VAT on Transportation Services in UAE

The latest public clarification issued by the Federal Tax Authority (FTA) sheds light on the treatment of VAT on transportation services in UAE. According to Article 46 (4) of the VAT Decree-Law, the supply of local passenger transportation in the UAE is exempt from VAT. Similarly, Article 45 (1) of the Executive regulation exempts the supply of local passenger transportation services through the means of transport by land, water, or air within the UAE. However, if the transportation services are undertaken for pleasure trips such as sightseeing, or other forms of entertainment, then the exemption will not apply.

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