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What you need to know now
An overseas customer address alone does not establish zero-rating. Analyse the recipient, place of supply and applicable export conditions.
- Keep contract and performance evidence.
- Review UAE presence connected to the supply.
- Special place-of-supply rules can affect the result.
Start with the actual recipient and the service
A foreign customer address or foreign currency invoice does not by itself prove an export qualifies for zero-rating. Identify the service being supplied and the recipient that actually receives it. The contract is a starting point, but the commercial facts must support the description used for VAT.
For a group engagement, consider whether the work is supplied to the foreign contracting company or another entity under the arrangement. Record who instructs the work, who benefits and how the deliverables are used. These factual questions help an adviser apply the relevant place-of-supply and export provisions rather than making assumptions from the billing address.
Document location and connected UAE presence
The FTA clarification discusses recipient residence and presence in connection with exported services. Review these conditions against the current Executive Regulation and the particular transaction. Not every visit or overseas head office leads to the same result; the connection between the presence and the service can matter.
Maintain proportionate evidence, such as contract details, communications describing where the work is received and records of meetings relevant to the supply. If a material fact is uncertain, obtain clarification before finalising the tax treatment. The objective is an evidence-based conclusion, not collecting documents that merely repeat an unsupported zero-rate assumption.
Check whether a special rule applies first
Some services have specific place-of-supply provisions. A review should identify whether the service falls within one of those categories before relying on a general export analysis. Property-related work, events and electronically supplied services should not automatically be treated in the same way as a general advisory engagement.
Prepare a short classification note for unusual or high-value services. Explain the service category, relevant facts and why the chosen provision applies. Refer to the current legislation for the final conclusion. The original 2020 clarification is valuable background, but later amendments and the actual transaction date also need attention.
Connect the conclusion to billing and return preparation
Once the treatment is determined, make sure the invoice description and tax code reflect it. Staff should know when a new contract, service location or recipient requires a fresh review. Reusing the last invoice’s tax code is convenient, but it is not a substitute for checking changed facts.
At return preparation, reconcile zero-rated service income to the supporting transaction list. Separate genuine exports from exempt or outside-scope items rather than combining them into one total. Retain the review note and evidence with the relevant period so that the reason for zero-rating remains accessible after the engagement ends.
YOUR NEXT STEPS
A practical way forward
- 01
Step 1
Identify the contractual and actual recipient.
- 02
Step 2
Map where services are performed and used.
- 03
Step 3
Document the conditions supporting the selected VAT treatment.
CLEAR ANSWERS
Frequently asked questions
Is all foreign-customer income zero-rated?
No.
Does having a foreign bank account prove an export?
No. Assess the transaction itself.
Earlier article & background First published 3 August 2020 · retained for context
This earlier article is preserved for context. Its rates, deadlines, approvals and announcements may have been superseded. Use the current guidance and official references on this page for your next step.
VAT Update – Zero rating of export of services
VAT Update – Zero rating of export of services
VAT Update – Zero rating of export of services : Article 31(1)(a)(1) of Cabinet Decision No. 52 of 2017 on the Executive Regulation of the Federal Decree-Law No. 8 of 2017 on Value Added Tax and its amendments1 (the “Executive Regulation”) prescribes rules for the zero-rating of certain exports of services. This zero-rating rule is further supplemented by additional rules and conditions in Article 31(2)2 and (3) of the Executive Regulation.
This Public Clarification provides a high-level clarification of the FTA’s view of the zero-rating conditions in Article 31(1)(a) of the Executive Regulation relating to the residency and location of the recipient of services, taking into account the amendments made to Article 31(2) of the Executive Regulation in Cabinet Decision No. 46 of 2020.
Zero rating of export of services
In accordance with Article 31(1)(a)(1) of the Executive Regulation, a supply may only be zero-rated where the recipient of services does not have a place of residence in an Implementing State and is outside the UAE at the time the services are performed.
In determining whether these conditions are met,the supplier must consider all available facts in order to identify the residency status and the location of the recipient. Where the recipient has multiple establishments, the supplier must also determine which establishment of the recipient is most closely related to the supply.
For further reference : Zero rating of export of services
VERIFY THE DETAIL
Official sources & further reading
Source checks support this general guide. Your treatment depends on the facts, tax period and applicable legislation.
