Do I Charge VAT to a Client Outside the UAE? Zero-Rating Rules

Quick answers

Do I charge VAT to a client outside the UAE?

Usually you charge 0%, not 5%. Under Article 31 of the VAT Executive Regulation, a service is zero-rated when the client has no place of residence in the UAE, is outside the UAE when you perform it (present here for fewer than 30 days, not in connection with your work), and the service is not tied to UAE real estate or goods in the UAE. If any of that fails, you charge 5%.

Which services to foreign clients still carry 5% VAT?

Services that the special place-of-supply rules treat as supplied in the UAE. Since 15 November 2024 these cannot be zero-rated as exports even when the client is abroad: services on goods in the UAE such as installation, restaurant, hotel and catering services here, cultural, artistic, sporting or educational services performed here, services connected with UAE real estate, transport from the UAE, certain transport hire, and telecoms or electronic services used in the UAE.

What counts as outside the UAE? The 30-day rule

A client counts as outside the UAE if their presence here is under 30 days and not effectively connected with your service. The FTA counts the days across a rolling 12-month period: if the foreign client's director spent more than 30 days in the UAE in the 12 months before the date of supply, the client is treated as being in the UAE.

How do I invoice a client outside the UAE?

If you are VAT registered, you issue a normal tax invoice with the line set to 0%, add AED amounts and the Central Bank rate if you bill in another currency, issue it within 14 days of the date of supply, and report the amount in box 4 (zero-rated supplies) of your VAT return.

Do overseas clients count toward the VAT registration threshold?

Yes. The AED 375,000 threshold counts taxable supplies, and zero-rated supplies are taxable. A UAE freelancer or agency billing only overseas clients can still be required to register.

Is this tax advice?

No. This is general information about zero-rating exported services in the UAE. Confirm your obligations with the Federal Tax Authority or a qualified tax advisor.

When is a service to a client outside the UAE zero-rated?

When all four conditions in Article 31(1)(a) are met. In plain terms:

• The client is not resident here. They have no place of residence in the UAE, or in another GCC state the law calls an “Implementing State”.
• The client is outside the UAE when you perform the service. A short presence, under 30 days and not connected with your work, does not count (the 30-day rule below).
• The work is not tied to things in the UAE. Not directly connected with real estate in the UAE, or with goods located in the UAE when you perform the service.
• The service is not one the law places in the UAE anyway. See the list in the next section.

Separately, a service actually performed outside the GCC VAT states, or arranging one, is zero-rated whoever the client is (Article 31(1)(b)). Consulting, design, development, marketing or writing done from a UAE desk for a company abroad is usually tested under the four conditions above, not under this rule.

Which services to foreign clients still carry 5% VAT?

Services that the special place-of-supply rules treat as supplied in the UAE. Since the Executive Regulation was amended on 15 November 2024, these cannot be zero-rated as exports even when the client is abroad (FTA clarification VATP040, based on Articles 30 and 31 of the VAT Decree-Law):

• Services on goods located in the UAE, such as installation
• Hiring out a means of transport that is in the UAE when handed over, to a lessee who is not a UAE taxable person and has no TRN in a GCC VAT state
• Restaurant, hotel and catering services performed in the UAE
• Cultural, artistic, sporting, educational or similar services performed in the UAE — a workshop, a performance, a training course held here
• Services directly connected with real estate in the UAE
• Transport, and transport-related services, where the goods or passengers leave from the UAE (international transport has its own zero-rating rules)
• Telecommunications and electronic services used and enjoyed in the UAE

There is also an anti-avoidance rule in Article 31(3). Zero-rating falls away when it is reasonably foreseeable that someone else — an employee or director of the foreign client, for example — will receive the service in the UAE, and that person could not recover the VAT in full. If the person in the UAE could recover it all, the rule does not apply.

What counts as “outside the UAE”? The 30-day rule

A client counts as outside the UAE if their presence here is under 30 days and not effectively connected with your service (Article 31(2)). The FTA counts the days across a rolling 12-month period, not per visit or per invoice (VATP040).

The FTA's own example: for services supplied throughout a year, if the foreign client's director spent more than 30 days in the UAE in the 12 months before the date of supply, the client is treated as being in the UAE.

In practice: a client who flies in often for meetings about your project can stop qualifying even though nothing about your work changed. A holiday or a transit stop unconnected with your work does not break zero-rating.

Does a client in Saudi Arabia or another GCC country qualify?

Check before you zero-rate. The residence test and Article 30(1) of the Decree-Law refer to “Implementing States” — GCC countries applying VAT under the common GCC agreement — not only the UAE. How that applies today to a client in Saudi Arabia, Bahrain or Oman is a point to confirm with the FTA or an advisor; we have not found it settled in the law itself.

How do I invoice a client outside the UAE?

If you are VAT registered, you issue a normal tax invoice with the line set to 0% and report it in box 4 of your VAT return. Step by step:

1. 1Check the four conditions below against this client and this piece of work, and save what shows it: the contract, the client's address abroad, and where the work was received.
2. 2Issue a tax invoice as usual — your name, address and TRN, a sequential number, the date, a description — and set each qualifying line to 0%. The VAT amount is AED 0.
3. 3If you bill in USD, EUR or another currency, add the AED amounts and the Central Bank exchange rate for the date of supply (how to invoice in a foreign currency).
4. 4Issue it within 14 days of the date of supply, the general deadline under Article 67 of the VAT Decree-Law.
5. 5In your VAT return, report the amount in box 4 (zero-rated supplies), not box 1 and not box 5 (VAT 201 boxes explained).

Strictly, the Executive Regulation does not require a tax invoice for a wholly zero-rated supply when your records are enough to show its details (Article 59(3)). Most businesses issue one anyway, because the client needs an invoice to pay and you need the record. If you are not VAT registered, none of this applies: you send an ordinary invoice with no VAT.

Worked example: a UK client, billed in USD

You are a VAT-registered designer in Dubai. A London company with no UAE office hires you to design its website; nobody from the client comes to the UAE for the project. You finish on 10 December 2026 and invoice USD 5,000.

All four conditions are met, so the line is 0%. At the Central Bank USD rate of 3.6725 (the dirham is pegged to the dollar), the invoice shows AED 18,362.50, VAT at 0% of AED 0.00, and the rate. You report AED 18,362.50 in box 4 of the return for the period containing 10 December — for a calendar quarter, the return due by 28 January 2027 (check your deadline).

Change one fact — the client's director spends six weeks in Dubai working with you on the launch — and the client is no longer “outside the UAE”. The same invoice then carries 5%: AED 918.13 of VAT in box 1.

Is zero-rated the same as exempt?

No. A zero-rated supply is taxable at 0%: it goes in box 4 of your return, counts toward the registration threshold, and input VAT on related costs stays recoverable. An exempt supply carries no VAT, does not count toward the threshold, and blocks input recovery on related costs; a registered business still reports it, in box 5.

Do overseas clients count toward the VAT registration threshold?

Yes. The AED 375,000 threshold counts taxable supplies, and only exempt supplies are left out of “taxable” (Decree-Law Articles 1 and 19). A UAE freelancer or agency billing only overseas clients can still be required to register for VAT.

Example: you bill foreign clients AED 32,000 a month. After twelve months, AED 384,000 is over AED 375,000, so you have 30 days to apply. Missing that deadline is an AED 10,000 penalty (Cabinet Decision No. 40 of 2017, as amended). The returns you then file may show nothing but box 4.

What evidence should I keep?

Enough to show each condition was met, kept with the invoice: the contract, evidence of the client's residence abroad, invoices and payment records, correspondence, the deliverables, and anything showing the work was not connected with UAE real estate or goods, and was not received in the UAE by someone else. At an audit, “the client was foreign” is not evidence; the file is.

When should I ask an accountant?

When the client has any UAE presence, branch or staff; when the work relates to property or goods in the UAE; when you sell through a UAE intermediary; when the client visits in connection with your work; or when the client is in another GCC country. An hour of advice costs far less than reclassifying a year of invoices. For filing itself, see how to file a VAT return.

Frequently asked questions