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VAT Applicability for RAKEZ FZE company invoicing to Dubai mainland company – however goods directly shipped from Europe to Africa

There is a case where goods are shipped from Europe to Africa for consumption. However, European company raises invoice on RAK Economic zone (RAKEZ) company and RAKEZ company invoices to Dubai mainland company and is being paid in their local Aed Account. Dubai main land company further invoices to the end recipient in Africa. Bill of lading is swapped, and UAE customs doesn’t comes in picture as goods doesn’t come to UAE ports at all.


Pls help to understand if this transaction of sale by RAKEZ company to Dubai mainland company (where goods doesn’t enter UAE at all – i.e. place of supply is outside UAE ) be at 5% or out of scope transaction



19/10/2021 14:29:18
SAJITH NAIR20/10/2021 10:54:30

This transaction would be Outside the Scope of UAE VAT since place of supply of goods is not in UAE. All relevant shipping and related documents should be retained as evidence for the same.

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Ali21/10/2021 14:40:37

Thanks for the quick response.. Just wanted to check one more thing. In another instance where instead of RAKEZ Free zone CO, Mainland company invoices to another mainland company but complete movement of goods is outside UAE. Will this transaction also remain as out of scope

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SAJITH NAIR23/10/2021 01:03:55

Since the goods do not enter UAE the place of supply of goods would be outside UAE hence out of scope.

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