VAT treatment of the repair/refurbishment work provided by to the Customers including replacement of parts

Dilip JainDilip Jain    26 March 2021
VAT treatment of the repair/refurbishment work provided by to the Customers including replacement of parts

As per Article 2 of the VAT Decree Law, “VAT shall be imposed on every taxable supply and deemed supply made by a taxable person and import of concerned goods into the UAE”.

The term “taxable supply” is defined in the VAT Decree Law as “a supply of goods or services for a consideration by a person conducting business in the UAE and does not include exempt supply.”

Article 30 (3) of the VAT Decree Law states that for the supply of services related to goods, such as installation of goods supplied by others, the place of supply shall be where said services were performed.

Article 31 of the Executive Regulations states that the export of services shall be zero-rated in the following cases:

“a. If the following conditions are met:

1.   The services are supplied to a recipient of services who does not have a place of residence in the State and who is outside the State at the time the services are performed 

2. The services are not supplied directly in connection with real estate situated in the State or any improvement to the real estate or directly in connection with moveable personal assets situated in the State at the time the services are performed.”

Referring to above, repair or refurbishment services provided by UAE Company in relation to the Goods/ machines located in the UAE cannot be considered as zero-rated export of services as these services are supplied directly in connection with the moveable personal assets (i.e. the machines ) situated in the UAE at the time the services are performed.

Note that the word " moveable personal assets " is to be construed as "moveable  assets" .

 

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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