Zero-rated supplies are taxable supplies of goods or services which are subject to VAT at 0%. The following broad categories of supplies are zero-rated:
- A direct or indirect export of goods or services to outside the GCC Implementing States.
- International transport of passengers and goods which starts or ends in the UAE or passes through the UAE’s territory, including services related to such transport.
- Goods and services consumed or used during the international transportation of goods or passengers.
- Air, sea and land means of transport intended for the transportation of passengers or goods, and goods and services supplied for the purpose of the operation, repair, maintenance or conversion of these means of transport.
- Aircraft or vessels designated for rescue and assistance by air or sea.
- Certain investment precious
- The first supply of a newly constructed or converted residential building within 3 years of the completion of the construction or conversion.
- The first supply of a building specifically designed to be used by charities
- Crude oil and natural metals.
- Educational services and related goods and services for nurseries, preschool, and elementary education; and higher educational institutions owned or funded by Federal or local Government
- Preventive and basic healthcare services and related goods and services.
As mentioned above, although VAT charged on a zero-rated supply is nil, the supply is still treated as a taxable supply in all other respects – including the right of the person making the supply to recover the VAT on expenses incurred in making the zero-rated supply.