VAT in the GCC Countries (Saudi Arabia, UAE)

The Gulf Cooperation Council (GCC) countries will start applying VAT on sales. Per January 1st, Saudi Arabia and UAE are the first two countries to introduce VAT. A year later, the other countries are expected to join.

Invoice layout requirements

- Show a sample of an invoice (visual capture attention)
- Explain the new columns and values in the invoice layout (English version)
- Explain draft of Arabic update of invoice layout (TBD)

Rules for applying VAT

In this section we provide a generic description of the structure that is likely needed to match the SA and UAE VAT requirements, followed by the expected rules to apply this structure.

Disclaimer: The rules for applying VAT to sales need to specified by your local accountant or tax inspector. The information below is for general information purposes only and cannot formally be relied upon.

VAT Codes

CodeDescriptionTax Rate
SR-SStandard rated sales5 %
ZR-D-SZero rated sales, domestic0 %
ZR-EXP-SZero rated sales, exports, non-GCC0 %
EX-SExempt salesNot applicable
OOSOut of scope for VAT purposesNot applicable
OOTS-GCCOutside territorial scope - Client in GCC
Similar to EU Reversed VAT
Not applicable

Aircraft categories

The rules for if an aircraft is considered commercial or private or not yet formally published.

PrivatePrivate use aircraft
CommercialCommercial aircraft (airliner)

Customer categories

DomesticAny debtor that has a country for VAT purposes that is to domestic to the FBO. If the customer's country is unknown, it is to be regarded as domestic as well.
GCCAny debtor that has a country for VAT purposes that is one of the other GCC VAT-countries. If the VAT Tax Identification Number of the client is not known, the debtor is to be regarded as Domestic.
Rest of WorldAny debtor that has a country for VAT purposes that is outside of the VAT GCC group of countries

Flight categories

For ground handling purposes, the rules are not yet formally specified as to when the service is considered to be towards an international or domestic flight. FBO One has can be configured to check the inbound, outbound or both related flights.

DomesticFlight with a local destination or route
InternationalFlight with an international destination or route

Product categories

Sample productPurpose of serviceDefault VAT CodeCan be OOTS GCCUse OOTS-GCC VAT for Zero Rate ArrivalVAT reasoning
NewspapersGeneral service - Local useSR-SNoNoDomestic supply of goods and general services is subject to VAT at standard rate. This also applies to customers from other GCC countries.
Ground transport UAEGeneral service - Local useEX-SNoNoLocal transport is always free of VAT in UAE
Ground transport KSAGeneral serviceSR-SYesNoStandard Rate to Domestic, OOTS for GCC customers,  Zero rate to International customers (Rest of World)
Admin feeGeneral serviceSR-SYesNoStandard Rate to Domestic, OOTS for GCC customers,  Zero rate to International customers (Rest of World)
Luggage handlingFlight related salesSR-SYes in KSA
No in UAE

No in KSA
Yes in UAE

In UAE: Evalulate services based on related arrival or departure. If domestic, then standard rate. Else (international), if inbound, then OOTS-GCC. If outbound, then ZR-D-S. 
In KSA, only if International and Commercial use. Other candidates: Inflight catering (which might also be regarded as Local Use Standard Rate VAT)
GPUAircraft related salesSR-SYes in KSA
No in UAE
NoIf the aircraft is a commercial airliner, VAT is Zero Rated Sales Domestic for products that are related to the means of transport. Other examples: Engine Oil

Note: If Purpose of service is not specified, the system will consider  'Local use' purpose and it will take the Default VAT code assigned to the product.

See test cases for KSA and UAE.

VAT Calculator settings

  1. InternationalFlightLookup - indicates how the system selects the Flight category for International or Domestic. Possible values: 
    • CheckDestination -  if destination is an international route, Flight category is International, else Domestic
    • CheckOriginOrDestinationPerService - if the service is an arrival specific service, the system will look at the Origin, else it looks at the Destination.
    • InternationalIfOriginOrDestinationIsInternational - if origin or destination is an international route, the flight category is International, else Domestic
    • DomesticIfOriginOrDestinationIsDomestic - if origin or destination is a local route, the flight category is Domestic, else International
    • InternationalIfDepartureInternationalElsePerService - if destination is an international route, the flight category is International. Otherwise the system will look at arrival for arrival specific service or departure for departure specific service.
    • eg: InternationalFlightLookup=CheckOriginOrDestinationPerService
  2. ExemptInternationalFlightsMustBeCommercial - indicates if the calculator should apply exemptions for services related to the flight or to the aircraft only if the aircaft is used Commercial
    • Yes - applies for KSA
    • No 
    • eg:ExemptInternationalFlightsMustBeCommercial=No
  3. DomesticStationsForVAT
    • station group name
    • eg: DomesticStationsForVAT=Domestic stations for VAT UAE
  4. GccVatCountriesStationGroupName
    • station group name
    • eg: GccVatCountriesStationGroupName=GCC VAT Countries
  5. UsePaxRuleForDomesticLegs - indicates if the pax count is considered for flight related services on domestic legs.
    • if all legs are domestic with pax: system applies Exempt vat code to flight related services
    • if all legs are domestic without pax: system applies 0% vat code to flight related services
    • by default the setting is disabled (false)
    • eg: UsePaxRuleForDomesticLegs=true
  6. UseContactCustomValueForVatID (default false) - instead of checking the contact VAT number, the system will look for a specific custom property named 'GCC VAT ID'  attached to the contact
  7. DefaultGeneralServicesConsumedLocally (default false) - in UAE, all general services are considered exports sales, so not enjoyed in UAE by international customers only. The system can then apply a special zero rated vat code (SR-EXP-S). For Saudi Arabia, the general services are considered to be consumed locally even for international customers. This setting can be specified per product in FBO One and can be configured to indicate that this service is always consumed locally or not via custom property 'GCC VAT Product Consumed Locally'. The product configuration overrides the calculator setting.

Configuration string for KSA: InternationalFlightLookup=InternationalIfDepartureInternationalElsePerService ;ExemptInternationalFlightsMustBeCommercial=Yes;DomesticStationsForVAT=Domestic stations for VAT SA;DefaultGeneralServicesConsumedLocally=true;

Configuration string for UAE: InternationalFlightLookup=InternationalIfOriginOrDestinationIsInternational ;ExemptInternationalFlightsMustBeCommercial=No;DomesticStationsForVAT=Domestic stations for VAT UAE;DefaultGeneralServicesConsumedLocally=false;

Override the flight and aircraft category at the order level

It is possible to manually adjust the Flight category and the Aircraft category by specifying the following Order custom values. The VAT calculator will follow these values instead of looking at origin/destiation and aircraft registration data.

  • GCC VAT Override Inbound Aircraft Use: Private | Commercial 
  • GCC VAT Override Inbound Flight: Domestic | International
  • GCC VAT Override Outbound Flight: Domestic | International
  • GCC VAT Override Outbound Aircraft Use: Private | Commercial