UAE VAT on International Transport

CA Rajiv HiraCA Rajiv Hira    18 March 2021
UAE VAT on International Transport

As per Article 33, VAT is applicable @ 0% in case of international transportation services for Passengers and Goods.The supply of international transportation Services for Passengers and Goods and Transport-related Services shall be subject to the zero rate in the following cases:

  • Transporting passengers or Goods from a place in the State to a place outside the State.
    Eg. A passenger travelling through plane from Dubai to India.
  • Transporting passengers or Goods from a place outside the State to a place in the State.
    Eg. A passenger travelling through plane from India to Dubai
  •  Transporting passengers from a place in the State to another place in the State by sea or air or land as part of a supply of an international transport of those passengers if either or both the first place of departure, or the final place of destination, is outside the State.
    Eg. A passenger travelling through plane from India to Abu Dhabi to Dubai.
  • Transporting Goods from a place in the State to another place in the State if the Services are supplied as part, or for the purpose, of the supply of Services of transporting Goods either from a place in the State to a place outside the State from a place outside the State to a place in the State.
    Eg: Transport of goods from UK to Dubai through plane and then from Dubai to Sharjah through truck.

However if in the above example in d) the transport company subcontracts the transportation in two legs then:

  • International Transportation - invoice with 0% VAT for UK to Dubai Airport & 
  • Domestic transport i.e. from Dubai Airport to Sharjah warehouse should be standard rated @5%.

From the above discussion we can conclude that for International Transportation 0% VAT is applicable but in case of domestic transport 5% fixed VAT rate is applicable. In case of transport in two legs and the whole transport is considered as a single contract then zero rate would be applicable but if the transport company subcontracts the transportation in two legs then for International Transport leg 0% VAT is applicable but in case of domestic transport leg 5% fixed VAT rate is applicable.

A video explaining Applicability of UAE VAT on International Transport can be viewed by clicking 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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