Is VAT charged on courier and delivery charges?

Article 51 – Designated zones30 1. Any Designated Zone specified by a decision of the Cabinet shall be treated as being outside the State and outside the Implementing States, subject to the following conditions: a. The Designated Zone is a specific fenced geographic area and has security measures and Customs controls in place to monitor entry and exit of individuals and movement of goods to and from the area. b. The Designated Zone shall have internal procedures regarding the method of keeping, storing and processing of Goods therein. c. The operator of the Designated Zone complies with the procedures set by the Authority. 30 Article amended as per Cabinet Decision No.88 of 2021. Cabinet Decision No. 52 of 2017 and its amendments – As published by the Ministry of Finance 39 2. Where the Designated Zone changes the manner of operating or breaches any of the conditions based on which the area was specified as a Designated Zone under a decision issued by the Cabinet, the Designated Zone will be treated as if inside the State. 3. The transfer of Goods between Designated Zones shall not be subject to Tax if the following two conditions are met: a. Where the Goods, or part thereof, are not released, and are not in any way used or altered during the transfer between the Designated Zones. b. Where the transfer is undertaken in accordance with the rules for customs suspension according to GCC Common Customs Law. 4. Where Goods are moved between Designated Zones, the Authority may require the owner of the Goods to provide a financial guarantee for the payment of Tax, which that Person may become liable for should the conditions for movement of Goods not be met. 5. Where a supply of Goods is made within a Designated Zone to a Person to be consumed by him or another person, then the place of supply of these Goods shall be in the State except in any of the following cases: a. The purpose was to incorporate the Goods into, attach the Goods to, or that the Goods become part of or are used in the production of another Good in the same Designated Zone and such Good is not consumed. b. The Goods were delivered to a place outside the State, and the Supplier retains supporting commercial or official evidence proving that, and customs evidence proving that the Goods were removed from the Designated Zone. c. The Goods were moved from the Designated Zone to a place inside the State, and the Supplier retains official evidence establishing that VAT had been applied on that import. 6. The place of supply of any Services is considered to be inside the State if the place of supply is in the Designated Zone. 7. As an exception to Clause 6 of this Article, the place of supply of any services shall be outside the State, where shipping or delivery services are supplied directly in connection with Goods that have a place of supply outside the State according to paragraphs (b) and (c) of Clause 5 of this Article, and all of the following conditions are met: a. Shipping or delivery services are supplied by the same supplier of the Goods; b. The supplier of the Goods is a Non-Resident, and not registered for Tax; c. These Goods are sold via an Electronic Sales Platform; an Electronic Sales Platform refers to any type of online sales platform, including websites and Cabinet Decision No. 52 of 2017 and its amendments – As published by the Ministry of Finance 40 electronic applications, which brings together third-party sellers and buyers, and through which Goods may be sold and purchased with or without shipping or delivery services; d. The person owning the Electronic Sales Platform is not the supplier of the Goods. 8. The Place of supply of water or any form of energy shall be considered to be inside the State if the place of supply is in a Designated Zone. 9. Goods located in a Designated Zone which the owner has not paid Tax on will be treated as Imported into the State if: a. The Goods are consumed by the owner unless they are incorporated into, attached to or otherwise form part of or are used in the production of another Good located in a Designated Zone which itself is not consumed. b. There is shortage in Goods. 10. Any Person established, registered or which has a Place of Residence in a Designated Zone shall be deemed to have a Place of Residence in the State for the purposes of the Decree-Law. Title Ten – Calculation of Due Tax

supplier is responsible to import and deliver ًّويشمل ّذلك ّالحاالت ّالتي ّيكون ّفيها ّالمورد ّمسؤوال ّ .عنّاستيرادّالسلعّوتوصيلهاّإلىّعنوانّفيّالدولة the goods to an address in the UAE. Furthermore, the registered supplier shall ّّيجبّأنّيحتفظّالموردّالمسجلّبدليلّيثبت،إضافةّلذلك retain proof that the goods were imported and ّأنهّتمّاستيرادّالسلعّوسدادّضريبةّالقيمةّالمضافةّعلى that VAT was settled on the import before ّاالستيرادّقبلّتقديمّإقرارّضريبةّالقيمةّالمضافةّعن submitting the VAT return for the tax period in ّالفترة ّالضريبية ّالتيّتم ّفيها ّالبيع ّليتمكن ّمن ّمعاملة which the sale was made in order to treat the ّالبيعّعلىّأنهّخارجّنطاقّضريبةّالقيمةّالمضافةّفي sale as outside the scope of UAE VAT. ّ .الدولة If any of the above conditions are not met, the ّّّفإن،إذاّلمّيتمّاستيفاءّأيّمنّالشروطّالمذكورةّأعاله sale of goods for consumption shall be treated ّبيعّالسلعّلالستهالكّسيعاملّعلىّأنهّيقعّضمنّنطاق as being within the scope of UAE VAT and ّ(٪5)ّّويخضعّلنسبة،ضريبةّالقيمةّالمضافةّفيّالدولة subject to VAT at 5%, unless it qualifies for ّ ّباإلضافة،ما ّلم ّيكن ّمؤهالً ّللخضوع ّلنسبة ّالصفر zero-rating, as well as subject to import VAT. ّ .لخضوعهّلضريبةّالقيمةّالمضافةّعلىّاالستيراد ّ ّ ّخدماتّالشحنّوالتوصيل Shipping and delivery services Under the general rule, the place of supply of any ّ ّيعتبر ّمكان ّتوريد ّأي ّخدمة ّتم،بموجب ّالقاعدة ّالعامة service supplied in a designated zone is considered ّ .توريدهاّفيّمنطقةّمحددةّعلىّأنهّفيّالدولة to be in the UAE. As an exception to the general rule, shipping or ّّفإنّخدماتّالشحنّأوّالتوصيل،استثنا ًءّ ّمنّالقاعدةّالعامة delivery services supplied directly in connection ّالموردة ّوالمرتبطة ّمباشرةّ ً ّبالسلع ّالمؤهلة ّستكون ّخارج with Qualifying Goods will be outside the scope of ّنطاقّضريبةّالقيمةّالمضافةّفيّالدولةّإذاّتمّاستيفاءّجميع UAE VAT if all of the following requirements are ّ :المتطلباتّاآلتية met: − The shipping or delivery service is supplied by ّيتمّتوريدّخدمةّالشحنّأوّالتوصيلّمنّقبلّموردّالسلع ّ ذاته؛ the same supplier of the goods; − The supplier of such goods is a non-resident, ّموردّهذهّالسلعّغيرّمقيمّوغيرّمسجلّلضريبةّالقيمة − ّ المضافةّفيّالدولة؛ and not registered for VAT in the UAE; − − The goods are sold via an electronic sales platform; and 8 / 11 ّ يتمّبيعّالسلعّعبرّمنصةّمبيعاتّإلكترونية؛ّو−

Since the lounge access is incidental to the provision of the supply of the international flight, both components will be treated as a single composite supply subject to VAT at 0%. 5.5. Service charges and tips If a person charges a service charge to their customers, it is further consideration for the principal supply (e.g. catering services) and follows the same VAT liability as that supply. If the customer, however, freely gives a tip over and above the total charge, no VAT is due on the tip and it is outside the scope of VAT. 22 VAT Guide | Taxable Person | VATG001