Every freight and logistics invoice in the UAE turns on one question: does the movement itself leave the country? Transport of passengers and goods out of the UAE is zero-rated under Article 31 of Federal Decree-Law No. 8 of 2017 and its Executive Regulation, while storage, warehousing and inland handling are standard-rated at 5% — so a single consignment file can carry several VAT treatments, and your ledger has to split them.
Rate each revenue line first
- Zero-rated (0%): international transport of goods and passengers departing the UAE by air, sea or land, where the qualifying conditions on the vehicle, vessel or aircraft are met.
- 5%: storage, warehousing, customs clearance, local trucking and inland movements inside the UAE, handling and documentation fees.
- Recharges: carrier costs re-invoiced to the customer follow the treatment of the underlying service — decide and document principal versus agent status per contract.
| Service | VAT rate | Evidence needed |
|---|---|---|
| Ocean/air/land transport out of the UAE | 0% | Bill of lading, air waybill, loading documents |
| Storage and warehousing | 5% | Standard tax invoice |
| Customs clearance and documentation | 5% | Standard tax invoice |
| Local delivery inside the UAE | 5% | Delivery note and invoice |
The freight-forwarder problem
Decide — in writing, per contract — whether the company acts as principal or agent. A forwarder that contracts the ocean leg in its own name and recharges the carrier's invoice makes its own supply of transport (zero-rated when the journey leaves the UAE); where it merely books and passes costs through, the treatment follows the underlying service. Mixing both in one revenue account is the most common VAT error in this sector, and it shows up in the first audit.
Chart of accounts for a freight operation
Revenue split by mode and leg (international versus domestic); carrier payables accrued from ratified statements; work-in-progress for in-transit shipments; detention and demurrage as a separate control account; all foreign-currency transactions converted to AED at the transaction rate with the source rate documented.
The monthly close
Reconcile carrier statements to accrued liabilities so no invoice lands unbilled; accrue detention and demurrage as notified; verify zero-rating evidence shipment by shipment — the port or airport of loading must be outside the UAE on the transport document.
Records and deadlines
| Obligation | Deadline | Record retention |
|---|---|---|
| VAT return | 28 days after tax period end | 5 years |
| Corporate tax return | 9 months after financial year-end | 7 years |
| VAT registration | Mandatory above AED 375,000; voluntary above AED 187,500 | — |
FAQ
Is local trucking zero-rated? No — only transport out of the UAE is zero-rated; movements inside the UAE are standard-rated at 5%.
Do I charge VAT on storage? Yes — storage and warehousing are standard-rated at 5%, even when part of an international consignment.
What proof do I need to zero-rate a leg? Transport documentation showing the journey leaves the UAE — bill of lading or air waybill — together with the qualifying conditions in the Executive Regulation.
Finanshels provides bookkeeping services for logistics and freight companies — see also how to file VAT returns in the UAE, how to calculate corporate tax for mainland companies and bookkeeping for free zone companies.
Reviewed by Suhail K Y, CMA®, Manager of Finance & Taxation at Finanshels. Last reviewed 21 September 2026. Rules reflect Federal Decree-Law No. 8 of 2017 and FTA guidance as of that date; confirm your specific facts before acting.
