Supply Regulations Under VAT LAW in The UAE
This resource will walk you through the basics of supply under VAT.
What is supply as it relates to VAT?
Supply, in this context, refers to an exchange of goods or services between two persons/parties, with or without consideration, where at least one of them is VAT registered in The UAE.
Types of Supply
Under UAE VAT regulation, supply is classified asfollows:
Standard rated supplies –
A majority of supplies provided by a VAT-registered supplier within UAE are rated at 5%.
Zero-rated supplies -
Certain supplies such as healthcare, certain medicines, and exports are taxed at 0%.
VAT exempt supplies -
Supplies, such as financial services, certain educational services, local passenger transport, etc. are not taxable under VAT.
Reverse charge supplies -
Taxable supplies on which the recipient of goods or services is liable to account for tax instead of the Supplier.
Intra-GCC B2B supplies -
VAT is not applicable if a registered supplier in The UAE supplies goods or services to a VAT-registered recipient in another GCC state.
Intra-GCC B2C supplies –
The UAE VAT rates are applicable if a registered supplier in The UAE supplies goods or services to a non-registered recipient in another GCC state, and if the value of all the supplies made by the supplier is below the mandatory registration threshold of that particular GCC state.
Date of Supply
Under UAE VAT regulations, the date of supply is simply the date on which the payment of VAT will be due. Whichever among the following dates is the earliest is considered the date of supply:
- The date of tax invoicing
- The date of payment receipt
- The date of service completion
- The date of transfer of goods or services by the supplier
- The date on which the recipient accepts the goods or services
- The date of import
- The date on which assembly or installation was completed
Place of Supply
The place of supply is the place from where the supply of goods or services has taken place. The place of supply is an important factor, as it determines whether VAT is applicable to the supply or not.
Different VAT rates are applicable depending on the type, place and date of supply. It is, therefore, crucial for enterprises to understand the clauses of supply under VAT regulation in UAE.
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