Page 74 - Focus Group

Export of Service:

Impact on Tax Treatment by

Changing OR to AND

Export of service was always It was very recently, that the be considered as being
a topic of discussion since the Federal Tax Authority have issued “outside the State” if
VAT law was implemented. The The Executive Regulation of the they only have a short-
main reason for such discussion Federal Decree-Law No. 8 of 2017
is that services may be provided on Value Added Tax (Cabinet term presence in the

in different ways from different Decision No. 46 of 2020), which is State of less than a month
locations despite of the borders an updated or revised Executive and the presence is not
and regulations of customs Regulation of UAE VAT Law effectively connected
authority. Various facts like initially issued on 26 November
location of the service provider 2017. The major change noticed with the supply.” The
and recipient, actual place of in the new document is related to change given in the amended
service, place of supply rules etc Article 31 – Zero rating the export executive regulation is a simple
made the taxation of services of services. As per the amended change of AND instead of OR
complicated. Unlike goods, executive regulation, “For the used earlier. But what is the VAT
which is traced by customs upon purpose of paragraph Impact of the same?
its clearance, services provided On a straight interpretation we
cross borders became a little (a) of Clause 1 of this
complicated in the absence of Article, a Person shall can say that the result of this
change is that the scope of export
such tracing.

74 TAX JOURNAL 2020 The Institute of Chartered Accountants of India (Dubai) Chapter NPIO