VAT ZERO-RATING for Export of Services in the UAE & KSA 

VAT ZERO-RATING for export of services in the UAE & KSA.

Conditions

Customer has no Place of Residence in the State.

UAE

• Service/ arranging of service is performed outside the State
• Recipient is outside the UAE when the service is performed
• Service is not directly related to "movable personal asset"
• Service is not directly connected to real estate situated in the UAE

KSA

• The supply of service does not fall under special cases for place of supply
• The benefit of the service is not received by a customer in a member state who does not have the right to fully deduct the input tax
• Service is not related to any tangible goods or property in the KSA

Challenges

KSA

• In the July 2019, the rules in have changed on ZR conditions for export of services and became less strict.
• Many taxpayers in KSA conservatively charge 15% VAT on supply of services to recipients outside KSA (even if ZR conditions are met).

UAE

• In July 2020, the ZR conditions for export of service have changed and became stricter.
• Interpretation of definitions such as services directly in connection with "Movable Personal Assets" or "Real Estate".
• Burden of proof for taxpayer to evidence that recipient is outside the UAE when service is performed.

How can Crowe help?

• Support taxpayers in the UAE and KSA to assess whether the conditions for VAT zero-rating of export of services have been met to ensure correct VAT treatment.
• Assist taxpayers in obtaining a Clarification or Ruling in case the tax treatment is not clearly specified in the VAT Laws in the UAE or KSA.