Why Place of Supply Matters
The place of supply determines whether a transaction falls within the scope of UAE VAT. If the place of supply is in the UAE, UAE VAT applies. If outside, different rules may apply (exports, reverse charge, or outside the scope).
General Rule for Goods
The place of supply of goods is the UAE if the goods are:
- Located in the UAE at the time of supply, or
- Located outside the UAE but imported into the UAE
General Rule for Services
The place of supply of services is where the recipient is located. If the recipient is in the UAE, the supply is subject to UAE VAT. If the recipient is outside the UAE, the supply may be zero-rated or outside the scope.
Why the Distinction Matters
- Goods: Taxed where the goods are physically located.
- Services: Taxed where the recipient is located.
This means a Dubai consultant providing services to a UK client has a different VAT treatment than a Dubai retailer selling goods to a UAE customer.
Special Rules
Certain supplies have special place of supply rules that override the general rules:
- Real estate-related services (where the property is located)
- Transportation services (where the transport takes place)
- Restaurant and catering services (where physically performed)
- Digital services (where the consumer is located)
- Entertainment and events (where the event takes place)
These special rules are covered in the next two lessons.