Under VAT, supply location is a very important concept. Supply location refers to the location where supply has occurred. The place of supply determines whether the tax applies to the supply. The rules for determining the supply location are different for the supply of goods and services. In addition, specific rules have been formulated to determine the supply location of certain goods and services. In this article, let us understand how to determine the place of supply of goods under VAT.

Supply locations of VAT-included goods in the UAE

The profit margin is the difference between the purchase price of the product and the sale price of the product.

The supply of goods can be divided into 3 categories to determine the supply location:

One kind. 

a.Domestic supplies

b. Export goods

C. Imported goods

Supply location in case of domestic supply

The supply location for domestic supply, that is, the goods supplied to the recipient in the UAE, will be the UAE. Therefore, UAE VAT will apply to the supply.

Let us understand this with an example.

Example: Mark LLC a registered distributor in Abu Dhabi, provided 100 Comptuer to Paul LLC, a registered distributor in Dubai, for a price of Dh500.

Here, since the recipient is located in the UAE, the delivery location is the UAE. According to UAE VAT, this is a taxable supply and subject to 5% VAT. Therefore, 5% UAE VAT should be levied on suppliers.

Supply location in case of export

Supply locations in the case of export can be divided into two categories:

One kind. Export outside the Gulf Cooperation Council

b. Export to member countries of the Gulf Cooperation Council

The following table is a summary table and ready-made estimator to determine the supply location in the case of export. We will discuss each situation in detail in the following articles.

 Is the recipient registered for VAT in a member country of the Gulf Cooperation Council? Is the supplier’s export value below the mandatory registration threshold in the destination country? Supply location

Exports other than GCC are not applicable Not applicable to UAE

Exports to Gulf Cooperation Council member states are not applicable destination member states


Is the destination member country

Supply location at import

When goods are imported into the UAE from outside the UAE, the place of supply will be the UAE. Therefore, UAE VAT will apply to the supply.

Example: Mark LLC a registered distributor in Abu Dhabi, purchased 500 iphone from the Indian company GC Pvt Ltd for a price of Dh1,500.

Here, Mark LLC imports goods from India to the UAE. The place of supply is the UAE, and UAE VAT applies to this supply. Mark LLC  must pay 5% value-added tax (reverse charge) for imported products. Therefore, the location of supply is an important factor in determining the supply tax. In the next article, we will learn how to determine where the service is provided.

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