What supplies are exempt from VAT in the UAE: the law explained

Q: What supplies are exempt from VAT in the UAE?

Article 46 of the UAE VAT Law exempts four groups: financial services specified in the Executive Regulation; residential buildings sold or leased (other than the first supplies that are zero-rated); bare land; and local passenger transport. The Executive Regulation sets the conditions. No VAT is charged on an exempt supply, and the business generally cannot recover the VAT on costs that relate to it. That is the difference from zero-rated supplies (Article 45), where the VAT on costs can be recovered.

What supplies are exempt from VAT in the UAE?

Short answer

Article 46 of the UAE VAT Law exempts four groups: financial services specified in the Executive Regulation; residential buildings sold or leased (other than the first supplies that are zero-rated); bare land; and local passenger transport. The Executive Regulation sets the conditions.

No VAT is charged on an exempt supply, and the business generally cannot recover the VAT on costs that relate to it. That is the difference from zero-rated supplies (Article 45), where the VAT on costs can be recovered.

Checked against the official texts below. The law is the authority; this is not tax advice.

What the law says

Federal Decree-Law No. 8 of 2017 on Value Added Tax and amendments, Article 46

Article 46 - Supply Exempt from Tax[^19]

The following shall be exempt from Tax:

Supply of financial Services that are specified in the Executive Regulation of this Decree-Law.
Supply of residential buildings through sale or lease, other than that which is zero-rated according to Clauses 9 and 11 of Article 45 of this Decree-Law.
Supply of bare land.
Supply of local passenger transport.

The Executive Regulation of this Decree-Law shall specify the conditions and controls for exempting the supplies mentioned in the preceding Clauses of this Article.

Decisions and FTA guidance on this

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