Zero-Rated Export of Services Outside the GCC
Official Principle: "Zero-rated (0%) if recipient has no place of residence in UAE and benefits outside state." — Облагается 0%, если заказчик не является резидентом ОАЭ и потребляет результат за рубежом.
📊 Regulatory Parameters & Compliance Table
| Supply Category | VAT Rate | Registration Threshold | Input VAT Recovery |
|---|---|---|---|
| Standard Supplies (Domestic) | 5% Standard VAT | AED 375,000 mandatory | Recoverable on taxable supplies |
| Export of Services / Goods | 0% (Zero-rated) | Counted in taxable turnover | Full Input VAT recovery rights |
| Voluntary Registration | 5% or 0% | AED 187,500 voluntary | Enables refund of start-up expenses |
| Late Registration Penalty | Fixed fine | AED 20,000 administrative penalty | Immediate FTA enforcement |
✓ Mandatory Compliance Action Steps:
- Track rolling 12-month taxable supplies and submit VAT registration within 30 days of crossing AED 375,000
- Issue compliant Tax Invoices featuring Seller TRN, Buyer TRN, and line-item VAT amounts
- Archive customs bills, import documentation, and Reverse Charge reconciliations
- Submit Form VAT 201 quarterly returns and pay liabilities by the 28th of following month
- Validate evidence of export for 0% zero-rated cross-border services
1. Core Statutory Provision & Key Legal Rule
"Zero-rated (0%) if recipient has no place of residence in UAE and benefits outside state."
"Облагается 0%, если заказчик не является резидентом ОАЭ и потребляет результат за рубежом."
2. Practical Application for UAE Businesses
Under the UAE federal tax framework governed by Executive Regulation, Art. 31, all taxable persons registered across Mainland jurisdictions and Free Zones (including Meydan, DMCC, DIFC, IFZA, DAFZA, and JAFZA) must align their accounting policies with this requirement.
- IFRS Accounting Standard: Financial statements must be prepared in accordance with International Financial Reporting Standards (IFRS or IFRS for SMEs).
- Record Retention: Primary accounting records, bank reconciliations, contracts, and tax filings must be archived for a minimum statutory period of 7 years.
- Audit Readiness: The Federal Tax Authority reserves statutory rights to request ledgers and supporting invoices during an official tax audit with a 5-day response window.
3. FTA Administrative Penalties (Cabinet Decision No. 75/2023)
Failure to register, inaccurate return filing, or violation of Executive Regulation, Art. 31 exposes the taxable entity to administrative fines starting from AED 10,000 up to AED 20,000 per incident, plus 1% monthly late-payment penalties.
Solution: Timely registration through the FTA EmaraTax portal and voluntary disclosure (Form 211) before an official audit notice is served.
Have Questions Regarding Zero-Rated Export of Services Outside the GCC?
Our licensed tax consultants and certified auditors in Meydan Free Zone, Dubai will review your contracts, calculate exact tax liability, and safeguard your company from FTA penalties.