Place of Supply for Services
General Rule
The place of supply of services is where the recipient is located. If the recipient is in the UAE, UAE VAT applies; if outside, the supply may be zero-rated.
Reverse Charge Mechanism
When a UAE-registered business receives services from a non-resident supplier, the UAE recipient must account for VAT under the reverse charge. The recipient treats the supply as if they made it to themselves, charging output VAT and claiming input tax (if eligible) in the same return.
This avoids the need for the non-resident supplier to register for VAT in the UAE.
Special Rules
Real estate services: Place of supply is where the property is located.
Transportation:
- International transport: Zero-rated
- Domestic passenger transport: Exempt
- Domestic goods transport: Standard-rated at 5%
Digital services: Supplied to a UAE consumer by a non-resident — the place of supply is the UAE. Non-residents may need simplified registration.
Restaurant and catering: Where the services are physically performed.
Entertainment, cultural, sporting, educational events: Where the event takes place.
Export of Services
Services supplied to a recipient outside the GCC implementing states are zero-rated, provided they are not caught by the special rules above.
Worked Example
A Dubai IT consultancy provides software development to a UK client. The recipient is outside the GCC, so the export of services is zero-rated. Conversely, if a UK consultancy provides services to a Dubai-registered business, the Dubai business accounts for VAT under the reverse charge.