VAT on Telecommunication and Electronic Services

Is it an article (23) of Decision No. (52) are under taxable supplies and how can we charge VAT on these services?

The answer is YES! All the above-categorized services consider as taxable services and service provider charge VAT by the standard rate of 5% on given invoice to the service recipient.

How to manage the rendering of telecommunication and electronic services outside UAE?

The export of telecommunications services shall be subject to the zero rate in the following situations:

  1. Telecommunication services commence by telecommunication supplier inside the state of UAE to a nonresident of UAE who is the supplier of Telecommunication services.
  2. Telecommunication services commence by telecommunication supplier inside the state of UAE to the nonresident of UAE who is not the supplier of Telecommunication services.

What’s the impact of VAT if unregistered person (outside UAE) Invoice to the registered person (inside UAE)?

In that case, VAT implemented on the rendering of telecommunication and electronic services outside state depend on the place where a supply is initiated shall be identified according to the following:

  1. The place of the Person who commences the supply.
  2. If (a) point does not apply, the Person who pays in return for the services.
  3. If (a) and (b) point do not apply, the Person who contracts for the purposes of the supply.

Am I file VAT return?

Yes! Telecommunication and electronic services related industries also file return on monthly or quarterly basis on given format and pay VAT with the return.

How telecommunication and electronic services get registered to be the part of VAT?

The process of Registration under VAT is decided by Cabinet in Article (6), (7), (8) of decision no. (52) Named as Executive regulation of the federal Decree-Law no (8) on value-added tax. In the Process of registration telecomm and electronic services registered under Mandatory registration or voluntary registration.

When telecommunication and electronic services get mandatory registration?

The Mandatory Registration Threshold shall be AED 375,000 by applying through the application under article (6) within thirty days of being required to register.

When telecommunication and electronic services get Voluntary registration?

The Voluntary Registration Threshold shall be AED 187,500 by applying through the application under article (6) within thirty days of being required to register.

Which type of services considers telecommunication and electronic services?

The Cabinet decision defines the “telecommunication and electronic services” meaning and industrial products as follows;

Telecommunication services” means delivering, broadcasting, converting or receiving any of the services specified below by using communications equipment or devices that transmit, broadcast, convert, or receive such service by electrical, magnetic, electromagnetic, electrochemical or electromechanical means or other means of communication, including:

  1. Wired and wireless communications.
  2. Voice, music and other audio material.
  3. Viewable images.
  4. Signals used for transmission with the exception of public broadcasts.
  5. Signals used to operate and control any machinery or equipment;
  6. Services of an equivalent type which have a similar purpose and function.

Electronic services” means Services which are automatically delivered over the internet, or an electronic network, or an electronic marketplace, including:

  1. Supply of domain names, web-hosting and remote maintenance of programs and equipment;
  2. The supply and updating of software;
  3. The supply of images, text, and information provided electronically such as photos, screensavers, electronic books and other digitized documents and files; d. The supply of music, films, and games on demand;
  4. The supply of online magazines;
  5. The supply of advertising space on a website and any rights associated with such advertising;
  6. The supply of political, cultural, artistic, sporting, scientific, and educational or entertainment broadcasts, including broadcasts of events;
  7. live streaming via the internet;
  8. The supply of distance learning;
  9. Services of an equivalent type which have a similar purpose and function.

As you know well-known companies execute their business in the United Arab Emirates for decades. Some of these companies named as follows;

  • Alpha Data provides services for system integration since 1981.
  • Burhani provides services of I/T Consulting since 2003.
  • Du provide services of Emirates integration Telecommunication Company since 2005.

Read more about UAE Tax Invoice Article (59)