Supplier Jehan & Co exports monitors to an unregistered customer in Saudi Arabia. Jehan & Co’s Saudi exports don’t exceed the SAR 375,000 registration threshold. Place of supply is UAE. Jehan charges 5% UAE VAT Registration.
No Yes Destination state Supplier Jehan & Co exports to an unregistered Saudi customer. Jehan’s Saudi exports exceed the SAR 375,000 threshold. Jehan must register for Saudi VAT. Place of supply is Saudi Arabia. Jehan charges Saudi VAT.
In summary, the place of supply for exported goods depends on the export scenario. Taxpayers can use this guide to charge the correct tax invoice for goods exports as per UAE VAT dubai rules.