The reverse charge is one of those rules that sounds complicated and is actually straightforward. If you buy services from outside the UAE, AWS, Google, foreign consultants, you account for the VAT yourself, on both sides of the ledger.
What you'll learn
→ What the reverse charge actually does → What triggers it → How to file it → The most common mistakesWhat the reverse charge actually does
When you buy a service from a non-UAE supplier and use it in the UAE, the foreign supplier does not charge UAE VAT (they are not registered here). Instead, you self-account: you record output VAT at 5% on the value of the service, and simultaneously claim input VAT at 5%, assuming the service is used for taxable supplies.
If the service is fully used for taxable supplies, the net VAT impact is zero, output cancels input. If the service is used partly for exempt supplies, the input recovery is reduced and the entity actually pays VAT on the import. That is the substance of the reverse charge.
What triggers it
Imports of services to a UAE-registered VAT person are subject to reverse charge. Imports of services to non-registered persons are not. Goods imports follow a separate set of rules, usually customs-collected VAT, not reverse charge, although Designated Zones have their own treatment.
Common reverse-charge transactions: cloud subscriptions (AWS, GCP, Azure), software licences (Adobe, Atlassian), professional services from foreign accountants and lawyers, marketing services from foreign agencies, and inter-company management charges from a foreign parent.
How to file it
On your VAT return: Box 6 (Imports of Services) records the value of the import; Box 7 (Inputs) records the deemed input VAT. The output VAT side feeds into Box 1 implicitly through the boxes' totals. EmaraTax calculates the net automatically once you fill the import value.
Document each reverse-charge transaction with: a foreign invoice, a screenshot of the service description, the FX conversion at the date of supply, and a link to the contract or order. The FTA frequently requests reverse-charge documentation during VAT audits.
The most common mistakes
Three mistakes we see weekly: forgetting to apply reverse charge on a foreign invoice (so output VAT is missed); applying it but forgetting input recovery (so the entity overpays); and failing to convert foreign currency at the right exchange rate (use the date of supply, not the invoice date).
If you discover a missed reverse charge spanning multiple periods, you may need to file a voluntary disclosure (Form 211), see our separate guide. The good news: in most cases the input recovery offsets the output and the net cash impact is zero or small.
This guide is general information, not professional advice. For situations that involve specific facts, talk to your accountant, or hire one of ours from the marketplace.