Many new businesses and consumers in the UAE still struggle to know when VAT applies and when it doesn’t. This confusion can lead to mistakes, fines, or missed opportunities for savings. You could be paying too much or charging your customers VAT unnecessarily.
Here, Tax Gian breaks down zero-rated goods and services in plain language, using examples you’ll recognise. No jargon; no prolonged explanations. Just clear, useful information to help you stay compliant and make better decisions.
What Does Zero-Rated Mean?
Zero-rated supplies are taxable, but VAT is charged at 0%. That means you don’t collect any VAT from your customers, but you can still recover the VAT you paid on related expenses.
This is not the same as exempt supplies. If something is exempt, you don’t charge VAT, and you also can’t claim back the VAT you’ve paid. Zero-rated is better if you want to recover VAT costs.
Still confused? Ask VAT consultants in the UAE.
Goods That Are Zero-Rated in the UAE
- Exports
- Direct exports: When a UAE supplier ships goods abroad and handles the transport, VAT is zero-rated.
- Indirect exports: If the buyer from outside the UAE handles the shipping, it’s still zero-rated if proper export documents are kept and the goods leave the UAE within 90 days.
- Crude Oil and Natural Gas
- These are always zero-rated, but if conditions don’t meet zero-rating rules, standard VAT (5%) applies.
- Investment in Precious Metals
- Gold, silver, and platinum are zero-rated onlyif they’re at least 99% pure and sold in a tradeable form.
- International Transport
- Moving goods or people from the UAE to another country, or vice versa, is zero-rated.
- Transport inside the UAE is also zero-rated ifit’s part of a bigger international trip.
- Certain Vehicles and Transport Equipment
- Commercial airplanes, buses for 10+ people, and ships used for cargo or passengers are zero-rated.
- Sports boats or personal-use vehicles are not.
Any specific questions about the above categories? Ask expert VAT consultants in Dubai.
Services That Are Zero-Rated
- Healthcare
- Medical services by licensed professionals or hospitals are zero-rated if aimed at human health.
- Medicines and medical equipment are also zero-rated if approved by the UAE Ministry of Health.
- Plastic surgery or health-related vacations? Not zero-rated.
- Education
- Schools and universities recognised by the government can offer zero-rated services.
- Books linked to the curriculum are zero-rated.
- Uniforms, gadgets, or food? Not zero-rated.
- Services for Non-Residents
- Services to clients outside the UAE may be zero-rated if the client isn’t in the GCC and the service isn’t tied to UAE land or goods.
- Example: A UAE consultant helping a UK company can zero-rate the service.
- Tourism Packages Outside UAE
- Planning a tour that includes hotels, transport, and meals abroad? That’s zero-rated.
- UAE-based packages aren’t.
- Telecom Services
- Zero-rated if the service is sold from a UAE provider to someone outside the GCC.
- The customer’s location and payment details help determine this.
Do you offer any additional services beyond the ones mentioned above? Ask VAT consultants in the UAE about your specific services.
Buildings and Property
- New Residential Buildings
- The first sale or lease of a newly built home is zero-rated if done within 3 years.
- Later sales are usually exempt (not zero-rated).
- Converted Residential Buildings
- If a building becomes a home after not being one for 5+ years, the first supply is zero-rated.
- Buildings for Charities
- If built for a registered charity and not for profit, the first sale or lease can be zero-rated.
Supplies Connected to Transport
- Goods and Services for Commercial Vehicles
- Spare parts and services for public-use buses, planes, and ships are zero-rated if used directly for their operation or repair.
Items to Keep in Mind
- Keep Proof: Always maintain export documents like airway bills or customs paperwork.
- Follow Deadlines: Goods must be exported within 90 days (or an extended period) to keep zero-rated status.
- No Personal Use: Items taken abroad in someone’s suitcase usually don’t qualify for zero-rating.
- Stay Licensed: Healthcare and education must be approved by the government to qualify.
- Stay in Touch with VAT Consultants in Dubai:It is advisable to always keep in touch with a VAT consultant or advisor so that you can get help immediately when you need it.
How can Tax Gian Assist?
Understanding taxable, exempt and zero-rated supplies in UAE VAT law can help you save money and avoid issues with tax authorities. Tax Gian enables you to understand these concepts better, ensures you check the conditions correctly, and keeps your documents in order. Our seasoned experts are just a click away from being your best VAT consultants in the UAE.
