Indirect export applies where there is an arrangement between the local seller and its overseas customer whereby the overseas customer will ensure export of goods outside UAE as per Article 30.2 of ER. This does not apply where the customer is in UAE itself. The purchase for the purpose of export should not ideally give eligibility to Company A to avail zero rating on its supply. Company A can apply zero rating only if the export documentation is in its own name and not in the name of Company B.

There is more clarity required on it. Overseas customers contact with company B(mainland) for purchase of goods. Company B contacts with company A in mainland and first buy goods under its own name by confirming for export. Within 90 days company export to its overseas customers and provide documents to Company A. What is VAT implication for company A as the goods detail are available on the exports papers.

Strictly by the Law, the scenario given cannot be applied for Indirect Export as there is transfer of title to a local customer B. The intended usage of the goods procured for the purpose of export by B cannot be used to zero rate the supply of A. The effect would be that both A and B would end up having to report the supply of same goods as zero rated which is incorrect. A should be charging VAT to B who can then recover the same in its VAT return.

There is a pre-arrangements between both the entities and overseas customer is of company B only hence all buying & shipping arrangements made by company B as per the instruction of overseas customer. The company B works as an agent temporary getting title for exit. There is an example A UAE company sells agricultural products to another UAE company. As part of the arrangements, the products are exported by the supplier to Switzerland within 30 days from the date of supply. What is the correct treatment? 1. The supply is out of scope. 2. VAT @5% 3. The supply is exempt 4. VAT @0%

The first scenario would be a hard argument in front of FTA since there is title transfer from Company A to B and arrangement between B and the overseas customer should not impact A's supply. In the new scenario for Agricultural product, if the supplier has export documents in their name and as per the terms of supply the date of supply gets triggered only outside UAE, many companies are treating this as Zero rated for the supplier and for the customer as out of scope for further supply of those goods outside UAE. However this scenario is difference from the previous one mentioned as the supplier here would be regarded as eligible for Direct Export claim.

Hi Nusrat Abbas, Only if the goods are exported in you name, it can be treated as your export. You should charge VAT on sale to your customer in this case. Your customer B will make exports at 0% and will claim the VAT which you charged as input tax. Exports by B cannot be considered as your export only because same goods are exported.