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Simple hotel bill format for Export

alright everyone get ready because today we're going deep on something super important for businesses in the UAE zero rated supplies under UAE VAT yeah we're talking VAT it can get tricky so let's dive right in hello everyone happy to be here to break it all down for you so zero rated it sounds pretty simple right like zero tax yeah it does sound straightforward but unfortunately it's not quite that simple when it comes to VAT okay so it's not just a free pass then right you're still in the VAT system you're just playing the game with a special card you still need to keep track of everything file returns dot your eyes and cross your stats it's like I still have to do all the paperwork yeah but I'm not actually paying anything exactly and here's where it gets interesting even though you're not charging VAT on these zero rated supplies you might still be paying VAT on the stuff you need to actually make those supplies wait so I'm not charging VAT but I'm still paying it how does that even make sense yeah it can be confusing that's where input VAT comes in input VAT yeah it's the VAT you pay on your business purchases like the raw materials or services you need to create your product now the good news is if you're registered for VAT you can actually reclaim that input VAT you paid hold on so I'm selling things that are zero rated but I might actually get money back from the government because of the VAT I paid on my supplies you got it wow okay I'm starting to see why understanding this whole zero rated thing is so important it's not just about avoiding VAT on sales it's like a whole strategy absolutely it's about managing your entire VAT position right to optimize your cash flow exactly okay so now I know our listeners are dying to know what kind of supplies actually qualify for this zero rating let's get into it let's unlock the treasure chest hit me with the first category okay the classic one exports of goods and services yes the international jet setter of the VAT world so if I'm selling my amazing products to customers outside the UAE I'm in zero rated territory right well it's not quite as simple as just shipping something across the border we need to be a bit more precise here okay ing to the UAE v 8th law an export has to meet certain conditions okay let's break it down for goods they need to physically leave the UAE we're talking containers on ships packages on planes that sort of thing right but when we're talking about services things get a bit more complex how so we need to be able to prove that the service was truly exported meaning it was provided to a customer whose main place of business is outside the UAE so just because I answer an email from someone in another country doesn't mean I've exported a service right there needs to be a clear link to a business operating outside the UAE exactly something that always trips people up direct versus indirect exports duh yeah what's the difference these terms are important because they determine who's responsible for actually getting the goods out of the UAE and proving it imagine you're a business here in the UAE you're selling handmade carpets to a luxury hotel in London okay I'm picturing it no if you handle the shipping yourself hire a freight forwarder do all the export paperwork that's a direct export so I'm the one making sure those carpets get on that plane to London got it what about indirect exports then imagine this instead of you dealing with the shipping that fancy London hotel sends their own representative to pick up the carpets from your warehouse here in Dubai they're the ones handling the logistics and providing the proof of export so it's all about who's actually in charge of the shipping and paperwork exact and who's ultimately responsible for proving those carpets actually left the UAE right now I know there are some time limits involved here it's not like you can just say oh yeah those carpets are on their way to London eventually you're right there's a deadline right for both direct and indirect exports the goods need to leave the UAE within 90 days of the supply date and you need proper documentation to prove it okay so we've got 90 days to get those carpets out of here what happens if there's a delay like a global shipping crisis hits and those carpets are stuck in port do I lose my zero rating well you can request an extension okay it's not automatic okay you need a very good reason for the delay and you need to apply for it through the FTA portal before that 90 day deadline so no last minute panic emails not a good idea best to plan ahead and meet that deadline if possible all right so we've covered exporting goods what about services how do you prove that something intangible like consulting advice or software development has actually left the UAE that's where documentation is key okay you need a solid contract stating clearly that the client is outside the UAE and that the work is being performed outside the UAE so invoices emails report exactly anything that creates a clear paper trail so it's about building a strong case showing that the service was truly delivered to an overseas client yes and consumed outside the UAE precisely no funny business everything above board alright let's move on to another exciting category okay international transport yeah of goods and passengers oh now we're talking planes trains automobiles the whole shebang tell me how does VAT apply to all that well UAE VAT law is pretty clear transporting goods and passengers from the UAE to a destination outside the UAE or vice versa is zero rated okay and this includes related services that are an essential part of that international journey okay so let's say I'm flying from London to Sydney with a layover in Dubai which parts of that journey would be zero rated so the legs from London to Dubai and Dubai to Sydney definitely zero rated okay the tricky part is that layover in Dubai right if you stay within the UAE during that time like taking a cab to a hotel for a desert safari a quick detour to see the Burj Khalifa exactly that wouldn't be zero rated that cab ride subject to VAT so my little side trip is gonna cost me some VAT fair enough what about things like those tiny pretzels they give you on the plane hmm or travel insurance for the trip zero rated too absolutely they're considered directly related to the international transport okay good now what about the actual vehicles are we talking zero rated airplanes and cruise ships well not all of them hmm the law is specific here it applies to aircraft ships and boats designed for commercial transportation of passengers or goods okay so your friends fancy yacht not gonna qualify there but commercial airlines cargo ships cruise liners those are in got it it also includes buses and trains designed for public transportation okay but there's a catch they need to be designed to carry 10 or more passengers 10 or more passengers so a school bus full of kids is zero rated actually that's a common misunderstanding a school bus even if it's packed with students doesn't qualify why not the vehicle has to be designed for the general public not a specific group of people ah I see so school buses tour buses for a specific company outing those are out right it has to be good old fashioned public transportation yeah now what about the things you need to keep those zero rated vehicles running spare parts maintenance services even those little bags of peanuts they give you on the plane those can be zero rated too great but with a few conditions but for goods yeah they need to be incorporated into the vehicle itself like spare parts for repairs right or things that get used up during operation like those tiny bags of peanuts exactly what about the services they need to be performed on board the vehicle or directly related to its repair and maintenance like engine repairs cabin cleaning exactly so it's all about being directly connected to those international transport superstars right what's next on our zero rated adventure let's talk about something shiny investment precious metals oh fancy are we talking buried pirate treasure here yeah gold doubloons not quite pirate treasure but we are talking gold silver and platinum okay to be considered investment precious metals under UAE VAT law they have to meet certain criteria so my grandmother's silver tea set probably doesn't count probably not the metal has to be at least 99% pure okay and it has to be in a form that's commonly traded on global markets bars coins things like that so we're not talking about family heirlooms or decorative pieces it's for those serious investors exactly okay I'm starting to see the distinction what's next next up we have new residential buildings ah real estate always a hot topic here in the UAE so if I buy a brand new apartment in Dubai I don't have to pay VAT that's the general idea but of course there are some caveats of course first residential building has a specific meaning in VAT law okay we're talking about any building design for people to live in apartments yes Villas right those trendy townhouses popping up everywhere those too student dorms yes even nursing homes exactly so a hotel wouldn't count no hotels service departments those fancy penthouse suites for short term stays all excluded got it so it's about creating homes not temporary lodging right now I've heard there's a time limit here too it's not like any residential building gets a VAT exemption you're right this zero rating only applies to the first supply of a residential building within three years of its completion three years so if you buy an apartment straight from the developer within those three years you're good lucky me but if you buy it from someone who bought it from the developer two years ago then VAT applies okay so it's like a three year window of VAT free bliss exactly makes sense okay what if an older building is converted into residential units like an old office block turned into trendy loft apartments good question does the zero rating magic apply there it does really if a building that wasn't residential in the past 5 years yeah is converted into residential units then the first supply of those new units within three years of the conversion's completion is zero rated wow so there's an incentive for developers to revamp those old buildings yes create more residential spaces now what if a building is specifically designed for charity like a non profit providing affordable housing that qualifies too oh wow if it's used solely for charitable purposes by an approved charity the first sale or lease is zero rated amazing okay so we've covered exports international transport precious metals and residential buildings we've got quite a list going here we do what other treasures are hidden in this VAT vault we have a few more exciting categories to explore but I think this is a good place to pause for now I agree we've covered a lot and I'm sure our listeners need a moment to digest all this we'll be back soon with more zero rated adventures don't go anywhere welcome back everyone I hope you've got your thinking caps on because we're about to go even deeper into the zero rated universe that's right we've laid the groundwork now let's see how it all works in practice love it real world examples are the best way to make sure this all sinks in so hit me with your first VAT challenge alright imagine you're a marketing wiz here in the UAE you land a big client a fashion brand based in Paris they want you to develop a killer social media campaign targeting the European market everything's remote no one from their team is coming to the UAE would your services be considered a zero rated export okay let me think this feels like a classic exporter of services scenario the client is outside the UAE the work is being done remotely from here and the target market is also outside the UAE I'd say it takes all the boxes zero rated rate you nailed it yes that's a textbook example of a zero rated export of services okay let's make it a bit harder all right what about a shipment of goods that starts outside the UAE passes through a free zone here in Dubai and then continues on to its final destination let's say India zero rated or not hmm this is where it gets tricky the key here is that the goods never actually entered the UAE market okay they were simply passing through a designated free zone which is considered outside the UAE for VAT purposes so it's like those airport transit lounges you're technically in the airport yeah but you haven't officially entered the country so the goods are just passing through they never really arrive right so that would still be considered a zero rated supply yes wow okay next VAT brain teaser bring it on let's say I'm a real estate developer I'm building a fancy new residential tower in Dubai I decide to include a state of the art gym and a luxurious spa exclusively for the residents would those amenities be considered zero rated too that's a great question while those amenities definitely add value to the building they're not considered essential parts of a residential unit uh they're separate supplies and would be subject to standard VAT so I can't just claim the whole project is zero rated right because it's attached to a residential building right those extra perks have their own VAT destiny exactly alright next scenario I'm a health care provider I offer all sorts of services routine checkups cosmetic procedures the whole nine yards how do I know which ones are zero rated and which ones aren't okay so here's where the line gets drawn it's about preventative health care versus cosmetic procedures preventive health care services those that focus on keeping people healthy preventing illness those are generally zero rated okay like routine checkups yeah vaccinations screenings it's all about keeping people healthy exactly catching potential problems early right what about treatments for existing medical conditions those would usually be zero rated too as long as they're provided by a licensed professional or institution makes sense but when we get into the cosmetic stuff hmm things change right treatments that are mainly for aesthetic purposes right just enhancing appearance not really addressing a medical issue those are not considered zero rated so nose job to improve breathing probably zero rated likely yes but a nose job purely for looks yeah standard V a t exactly it all comes down to the primary purpose right okay last one I'm an education provider I offer a bunch of courses workshops language classes online courses how to figure out which ones are zero rated the key is who you're teaching and who's running the show educational services provided by nurseries preschools schools higher education institutions that are owned or funded by the government those are zero rated so government schools are in but my private language academy is out of luck that's right and it's not just about the institution either it's also about the students oh right the zero rating only applies to services provided to students right who are enrolled in those government recognized institutions so if I'm offering professional development courses to companies right or teaching English to tourists those wouldn't be zero rated correct it's all about supporting those core educational activities within that government approved framework exactly got it these examples have been super helpful I feel like I'm starting to see the world through zero rated lenses now glad to hear it remember understanding these nuances is crucial for accurate VAT accounting managing your cash flow and making smart decisions for your business absolutely but before we get too carried away with our VAT wisdom I want to remind everyone this is just the tip of the iceberg we've scratched the surface but for specific advice it's always best to talk to a qualified VAT professional absolutely now I know what our listeners are thinking this is all very interesting but how does it actually affect my bottom line that's exactly what we'll be exploring in the final part of this deep dive get ready to discover how zero rated supplies can impact your business in the UAE all right we're back we've explored the what and the how of zero rated supplies now let's talk about the why why does all of this even matter it's time to see the bigger picture how can understanding zero rated supplies give your business a real advantage let's get strategic I'm a business owner I'm dealing with a lot of these zero rated supplies what are the key takeaways for me first accuracy is crucial okay getting it wrong classifying something as zero rated when it's not can lead to penalties right nobody wants that make sure your documentation is perfect your record keeping is spotless dot those eyes cross the side exactly okay so accuracy is non negotiable what else cash flow if you're dealing with a lot of zero rated supplies registering for VAT can actually be a good move wait even if I'm not required to yeah why would I voluntarily sign up for more paperwork because of that input VAT we talked about well right the VAT I pay on my business purchases exactly by registering you can reclaim it and that can really help my cash flow especially if you have high input costs so it's like I might be dealing with more paperwork in the short term but in the long run I could be saving a lot of money precisely okay so I'm seeing the advantages for suppliers what about the buyers if I'm the one purchasing something that's supposed to be zero rated what should I be careful about don't just take their word for it okay do your due diligence right ask for proof make sure they actually meet the criteria so it's like checking someone's credentials before you trust them exactly I need to make sure they're legitimate check those tax invoices look for supporting documentation don't hesitate to ask questions because if it turns out the supply isn't really zero rated you might end up footing the VAT Bill yourself okay so both sides need to be on top of things suppliers and buyers right now are there any broader strategic implications here beyond just compliance and cash flow absolutely think about pricing if you're exporting goods you can potentially offer more competitive prices because you're not factoring VAT into your costs ah I see so understanding zero rated supplies can be a real advantage for exporters exactly and it's not just about exports think about real estate that zero rating on new residential buildings it can really influence developers right their investment decisions yeah the types of properties they build because if they know they can sell those new apartments VAT free for the first three years that's a big selling point right it makes them much more attractive to buyers exactly so this isn't just about checking boxes for the tax authorities it's about making smart business decisions absolutely gaining a competitive edge and ultimately achieving your business goals this has been amazing we've really uncovered a whole new level of strategic thinking here I'm glad you found it helpful any final words of wisdom for our listeners the UAE is constantly changing VAT law is evolving stay informed stay curious and don't be afraid to ask for professional guidance couldn't agree more huge thanks to our VAT expert for shedding light on this complex topic I'm glad to be here and to our listeners we hope this deep dive has helped you understand the world of zero rated supplies and if you're looking for more personalized advice don't forget to check out the comment section we have a great community of experts ready to help exactly and be sure to subscribe for more deep dives into the world of business and finance one last thing before we go a quick legal disclaimer the information in this episode is for educational purposes only it's not legal advice for specific guidance please consult with a qualified VAT professional until next time happy VAT navigating