Which goods or services in the UAE are subject to the 0% VAT rate

The UAE has implemented a value-added tax (VAT) system since January 1, 2018, with a standard rate of 5%, covering the vast majority of goods and services. However, in order to promote the development of specific industries and enhance international competitiveness, the government has set a 0% VAT rate on some goods and services. These policies not only reduce the operating costs of enterprises, but also indirectly benefit consumers. This article will systematically sort out the categories of goods and services that apply the 0% VAT rate in the UAE.

UAE applies 0% VAT rate on goods or services

1. Export of goods and services:

when businesses sell goods or provide services to customers outside the UAE, a VAT rate of 0% is usually applied to these transactions. This will help enhance the international competitiveness of UAE companies and encourage the development of export business.

2. International transportation services:

includes international air and sea freight services. These services play an important role in cross-border trade, and the application of the 0% VAT rate helps to reduce logistics costs and promote the facilitation of international trade.

3, investment-grade precious metals trading:

for example, the 0% VAT rate applies to the trading of precious metals such as unprocessed gold, silver, platinum, etc. This will help maintain the stability of the precious metals market and promote the development of related industries.

Specific education and medical services:

A VAT rate of 0% is also applied to education and health services, subject to certain conditions. For example, educational services provided by schools, universities and other educational institutions, as well as eligible health care services, such as basic medical examinations, treatment, etc., are not required to charge VAT.

0% VAT Rate Corporate Compliance Points

1. Registration and reporting obligations

even if the 0% tax rate applies, companies still need to complete VAT registration and submit regular returns to the Federal Tax Service (FTA).

2. Retention of supporting documents

enterprises are required to keep supporting documents related to 0% tax transactions, such as export contracts, transport documents, medical records, educational fee vouchers, etc. These documents may be used as a key basis for tax audits.

3, input tax deduction rules.

Enterprises that apply the 0% tax rate can refund the input tax paid in the purchase process, but they need to ensure that the purchase is directly related to the 0% tax rate transaction. For example, VAT paid by an exporting enterprise for the purchase of raw materials is fully deductible, but if it also purchases goods for domestic sale, it is required to share the input tax on a pro rata basis.

application of the 0% VAT tax rate.

1. Impact on exporters:

the application of the 0% VAT rate means that exporters do not need to charge customers VAT when selling goods or providing services, which helps reduce export costs and improve the price competitiveness of products in the international market.

Impact on international transport service providers:

the application of a 0% VAT rate for international transport services helps to reduce logistics costs and improve transport efficiency, thereby promoting the development of international trade.

3. Impact on education and medical industry:

the application of the 0% VAT tax rate will help reduce the burden on the education and medical industries and enable more people to enjoy quality education and medical services. At the same time, it also helps to improve the service quality of related industries and promote the overall development of society.

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