Goods and Services on Which Zero VAT is Implied

The president, His Highness Sheikh Khalifa Bin Zayed Al Nahyan, issued federal tax no. 8 of 2017 on VAT on Sunday, with one of the lowest rates in the world.

A preliminary step in the introduction of VAT in the United Arab Emirates from January 2018 is the 5 percent tax on the import and delivery of goods and services at every stage of production and distribution, including what is considered delivery. However, there are certain conditions under which VAT is not charged.

  • Zero rating applies when goods and services are exported from a GCC state to a Non GCC State. International transport of passengers or goods, including a transfer that begins or ends its territory in the United Arab Emirates or by the United Arab Emirates.
  • The transfer of passengers to the United Arab Emirates also has zero rates of “international traffic” in accordance with Article 1 of the International Convention for the Unification of Certain Rules for International Carriage 1929.
  • The Zero Rating also applies to the delivery of air, sea and land transportation for the carriage of passengers and goods and the provision of goods and services related to the provision of transport services necessary for the operation, repair, maintenance or transformation of them; the delivery of aircraft or ships intended to help or rescue them by air or sea; the supply of goods and services in connection with the carriage of goods or passengers by land, air or sea transport for consumption on board; or anything consumed during transportation, installation or addition or other use during transportation.

• The delivery or importation of precious metals investments and the first delivery of residential buildings within period of (3) years after completion, whether by sale or lease, in whole or in part, are also subject to a zero rate. The first offering of buildings specially designed for charitable purposes and for the conversion of non-residential buildings into apartments is also taxed at zero rates.

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