Key takeaways
- A UAE business that sells services to a foreign client charges VAT at the standard rate of 5% unless the supply qualifies for zero-rating as an export of services under Article 31 of the VAT Executive Regulation.
- A service to a foreign client is zero-rated at 0% only if the client has no place of residence in a VAT-implementing GCC state, is outside the UAE when the service is performed, and the service is not directly connected with UAE real estate or treated as performed in the UAE.
- A foreign client counts as outside the UAE if its presence in the UAE is for less than 30 days and not effectively connected with the supply; the FTA's March 2025 clarification applies that count over a rolling 12-month period.
- Hotel, restaurant and catering services, installation work on goods in the UAE, UAE real estate services, transport starting in the UAE, and telecom or electronic services used in the UAE stay at 5% even when the customer is overseas.
- A zero-rated service is still a taxable supply under the VAT law, so a UAE business that only exports services still counts those sales toward VAT registration and keeps its input VAT recovery.
Is VAT charged on services to foreign clients in the UAE?
Yes by default: the UAE VAT law taxes a service at 5% when its place of supply is the UAE, and a UAE-based supplier's services have their place of supply in the UAE unless an exception applies. The relief is zero-rating under Article 31 of the Executive Regulation, which treats qualifying exports of services as taxable at 0%.
Federal Decree-Law No. 8 of 2017 sets the standard rate at 5% (Article 3) and puts the place of supply of services at the supplier's place of residence (Article 29), with exceptions in Article 30. Because a UAE company's place of residence is the UAE, a foreign client does not by itself take the supply outside VAT. The conditions below do that work. Rules as of November 2026; check tax.gov.ae before relying on them for a specific contract.
What conditions make a service to a foreign client zero-rated?
A service is zero-rated as an export when the recipient has no place of residence in an Implementing State, is outside the UAE when the service is performed, and the service is neither directly connected with UAE real estate nor treated as performed in the UAE or a Designated Zone. All conditions must hold at once.
Article 31(1)(a) of the Executive Regulation (Cabinet Decision No. 52 of 2017, as amended by Cabinet Decision No. 100 of 2024, effective 15 November 2024) sets them out. An Implementing State is a GCC state that has put the GCC VAT framework into law, so a client in a GCC country with VAT may not qualify even though it sits outside the UAE.
| Test | What the Executive Regulation requires | Where it sits |
|---|---|---|
| Recipient residence | No place of residence in an Implementing State | Article 31(1)(a) |
| Recipient location | Outside the UAE when the service is performed | Article 31(1)(a), Article 31(2) |
| Real estate | Not directly connected with UAE real estate | Article 31(1)(a) |
| Place of performance | Not treated as performed in the UAE or a Designated Zone | Article 31(1)(a) |
| Alternative route | Service actually performed outside the Implementing States, or arranging of services | Article 31(1)(b) |
Here are the steps to test a single sale:
- Confirm where the client is established, using its licence, certificate of incorporation or registration documents.
- Confirm the client has no place of residence in a VAT-implementing GCC state, including a branch or fixed establishment there.
- Check that the client's people were outside the UAE when you performed the work.
- Check the service against the excluded types (UAE real estate, goods in the UAE, hotel and catering, transport, electronic services).
- Check the contract for who actually receives the service (see the agreement test below).
- Record the result on the tax invoice and report the sale as a zero-rated supply on your VAT return on EmaraTax.
Which services to foreign clients still attract 5% VAT?
Services tied to something physically or economically located in the UAE stay at 5% whoever the customer is. The FTA's March 2025 public clarification on the Executive Regulation amendments, summarised by Alvarez & Marsal, lists the main categories.
| Service type | VAT treatment | Why |
|---|---|---|
| Consulting, design, software development for a client with no UAE presence | 0% if all Article 31 conditions are met | Export of services |
| Work directly connected with UAE real estate | 5% | Excluded by Article 31(1)(a) |
| Installation or repair of goods located in the UAE | 5% | Place of supply is where performed |
| Hotel, restaurant and catering in the UAE | 5% | Special place-of-supply rule |
| Transport of goods or passengers starting in the UAE | 5%, unless an international transport zero-rating applies | Special place-of-supply rule |
| Telecom and electronic services used in the UAE | 5% | Place of actual use |
Treatment as of November 2026. The practical test: ask what the client receives and where. If the answer is "advice delivered by email", zero-rating is usually in play; if the answer is "something done on a UAE site or to a UAE asset", expect 5%.
How does the 30-day presence test work?
A foreign client is treated as outside the UAE if its presence in the UAE is for less than 30 days and is not effectively connected with the supply (Article 31(2)). A longer presence, or a connected one, means the recipient is treated as being in the UAE and the zero rate is lost.
The FTA's clarification, reported by PwC and Alvarez & Marsal, measures the days over a rolling 12-month period. Its example: where a non-resident client's director spends more than 30 days in the UAE in the 12 months before the supply date, the client is treated as in the UAE for that supply. A short holiday or a transit with no meetings about the work does not count against you, but a week of kick-off meetings in Dubai connected to the project does. So for a long-running client, keep a note of its visits.
What if the foreign client is in another GCC country?
A client with a place of residence in a GCC state that has implemented VAT is not an export customer under Article 31, so the zero rate is not available on that basis. The supply is tested under the place-of-supply rules and the GCC VAT framework instead.
Not every GCC state has implemented VAT, and the VAT law defines Implementing States by reference to the GCC states that have put the framework into law, so confirm the client's country before invoicing. For a Saudi or other GCC client the outcome can differ by service type and by whether the client is registered; get a written view before issuing the first invoice.
What should your invoice and records show?
The invoice must be a valid tax invoice showing the 0% or 5% rate you applied, and your file must be able to prove the client's residence and location at the time of service. The law leaves record-keeping periods to the Executive Regulation, so check the current period on tax.gov.ae.
If you'd rather not track these dates by hand, the free UAE compliance calendar lists the VAT return and filing deadlines for your company.
0%: the VAT rate on a qualifying export of services, against the standard rate of 5%. Source: Federal Decree-Law No. 8 of 2017 (Articles 3 and 44) and Executive Regulation Article 31, checked 09 November 2026.
What most guides don't tell you
The agreement test can strip the zero rate even for a clean overseas client. Article 31(3) removes zero-rating where the contract is made with a non-resident but the services are, or are reasonably expected to be, received in the UAE by another person, such as the client's employee or director, and the recipient could not fully recover the input VAT. Say a UAE firm trains the staff of an overseas group, and some of those staff attend in Sharjah: the sale is not safely zero-rated just because the invoice goes to a foreign entity.
Zero-rated is not exempt. The VAT law defines a taxable supply as any supply for consideration in the course of business other than an exempt supply, and Article 44 treats a zero-rated supply as a taxable supply at the zero rate. That means your export sales count toward registration and you keep input VAT recovery on related costs; exempt sales would not do that.
Saying "the client is overseas" is not evidence. If the FTA queries a return, what holds up is the contract, client incorporation documents, and proof of where the work was done and who received it. A client that sits abroad on paper but whose team works from a Dubai office is the pattern that fails.
Frequently asked questions
Are exports of goods zero-rated in the UAE too? Yes, exports of goods outside the Implementing States are zero-rated under Article 30 of the Executive Regulation when you hold the required export evidence. Services follow a separate test under Article 31, so a goods rule does not decide a services sale.
Is a zero-rated supply the same as an exempt supply? No. A zero-rated supply is a taxable supply at 0%, so it counts toward VAT registration and you keep input VAT recovery; an exempt supply is excluded from the definition of taxable supply.
Does the reverse charge apply when I buy services from a foreign supplier? Yes, if you import services for your business, Article 48 of the VAT law makes you responsible for accounting for the VAT yourself. That is the mirror image of exporting services: the foreign seller charges nothing and you declare the tax on your return.
Do I charge VAT to a UAE free zone company? Generally yes, because a free zone company is established in the UAE and so does not meet the 'no place of residence in an Implementing State' condition for zero-rating. Designated Zone rules are mainly about goods, so check the FTA Designated Zones VAT Guide on tax.gov.ae before treating a zone customer differently.
What is a Designated Zone for UAE VAT? A Designated Zone is a specified area that is treated as outside the UAE for certain VAT purposes, and Article 31 of the Executive Regulation refers to services treated as performed in one. Whether a given free zone is a Designated Zone is set by Cabinet decision, so check the current list on tax.gov.ae.
Which VAT deadlines apply to your company?
VAT return dates depend on your tax period and registration date, and missing one costs a penalty even when the sale was correctly zero-rated. The free UAE compliance calendar is a calendar of your company's UAE tax and compliance deadlines, personalised from a few questions, as a PDF and calendar file.
About Qawi · Qawi is a corporate services firm licensed in the Sharjah Media City (SHAMS) free zone, handling company formation, visas and PRO, bookkeeping, VAT and corporate tax for UAE businesses. Guides are researched from FTA, Ministry of Finance and free zone sources. Qawi on LinkedIn
Sources
- Federal Decree-Law No. 8 of 2017 on Value Added Tax and amendments, Ministry of Finance
- Executive Regulation of Federal Decree-Law No. 8 of 2017 (Cabinet Decision No. 52 of 2017 and amendments), Ministry of Finance
- Cabinet Resolution No. 52 of 2017, UAE Legislation portal
- Federal Tax Authority, tax.gov.ae (FTA public clarification on the Executive Regulation amendments, March 2025, read through the two secondary summaries below)
- Interpretation only, not official: PwC tax alert on the FTA public clarification; Alvarez & Marsal tax alert; DLA Piper on Cabinet Decision No. 100 of 2024
Last checked: 09 November 2026
This is general information, not tax or legal advice for your specific situation.