Reverse Charge Mechanism in UAE VAT (Article 48): Imported Services, SaaS & Goods
When Does Article 48 Reverse Charge Apply in the UAE?
Under Article 48 of UAE Federal Decree-Law No. 8 of 2017 on VAT, when a VAT-registered UAE business imports concerned services (such as AWS/Google Cloud hosting, foreign SaaS tools, legal/management consulting from abroad) or concerned goods from a supplier located outside the UAE who does not have a place of residence in the State, the UAE recipient is treated as making the taxable supply to itself.
How Reverse Charge Works on Form VAT 201
Instead of the foreign supplier charging UAE VAT, the VAT-registered UAE buyer self-accounts for 5% VAT:
| Step | Form VAT 201 Box | Impact for a Fully Taxable Business |
|---|---|---|
| 1. Output VAT Self-Assessment | Box 3 (Supplies subject to Reverse Charge) | Declares the AED value of the imported service and +5% Output VAT. |
| 2. Input VAT Recovery | Box 10 (Supplies subject to Reverse Charge — Recoverable) | Reclaims the -5% Input VAT to the extent the expense relates to taxable supplies. |
| 3. Net Cash Impact | Box 14 (Net VAT Due) | AED 0 net cash outflow (provided 100% of supplies are taxable). |
Mandatory Invoice Wording for Domestic Reverse Charge
Where domestic Reverse Charge applies (such as qualifying wholesale supplies of hydrocarbons, crude/refined oil, gold/diamonds, or B2B electronic devices under Cabinet Decision No. 91 of 2023), the supplier must omit the 5% VAT charge and include the explicit statement required by Article 59(1)(k):
"Tax Invoice subject to Reverse Charge Mechanism — recipient is required to account for UAE VAT pursuant to Article 48 of UAE Federal Decree-Law No. 8 of 2017."