Place of supply is a very important concept in the context of VAT. The place of fulfillment is the place where the delivery took place. Whether a delivery is taxed depends on the delivery location. Different rules apply to the delivery of goods and services when determining the delivery location. In addition, special rules have been established for determining the location of delivery of certain goods and services. In this article, let’s understand how the place of delivery of goods is determined within the framework of VAT.
Location of delivery of his goods subject to VAT in the United Arab Emirates
Profit margin is the difference between the purchase price of the goods and the sale price of the goods.
Product deliveries can be divided into three categories to determine delivery location:
Domestic delivery
Export
Import
Delivery location for domestic delivery
Delivery location for domestic delivery. H. Goods delivered to a recipient within the UAE are UAE. Delivery is therefore subject to UAE VAT.
To explain this, let’s examine an example.
Example: Jehan & Co, a registered dealer in Abu Dhabi, supplies 100 monitors to Noor Electronics, a registered dealer in Dubai, for AED 500.
The recipient is based in the UAE, so the delivery location will be in the UAE. According to UAE VAT, this is a taxable supply and is subject to his VAT of 5%. Therefore, deliveries are subject to 5% UAE Value Added Tax. The following table provides an overview and simple calculations for determining the delivery location during export. We will discuss each of these cases in more detail in future articles.
Is the recipient registered for VAT in a GCC country?
Does the destination country’s mandatory registration threshold for the supplier’s export value apply?
Place of Delivery
Transfers outside the GCC Exports
N/A
N/A
United Arab Emirates
Exports to GCC Member States
Yes
N/A
Destination Member States
No
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United Arab Emirates
No
Yes
Member State of Destination
Place of Delivery of Imported Goods
If goods are imported into the UAE from a location outside the UAE, the place of delivery is the UAE. Therefore, the delivery is subject to UAE VAT.
Example: Jehan & Co., a registered dealer in Abu Dhabi, purchases 50 mobile phones from Das Pvt Ltd, an Indian company, for Dh1,500.
Jehan & Co. here imports goods from India to his UAE. The place of delivery is the United Arab Emirates and the delivery is subject to UAE VAT. Jehan & Co. must pay his VAT of 5% using reverse charge procedure on import. The place of supply is therefore an important factor in determining the tax to be levied on the supply. In the next article, you will learn how to decide where to provide your services.
You can also register for VAT Registration on our website:
https://www.vat-registration-uae.com/
