Exported services from the UAE are zero-rated for VAT when four conditions set by the Federal Tax Authority (FTA) are met. That means VAT applies at a 0% rate, not the standard 5%, and input tax can be recovered. This status is only possible if the supply meets every condition below. Failing any test means the service is subject to standard-rated VAT.
The four FTA conditions for zero-rating exports
A UAE business may zero-rate its exported services where:
- The recipient does not have a place of residence in the UAE.
- The recipient is outside the UAE at the time the service is performed.
- The services are not supplied directly in connection with real estate in the UAE or movable personal property located in the UAE during the supply.
- The services are not provided to an individual who is in the UAE at the time the service is performed, except in specific direct-welfare cases.
All four tests must be satisfied for the zero-rating to apply.
What counts as a place of residence outside the UAE
The FTA considers a person to be established outside the UAE if they have no place of establishment or fixed establishment within the UAE. Being registered for VAT or holding a business licence in another country is not relevant unless the entity also operates in the UAE. A UAE branch of a foreign company does count as locally established, so supplying that branch is not zero-rated.
If the customer has a UAE office or other fixed base, even if their main business is elsewhere, the zero-rate does not apply and VAT at 5% is due.
The recipient’s location during supply
Zero-rating is only permitted if the recipient is physically outside the UAE during the performance of the services. Where the recipient has both UAE and foreign offices, evidence is needed to show the service was provided to the overseas entity and that the key decision-makers or users were abroad during the supply.
For example, management consulting for an EU-based head office is zero-rated if the recipient decision-makers are based in Europe at the time, and the contract is with the foreign entity. If the key recipient is in Dubai during the delivery of the service, standard UAE VAT applies.
Services linked to UAE real estate or moveable goods
No zero-rating applies where the service is directly connected to:
- UAE real estate (such as property management, surveying, or design for a Dubai building)
- Movable personal property located in the UAE at the time of supply (such as repair of a client's UAE-headquartered equipment)
Such services are always subject to the standard 5% VAT, regardless of where the customer is located.
Direct-welfare and specific exceptions
Some exceptions exist for services provided to individuals physically present in the UAE but only in a direct-welfare context, such as certain medical or educational services. These are narrowly defined and most B2B services to individuals in the UAE remain standard-rated.
Practical examples for UAE exporters
The table below sets out common service export scenarios and their VAT treatment according to the FTA's official guidance:
Scenario | VAT treatment | Why |
|---|---|---|
IT support for a foreign company with no UAE base | Zero-rated | Recipient outside UAE, not resident, not linked to UAE assets |
Legal advice for an individual in Europe | Zero-rated | Individual outside UAE, service not linked to UAE assets |
Architectural services for property in UAE | Standard-rated | Directly connected to UAE real estate |
Repair to equipment located in UAE | Standard-rated | Related to movable goods in UAE during supply |
Consulting for UAE branch of foreign company | Standard-rated | UAE branch is local establishment |
Management training for staff in UAE | Standard-rated | Recipient in UAE during service |
Medical services to patient in UAE hospital | Standard-rated | Patient present in UAE, not a general export of services |
Where evidence is required (for example, to prove the recipient was abroad at the time), businesses should retain contracts, correspondence, travel records, and other documents in line with FTA requirements.
Input VAT recovery on zero-rated exports
When a UAE business supplies zero-rated exported services, it can generally recover related input VAT on expenses incurred in making these supplies. Keeping clear documentation is essential to support these claims if reviewed by the FTA.
Summary: importance of conditions and documentation
Zero-rating exported services is only available if all four strict FTA tests are satisfied. The recipient's status, their physical location during supply, and the exact nature of the service all matter. Careful record-keeping supports compliance and input VAT recovery if challenged by the authorities.
