VAT
Reverse charge VAT in the UAE: imported services, software and online ads
How the UAE reverse charge works for software subscriptions, online advertising, overseas freelancers and imported goods, which Form 201 boxes it goes in, and why it counts towards registration.
Updated 6 November 2026 · 6 min read · Fisqel
Almost every UAE business buys something from abroad: cloud software, online advertising, a designer on another continent. None of these suppliers charge you UAE VAT, but that doesn't mean there's no VAT. Under the reverse charge, the VAT is accounted for by you, the buyer, on your own return.
How it works
When a VAT-registered UAE business receives services from a supplier outside the UAE, it treats the purchase as if it had supplied the service to itself:
- It calculates 5% VAT on the value of the service.
- It declares that VAT as output tax, in box 3 of Form 201 (supplies subject to the reverse charge).
- If the service is used for its taxable business, it recovers the same amount as input tax, in box 10.
For most businesses that make only taxable supplies, the two entries cancel out: no cash leaves the business. But both must appear on the return, and leaving them out is an error even when the net effect is zero.
Common examples
| Purchase | Usually |
|---|---|
| Software subscriptions billed from abroad | Reverse charge |
| Online advertising billed by an overseas entity | Reverse charge |
| An overseas freelancer or agency | Reverse charge |
| Software bought from a UAE-registered reseller | Normal 5% VAT on their invoice |
Check who actually bills you: the same platform may invoice from a UAE entity in one case and from abroad in another. The invoice tells you which treatment applies.
Imported goods
Goods imported through UAE customs by a registered business are usually also accounted for on the return rather than paid at the border: the import VAT goes in box 6 and, if recoverable, is claimed back on the input side. Keep the customs declaration showing your TRN.
It counts towards registration
If you're not yet registered, imported services still count towards the AED 375,000 mandatory registration threshold. A business with modest local sales but large overseas software or marketing bills can cross the threshold sooner than it expects.
Mistakes to avoid
- Booking an overseas invoice as an expense with no VAT, and leaving it off the return entirely.
- Claiming the input side without declaring the output side.
- Applying the reverse charge to a supplier who is UAE-registered and has already charged you VAT.
This article is general information, not tax advice. Rules as published in November 2026; for your own circumstances, speak to your accountant or a registered tax agent.
Questions
Do I pay anything extra under the reverse charge?
Usually not, if your business makes only taxable supplies: the output and input amounts cancel out. Businesses with exempt supplies may not recover all of it.
Does the reverse charge apply if I'm not VAT-registered?
You don't account for it on a return, but the value of imported services counts towards the registration threshold.
Are there reverse charges inside the UAE?
Yes, for certain goods traded between registered businesses, such as gold and diamonds. These follow their own rules.