UAE VAT Public Clarification VATP044: Import of Services, Self-Invoicing, and Documentary Requirements
Overview of VATP044
The UAE Federal Tax Authority (FTA) issued Public Clarification VATP044 on 26 May 2025 to clarify the VAT treatment of imported services by UAE tax registrants from non-resident suppliers. This update is crucial for businesses that procure services from abroad and need to comply with the UAE’s VAT laws.
What Are Concerned Services?
Concerned services refer to services imported into the UAE where the place of supply is considered the UAE and the services would not be exempt if supplied within the country5. Such services are subject to VAT under the reverse charge mechanism (RCM).
Reverse Charge Mechanism (RCM) Explained
Under RCM, the recipient of imported services—typically a UAE VAT-registered entity—must account for output VAT in their VAT return and can claim input tax, provided certain conditions are met. The supplier outside the UAE does not charge VAT; instead, the recipient pays the VAT directly to the government.
Reporting Requirements for Import of Services
Accounting for Output Tax
A taxable person importing concerned services is considered to be making a taxable supply to itself. The recipient must account for output tax on the value of the imported service and report this in Box 3 of its VAT return for the relevant tax period
Issuing a Tax Invoice to Yourself
Generally, the recipient is required to issue a tax invoice to itself for each imported service. However, as an administrative exception, the FTA allows the recipient to skip self-invoicing if they meet specific conditions:
Retain the overseas supplier’s invoice with all required details.
Pay for the service.
Account for the correct VAT amount under RCM.
Keep sufficient records to establish the particulars of the supply.
If these conditions are met, the recipient does not need to issue a self-invoice.
Documentary Requirements for Input Tax Recovery
To recover input tax on imported services, the recipient must:
Be VAT-registered.
Retain relevant supporting documents (such as the supplier’s invoice or, in exceptional cases, alternative documents).
Use the service to make taxable supplies.
Input tax can be recovered in the first tax period or immediately following the period in which the supporting document is obtained.
When Is Self-Invoicing Not Required?
Self-invoicing is not required if the recipient:
Obtains and retains the overseas supplier’s invoice.
Has paid for the service.
Accounts for the correct VAT under RCM.
Retains sufficient information to establish the particulars of the supply.
If the overseas supplier does not issue an invoice, the recipient must issue a self-invoice or apply for an administrative exception under Article 59(7) of the Executive Regulation.
Acceptable Alternative Documents
In exceptional cases—such as reinsurance services—if the supplier does not issue an invoice, a document (or a combination of documents) that includes the following details will be accepted:
Name and address of the supplier.
Name and address of the recipient.
Date the document was issued.
Date the service ended.
Description of the service.
Consideration for the supply, including currency and payment terms.
How to Apply for an Administrative Exception
If the overseas supplier does not issue an invoice or a combination of documents that can be regarded as an invoice, the recipient may apply for an administrative exception if the requirements of Article 59(7) of the Executive Regulation are met.
Key Takeaways
VATP044 clarifies the VAT treatment of imported services under RCM.
Recipients must account for output tax and may need to issue a self-invoice, unless an administrative exception applies.
Input tax recovery is allowed if the recipient retains the proper documentation and uses the service for taxable supplies.
Alternative documents may be accepted in exceptional cases.
