Key takeaways
- The UAE VAT reverse charge makes a VAT-registered business account for the 5% VAT itself on services it imports from abroad, instead of the overseas supplier charging it.
- A VAT-registered UAE company declares the value and VAT of an imported service in Box 3 of its VAT return for the period of the date of supply, and reclaims the VAT in Box 10 to the extent the service is used for taxable supplies.
- The reverse charge on imported services doesn't apply when the service would have been exempt had it been supplied inside the UAE (FTA Public Clarification VATP044, 26 May 2025).
- Two domestic reverse charges also exist between UAE VAT registrants: precious metals and stones (Cabinet Resolution No. 127 of 2024) and metal scrap (Cabinet Decision No. 153 of 2025, effective 14 January 2026).
- Input VAT on a reverse-charge purchase is recoverable only with the right documents, and the FTA treats the consideration as paid if you intend to pay within six months of the agreed payment date.
What is the reverse charge mechanism in UAE VAT?
The reverse charge shifts the job of accounting for VAT from the seller to the buyer. When a VAT-registered business in the UAE receives a taxable service from a supplier outside the UAE, Article 48(1) of Federal Decree-Law No. 8 of 2017 treats the buyer as making a taxable supply to itself, so the buyer declares the VAT due on its own return.
The rule covers what the law calls Concerned Services: imported services whose place of supply is the UAE, unless the service would be exempt if supplied locally. The VAT is worked out at the rate that would apply to a local supply, which is the 5% standard rate for most services (u.ae, checked 9 November 2026).
Say a VAT-registered SHAMS consulting company pays an overseas software firm AED 20,000 for a subscription, the invoice carries no VAT, and the place of supply is the UAE. This is a hypothetical, but the mechanics are the real ones: the company declares AED 20,000 and AED 1,000 of VAT in Box 3, then claims the AED 1,000 back in Box 10 if the subscription is used for taxable business.
Which transactions does the reverse charge apply to?
The reverse charge applies to four situations in UAE VAT: imported services, imported goods, and two domestic cases that were added by Cabinet decision. The table sets out who accounts for the VAT in each.
| Transaction | Who accounts for VAT | Reporting or condition | Source |
|---|---|---|---|
| Services from a non-resident supplier, place of supply in the UAE, not exempt locally | VAT-registered recipient | Output VAT in Box 3; input VAT in Box 10 | Decree-Law No. 8 of 2017, Art. 48(1); VATP044 |
| Goods imported into the UAE | Importer | Box 6 shows the net value and VAT on imported goods; conditions for declaring import VAT on the return are in the Executive Regulation | Executive Regulation, Art. 48; FTA VAT Returns User Guide |
| Precious metals, precious stones and jewellery sold between registrants for resale or manufacture | Recipient; supplier doesn't charge VAT | Recipient gives two written statements before supply: purpose and FTA registration | Cabinet Resolution No. 127 of 2024, Art. 2 |
| Metal scrap sold between registrants in the scrap sector | Buyer; supplier doesn't charge VAT | Written declaration before supply; invoice must state that the reverse charge applies; effective 14 January 2026 | Cabinet Decision No. 153 of 2025 (MoF announcement) |
Accurate as of 9 November 2026. The precious metals resolution replaced Cabinet Resolution No. 25 of 2018, and neither domestic case applies to a supply that is zero-rated under Article 45(1) of the Decree-Law.
How do I account for the reverse charge on my VAT return?
You account for an imported service by declaring it in Box 3 of the VAT return for the tax period in which the date of supply falls, then claiming the matching input VAT in Box 10. The steps below follow the FTA's VATP044 and the Executive Regulation.
- Confirm that your business is VAT-registered and that the place of supply of the service is the UAE.
- Check that the service wouldn't have been exempt if supplied locally; if it would, no reverse charge arises.
- Calculate VAT at the rate that would apply to a local supply, normally 5% of the value of the service.
- Declare the value and the VAT in Box 3 on EmaraTax, for the tax period of the date of supply.
- Keep the overseas supplier's invoice; for imported goods, also keep the customs statement (Executive Regulation, Art. 48(5)).
- Claim the input VAT in Box 10 to the extent the service is used, or intended for use, in making taxable supplies, in the first tax period in which you hold the documents and have paid, or the period after it.
If you'd rather not track these dates by hand, the free UAE compliance calendar lists your company's VAT and other deadlines.
Do I still need to issue a self-invoice for imported services?
Under the FTA's May 2025 position you don't need a self-invoice if you hold the overseas supplier's invoice and apply the reverse charge correctly. VATP044 says the recipient isn't required to issue a tax invoice to itself in that case; without a supplier invoice, a self-issued one is the safer course.
Federal Decree-Law No. 16 of 2025 then amended Article 48(1) with effect from 1 January 2026. A PwC summary reports that self-invoicing is no longer required for imports of goods and services used for business purposes. Read the wording in the FTA's consolidated Decree-Law before you rely on it for an edge case, and keep the supplier invoice either way, because the input VAT claim depends on it.
When does the reverse charge cost my business real money?
The reverse charge costs you cash only when you can't recover all of the input VAT it creates. Input VAT is recoverable to the extent the service is used for taxable supplies (Decree-Law, Art. 54(1)(a)), so the cost depends on what your business sells.
If a company makes only taxable supplies, the AED 1,000 of Box 3 VAT in the example above is cancelled by AED 1,000 in Box 10, and the net effect on VAT payable is nil. If a business makes only exempt supplies, the same AED 1,000 stays as a cost, because none of it is recoverable. Mixed businesses fall between the two, and the apportionment is a job for your accountant using your actual supply figures.
5%: the VAT rate you self-assess on an imported service that would be taxable if supplied in the UAE. Source: u.ae VAT page and Federal Decree-Law No. 8 of 2017, checked 9 November 2026.
What most guides don't tell you
- The six-month payment clock matters for recovery. Under Article 54(2) of the Executive Regulation, you're treated as having paid only to the extent you intend to pay before six months pass from the agreed payment date. Claim input VAT on a purchase you never plan to settle and the claim is exposed on audit.
- Domestic reverse charges depend on paperwork before the sale. For precious metals, a recipient that doesn't give the written statements loses the mechanism for that supply. For scrap, the supplier must hold the buyer's declaration before the date of supply and the invoice must say the reverse charge applies.
- A missing supplier invoice has a route. Where an overseas supplier issues no invoice at all, a set of documents showing supplier, recipient, dates, a description and the consideration can count as the invoice; if even that isn't available, VATP044 points to an administrative exception under Article 59(7) of the Executive Regulation.
- Anti-evasion rules now sit on top of recovery. The 2026 amendments reportedly let the FTA deny input VAT where a supply is linked to evasion and the taxpayer knew or should have known, so check who you're buying from.
Which VAT deadlines apply to your company?
Reverse charge entries land in the same return as everything else, so a missed filing date costs you on every line. The free UAE compliance calendar is a calendar of your company's UAE tax and compliance deadlines, personalised from a few questions, as a PDF and calendar file.
Frequently asked questions
Are exports zero-rated for UAE VAT? Exports of goods can be zero-rated, but only when the conditions in the VAT law on evidence and timing are met, so a sale isn't zero-rated just because the goods leave the country. Check Article 45 of Federal Decree-Law No. 8 of 2017 and the FTA's guidance before you issue a zero-rated invoice.
Is VAT charged on services to foreign clients? It depends on the place of supply of the service. If the place of supply is outside the UAE, UAE VAT doesn't apply; if it's inside the UAE, you charge the 5% standard rate even when the client is based abroad.
Do I charge VAT to a free zone company? For services, yes: Article 51(6) of the Executive Regulation treats the place of supply of services in a Designated Zone as inside the UAE, so you charge 5%. Goods are different, because the treatment depends on whether the zone is a Designated Zone and how the goods move.
What is a designated zone for VAT? A Designated Zone is a specified free zone area that the VAT law treats differently for certain supplies of goods. Not every free zone qualifies, so check that your zone appears on the Cabinet list before you rely on the special treatment.
About Qawi · Qawi is a corporate services firm licensed in the Sharjah Media City (SHAMS) free zone, handling company formation, visas and PRO, bookkeeping, VAT and corporate tax for UAE businesses. Guides are researched from FTA, Ministry of Finance and free zone sources. Qawi on LinkedIn
Sources
- Federal Tax Authority, Public Clarification VATP044: Concerned Services, tax invoices and input tax recovery (26 May 2025)
- Executive Regulation of Federal Decree-Law No. 8 of 2017 (Ministry of Finance copy)
- Federal Tax Authority, VAT Returns User Guide
- Cabinet Resolution No. 127 of 2024 on the reverse charge for precious metals and stones (UAE Legislation portal)
- Ministry of Finance announcement on Cabinet Decision No. 153 of 2025, scrap metal reverse charge (as published on Zawya)
- u.ae: Value Added Tax
- PwC Middle East alert on Federal Decree-Law No. 16 of 2025 (interpretation only, not an official source)
Last checked: 9 November 2026
This is general information, not tax or legal advice for your specific situation.