Let us explore Zero-Rated Supplies in UAE VAT
Exporting Beyond GCC Borders
If your business engages in the export of goods and services to countries beyond the GCC, you can take advantage of a 0% VAT rate. This move is set to boost cross-border trade opportunities and foster international business expansion.
Global Transportation and More
International transportation services and related supplies will be subject to a 0% VAT rate, providing support to the aviation and shipping sectors and promoting global connectivity.
Modes of Transportation: Air, Sea, Land
Certain essential modes of transportation, such as aircraft and ships, vital for both local and international mobility, will now benefit from a 0% VAT rate.
Investment-Grade Precious Metals
If you deal with investment-grade precious metals like high-purity gold and silver (99% purity), you'll enjoy a 0% VAT rate.
New Residential Properties
Newly constructed residential properties, sold for the first time within three years of completion, will now be subject to a 0% VAT rate.
Education and Healthcare Services
Certain education services, as well as related goods and services, and specific healthcare services with their associated goods/services, will now be taxed at 0% VAT.
Defining Permanent Establishment (PE) in the UAE
Within the framework of the UAE's Corporate Tax regulations, a Permanent Establishment (PE) is established based on two primary criteria:
Physical Location: Does the entity maintain a physical presence where it conducts its operations within the UAE?
Agency Representation: Does the entity operate within the UAE through an agent who consistently finalizes contracts on its behalf?
Exceptions to PE Definition
In accordance with Article 5 of the OECD Model Tax Treaty, specific activities carried out through a fixed place of business do not constitute a PE for foreign entities. These activities encompass:
- Use of facilities for storing or displaying goods.
- Maintenance of a stock of goods exclusively for storage, display, or processing by another enterprise.
- Establishment of a fixed place of business for purposes such as purchasing goods, collecting information, or engaging in preparatory or auxiliary activities.
It is essential for individuals and businesses operating in the UAE to comprehend these exemptions and definitions under the Corporate Tax Law.
