On What basis you will determine the VAT Taxability?

For all the business for whom the VAT is mandatory, let me ask you one question- On What basis you will determine the VAT Taxability?

Here is the answer to the same – VAT will be applied on the Basis of the Place of Supply.

But the question is How should a business determine the place of supply?

The place of supply will determine whether a supply is made within the UAE (in which case the UAE VAT law will apply), or outside the UAE for VAT purposes.

For a supply of goods, the place of supply should be the location of goods when the supply takes place with special rules for certain categories of supplies (e.g. water and energy, cross border supplies).

For the supply of services, the place of supply should be where the supplier is established with special rules for certain categories of supplies (e.g. cross border supplies between businesses).

Let us take this in detail:

Place of supply for goods and services :

  • Goods – Place of supply rules apply. Where goods are physically present when sold.
  • Goods for export – will be zero rated as the place of supply is Non Gcc country where VAT is not applicable but the Export has to be done within 3 months and BL/ documentary evidence required.
  • Import of goods – no VAT but Reverse Charge applies. Has to be accounted for on the VAT return.
  • Import & transhipment to other GCC countries where VAT is applicable – Pay VAT and UAE will transfer it to the other GCC country.
  • Services – based on where the Business is based. Alternatively, a Consumption based rule will apply. E.g. telecom or software services will be taxed where services and used and enjoyed.

Thus it is very important to determine the place of supply.

BMS is always available to solve all your queries regarding all the VAT Issues.

You can provide us with the opportunity to be your Tax Consultant and we will keep you hassle free..!!

  • We will determine the place of supply for you and thus determine if VAT is applicable to you or not.
  • If VAT is applicable on your transactions, we will take up the complete determination, Accounting, Payment (on your behalf) and filing of return.
  • With you relieved from your burden of tax compliances, can focus more on your business and its development.




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