ZERO RATING OF EXPORT OF GOODS
Exporting goods from the UAE falls under the zero-rated tax category, meaning no tax is to be levied, but the input tax incurred on related purchase and expenses can be claimed back. However, it's crucial to understand and adhere to specific guidelines before charging tax at zero rate for exports to avoid potential penalties down the road.

Zero-Rating Direct and Indirect Exports
Direct Export: This refers to goods being exported outside the UAE, with the supplier responsible for transportation or designating an agent to handle it.
Indirect Export: In the case of indirect export, the overseas customer is responsible for collecting goods from the supplier in UAE and exporting them themselves or via an appointed agent.

• The Direct Export shall be subject to the zero rate if the following conditions are met:
a) The Goods are physically exported to a place outside UAE or are put into a customs suspension regime within 90 days of the date of the supply.
b) Official and commercial evidence of Export or customs suspension is retained by the exporter.


• An Indirect Export shall be subject to the zero rate if the following conditions are met:
a) The Goods are physically exported to a place outside the UAE or are put into a customs suspension regime within 90 days of the date of the supply under an arrangement agreed by the supplier and the Overseas Customer at or before the date of supply
b) The Overseas Customer obtains official and commercial evidence of Export or customs suspension and provides the supplier with a copy of this.
c) The Goods are not used or altered in the time between supply and Export or customs suspension
d) The Goods do not leave the State in the possession of a passenger or crew member of an aircraft or ship.

What Doesn't Count as an Export?
Movements of goods into a designated zone from within the state or the supply of goods to a designated zone are not considered exports for the purpose of zero-rating.

Understanding the documentation for proving Export
To qualify for zero-rating, you'll need to provide official and commercial evidence of your export.
Official evidence includes export documents issued by the local Emirate Customs Department for goods leaving the state. In practical scenario, this refers to the Customs Exit form issued by relevant customs authority with their stamp proving the export of goods. This will be issued on request by the exporter and upon inspection of goods.
Commercial evidence include an airway bill, bill of lading, consignment note, certificate of shipment, and more.

Navigating Administrative Exceptions
There are several scenarios where adhering to these procedural aspects of the law might be challenging. For example, if the goods are of small value or goods are exported through courier, it is difficult to obtain Customs Exit form which is the Official Evidence. Also there might arise cases where the 90 days time period could not be followed. FTA has provided the option of Administrative Exceptions to help the tax payer in these scenarios. Following requests can be made for the respective cases:

1. Evidence to Prove Export of Goods:
A registrant may request the Federal Tax Authority (FTA) to permit the use of an alternative form of evidence for proving the export of goods. The FTA will review the request and specify an alternative form of evidence based on the nature of the export or the goods.
The registrant should provide the reasons and circumstances for seeking approval to use alternative evidence and details of the proposed alternative.

2. Extending the Time for Export of Goods:
A registrant may request an extension of time for physically exporting goods outside the UAE. The FTA can grant an extension beyond the 90-day period if specific circumstances apply, such as those beyond the supplier's and recipient's control or due to the nature of the supply. The registrant should outline the reasons and circumstances, as defined in the legislation, for seeking an extension.

In Conclusion
Zero-rating is a valuable concept for businesses involved in international trade, making your goods more competitive on the global stage. However, understanding the rules, exceptions, and evidence requirements are crucial to help you make the most of these opportunities. If you need assistance with specific tax scenarios or have questions about how zero-rating applies to your business, don't hesitate to reach out to us at finance@hicuae.com