Supply Under VAT: What Counts as a Supply in the UAE

Article 7 removes some cases, such as most voucher issues and business transfers, and Article 11 adds deemed supplies. VAT at 5% applies when a taxable person makes a taxable supply for consideration in the course of business in the UAE (position as of October 2026).

The VAT Decree-Law does not give 'supply' a one-line definition. Instead, Article 1 defines VAT as a tax on the import and supply of goods and services at each stage of production and distribution, including the deemed supply, and then Title Three (Articles 5 to 12) explains what is and is not a supply.

Under Article 2, VAT is imposed on every taxable supply and deemed supply made by a taxable person, and on the import of concerned goods. A taxable supply is a supply of goods or services for consideration during the course of business by any person in the State, excluding exempt supplies. Consideration means everything received or expected to be received for the supply, in money or other acceptable forms of payment.

So, for a UAE business, four questions decide whether VAT can arise:

1. Is there a supply of goods or a supply of services (or a deemed supply)?
2. Is it made for consideration?
3. Is it made in the course of business?
4. Is the place of supply in the UAE, and is it taxable rather than exempt?

If the answer to the first question is no, VAT never starts. That is why the special cases in Article 7 and the agency rule in Article 9 matter as much as the rate. The registration test looks at the same building block: see taxable supplies.

Article 1 defines goods as physical property that can be supplied, including real estate, water and all forms of energy, as specified in the Executive Regulation. Article 5 of the Decree-Law (as amended by Federal Decree-Law No. 18 of 2022) treats two things as a supply of goods:

• the transfer of ownership of goods, or of the right to use them as an owner, to another person, as specified in the Executive Regulation; and
• entering into a contract between two or more parties that entails the transfer of goods at a later time, under the conditions in the Executive Regulation.

Article 2 of the Executive Regulation (Cabinet Decision No. 52 of 2017, as amended) fills in the detail. It lists, among others, a transfer of ownership under a written or verbal agreement for any sale, and a supply of real estate including the lease, sale and other forms of disposal. In practice this means:

• selling stock, equipment or vehicles is a supply of goods;
• a contract under which ownership passes later (for example on final payment) is treated as a supply of goods when the agreement provides for that transfer;
• supplies of real estate, including leases, follow the goods rules, which is why zero-rating and exemption for property depend on the type of building.

Classifying a supply as goods matters for the place of supply and for the date of supply rules.

Article 1 defines services as anything that can be supplied other than goods, and Article 6 says a supply of services is every supply that is not a supply of goods, including any services specified in the Executive Regulation. Services are the residual category: if something is supplied for consideration and it is not goods, it is a service.

Article 3 of the Executive Regulation gives examples of what a supply of services includes:

• the granting, assignment, cessation or surrender of a right (for example a licence to use software, a trademark or a franchise);
• making a facility or advantage available (for example a membership, access to a co-working space or a standby facility).

Article 3 of the Executive Regulation, as amended, also carves out serving as a board member in the cases it specifies, so that role is not treated as a supply of services. Check the current text if you hold directorships, because the wording and conditions changed with the 2024 amendments.

Because services are a catch-all, payments that do not look like sales can still be supplies: agreeing not to compete, releasing a contractual right in exchange for a fee, or giving exclusivity. Each is a supply of services if made for consideration in the course of business, and its place of supply then decides whether UAE VAT applies, including reverse charge on imported services.

Article 7 of the Decree-Law (as amended by Federal Decree-Law No. 18 of 2022) lists cases that are not a supply, as an exception to Articles 5 and 6:

• Vouchers: the sale or issue of a voucher is not a supply unless the consideration received exceeds its advertised monetary value, as specified in the Executive Regulation. See VAT on vouchers.
• Transfer of a business: the transfer of the whole or an independent part of a business from a person to a taxable person, to continue the business transferred, is not a supply. See transfer of a going concern.
• any other supply specified in the Executive Regulation.

Article 8 leaves it to the Executive Regulation to set the conditions for treating a supply with several components for one price as one supply or several. The current tests, including the single composite supply clause added from 1 October 2026, are explained in single composite supply.

Article 9 deals with agents. A supply made through an agent acting in the name of and on behalf of a principal is a supply by the principal. A supply through an agent acting in its own name is a direct supply by the agent. Getting this wrong means the wrong party charges VAT; see principal vs agent.

Some transactions are treated as supplies even without a sale. Article 11 lists the cases of deemed supply:

1. goods or services that formed part of a taxable person's business assets but are no longer treated as such, where supplied without consideration;
2. transfers of business goods between the UAE and an implementing GCC state, subject to the exceptions in the Article;
3. goods or services on which input tax may be recovered but which are used wholly or partly for non-business purposes, to the extent of that use;
4. goods and services the taxable person owns at the date of VAT deregistration.

Article 12 removes the charge where no input tax was recovered, where the supply is exempt, or where the input tax was already adjusted under the capital assets scheme. It also excludes low-value cases by reference to amounts set in the Executive Regulation. Article 5 of the Executive Regulation sets AED 500 per recipient of goods in a 12-month period, and AED 2,000 of total output tax on deemed supplies per supplier in a 12-month period. The gift rule is worked through in VAT on gifts and samples and the general concept in deemed supply.

A VAT-registered Dubai electronics trader has the following in one quarter. All are in the UAE.

• Sells a laptop for AED 10,000. Transfer of ownership of goods (Article 5). Standard rate under Article 3 is 5%, so output VAT is AED 500 on the AED 10,000 value.
• Sells a one-year repair plan for AED 1,000. No goods change hands, so it is a supply of services (Article 6). Output VAT at 5% is AED 50.
• Sells an AED 200 gift card for AED 200. Consideration does not exceed the advertised value, so the issue is not a supply under Article 7; VAT follows the voucher rules when it is redeemed.
• Gives a staff member a used office laptop for free. A business asset leaves the business without consideration, a deemed supply under Article 11 if input tax was recovered and no Article 12 exception applies.
• Sells one of its branches as a going business to another registrant. If the conditions are met, not a supply under Article 7.

The trader's output VAT on these lines is AED 550 plus any deemed-supply VAT. How each amount is measured is covered in value of supply.