Zero Rating on Export of Services in the UAE

The Federal Tax Authority clarifies the conditions for the zero-rating treatment of export of services relating to the residency and location of the recipient of services.

Conditions for Zero-rating

• Customer’s place of residence is outside the UAE.
• Customer is outside the UAE when the services are performed.

1.    Customer’s place of residence is outside the UAE:

a.    Definition of Place of Residence

• Place of Establishment (PE) – Where customer is legally established in which significant management decisions are taken.
• Fixed Establishment (FE) – Fixed place in which the customer conducts business regularly or permanently and where sufficient human and technology resources exist.

b.    Determination of Place of Residence:

• If there is a multiple establishment – Where the establishment most closely related to the services is located.

2.    Customer is outside the UAE when the services are performed if:

• Presence in the UAE is less than a month; AND
• Presence is not effectively connected with the supply.

How can Crowe Help?

• Determining the Recipient’s residency status and location at the time the services are performed.
• Determining whether export of services is subject to zero rating.
• Preparing documents to support zero rating treatment of export of services.