In VAT it is very crucial to determine the place of supply of every transaction. Because, place of supply is the place where supply is considered to have taken place. Taxability on a particular supply depends upon its place of supply. Where place of supply is considered to be in UAE, tax is applicable on such supply. On the other hand where place of supply is considered to be outside the territory of the state, tax can’t be imposed by the state on such supply. The rules for determining place of supply are different for supply of goods and services. Also, there are special rules for certain special cases. Here we will discuss about place of supply of service under VAT.
According to the Article 29 of VAT Decree-Law No. (8) of 2017, the place of supply of services shall be the place of residence of the supplier.
Place of residence: The place where a person has a place of establishment or fixed establishment, in accordance with the provisions of the VAT Decree-Law.
Determining place of supply for special cases:
(i) Recipient of service has a place of residence in another GCC VAT implementing state and a tax registrant therein: The place of supply shall be recipient’s state.
(ii) Service received by a business resident in UAE from a person who is resident outside the GCC VAT implementing state: The place of supply shall be UAE
(iii) Supply of restaurant, hotel and food and drink catering services: Place of supply shall be the place where service is actually performed.
(iv) Supply of any cultural, artistic, sporting, educational or similar services: Place of supply shall be the place where service is actually performed.
(v) Supply of service related to real estate: Place of supply shall be the place where the real estate is located.
(vi) Place of supply of transportation services: Place of supply shall be the place where the transportation starts.
(vii) Place of supply of transport related services: Place of supply shall be the place of supply of transportation service to which they relate.
(viii) Place of supply of telecommunication and electronic services: Where it is actually used and enjoyed regardless of the place of contract or payment.
(ix) Place of supply for the supply of means of transport to a lessee who is not a registrant in UAE or any other GCC VAT implementing states: Where such means of transport are placed at the disposal of the lessee.