Zero-rated taxable supplies

What is a zero-rated tax?

A zero-rated tax is applied to taxable supplies 0%. These supplies should be declared in the VAT returns that are submitted every tax period. A zero-rated VAT is charged for goods and services that are exported outside of the UAE, provided that official documents of the export can be submitted.

Add a zero-rated tax in Wafeq

You can add zero-rated tax to your supplies when you create your invoices in Wafeq. In the Price column, click on +Add Tax, and select Zero-Rated Sales (0.00%). Note that zero-rated supplies must be defined as Outside the UAE for the place of supply so that VAT return picks it up.

Should I be registered under UAE VAT if I only make zero-rated supplies?

You should be registered for VAT if your taxable turnover exceeds 375,000 AED in a year’s period or if you expect your turnover to exceed 375,000 AED in the next 30 days.

If you only make zero-rated supplies, you can apply for an exemption from the registration. If you get the exemption, you won’t be required to submit regular tax returns and won’t be able to recover input tax on inward supplies.

What goods and services are under a zero-rated tax?

Fourteen goods and services are subject to zero-rated VAT.

  • International transport: The international transport of goods and services crossing any part of the UAE region or starting, or ending in the UAE.
  • Air passenger transport: The transport of air passengers if this transport is considered as part of an international carriage.
  • Supply of air, sea, and land means of transport: The supply of air, sea, and land means of transport for passengers and goods transportation.
  • Goods and services associated with the supply of the means of transport: Supplying goods and services for repair, maintenance, and operation of the air, sea, and land means of transport.
  • Aircraft and vessels for rescue: Any aircraft or vessel used for assistance or rescuing purposes by air or sea.
  • Supply of goods and services associated with the transfer of goods or passengers: Any good or service that is consumed onboard or by any means of transport during transportation.
  • Investment in precious metal: The supply or import of investment in 99% pure and tradeable precious metals such as gold, silver, and platinum.
  • Sale of residential buildings: The sale or lease of newly constructed residential buildings that are in their first 3 years of completion, either in whole or in parts.
  • Charitable building supplies: The first supply of buildings for sale or lease used for charity purposes.
  • The First Supply for Residential Buildings: The sale or lease of non-residential buildings converted to residential properties in their first supply.
  • Oil and Gas: Crude oil and gas.
  • Educational Services: The goods and services related to educational services, nurseries, preschool, elementary education, and higher education institutions owned and funded by the federal or local government.
  • Healthcare services: The provision of preventive and basic health care services and their associated goods and services.