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Zero Rated Supply

Zero-rated supplies in UAE VAT refers to the taxable supply on which VAT is charged at zero rate. Generally, all exports of goods and services in UAE will be considered as zero-rated supplies. Apart from exports, education services, healthcare services, a residential building for human occupation etc. are also considered under zero-rated in UAE.

The supplier of goods and services who produces the zero-rated and in UAE VAT supplies must register their business for VAT with the FTA. The other general terms and conditions laid down by FTA for VAT apply to them.

They must file their returns on the prescribed dates, and they must undergo the process of VAT registration in UAE or other emirates. 

As per the Federal Decree-Law (No 8) of 2017 Article no. 45, the supplies that have been declared zero-rated for VAT in the UAE are as follows:

• A direct or indirect Export.
• International transport of passengers and Goods which starts or ends in the State or passes through its territory, including Transport-related Services.
• Air passenger transport in the State if it is considered an “international carriage” pursuant to Article (1) of the Warsaw Convention for the Unification of Certain Rules Relating to International Carriage by Air 1929.
• Supply of air, sea, and land means of transport for the transportation of passengers and Goods as specified in the Executive Regulation of this Decree-Law.
• Supply of Goods and Services related to the supply of the means of transport mentioned in Clause (4) of this Article and which are designed for the operation, repair, maintenance, or conversion of these means of transport.
• Supply of aircrafts or vessels designated for rescue and assistance by air or sea.
• Supply of Goods and Services related to the transfer of Goods or passengers aboard land, air or sea means of transport pursuant to Clauses (2) and (3) of this Article, designated for consumption on board; or anything consumed by any means of transport, any installations or addition thereto or any other use during transportation.
• The supply or import of investment precious metals.
• The first supply of residential buildings within (3) years of its completion, either through sale or lease in whole or in part, according to the controls specified in the Executive Regulation of this Decree-Law.
• The first supply of buildings specifically designed to be used by Charities through sale or lease according to the controls specified in the Executive Regulation of this Decree-Law.
• The first supply of buildings converted from non-residential to residential through sale or lease according to the conditions specified in the Executive Regulation of this Decree-Law.
• The supply of crude oil and natural gas.
• The supply of educational services and related Goods and Services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government, as specified in the Executive Regulation of this Decree-Law.
• The supply of preventive and basic healthcare Services and related Goods and Services according to what is specified in the Executive Regulation of this Decree-Law.

Smart Book Accounting and Bookkeeping is accounting and auditing firm who can help you in understanding the concept of Zero Rated Supply under VAT. If you are looking for any clarification in terms of Zero rated concept in UAE, Contact Smart Book Accounting and Bookkeeping. We are covering all the elements of VAT such as VAT registration, VAT return filing, VAT audit, VAT refund, VAT accounting and VAT deregistration.