UAE Tax VAT Supplies, place, time, value and reverse charge: practice questions with answers

Question 1

Tamrah Retail LLC, a VAT registrant, operates three outlets. On 1 December 2026 it sells its Al Ain outlet, including the shop lease, fixtures, stock, staff contracts and customer loyalty records, to Fanar Stores LLC, a VAT registrant that will carry on the same retail business from the outlet without a break. Tamrah keeps its other two outlets. How should Tamrah treat the sale of the Al Ain outlet for VAT?

1. A Not a supply: an independent part of the business passes to a taxable person
2. B Standard-rated at 5%, because only part of Tamrah's business is transferred to Fanar
3. C Zero-rated, because the buyer is a VAT registrant that can recover any VAT charged
4. D Standard-rated on the stock and fixtures, with the lease and staff transfer outside scope

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Answer: A. Article 7(2) of the VAT Decree-Law provides that the transfer of the whole or an independent part of a business to a taxable person for the purpose of continuing that business is not a supply of goods or services. The Al Ain outlet is an independent part of Tamrah's business (premises, stock, staff and customers moving together), Fanar is a taxable person and it will carry on the same activity. Tamrah therefore charges no VAT on the transfer. The relief is not limited to sales of the whole business and does not split the package into taxable and non-taxable assets.

Question 2

Hartwerk GmbH, a German manufacturer with no establishment in the UAE, sells a production line to Najm Plastics LLC, a VAT registrant in Ajman. Hartwerk ships the line from Germany, and Hartwerk's own engineers install and commission it at Najm's factory in Ajman before Najm accepts it. Where is the place of supply of the production line?

1. A In the UAE, because the goods are installed in the State by the supplier
2. B In Germany, because the goods are located there when shipment begins
3. C Outside the State, because Hartwerk has no place of establishment in the UAE
4. D In the UAE for the installation only; the machinery is supplied in Germany

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Answer: A. Under Article 27 of the VAT Decree-Law, where goods are installed or assembled by or on behalf of the supplier, the place of supply is where the installation or assembly takes place. Hartwerk installs the line in Ajman, so the place of supply of the whole supply is the UAE. (Who accounts for the tax, the reverse charge or registration of the non-resident, is a separate question not asked here.)

Question 3

Saffron Events Catering LLC, a VAT registrant in Dubai, provides two catering contracts in December 2026: (1) food and service at a product launch held in a Dubai hotel for a UK company with no UAE establishment; (2) food and service at a wedding held in Cairo for a Dubai-resident family, prepared and served in Cairo by Saffron's team. What is the VAT treatment of the two contracts?

1. A (1) zero-rated as an export; (2) standard-rated in the UAE
2. B (1) standard-rated in the UAE; (2) standard-rated in the UAE
3. C (1) standard-rated in the UAE; (2) outside the scope of UAE VAT
4. D (1) outside the scope of UAE VAT; (2) zero-rated as an export

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Answer: C. Under Article 30 of the VAT Decree-Law, restaurant, hotel, food and drink catering services are supplied where they are actually performed. Contract (1) is performed in Dubai, so it is standard-rated even though the customer is overseas (export zero-rating does not apply to services supplied in the State under a special rule). Contract (2) is performed in Cairo, so its place of supply is outside the State and no UAE VAT is charged, even though the customer and supplier are in the UAE.

Question 4

On 18 November 2025 Jawhar Displays LLC, a VAT registrant, delivers display units to a retailer on approval: the retailer may return them or accept them. No invoice is issued and no payment is made. By 2 November 2026 the retailer has neither accepted nor returned the units; it eventually accepts them on 10 December 2026. What is the date of supply?

1. A 18 November 2026
2. B 18 November 2025
3. C 10 December 2026
4. D 18 May 2026

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Answer: A. Under Article 25 of the VAT Decree-Law, where goods are placed at the recipient's disposal on approval or on a returnable basis, the date of supply is the date the recipient accepts them, or 12 months after the date of transfer, whichever is earlier (unless payment or an invoice comes first). Twelve months after 18 November 2025 is 18 November 2026, which is earlier than acceptance on 10 December 2026.

Question 5

Ruwais Holdings LLC, a VAT registrant, sells office equipment with a market value of AED 80,000 to its sister company Ruwais Homes LLC for AED 50,000 (both excluding VAT). Ruwais Homes makes only exempt residential leases and cannot recover any input tax. The two companies are related parties but are not in a VAT group. What output tax should Ruwais Holdings charge?

1. A AED 1,500
2. B AED 2,500
3. C AED 3,809.52
4. D AED 4,000

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Answer: D. Article 36 of the VAT Decree-Law requires a supply between related parties to be valued at market value (Article 25, Executive Regulation) where the consideration is below market value and the recipient is not entitled to recover the tax in full. All conditions are met.

Output tax = 5% x 80,000 = AED 4,000.

Question 6

In February 2026 Zahra Logistics LLC, a VAT registrant, receives IT consulting services from a supplier in India with no UAE establishment. Its finance team plans to raise a self-invoice for the reverse charge, as it did in 2025. Under the VAT Decree-Law as amended by Decree-Law No. 16 of 2025, what is required?

1. A No self-invoice is issued; Zahra keeps the supplier's invoice and contract
2. B A self-invoice must be issued within 14 days of the date of supply
3. C A simplified tax invoice must be issued, as the supplier is not registered
4. D The Indian supplier must register in the UAE and issue a tax invoice

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Answer: A. Decree-Law No. 16 of 2025, effective 1 January 2026, amended Article 48(1) of the VAT Decree-Law so that a recipient accounting for VAT under the reverse charge no longer issues a self-invoice. Zahra still reports the output tax (and input tax, where recoverable) in its return and keeps the supplier's invoice, the contract and other supporting documents (for imported goods, the customs documents). Simplified tax invoices are not allowed for reverse-charge supplies.