VAT Public Clarification (Concerned Services)

1. Concerned Services (Imported) received from Outside UAE where the Place of supply is in UAE.
2. VAT registered businesses in the UAE receiving such services are deemed to have such supplied these services to themselves and must account for output VAT using the Reverse Charge Mechanism (RCM).
3. Registrant must issue self-invoice for accounting and paying VAT.

1. This is where the recipient of imported service account for the VAT applies Reverse charge mechanism by issuing self-invoice.
2. This ensures fair tax treatment for services consumed in UAE, even when supplied by vendor located outside UAE who has not obtained VAT registration in UAE.

1. Registrant must issue a tax invoice to themselves within 14 days from the date of supply.
2. No need to issue self-invoice when overseas supplier has issued invoice with the details of:
   • Supplier & Recipient details
   • Date of issuance of document and date when service provision ended
   • Description and consideration
   • Payment terms, if applicable

1. The service was acquired for taxable business use.
2. Registrant must pay the supplier within 6 months from the date of issued invoice. Timely payment to supplier avoids losing the right to reclaim VAT.
3. Input VAT can be recovered in First tax period of receipt/payment or the immediate tax period. The detailed clarification is provided in VAT Public Clarification Timeframe for recovering input tax  (VATP017)

Our Comments

The said Public Clarification gives clear guidance on VAT for imported services. It highlights the need for proper documents, on-time payments, and using the reverse charge correctly. Businesses should review their processes to stay compliant and recover VAT effectively.