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