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VAT On Export Of Goods

CA Harsh Bhatia both ‘official’ and ‘commercial’ evidence as proof of
movement of goods outside the UAE, the transaction
should be treated as a zero-rated export. FTA has clarified
against this position and suggested to account for 5%
“VAT will soon be completing 5 Years in the UAE, VAT, based on the reasoning that the UAE supplier is
however, many businesses have been unable to decode acting as an agent to export the goods on behalf of the
the VAT zero-rating conditions for export. To avail of VAT UAE buyer.
benefit on exports, goods should be physically exported 3. Non-issuance of Exit Certificate by Customs
to a place outside the UAE within 90 days from the date department in case of Indirect exports: Many times
of supply (‘DoS’) and the supplier needs to maintain suppliers are unable to retain Exit certificates from
both ‘Official’ and ‘Commercial’ evidence. Challenges Customs authority as proof of ‘Official Evidence’. FTA
faced by the businesses in this regard and how they can has been seeking an Exit certificate as mandatory
structure solutions around this are highlighted below: evidence for zero-rating. In instances wherein Customs
1. Goods not being exported within 90 days from the authorities are not issuing Exit certificates, it is
DoS: For zero-rating benefits, it is vital to have evidence suggested to take an administrative exception from the
of goods leaving the country within 90 days from the FTA requesting to accept evidence other than an Exit
DoS. Businesses should track 90 days timeline and certificate.
account for 5% VAT on the 91st day if the goods are not 4. Export through an agent: For exporting goods through
exported or account for 5% VAT in advance and issue an agent it is important that the business should have
a tax credit note when there is evidence for exporting a valid contract with the agent and all the ‘Official’ and
goods within 90 days from the DoS. Businesses can ‘Commercial’ evidence are in the name of the business
also request FTA for an extension of the 90-day limit by and not the agent. Businesses should ensure that
submitting an administrative exception request. complete export documentation is readily available to

2. ‘Bill To Ship To’ Supply Model: In UAE, ‘Bill To Ship get the zero-rating benefit during audits as FTA expects
To’ transactions are a common occurrence. Businesses that all the records are maintained by businesses during
have been taking a position that since they have their regular course of business.”

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