Reverse Charge VAT in the UAE: Imported Services, Imported Goods and Domestic Cases

What the reverse charge is

Normally the supplier charges VAT and pays it to the FTA. Under the reverse charge the buyer accounts for the VAT instead: it declares the output VAT and, where it is entitled to recover input tax, claims the same amount back in the same return. For a business making only taxable supplies the net cost is zero — but both sides must still appear in the return.

1. Services bought from abroad

If a VAT-registered UAE business receives services from a supplier with no UAE establishment — software subscriptions, cloud hosting, online advertising, consulting, design, licences — the reverse charge usually applies.

• Declare the value and the 5% VAT in the box for supplies subject to the reverse charge (Box 3).
• Recover the same VAT as input tax in Box 10, to the extent you are entitled to recover it.
• Use the exchange rate published by the UAE Central Bank for foreign-currency invoices.

Businesses that make exempt supplies — residential landlords or some financial services, for example — may only recover part of that VAT, so for them the reverse charge is a real cost.

2. Goods imported into the UAE

• VAT-registered importers whose customs registration is linked to their TRN declare the import VAT in Box 6 of the return and recover it as input tax where entitled — no cash is paid at the border.
• Importers that are not registered pay the VAT to customs before the goods are released.
• The figures in Box 6 should match the import declarations the FTA receives from customs. Box 7 is used for amendments to earlier import figures.

3. Domestic reverse charge

Some supplies between VAT-registered businesses inside the UAE also use the reverse charge — the buyer accounts for the VAT. The main cases are supplies of gold and diamonds, crude oil, hydrocarbons and natural gas, and certain electronic devices such as mobile phones, computers and tablets bought for resale. The supplier's invoice must state that the reverse charge applies, and the buyer may need to confirm its status in writing.

What changed in 2026

From 1 January 2026 the amended VAT Law no longer requires businesses to issue a tax invoice to themselves for reverse-charge supplies. You still need evidence for the VAT you declare and recover: the supplier's invoice, the contract or order, proof of payment and, for goods, the customs import declaration. Read more in our guide to the 2026 VAT amendments.

Mistakes we see most often

• Foreign subscriptions and ad invoices booked as expenses with no reverse-charge VAT in the return.
• Box 6 import values that do not match customs records, usually because the customs code is not linked to the TRN.
• Recovering 100% of reverse-charge VAT in a business that also makes exempt supplies.
• Using the wrong date or exchange rate for foreign-currency invoices.
• No supporting documents after self-invoicing stopped in 2026.

Errors like these are fixed through a voluntary disclosure; correcting them early keeps penalties lower.

How Business Future CPA helps

We set up reverse-charge tax codes in Xero, Zoho or Odoo, reconcile Box 6 to customs data, review foreign supplier invoices and file corrections where needed. See our VAT services and bookkeeping services.