Place of Supply

A UAE company that sells goods abroad and provides software services to overseas customers must determine the relevant transaction and facts first. The UAE VAT Decree-Law puts goods rules in Article 27 and the general services rule in Article 29, with exceptions in Articles 30 and 31, so apply the current legislation and executive regulation to the supply rather than guessing from a sales category.

For ordinary services, Article 29 states that the place of supply is the supplier's place of residence, which can make a UAE supplier's service treated as supplied in the UAE even if the customer is overseas, and separate export zero-rating conditions then need review. Special service rules can change the answer: services connected with real estate can follow its location, restaurant and catering services follow where they are performed under Article 30, and transport and certain educational or cultural services have other tests.

Telecommunications and electronic services have a use-and-enjoyment rule in Article 31, which looks at where the service is actually used and not merely where the contract was signed or paid. Goods require a different map, because Article 27 considers where a supply occurs and contains rules for installed goods, exports, imports and Implementing States.

Do not confuse place of supply with place of payment, since a UAE card paying for a service supplied elsewhere does not by itself move the VAT location and an offshore bank account does not take a UAE supply outside the tax system. Nor is the company registration address always decisive, as a business with establishments in more than one country may need to identify which establishment is most closely connected to a service under residence rules.

Start with the contract and actual performance, asking who supplies what, to whom, and where goods are installed or services used, since a bundled contract may contain components with different treatments. Check the customer's status where an exception uses it, because registration in an Implementing State or business status can affect specific rules.

Once the location is known, determine the rate or exemption separately, because a UAE place of supply can still be zero-rated under qualifying export provisions or exempt under a specific rule. Likewise, a supply outside UAE VAT may still face tax obligations in another country, and the UAE analysis does not allow foreign VAT or registration requirements to be ignored, so seek local advice for significant cross-border trade.

Input-tax recovery may turn on the nature of the activity and related rules, and the basis should be documented with shipping records, service descriptions, customer tax status and evidence of use or location where needed. Systems should separate goods, services and special categories, and unusual arrangements should be escalated to the tax team before invoices are issued.

Review the rules when markets change, as a business may add warehousing, install goods abroad or open a new establishment, changing the relevant facts. For a business owner, place of supply is a location test with real billing consequences: classify what was supplied, apply the right article, retain evidence, and then decide the VAT rate, recovery and any foreign obligation.