Key Points
- Under the reverse charge, the buyer, not the supplier, accounts for the 5% VAT.
- It applies to imported goods and services, and to domestic sales of precious metals and stones, certain electronic devices, crude and refined oil and similar products, and metal scrap, when bought for resale or manufacture.
- The buyer reports output VAT in Box 3 (or Box 6 for customs imports) and, where recoverable, the same VAT as input in Box 10.
- Since 1 January 2026, you no longer issue a self-invoice for reverse-charge imports (Federal Decree-Law No. 16 of 2025).
- Scrap metal joined the domestic reverse charge on 14 January 2026 (Cabinet Decision No. 153 of 2025).
What the Reverse Charge Is
Normally, a VAT-registered supplier charges 5% VAT, collects it from the customer and pays it to the Federal Tax Authority (FTA). Under the reverse charge mechanism, the supplier does not charge VAT. The VAT-registered buyer calculates the VAT itself, reports it as output tax and, if it is entitled to, recovers it as input tax in the same return.
For a fully taxable business, the net effect is usually zero. The point of the rule is to collect VAT where the supplier is outside the UAE, and to stop fraud in sectors where suppliers collected VAT and disappeared. If you get it wrong, you can face penalties and lose input tax, even when the net figure is nil.
When the Reverse Charge Applies
There are two broad groups.
1. Imports. Under Article 48(1) of the VAT Decree-Law, a VAT-registered business that imports goods or services for its business accounts for the VAT itself. Examples are a software subscription from an overseas provider, consultancy from a foreign firm, or goods imported through UAE customs.
2. Domestic supplies of designated goods between VAT-registered businesses, where the buyer intends to resell the goods or use them in production or manufacture.
| Goods | Legal basis | In force from |
|---|---|---|
| Crude or refined oil, unprocessed or processed natural gas, or pure hydrocarbons, bought for resale in the same form or to produce or distribute energy | Article 48(3) of the VAT Decree-Law | Set in the VAT Decree-Law itself |
| Precious metals (gold, silver, platinum, palladium) and precious stones (natural and synthetic diamonds, pearls, rubies, sapphires and emeralds), including jewellery where the metal or stone value exceeds the other components | Cabinet Decision No. 127 of 2024 (replacing Cabinet Decision No. 25 of 2018 on gold and diamonds) | 26 February 2025 |
| Electronic devices: mobile and smart phones, computers (including servers and vehicle engine control units), tablets, and their qualifying parts | Cabinet Resolution No. 91 of 2023 | October 2023 |
| Metal scrap: ferrous or non-ferrous metal waste with commercial value that can be used after processing | Cabinet Decision No. 153 of 2025 | 14 January 2026 |
Conditions for the Domestic Reverse Charge
For precious metals and stones, electronics and scrap metal, the conditions follow the same pattern:
- the buyer is VAT-registered in the UAE;
- the buyer intends to resell the goods or use them in production or manufacture, not for its own use (for example, phones given to staff are outside the electronics rule);
- before the supply, the buyer gives the supplier a written declaration confirming its registration and its intended use;
- the supplier keeps the declaration and verifies the buyer's TRN using the FTA's tools, such as the TRN verification service;
- the supplier's tax invoice states that the reverse charge applies and refers to the relevant provision.
If the conditions are not met, normal VAT rules apply and the supplier must charge 5%. The reverse charge also does not apply to supplies that are zero-rated as exports. For investment-grade precious metals, check whether zero-rating applies before you look at the reverse charge.
What Changed on 1 January 2026
Federal Decree-Law No. 16 of 2025 amended the VAT Decree-Law from 1 January 2026:
- No more self-invoices. When you account for VAT on imported goods or services under the reverse charge, you no longer have to issue a tax invoice to yourself. You must still keep the supporting documents, such as the supplier's invoice, the contract and proof of payment.
- Five-year limit on refunds. Excess recoverable tax must be claimed within five years.
- Input tax can be denied where a supply is connected to tax evasion and you knew, or should have known. In reverse-charge sectors such as gold and scrap, keep your declarations and TRN checks on file.
How to Record the Reverse Charge in VAT 201
| Transaction | Output side | Input side |
|---|---|---|
| Imported services | Box 3: value and 5% VAT | Box 10: value and recoverable VAT |
| Imported goods cleared through UAE customs under the reverse charge | Box 6: pre-filled from customs declarations (corrections in Box 7) | Box 10: value and recoverable VAT |
| Domestic reverse-charge purchases (gold, electronics, oil and gas, scrap) | Box 3: value and 5% VAT | Box 10: value and recoverable VAT |
Do not put reverse-charge purchases in Box 9. Box 9 is for purchases where a UAE supplier charged you VAT. If part of the VAT is not recoverable, for example because the item is blocked or relates to exempt supplies, report only the recoverable part in Box 10. The output VAT in Box 3 or Box 6 stays in full. For the full return, see our VAT 201 filing guide.
Worked Examples
All examples assume a VAT-registered business that makes only taxable supplies, so all input VAT is recoverable.
Example 1: Software Bought from an Overseas Supplier
A Dubai trading company pays an Irish software company the equivalent of AED 20,000 for an annual subscription. No UAE VAT is shown on the invoice.
| Box | Amount (AED) | VAT (AED) |
|---|---|---|
| Box 3 | 20,000 | 1,000 |
| Box 10 | 20,000 | 1,000 |
Net VAT payable: nil. Keep the supplier invoice, the contract and proof of payment.
Example 2: Goods Imported Through Customs
A Sharjah distributor imports goods with a customs value, including duty, of AED 105,000 and uses the reverse charge at import. Box 6 is pre-filled with AED 105,000 and AED 5,250 of VAT. The distributor checks this against its customs declaration and claims AED 5,250 in Box 10. If an import is missing from Box 6, it is added through Box 7.
Example 3: Gold Bought by a Jeweller for Resale
A registered jeweller buys gold bars worth AED 200,000 from a registered bullion trader to make jewellery for sale. Before the sale, the jeweller gives the trader a written declaration. The trader verifies the jeweller's TRN and issues a tax invoice with no VAT and a reverse-charge statement.
| Box | Amount (AED) | VAT (AED) |
|---|---|---|
| Box 3 | 200,000 | 10,000 |
| Box 10 | 200,000 | 10,000 |
When the jeweller later sells jewellery to consumers, it charges 5% VAT in the normal way, including on any making charges.
Example 4: Scrap Metal Bought by a Recycler
Since 14 January 2026, a registered recycler buying AED 50,000 of copper scrap from a registered collector for processing gives a written declaration before the supply. It then reports AED 50,000 and AED 2,500 of VAT in Box 3, and the same in Box 10. The collector must keep the declaration, verify the recycler's TRN and state on the invoice that the reverse charge applies.
Common Mistakes
- Claiming input VAT on a foreign invoice in Box 9 without reporting output VAT in Box 3.
- A supplier charging 5% on gold, electronics or scrap to a reseller who gave a valid declaration. The VAT is then wrongly charged, and the buyer's claim is at risk.
- A supplier applying the reverse charge without a declaration or TRN check. The supplier stays liable for the VAT.
- Applying the electronics reverse charge to devices bought for the buyer's own staff.
- Ignoring Box 6 because it is pre-filled. Customs data can be incomplete.
TaxMate keeps your sales, purchases, supplier TRNs and VAT 201 working in one ledger, so reverse-charge entries can be reviewed alongside the return before it is filed. Its data checks flag common problems, such as suppliers without a TRN. Because rules differ by sector, we recommend walking through your own reverse-charge transactions, whether imports, gold, electronics or scrap, in a live session. Book a demo or see how TaxMate fits your sector on our industries page.
Frequently Asked Questions
What is the reverse charge in UAE VAT?
A mechanism where the VAT-registered buyer, instead of the supplier, calculates and reports the 5% VAT. If entitled, the buyer recovers the same VAT as input tax in the same return.
Which goods are under the domestic reverse charge in the UAE?
Crude or refined oil, natural gas and pure hydrocarbons; precious metals and precious stones (Cabinet Decision No. 127 of 2024); mobile phones, computers, tablets and their parts (Cabinet Resolution No. 91 of 2023); and metal scrap from 14 January 2026 (Cabinet Decision No. 153 of 2025). In each case it applies when supplied to a registered buyer for resale or manufacture.
Which VAT 201 boxes are used for the reverse charge?
Box 3 for output VAT on imported services and domestic reverse-charge purchases, Box 6 (and Box 7 for corrections) for goods imported through customs, and Box 10 for the recoverable input VAT.
Do I still need to issue a self-invoice for imported services?
No. Since 1 January 2026, Federal Decree-Law No. 16 of 2025 removed the requirement to issue a tax invoice to yourself for reverse-charge imports. You must still keep the supporting documents.
Does the reverse charge apply if I am not VAT-registered?
No. The domestic reverse charge requires a VAT-registered buyer. Unregistered importers pay VAT on imported goods at customs before release.
Can a simplified tax invoice be used for a reverse-charge supply?
No. Reverse-charge supplies need a full tax invoice with a statement that the recipient must account for the VAT.
Sources
- Federal Decree-Law No. 8 of 2017 on Value Added Tax, Article 48 (UAE Legislation portal)
- MoF news, 3 December 2025: VAT law amendments from January 2026 (Federal Decree-Law No. 16 of 2025)
- Cabinet Decision No. 127 of 2024 on the reverse charge for precious metals and precious stones
- FTA Public Clarification VATP043: Precious Metals and Precious Stones
- Cabinet Resolution No. 91 of 2023 on the reverse charge for electronic devices (UAE Legislation portal)
- FTA news: public clarification on the reverse charge for electronic devices
- Cabinet Decision No. 153 of 2025 on the reverse charge for metal scrap
- FTA: VAT Returns User Guide (box descriptions)
This guide is general information, not tax or legal advice. Rules change, so check the current position with the FTA or a registered tax agent before you act.