Previously, the FTA have stated that the UAE shall treat the movement of goods between UAE and Kingdom of Saudi Arabia (“KSA”) as Non-GCC Exports and Imports. This shall be the practice until both the UAE and KSA recognise each other as “VAT Implementing States”. There were some doubts as to whether this approach extends to supply of services between the UAE and KSA.
The FTA have announced that this approach for supplies of goods between the UAE and KSA, shall also apply to the supply of services between the UAE and KSA. UAE companies should evaluate the impact of these rules announced by the FTA on their IT systems, pricing decisions and other requirements relating to any services provided to or procured from the KSA.