Definition

A Zero-Rated Supply is a taxable supply in the UAE charged at 0% VAT. Unlike exempt supplies, businesses can still recover input VAT on expenses related to zero-rated sales.

Key points

• Key examples: exports of goods and services, international transport, certain healthcare and education services.
• Requires proper documentation to prove eligibility.
• Must still be reported in the VAT return, even though VAT is charged at 0%.

Practical example

A Dubai logistics firm exports goods worth AED 200,000 to Europe. It issues an invoice with 0% VAT but can recover input VAT paid on related shipping and warehousing costs.

Why it matters

Zero-rated supplies help businesses stay competitive internationally while allowing full recovery of input VAT.