Which goods and services are zero-rated for VAT in the UAE?

Article 41 – Zero-rating Healthcare Services 25 1. The phrase “Healthcare Services” means any Service supplied that is generally accepted in the medical profession as being necessary for the treatment of the Recipient of the supply, including preventive treatment. 2. A supply of healthcare services shall be zero rated on the condition that the supply shall: a. Be made by a healthcare body or institution, doctor, nurse, technician, dentist, or pharmacy, licensed by the Ministry of Health and Prevention or by any other competent authority concerned with healthcare. b. Relate to the wellbeing of a human being. 3. "Healthcare services" do not include any of the following: a. Any part of a supply that relates to staying in or attending an establishment the principal purpose of which is to provide holiday accommodation or entertainment such that any Healthcare Service is incidental to the provision of the accommodation or entertainment. b. Elective treatment for cosmetic reasons other than prescribed by a doctor or medical professional for treating or prevention of a medical condition. 4. A supply of Goods or an Import of Concerned Goods is zero-rated if it is a supply or an Import of:26 a. Any medical product as specified in a decision issued by the Cabinet. b. Any other Goods not covered by paragraph (a) of this Clause which are supplied in the course of supplying a Person with zero-rated Healthcare Services that are necessary for the supply of such Healthcare Services. Title Seven – Exempt Supplies

Article 45 - Goods and Services Subject to Zero Rate18 The zero rate shall apply to the following Goods and Services: 1. A direct or indirect Export of Goods and Services to outside the Implementing States as specified in the Executive Regulation of this Decree-Law. 2. International transport of passengers and Goods which starts or ends in the State or passes through its territory, including Transport-related Services. 3. Air passenger transport in the State if it is considered an “international carriage” pursuant to Article 1 of the Warsaw Convention for the Unification of Certain Rules Relating to International Carriage by Air 1929. 4. Supply or Import of air, sea and land means of transport for the transportation of passengers and Goods as per the criteria and conditions specified in the Executive 18 Article amended as per Federal Decree-Law No. 18 of 2022. Federal Decree-Law No. 8 of 2017 and its amendments – As published by the Ministry of Finance 21 Regulation of this Decree-Law. 5. Supply of Goods or Services, or Import of Concerned Goods, related to the supply of the means of transport mentioned in Clause 4 of this Article and which are designated for the operation, repair, maintenance or conversion of these means of transport. 6. Supply or Import of air or sea rescue and assistance aircrafts or vessels. 7. Supply of Goods and Services related to the transport of Goods or passengers aboard air, sea and land means of transport pursuant to the provisions of Clauses 2 and 3 of this Article, designated for consumption on board; or anything consumed by any means of transport, any installations or addition thereto or any other use during transportation. 8. The supply or Import of investment precious metals. The Executive Regulation of this Decree-Law shall specify the precious metals and the standards based on which they are classified as being for investment purposes. 9. The first supply of residential buildings within 3 years of its completion, either through sale or lease in whole or in part, according to the controls specified in the Executive Regulation of this Decree-Law. 10. The first supply of buildings specifically designed to be used by Charities through sale or lease according to the controls specified in the Executive Regulation of this Decree-Law. 11. The first supply of buildings converted from non-residential to residential through sale or lease according to the conditions specified in the Executive Regulation of this Decree-Law. 12. The supply or Import of crude oil and natural gas. 13. The supply of educational Services and related Goods and Services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government, as specified in the Executive Regulation of this Decree-Law. 14. The supply of preventive and basic healthcare Services and related Goods and Services, and Import of related Concerned Goods according to what is specified in the Executive Regulation of this Decree-Law. Federal Decree-Law No. 8 of 2017 and its amendments – As published by the Ministry of Finance 22 Chapter Two – Exemptions

Article 33 – Zero-rating International Transportation Services for Passengers and Goods 20 1. The supply of international transportation Services for passengers and Goods and Transport-related Services shall be subject to the zero rate in the following cases: a. Transporting passengers or Goods from a place in the State to a place outside the State. b. Transporting passengers or Goods from a place outside the State to a place in the State. c. Transporting passengers from a place in the State to another place in the State by sea or air or land as part of a supply of an international transport of those passengers if either or both the first place of departure, or the final place of destination, is outside the State. d. Transporting Goods from a place in the State to another place in the State if the Services are supplied by the same supplier as part of the supply of Services of transporting these Goods either from a place in the State to a place outside the State or from a place outside the State to a place in the State. 2. The following Goods and Services shall be zero-rated if they are supplied in respect of the transportation Services of passengers or Goods to which Clause 1 of this Article applies: a. The Goods which are supplied for use or consumption or sale by or on an aircraft or a ship. b. The Services supplied to the recipient of transportation services during the supply of transportation services. c. The Service of insuring, or the arranging of the insurance, or the arranging of the transport of passengers or Goods. 3. A supply of a postage stamp issued by Emirates Post Group Company shall be zerorated where the postage stamp may only be used or redeemed for transportation of Goods to a place outside the State.

6. Zero-rated and exempt supplies 6.1. Chapter summary The purpose of this chapter is to give an overview of the supplies which will be subject to VAT at the zero rate and supplies which will be exempt from VAT. More detailed Guides will be provided separately on some of the areas below. 6.2. Zero-rated supplies 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 metals. 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 gas. 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. 6.3. Exempt supplies The following supplies are exempt from VAT:   23 Financial services which are not conducted for an explicit fee, discount, commission, rebate or similar type of consideration, including life insurance and reinsurance of life insurance. Residential buildings, other than the residential buildings which are specifically zero-rated. VAT Guide | Taxable Person | VATG001

3. VAT 3.1 What is a taxable supply? Most business transactions involve supplies of good or services. A taxable supply is one where there is:     a supply of goods or services; for consideration; supplied in the course of conducting business in the UAE; by a VAT registered business (or a business that is obliged to be VAT registered). Taxable supplies may either be subject to the standard rate or zero rate of VAT. The term ‘taxable supply’ excludes exempt supplies and any supplies that are outside the scope of UAE VAT. 3.1.1 Standard rate In general terms, where VAT is charged at the standard rate, businesses that are registered for VAT are able to recover the VAT they are charged by their suppliers on goods and services, subject to certain conditions. VAT which is incurred on purchases is known as ‘input tax’. 3.1.2 Zero rate VAT is charged but at 0% on zero-rated supplies. Zero-rated supplies are treated as taxable supplies in all respects, including the right of the person making the supply to recover the VAT on their own business expenditure. 3.2 What is an exempt supply? No VAT is charged on exempt supplies. As these supplies are not ‘taxable supplies’, the supplier cannot recover any of the VAT on expenses (input tax) directly incurred in making exempt supplies. In addition, businesses which make supplies with a mixture of differing VAT liabilities will need to use a method of apportionment in respect of VAT incurred on general costs (i.e. input tax which is non-attributable to either taxable or exempt supplies). 7 VAT Guide | Financial Services | VATGFS1