Export of Services Under UAE VAT – Why Documentation Matters More Than You Think

Zero-rating isn’t automatic. FTA needs proof services were delivered and consumed abroad. Build comprehensive evidence or risk reassessment, penalties, and denied zero-rating.

At a glance, it covers

Prove recipient established abroad.
Evidence of foreign consumption.
Go beyond contract, invoice.
Maintain execution documentation trail.
Create SOP and checklist.

Export of services is one of the most commonly misunderstood areas under UAE VAT. Businesses often assume that once they have a contract and an invoice mentioning “export of services – zero-rated,” they are protected.

The reality is: the Federal Tax Authority (FTA) requires far more robust evidence to accept that services were indeed rendered and consumed outside the UAE. Without comprehensive documentation, companies risk VAT re-assessments, penalties, and rejection of zero-rating claims.

In this article, we highlight the critical documentation requirements and why relying on minimum paperwork can be a costly mistake.

The Legal Framework

Article 30(7) and 31(1) of the UAE VAT Decree-Law, along with the Executive Regulations, allow zero-rating of services exported to recipients outside the UAE only when

The recipient is established outside the UAE,
The benefit or consumption of the service is outside the UAE, and
The service is not directly connected with real estate or goods located in the UAE.

It is the taxpayer’s burden to prove with documentary evidence that these conditions are satisfied.

Documentation – Going Beyond Contract & Invoice

While contracts and invoices are starting points, they are rarely sufficient on their own. To withstand FTA scrutiny, businesses must build a 360° evidence file, typically covering five categories

1. Contractual Evidence

Signed Service Agreements clearly stating that services are to be executed abroad.
Purchase Orders (POs) mentioning work locations outside the UAE.

2. Commercial Evidence

Work orders, emails, or correspondence confirming execution outside the UAE.
Invoices that explicitly state “services rendered in foreign country, VAT treatment: zero-rated.

3. Execution Evidence

Service completion certificates signed by the foreign entity.
Timesheets, travel records, engineer site attendance sheets.
Delivery notes or technical reports confirming performance abroad.

4. Payment Evidence

Bank transfer records showing funds received from a non-UAE bank account.
Payments in foreign currency further strengthen the case.

5. Regulatory Evidence

Trade license/commercial registration of the foreign customer.
Import permits or local access permits proving equipment/people entered and worked abroad.

Why FTA Looks for This

FTA audits go beyond checking whether VAT was charged. They examine where the service was actually consumed. For example

If a UAE-based engineering firm claims to export services to Qatar, the FTA will ask: Did your engineers travel? Did Qatar issue site passes? Were completion certificates signed locally?
If such documents are missing, the FTA may argue that services were consumed in the UAE (planning, coordination, design stages done locally) – making them standard-rated at 5%.

Practical Challenges & Best Practices

Challenge 1

Incomplete paperwork – Many companies keep only invoices & contracts. Best practice: Create a standard checklist of all five categories of evidence for every export project.

Challenge 2

Payment routing – Sometimes foreign clients pay from their UAE group entity. Best practice: Always insist on foreign bank transfer records wherever possible, or retain group agreements explaining intercompany payments.

Challenge 3

Multi-location execution – Work may partly be done in the UAE (design) and partly abroad (installation). Best practice: Split invoices accordingly and support each portion with evidence.

Key Takeaways

Export of services is not self-declared – it must be proven.
Contracts and invoices are necessary but not sufficient.
Maintain a bundle of evidence: contractual, commercial, execution, payment, and regulatory.
FTA assessments have shown that weak documentation can result in denial of zero-rating and penalties.
Export of services can be a tax-efficient model under UAE VAT, but only if backed by strong evidence. Businesses should build internal SOPs and train teams to capture documents in real time – from site permits to completion certificates.
When in doubt, retain more evidence than you think is needed. In VAT audits, silence or missing paperwork often works against the taxpayer.