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Reverse charge VAT in the UAE, explained

By the Cenqra team · Last reviewed 9 November 2026

Under the reverse charge, the buyer accounts for VAT instead of the seller. The buyer reports the VAT as if it had charged it, and, if it is allowed to recover VAT, claims the same amount back on the same return. For most fully taxable businesses the net effect is zero, but it must still be reported.

When the reverse charge applies

Purchase	When	Rule
Services from abroad	A VAT-registered business buys services from a supplier with no place of residence in the UAE, such as software, advertising or consultancy.	Article 48 of the VAT Law
Imported goods	Goods imported by a VAT-registered business, where VAT is accounted for on the return (shown in Box 6, from customs data).	Article 48 of the VAT Law
Gold, precious metals and stones	Sales between VAT-registered businesses for resale or for making jewellery. Investment gold of 99% purity or more is zero rated instead.	Cabinet Decision No. 127 of 2024 (from 25 February 2025)
Crude and refined oil, natural gas	Sales between VAT-registered businesses where the buyer resells them or uses them to produce or distribute energy.	Article 48 of the VAT Law
Electronic devices	Mobile phones, smartphones, computers, tablets and their parts, sold to a VAT-registered buyer for resale or for making electronic devices.	Cabinet Resolution No. 91 of 2023 (from 30 October 2023)
Scrap metal	Sales between VAT-registered businesses where the buyer resells it or processes it into new products.	Cabinet Decision No. 153 of 2025 (from 14 January 2026)

What the seller must do (domestic reverse charge)

• Get a written declaration from the buyer before the date of supply, confirming it is VAT-registered and buying for resale or production.
• Check the buyer's VAT registration using the FTA's methods.
• Issue a tax invoice without VAT, stating that the reverse charge applies.
• Keep the declaration and the registration check with your records.

What the buyer must do

• Account for the VAT on the purchase on its own return.
• Recover the VAT in the same return, to the extent it is allowed to recover input tax.
• For imported services: account for VAT even if the foreign supplier's invoice shows no VAT at all.
• From 1 January 2026, buyers no longer need to issue themselves a self-invoice for reverse charge purchases; they keep the supporting documents instead.

Reporting on the VAT 201

Example: a Dubai company buys a software subscription from a US supplier for AED 10,000.

• Box 3: AED 10,000 with VAT of AED 500 (5%).
• Box 10: AED 10,000 with recoverable VAT of AED 500.
• Net VAT to pay on this purchase: AED 0.

A business that makes exempt sales, or is only partly able to recover VAT, still reports the full AED 500 in Box 3 but claims only the recoverable part in Box 10, so it pays the difference.

Common mistakes

• Leaving foreign subscriptions and services off the return because the invoice has no VAT on it.
• Charging 5% VAT on a domestic sale of phones, gold or scrap metal that falls under the reverse charge (or the opposite: not charging VAT without a valid buyer declaration).
• Reporting a reverse charge purchase in Box 9 instead of Boxes 3 and 10.
• Not keeping the buyer declarations and registration checks.

How Cenqra helps

Cenqra treats imported services and goods, and the domestic reverse charge on gold, electronic devices, oil and gas, as reverse charge automatically when you choose the right tax code, and puts them in the right VAT 201 boxes. See VAT returns in Cenqra.

Sources

• Federal Tax Authority: VAT
• Gulf News: UAE implements reverse charge VAT on scrap metal
• Virtuzone: the reverse charge mechanism under UAE VAT
• Deloitte: domestic reverse charge on electronic devices

This guide is general information, not tax advice. Check the FTA's latest guidance or a registered tax agent before applying the reverse charge.