Goods that never enter the UAE: the commercial invoice

In short

When you buy goods abroad and sell them to a buyer abroad, and the goods ship straight from one foreign country to another, the sale is outside the scope of UAE VAT. It is not a zero-rated export. It still needs an eInvoice: a commercial invoice out of scope of tax (type 480), VAT category O, with the reason "Supply of goods located outside the UAE". Your sales team picks the right document type; the rest follows.

Why eInvoicing needs it

This pattern goes by several names: direct shipment, triangular trade, third-port shipment, drop shipment. The test is the same. Where were the goods when you sold them, and did they ever come into the UAE through you?

The VAT Law places a supply of goods in the UAE when the supply is made in the UAE (Article 27). It defines an export as goods departing the UAE (Article 1), and only an export can be zero rated (Article 45). Goods that sit in a factory in Italy and ship from there to Saudi Arabia never depart the UAE, so they are not an export. The supply takes place outside the UAE. The MoF Guidelines list this case under "outside the scope of VAT", for example where the place of supply is outside the UAE.

Out of scope does not mean outside eInvoicing. Ministerial Decision No. 243 of 2025 applies to every business transaction of a person doing business in the UAE (Article 3), and the MoF Guidelines say a commercial invoice is used for sales that need no tax invoice, including out-of-scope sales and sales by a business not registered for VAT.

The commercial invoice has its own rules in the PINT AE format (the UAE eInvoice standard):

• Every line is category O (or E or Z), never S.
• No VAT is charged. Leave the rate empty; the VAT amount is 0.00.
• The buyer's company registration number (its trade licence or commercial registration) is required.
• Reductions use a credit note out of scope of tax (type 81), not a tax credit note (381).

Calculus applies this treatment by default where the goods were outside the UAE at the time of sale and never passed through your hands in the UAE. Keep the supplier's shipping documents showing the origin and destination. Goods that land in the UAE, or in a UAE free zone, before onward sale need a different analysis. Confirm with your tax advisor if your facts differ.

A proforma invoice has no bearing on VAT. It is a quote or a payment request. It is not a tax invoice or a commercial invoice, and it does not go through eInvoicing.

What good looks like

Al Noor Trading LLC buys tiles from a factory in Spain. The factory ships them by sea straight to a buyer in Doha.

Field	Before	After
Document type	"Tax Invoice"	Commercial invoice out of scope of tax (480)
VAT	"Zero Rated" at 0%	Category O, rate empty, VAT 0.00
Reason	None	Supply of goods located outside the UAE
Transaction flag	Exports	None (00000000)
Buyer registration	None	Qatar commercial registration number, type trade licence
Customs tariff (HS) code	None	690721

How to fix it in Tally

1. Create a separate sales ledger, for example "Sales Out of Scope Direct Shipment". Open it with Alt+G, Create, Ledger, and set its VAT treatment to out of scope.
2. Create a separate Sales voucher type for these sales, so they carry their own numbering and map to type 480.
3. Raise reductions on these sales as a Credit Note voucher against the original invoice, using Agst Ref in the bill-wise details. It maps to type 81.
4. Add the buyer's commercial registration number to the party ledger.
5. Never post a direct shipment to your export ledger. The ledger decides the category on the eInvoice.

How to fix it in Excel or another system

Add a "Document type" column with a dropdown: 380 for tax invoices, 480 for commercial invoices out of scope of tax. For 480 rows, set VAT category to O, leave the rate empty, VAT amount 0.00, and reason "Supply of goods located outside the UAE". Add a "Buyer registration number" column. Example: 480, O, 0.00, "Supply of goods located outside the UAE". ERP users: ask your ERP partner to add a document type that maps direct shipments to 480 and their credit notes to 81.

Checklist

• For each sale, you know where the goods were at the time of sale
• Direct shipments go out as 480, category O, with the reason
• No "Zero Rated" and no exports flag on direct shipments
• Buyer's company registration number held for every 480 buyer
• Reductions on 480 invoices use credit note type 81

The law

• Federal Decree-Law No. 8 of 2017 on Value Added Tax (VAT Law), Article 1 (definition of export), Article 27 (place of supply of goods), Article 45(1) (zero rate on exports). MoF PDF
• Ministerial Decision No. 243 of 2025, Article 3 (scope: every business transaction) and Article 6(1) (issue and transmit an Electronic Invoice for any business transaction). MoF PDF
• MoF UAE Electronic Invoicing Guidelines, section 10.2.1 (commercial invoices for out-of-scope and exempt sales and sales by non-registered persons) and section 10.5 (out of scope, for example place of supply outside the UAE). MoF PDF
• Peppol PINT AE rules ibr-122-ae (480 and 81 lines are O, E or Z), ibr-136-ae (buyer legal registration identifier IBT-047 on 480 and 81), ibr-134-ae (seller VAT identifier IBT-031 not required on 480 and 81). PINT AE specification