Similar in concept to India's GST reverse charge, the UAE VAT Reverse Charge Mechanism shifts the responsibility for accounting for VAT from the supplier to the recipient in specific situations, most commonly when a UAE VAT-registered business imports goods or services from outside the UAE. Instead of the foreign supplier (who typically isn't UAE VAT-registered) charging VAT, the UAE recipient self-accounts for VAT on the transaction: it declares the VAT as both an output tax (as if it made the supply to itself) and, where the purchase is used for taxable business purposes, simultaneously recovers the same amount as input tax, making the mechanism cash-flow neutral in most fully-taxable business scenarios. This mechanism ensures VAT is still collected on cross-border transactions even though the foreign supplier is outside UAE VAT jurisdiction. Reverse charge also applies to certain specified domestic transactions between VAT-registered businesses: hydrocarbons (crude and refined oil, natural gas), precious metals and stones (gold, silver, palladium, and platinum, plus diamonds, pearls, rubies, sapphires and emeralds, and jewellery made predominantly of these, expanded by Cabinet Decision No. 127 of 2024, effective 25 February 2025), and, since Cabinet Decision No. 153 of 2025 took effect on 14 January 2026, metal scrap trading. Getting reverse-charge treatment right on import transactions, and knowing which domestic categories it now covers, is a common compliance focus area, since the domestic scope has expanded more than once and it's easy to either miss the self-accounting step entirely or apply it incorrectly to a transaction it doesn't cover.
Example: A UAE company imports software licensing services from a US-based provider with no UAE VAT registration. The UAE company self-accounts for VAT on that import under reverse charge, rather than the US supplier charging UAE VAT.
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