We run a freight-forwarding business — is everything zero-rated just because it's 'international', or is it more nuanced than that?

The international transport of goods — from the UAE outward or into it — is zero-rated for VAT, and this extends to services directly connected to that transport, such as loading, unloading, and handling, when they form part of that same international transport supply and are provided by the same supplier. The trouble is that many shipping and clearance companies assume their entire operation benefits from zero-rating automatically just because it's broadly 'international shipping'.

In practice, charges not directly tied to the international movement itself — such as local storage fees, customs clearance charged as a standalone service, or the agency commission a company earns for arranging the shipment — are often standard-rated at 5%, even when the shipment itself is international. The distinction here is that the tax rate is determined by the nature of the service you provide, not by the shipment's route.

Another important point is the difference between a genuine disbursement — an amount the company pays on the client's behalf as a true agent, such as customs duty or port fees, and then recovers at the same value from the client — and a reimbursement, where a cost is re-billed as part of your own cost base with a margin attached. The first can fall outside VAT scope if it meets the conditions of genuine agency, while the second follows the same rate as the underlying service you provide.

A common mistake is freight and logistics companies applying zero-rate across the entire invoice in bulk without breaking out line items, which exposes them to real risk if the Federal Tax Authority reviews the file and finds that part of the invoice should have carried 5%. RASEEKH reviews your invoicing structure and separates the line items properly so the correct rate applies to each one individually.