0% VAT on Export of Services in the UAE – Rules, Conditions, and Examples

Under the UAE VAT Law, the general rule is that services supplied in the UAE are subject to 5% VAT. However, certain service supplies can be treated as exports and qualify for the 0% VAT rate. This relief is valuable, but it comes with conditions that businesses must carefully meet.

Article 31 of the UAE VAT Executive Regulations outlines when services can be zero-rated as exports. There are two main routes:

1. Non-resident recipient outside the UAE
   • The recipient of the service is outside the UAE when the services are performed.
   • The recipient is not a resident of the UAE.
   • The services are not directly connected to real estate in the UAE or to goods located in the UAE.
   • The services are not consumed by a person in the UAE.
2. Services actually performed outside the UAE
   • If the services are physically carried out outside the UAE (the Implementing State), they can be zero-rated.
   • This also includes arranging services that are performed outside the UAE.

Importantly, the rules include an anti-avoidance test: even if the recipient is outside the UAE, 0% cannot apply if it is reasonably foreseeable that a person in the UAE will directly benefit from the service.

Examples of Qualifying Export of Services

• A UAE consultancy provides strategy advice to a client based in Europe, with no UAE presence or consumption of the service.
• An IT company in Dubai delivers remote support to a US-based firm.
• A training company sends its staff to London to conduct workshops — services are physically performed outside the UAE.
• A UAE marketing agency prepares a campaign for a Saudi client with no operations in the UAE.

Examples That Do Not Qualify

• Property management or brokerage services connected with UAE real estate.
• Services related to goods that are physically in the UAE at the time of service.
• Services that are contractually with a non-resident, but actually consumed by a related party in the UAE.

Documentation Required

To apply 0% VAT, businesses must maintain strong evidence:

• Contracts showing the recipient is outside the UAE or that the services are performed abroad.
• Proof of the client’s residence outside the UAE (e.g., trade license, company documents).
• Evidence of where the service was performed and where it was consumed (e.g., travel records, reports, emails).

Why It Matters

Incorrectly applying 0% VAT can expose a business to FTA reassessments, penalties, and tax liabilities. At Finzoryx, our approach is to verify eligibility thoroughly, maintain solid documentation, and ensure clear reconciliations between VAT and Corporate Tax.

Finzoryx Tip: Before applying the 0% rate, always ask two questions:

1. Where is the service performed and consumed?
2. Who is the actual recipient of benefit?

Getting these right helps you avoid disputes and maintain compliance with confidence.

📩 For tailored VAT guidance and support, contact Finzoryx at connect@finzoryx.com | 📞 0503978121