Understanding the place of supply is fundamental to ensuring correct VAT treatment in the UAE. It determines whether a transaction is subject to UAE VAT, treated as outside the scope, or considered an export/import. Misinterpreting this concept often leads to compliance errors, penalties, and additional costs for businesses.
What is Place of Supply?
The place of supply refers to the location where goods or services are deemed to have been supplied for VAT purposes. Under Federal Decree-Law No. 8 of 2017 on VAT and its Executive Regulations, the place of supply rules depend on whether the transaction involves goods or services.
Place of Supply – Goods
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Within the UAE
If goods are supplied and delivered within the UAE, the place of supply is the UAE, and VAT at 5% applies. -
Export of Goods
When goods are exported outside the GCC Implementing States, the place of supply is still the UAE, but exports are generally zero-rated if conditions are met (e.g., proof of export within 90 days). -
Import of Goods
For goods imported into the UAE, the place of supply is the UAE. VAT is accounted for under the reverse charge mechanism at the time of customs clearance.
Place of Supply – Services
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General Rule
The place of supply of services is where the supplier has their place of residence. For example, if a UAE company provides consultancy services to a UAE client, VAT at 5% applies. -
Services to Recipients Outside UAE
If services are provided to a recipient outside the UAE, and they are used and enjoyed outside the UAE, the supply is generally considered an export of services and can be zero-rated, subject to conditions. -
Special Cases
Certain services follow specific rules, such as:- Real estate-related services → place of supply is where the property is located.
- Telecommunication and electronic services → place of supply is where the services are used and enjoyed.
- Transportation services → place of supply depends on the origin and destination of the transport.
Why Place of Supply Matters
- It determines whether UAE VAT applies or if the supply qualifies as zero-rated or out of scope.
- Errors in determining place of supply can result in incorrect VAT returns, additional assessments, and penalties by the FTA.
- Businesses with cross-border operations (imports, exports, international services) are especially at risk if rules are not applied correctly.
Final Thought
Determining the correct place of supply is not always straightforward, especially when cross-border elements are involved. Businesses must review their transactions carefully and apply the correct VAT rules to remain compliant.
At Finzoryx, we ensure your VAT filings reflect the correct place of supply so your business operates with Clarity | Compliance | Confidence.
📩 For professional VAT guidance, contact us at connect@finzoryx.com or call 0503978121.