• Meaning

Zero rated supplies shall mean that goods are still VAT taxable but the rate of VAT is 0%. You will need to record any zero rated supplies in your VAT account and report them on your tax returns.

  • Includes

Zero rated supplies as per article 45 of the federal decree law no.(8) of 2017 on VAT, shall include:

  1. Exports of goods and services.
  2. International transport of goods and passengers.
  3. Certain means of transport, such as trains, trams, vessels, airplanes.
  4. First sale/rent of residential buildings.
  5. Aircraft or vessels designated for rescue and assistance by air or sea.
  6. Certain investment precious metals.
  7. Certain healthcare services and related goods and services.
  8. Certain educational services and related goods and services
  • Suppliers

Registrant from following sector can fall under zero rated supplies of goods or services:  exporters, real estate developers, airlines, schools, clinics, hospitals, etc.

  • Registration requirement

Any supplier dealing in supply of zero rated goods or service is required to obtain registration if total turnover of taxable supplies including zero rated exceeds AED 375,000 in a 12 months period, or it is expected to exceed AED 375,000 in the next 30 days.

  • Exception from registration

Exception from registration are allowed if supplier does not make any supplies which are taxable at the standard rate of 5%. If exception from registration is granted, then supplier will not submit regular tax returns and you will not be able to recover input tax incurred.

  • Return filing and tax recovery

–          Registrant supplier must file tax returns with the FTA, if they do not qualify for an exception from registration

–          He will also be entitled to recover the input tax incurred on business purchases subject to the normal conditions.

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The entire contents of this article is solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation.. It doesn't constitute professional advice or a formal recommendation. The author has undertook utmost care to disseminate the true and correct view and doesn't accept liability for any errors or omissions. You are kindly requested to verify & confirm the updates from the genuine sources before acting on any of the information's provided herein above.

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