Reverse Charge Mechanism Under UAE VAT

This guide explains the reverse charge in plain English. It is not tax advice. Reverse charge treatment depends on the exact facts, so confirm with the Federal Tax Authority (FTA) or a registered tax agent.

Normally the supplier charges VAT and pays it to the FTA. Under the reverse charge, the buyer accounts for the VAT instead. The buyer reports the VAT as output tax in its own return and, if it can recover input tax on that purchase, claims the same amount back in the same return. For a fully taxable business the two cancel out, so no cash changes hands, but both entries must still be made.

1. Imported services. A UAE VAT-registered business buying services from a supplier abroad, such as software subscriptions, online advertising or consulting, accounts for the 5% VAT itself.

2. Imported goods. A VAT-registered importer can account for import VAT through its VAT return instead of paying it at customs. This needs the business's TRN to be linked to its customs registration.

3. Domestic reverse charge. For some supplies between two UAE VAT-registered businesses, the buyer accounts for the VAT even though the supplier is in the UAE. The main cases are:

• Gold, silver, platinum, palladium, diamonds and other precious stones, and jewellery where the metal or stone is worth more than everything else, when bought for resale or manufacturing (expanded from 26 February 2025).
• Mobile phones, smartphones, computers, tablets and their parts, when bought for resale or for making electronic devices (since 30 October 2023).
• Certain crude oil, refined oil, natural gas and other hydrocarbons, bought for resale or production.

For the domestic cases, the buyer usually has to give the supplier a written declaration that it is VAT-registered and buying for resale. If the conditions aren't met, normal VAT applies.

Your Dubai company pays a US software provider the equivalent of AED 4,000 for an annual subscription. No VAT is shown on the invoice. In your VAT return you:

• Enter AED 4,000 and VAT of AED 200 in Box 3 (supplies subject to the reverse charge).
• Enter AED 4,000 and recoverable VAT of AED 200 in Box 10 (reverse charge purchases).

If you can recover all your input tax, the net VAT effect is zero.

Until the end of 2025, businesses had to raise an internal self-invoice for reverse charge purchases. Amendments to the VAT law that took effect on 1 January 2026 removed that requirement. You still need to keep the supplier's invoice and any import or customs documents as evidence, and report the VAT correctly in your return.

For domestic reverse charge supplies, the supplier doesn't charge VAT. The tax invoice still carries all the usual details and shows that the reverse charge applies, and suppliers typically keep the buyer's declaration and check the buyer's TRN. See the UAE VAT invoice guide for the full list.

• Forgetting overseas subscriptions and ad spend because no VAT appears on the invoice.
• Entering the VAT in Box 3 but not claiming it back in Box 10, or the other way round.
• Charging VAT on a domestic reverse charge supply, or applying it to goods bought for own use.
• Not keeping the buyer's written declaration.

Last reviewed: 19 October 2026.

• Federal Decree-Law No. 8 of 2017 on VAT, with amendments
• FTA: Reverse charge on electronic devices
• FTA: Taxable Person Guide for VAT
• FTA: VAT Returns User Guide