Taxability of Supply through an Agent

CA Rajiv HiraCA Rajiv Hira    22 March 2021
Taxability of Supply through an Agent

An Agent is a person who acts on behalf of the principal and has the authority to bind the Principal to obligations towards third parties. The Agent’s actions, if they are within the scope of their agency, even without prior intimation can bring binding obligations that the Principal must fulfill.

In Federal Decree-Law No. (8) of 2017 on Value Added Tax, Article (9) Supply via Agent is defined as :

1. The Supply of Goods and Services through an agent acting in the name of and on behalf of a principal is considered to be a supply by the principal and for his benefit.

2. The Supply of Goods and Services through an agent acting in his name is considered to be a direct supply by the agent and for his benefit.

Example: A Multinational company  appoints a resource with "UAE Agent / Distributor", who is tasked for quality & service. A Multinational company agrees with "UAE Agent / Distributor", to pay for the full cost of head-count (Resource). 


  • Resources are working on UAE Agent/ Distributor visa.
  • All the contracts (labour) are between resource and UAE Agent/Distributor.

If these assumptions are considered, there is no agent relation,then

(a) UAE Agent / Distributor is paying salary to the resources.

(b) Cost of salary is paid, by Multinational company, and may be classified as export of Services, in this case.

What should be considered?

Check the contract executed and arrive at place of supply rule, in this case:

  • between employee and employer.
  • between Agent/ Distributor and Multinational Company.

Draw the transaction structure and connect the links end to end (if there is an export, there should be an import / purchase / expenses).

In the event, logic as provided in public clarification for zero rating of services is compliant, then adopt the principle of Zero Rating, for export of services

From the above we can conclude that supply of goods & services through an agent is considered to be a supply by the principal and for his benefit only if he is acting on behalf of a principal.

To view the “Agent Principal : Payment of Salary by Principal” video, please click here



Disclaimer: Content posted is for informational & knowledge sharing purposes only, and is not intended to be a substitute for professional advice related to tax, finance or accounting. The view/interpretation of the publisher is based on the available Law, guidelines and information. Each reader should take due professional care before you act after reading the contents of that article/post. No warranty whatsoever is made that any of the articles are accurate and is not intended to provide, and should not be relied on for tax or accounting advice.

You can access Law including Guidelines, Cabinet & FTA Decisions, Public Clarifications, Forms, Business Bulletins for all taxes (Vat, Excise, Customs, Corporate Tax, Transfer Pricing) for all GCC Countries in the Law Section of GCC FinTax

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