Most people meet the reverse charge through a Google Ads bill or a SaaS subscription and assume it is a technicality. It is not optional and it is not small: in an audit, missing reverse-charge entries are among the first things checked, because they leave a trace on both sides of the return and are easy to test. The good news is that the rules are mechanical. Once you know which of the cases below a purchase falls into, the treatment follows.
The cases at a glance
| What you buy | From whom | Legal basis · since | VAT 201 boxes |
|---|---|---|---|
| Services: software, advertising, consulting, design, licences | A supplier outside the UAE | VAT Law Art. 48 · 2018 | 3 + 10 |
| Goods cleared through UAE customs under your TRN | Anyone abroad | VAT Law Art. 48 · 2018 | 6 (+7) + 10 |
| Gold, silver, platinum, palladium; diamonds, pearls, rubies, sapphires, emeralds; jewellery mostly made of them | A UAE-registered supplier, when you will resell or manufacture | Cabinet Decision 127/2024 · 26 Feb 2025 | 3 + 10 |
| Mobile phones, smartphones, computers, tablets and their parts | A UAE-registered supplier, when you will resell or manufacture | Cabinet Decision 91/2023 · 30 Oct 2023 | 3 + 10 |
| Crude or refined oil, natural gas and other hydrocarbons | A UAE-registered supplier, when you will resell or use them to produce or distribute energy | VAT legislation · 2018 | 3 + 10 |
| Ferrous and non-ferrous metal scrap | A UAE-registered supplier, when you will reuse, recycle or process it | Cabinet Decision 153/2025 · 14 Jan 2026 | 3 + 10 |
Imported services: the everyday case
If a business outside the UAE supplies you a service and you are VAT-registered here, the place of supply is usually the UAE and nobody abroad is going to charge you UAE VAT. So you do it. The list is longer than people think: cloud software, app-store and marketplace fees, social media and search advertising, overseas lawyers and auditors, foreign freelancers, licence fees to a parent company abroad, even the platform fee on some payment gateways.
Two checks before you reverse-charge anything. First, look at the invoice: if the supplier has a UAE TRN and charged 5%, it is an ordinary local purchase and belongs in box 9. Several large platforms register in the UAE for exactly this reason. Second, check the currency treatment: the value you report is the AED equivalent at the Central Bank rate for the date of supply, not whatever the card statement converted it to.
Goods imported through customs: box 6, not box 3
When goods come through a UAE port or border on a customs declaration that carries your TRN, the import VAT is not paid at the border. It appears in box 6 of your return, pre-filled by the FTA from customs data, and you recover it in box 10 if the goods are for your taxable business. Your job is to check box 6, not to type it: compare it to your own list of bills of entry and use box 7 for any correction. The VAT base is the customs value plus insurance, freight, customs duty and any excise tax, not the supplier's invoice price alone.
The domestic reverse charge: five trades
Inside the UAE, the reverse charge exists to stop one specific fraud: a trader collects VAT from its customer and disappears before paying it over. In sectors where goods are valuable, small and fast-moving, the law moves the obligation to the buyer. The buyer is a registered business that can recover the tax anyway, so the money never sits with someone who might vanish.
All five work on the same pattern. The buyer must be VAT-registered and must be buying to resell, or to use in making something (for hydrocarbons, also to produce or distribute energy; for scrap, to reuse, recycle or process it). Before the date of supply the buyer gives the supplier written declarations confirming both facts, and the supplier keeps them and verifies the buyer's registration through the FTA. Only then does the supplier invoice without VAT.
The supplier must
- Receive and keep the buyer's written declarations before the date of supply
- Verify the buyer's TRN using the FTA's verification service
- Issue a tax invoice with no VAT that states the recipient accounts for the tax, citing Article 48
- Report the sale without output tax
The buyer must
- Give the declarations of registration and intended use, in writing, before the supply
- Declare the VAT in box 3 for the period of the supply
- Recover it in box 10 to the extent the goods are for taxable activity
- Charge VAT normally when it later sells to anyone outside the scheme
What changed on 1 January 2026
Federal Decree-Law No. 16 of 2025 amended Article 48 so that a business accounting for VAT under the reverse charge is no longer required to issue a tax invoice to itself. In practice many businesses had stopped bothering years ago, but it was a technical breach and auditors sometimes raised it. From 2026 the evidence is the supplier's own invoice for services, or the customs declaration and supplier invoice for goods. Keep both, because without them you cannot support the box 10 recovery.
The same law added a rule that matters most in exactly the sectors the domestic reverse charge covers: the FTA may deny input tax where a supply is connected to tax evasion and you knew, or should have known, about it. Failing to carry out reasonable checks counts as "should have known". For a phone or gold trader, verifying a counterparty's TRN and keeping the declarations is now part of protecting your own recovery, not just your supplier's.
Three worked examples
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A Dubai agency pays a US design studio AED 20,000
The studio has no UAE registration and charges no VAT. The agency reports AED 20,000 and VAT of AED 1,000 in box 3, and the same AED 20,000 and AED 1,000 in box 10. Net effect on the return: nil. Evidence: the studio's invoice and proof of payment.
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A residential landlord buys the same service
Residential rent is exempt, so the landlord cannot recover input tax on costs that relate to it. Box 3 still shows AED 1,000, but box 10 shows only the recoverable part, possibly nothing. The reverse charge here is a real cost of AED 1,000, which is exactly why it exists: a business that cannot recover VAT should not be able to avoid it by buying from abroad.
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A phone wholesaler buys AED 1,000,000 of handsets in Dubai
The distributor holds the wholesaler's declarations and invoices AED 1,000,000 with no VAT and a reverse-charge statement. The wholesaler declares AED 50,000 in box 3 and recovers AED 50,000 in box 10. When it sells to a registered retailer that also declares resale, the reverse charge applies again. When the retailer sells a phone to a walk-in customer, it charges 5%.
The chain ends at the first sale to someone who is not reselling. That sale is the one that carries VAT.
The mistakes we see most
- Recording an overseas invoice as zero-rated because it shows no VAT. Nothing is declared in box 3 or box 10, and the return still balances, so nobody notices.
- Filling box 3 and forgetting box 10, so the business pays VAT it was entitled to recover.
- Recovering in full in box 10 when the purchase relates to exempt income or to blocked costs such as client entertainment.
- A domestic supplier dropping VAT for a buyer whose declarations were never collected, and then being assessed for the 5%.
- Declaring a customs import in both box 6 and box 3.
Questions people actually ask
Do I need to issue a self-invoice for the reverse charge?
Not since 1 January 2026. Federal Decree-Law No. 16 of 2025 removed the requirement. Keep the supplier's invoice, or the customs declaration for imported goods, as your evidence.
Is Google Ads or Meta advertising subject to reverse charge in the UAE?
If the invoice comes from an entity outside the UAE with no UAE VAT on it, yes: declare it in box 3 and recover in box 10. If the invoice is issued by a UAE-registered entity and shows 5% VAT, treat it as a normal local purchase in box 9. Check who issued each invoice; it can change.
I am not VAT-registered. Does the reverse charge apply to me?
The reverse charge is accounted for through a VAT return, so it applies to registered businesses. But imported services count towards your registration threshold, so a business buying a lot from abroad can be required to register because of them.
Does the domestic reverse charge apply when I sell gold or phones to a consumer?
No. It applies only where the buyer is VAT-registered and buying to resell or manufacture, and has given you the written declarations. Sales to consumers carry 5% VAT as normal. Investment-grade precious metals that are zero-rated stay zero-rated.
Which box do I use for goods imported through customs?
Box 6, which the FTA pre-fills from customs data, with corrections in box 7. Recover the VAT in box 10. Do not report the same goods in box 3.
What wording goes on a reverse-charge sales invoice?
Article 59 of the Executive Regulation requires a statement that the recipient is required to account for the tax, with a reference to Article 48 of the VAT Law. A bilingual line such as "VAT to be accounted for by the recipient under Article 48 of Federal Decree-Law No. 8 of 2017" does the job.
Where these facts come from
Checked against the following on 8 October 2026. Rules and dates change — if you are reading this long after that date, verify before you act on it.
- Federal Decree-Law No. 8 of 2017 on VAT, as amended (Article 48)
- Cabinet Decision No. 127 of 2024 — precious metals and stones (effective 26 February 2025)
- Ministry of Finance — reverse charge on precious metals and stones
- Cabinet Decision No. 91 of 2023 — electronic devices (analysis)
- Cabinet Decision No. 153 of 2025 — metal scrap (analysis)
- KPMG — Federal Decree-Laws No. 16 and 17 of 2025
WisoBooks is a bookkeeping and business-management tool, not an accounting, tax or legal advisor. Nothing on this page is tax advice, and tax rules change. Confirm your own obligations with the relevant authority or a qualified advisor.
