The Reverse Charge Mechanism in UAE VAT (2026): Imports, Gold, Electronics, Metal Scrap and How to Report It

Under the reverse charge, the buyer, not the seller, accounts for UAE VAT. It applies every time a VAT-registered business buys services from abroad or imports goods, and between registered businesses trading gold and other precious metals, phones and computers, or metal scrap. This guide is for finance teams, jewellery and electronics traders, scrap dealers, and any business paying overseas suppliers. It explains when the reverse charge applies, what both parties have to do before a domestic sale, how to report it in the VAT 201 return, what changed in 2026, and how the numbers work in AED.

Quick answer

Under the reverse charge, the supplier doesn't charge VAT and the VAT-registered buyer declares the 5% as output tax in Box 3 (or Box 6 for customs imports) and recovers it in Box 10 if it's for taxable business. It applies to imported services and goods, and domestically to precious metals and stones, electronic devices and metal scrap bought for resale or manufacturing.

• Fully taxable businesses pay no net VAT, but both entries must be reported

• Domestic reverse charge needs written buyer declarations and a TRN check before supply

• Self-invoices are no longer required from 1 January 2026; keep the supplier invoice instead

• Failing to account for VAT due on behalf of another person costs 14% a year, charged monthly

How the reverse charge works

Normally, a registered supplier charges VAT on its sale, collects it from the customer and pays it to the Federal Tax Authority (FTA). The reverse charge, set out in Article 48 of Federal Decree-Law No. 8 of 2017 and Articles 48 to 50 of its Executive Regulation, flips that. The supplier issues its invoice without UAE VAT. The buyer calculates VAT at the rate that would apply if the supply had been made by a UAE business, declares it as output tax, and then treats the same amount as input tax, subject to the usual recovery rules.

There are two reasons for it. For imports, a foreign supplier isn't registered in the UAE, so the buyer is the only person in the UAE who can account for the tax. For domestic sectors, the government targets trades where VAT fraud has been a problem, typically a supplier collecting VAT from a buyer, the buyer reclaiming it, and the supplier disappearing without paying. Moving the liability to the buyer stops the tax ever changing hands.

For a business that makes only taxable supplies, the reverse charge is cash-neutral: output and input tax cancel out in the same return. It costs real money only when the buyer can't recover all its input tax, for example a business that also makes exempt supplies, such as residential leasing or certain financial services, or a purchase that is blocked, such as entertainment. It also costs money when it's missed, because the FTA treats an unreported reverse charge as an error in the return.

Reverse charge in one return

Step 1

Supplier invoices without VAT

states the buyer accounts for tax

Step 2

Buyer declares 5% output

Box 3 or Box 6

Step 3

Buyer recovers input

Box 10, if recoverable

Step 4

Net VAT

nil if fully taxable

Imported services

When a UAE-resident registrant receives services from a supplier with no place of residence in the UAE, and the place of supply is the UAE, the registrant accounts for the VAT. Article 48(3) of the Executive Regulation spells this out: a supply received from a non-resident supplier who doesn't charge VAT is treated as subject to the reverse charge.

Typical examples are cloud software and SaaS subscriptions billed from Ireland or the US, social media and search advertising, overseas consultants and law firms, foreign recruitment agencies, and group management fees charged by a parent company abroad. The value is the consideration you pay, converted to AED, and the date of supply follows the normal rules, so the VAT belongs in the return for the period in which the supply took place, under Article 48(4)(b).

The FTA's returns guide asks for zero-rated imported services to be reported in Box 3 too, at their value with no VAT, so the FTA sees the full picture.

Businesses that aren't yet registered need to watch this closely. Imported services count towards the AED 375,000 registration threshold, so a company with modest local sales but large overseas service costs can be required to register. Our VAT registration guide explains the threshold tests.

Imported goods

Goods imported through UAE customs are handled differently depending on whether the importer is registered.

A registered importer can account for import VAT through its return rather than paying at the border, provided it meets the conditions in Article 48(1) of the Executive Regulation: it can show at the time of import that it's registered, it has enough detail for the FTA to verify the import and the tax, it has given the FTA its customs registration number, and it complies with the FTA's rules. In practice, link every customs registration number to your TRN in EmaraTax. The import then appears automatically in Box 6 of your return, valued at the customs value including insurance, freight, customs duty and any excise tax, with 5% VAT calculated on that total.

An unregistered importer, or a registered one that doesn't meet those conditions, pays the VAT before the goods are released, under Article 50. A registered agent importing on behalf of an unregistered person accounts for the VAT and reports it in its own return.

Keep the supplier's invoice and the customs declaration for each import; Article 48(5) makes both part of the records you need. If Box 6 is wrong or incomplete, for example because an import was declared under a code not linked to your TRN or the goods are zero-rated, correct it in Box 7. Failing to account for VAT due on imported goods carries a penalty of 50% of the unpaid or undeclared tax under Cabinet Decision No. 40 of 2017, so this reconciliation matters.

Domestic reverse charge: precious metals and stones

Cabinet Decision No. 127 of 2024, in force from 26 February 2025, applies the reverse charge to supplies of precious metals, precious stones and jewellery between registrants. It repealed Cabinet Decision No. 25 of 2018, which covered only gold and diamonds, so many older guides are out of date.

The scope is now wider:

• Precious metals: gold, silver, palladium and platinum.
• Precious stones: natural and synthetic diamonds, pearls, rubies, sapphires and emeralds.
• Jewellery made from them, provided the value of the precious metal or stones exceeds the value of the other components.

The reverse charge applies when the buyer is registered and intends to resell the goods or use them in producing or manufacturing such goods. A retail sale to a consumer, or a sale to a business buying jewellery as a gift for staff, is taxed normally. It also doesn't apply where the supply is zero-rated under Article 45(1) of the VAT Law, and investment-grade precious metals are already zero-rated under separate rules.

Domestic reverse charge: electronic devices

From 30 October 2023, under Cabinet Decision No. 91 of 2023, supplies of mobile phones, smartphones, computers and tablets between registrants are under the reverse charge when the buyer intends to resell them or use them in producing or manufacturing electronic devices. Parts and components are covered when bought for production or manufacturing, and Ministerial Decision No. 262 of 2023 sets the criteria for which parts qualify.

The FTA's public clarification VATP034 fleshes out the scope. Phones means devices with call or text functions operating by wireless transmission. Computers include desktops, servers and even vehicle engine control units, while e-readers marketed as such are excluded. Resale can be wholesale or retail. The key exclusion is own use: a company buying laptops or smartphones for its employees pays VAT to the supplier in the normal way and recovers it as input tax, if it's entitled to.

Domestic reverse charge: metal scrap

The newest sector is metal scrap. Cabinet Decision No. 153 of 2025 applies the reverse charge from 14 January 2026 to supplies of ferrous and non-ferrous metal waste that has commercial value and can be used after processing. Processing means converting the scrap into material for new products, whether by repair, recycling or any other method. As with precious metals, it applies only where the registered buyer intends to resell the scrap or use it in processing, and not to zero-rated supplies such as exports.

The Ministry of Finance said the scrap rules follow the approach already used for electronic devices, gold and other precious metals. Scrap yards, recyclers, demolition contractors selling recovered metal and foundries buying it all need to check their invoicing from that date.

Certain hydrocarbon supplies are also under a domestic reverse charge, where a registrant supplies crude oil, refined oil, natural gas or other hydrocarbons to a registrant that will resell them or use them to produce or distribute energy. The FTA's returns guide lists these local oil and gas supplies among the items reported in Box 3.

What buyer and supplier must do before the supply

The precious metals and metal scrap decisions set out the same pre-supply steps. Both must be completed before the date of supply, so build them into customer onboarding rather than doing them invoice by invoice.

Domestic reverse charge conditions

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• Buyer gives the supplier a written declaration that it's buying to resell or to use in manufacturing or processing
• Buyer gives a written declaration that it's registered with the FTA
• Supplier receives and keeps both declarations
• Supplier verifies the buyer's TRN using the FTA's approved means, such as the TRN verification tool
• Invoice states that the buyer must account for the tax and cites the relevant provision
• Price is shown exclusive of VAT

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The invoice requirements come from the Executive Regulation. Article 59(1)(l) requires a tax invoice for a reverse-charge supply to include a statement that the recipient must account for the tax and a reference to the relevant provision, and Article 27(4) requires such prices to be declared exclusive of tax. The scrap decision adds an explicit requirement that the invoice says the reverse charge applies.

If the buyer doesn't provide the declarations, the reverse charge doesn't apply to it. The supplier must then charge VAT normally, and the buyer can't treat the goods as used for taxable supplies, so it can't recover that VAT. For a buyer that has lost track of a declaration, that's a 5% cost on the purchase. For a supplier who applies the reverse charge without the declarations and TRN check, the VAT it should have charged may become its own liability.

How to report the reverse charge in the VAT 201 return

The FTA's returns guide sets out where each type of reverse-charge purchase goes.

Box 10 takes only the VAT you're entitled to recover. A business that recovers 60% of its input tax under an approved apportionment method reports the full value and full VAT in Box 3 but only 60% of the VAT in Box 10. Our VAT return guide explains every box.

No more self-invoices. Before 2026, businesses were expected to issue a self-invoice to document reverse-charge transactions. Federal Decree-Law No. 16 of 2025, in force from 1 January 2026, removed that obligation. You now keep the supporting documents the Executive Regulation requires: the supplier's invoice showing the details and the consideration and, for imported goods, the customs statement.

Worked examples in AED

1. An Abu Dhabi software firm buying SaaS from abroad. It pays an Irish provider AED 80,000 for a year's licences. It reports AED 80,000 and AED 4,000 VAT in Box 3, and AED 80,000 and AED 4,000 in Box 10. Net VAT: nil.

2. A partially exempt property company. A Dubai company that leases both commercial and residential units recovers 40% of its input tax under its apportionment method. It pays a UK architect AED 150,000. Box 3 shows AED 150,000 and AED 7,500. Box 10 shows AED 150,000 and AED 3,000. The reverse charge costs it AED 4,500, the part it can't recover.

3. A jewellery retailer buying stock. A Sharjah jeweller buys AED 1,000,000 of gold jewellery from a registered Dubai manufacturer for resale. Before the first delivery, it gives the manufacturer its two declarations, and the manufacturer checks its TRN. The invoice shows AED 1,000,000 with no VAT and a reverse-charge statement. The jeweller reports AED 1,000,000 and AED 50,000 in Box 3 and the same in Box 10. When it sells a AED 20,000 necklace to a shopper, it charges AED 1,000 VAT in the normal way.

4. An electronics dealer with mixed purchases. A Deira phone wholesaler buys 200 smartphones for AED 600,000 from a registered distributor for resale; that's reverse charged, and both sides go in Boxes 3 and 10. In the same month it buys 10 laptops for its staff for AED 40,000; that's own use, so the supplier charges AED 2,000 VAT, which the dealer claims in Box 9.

5. A scrap recycler. An Ajman recycler buys AED 250,000 of copper and steel scrap from a registered demolition contractor for processing. From 14 January 2026, the contractor invoices without VAT, stating the reverse charge applies, and the recycler declares and recovers AED 12,500.

Common mistakes

Leaving imported services out of the return. It's tempting to skip entries that net to zero, but omitting them understates Box 3 and Box 10 and counts as an error. For partially exempt businesses, it also understates tax.

Charging VAT when the reverse charge applies. If a gold or scrap supplier charges 5% on a qualifying supply to a registered reseller, the buyer can't simply reclaim it. Get a corrected invoice.

Applying the reverse charge without declarations. Without the buyer's written declarations and a TRN check made before supply, the domestic reverse charge doesn't apply.

Treating own-use electronics as reverse charge. Laptops for staff are taxed normally.

Using old gold rules. Silver, platinum, palladium and gemstones have been in scope since February 2025.

Ignoring Box 6. Imports declared under unlinked customs codes don't appear automatically, and the 50% of the unpaid or undeclared tax penalty for unaccounted import VAT is steep. If you find a past error, our UAE VAT penalties guide explains when to correct it in your next return and when to make a voluntary disclosure.

Official links

• VAT Executive Regulation (consolidated, September 2026)Articles 27, 48–50 and 59
• Cabinet Decision No. 127 of 2024 — precious metals and stonesFrom 26 February 2025
• Cabinet Decision No. 153 of 2025 — metal scrapFrom 14 January 2026
• Ministerial Decision No. 262 of 2023 — electronic device partsWhich parts are in scope
• FTA guides and public clarificationsIncluding VATP034 on electronic devices
• EmaraTax portalFile returns; link customs numbers

What to do next

List every overseas supplier you paid this quarter and check that each appears in Box 3. If you trade precious metals, electronics or scrap, collect the buyer declarations and TRN checks now and add the reverse-charge wording to your invoice template. Then check your next return against our VAT return guide, and use the UAE VAT calculator to work out the 5% on each reverse-charge purchase.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

What is the reverse charge mechanism in UAE VAT?

It moves the job of accounting for VAT from the supplier to the buyer. The supplier invoices without VAT, and the VAT-registered buyer declares the 5% as output tax in its own return and, if the purchase is for taxable business, recovers the same amount as input tax. For a fully taxable business the cash effect is nil, but both entries must be reported.

Does reverse charge apply to services bought from abroad?

Yes. When a UAE-resident VAT registrant receives services from a supplier with no place of residence in the UAE that doesn't charge UAE VAT, the registrant accounts for VAT under the reverse charge. Software subscriptions, overseas consultants, advertising platforms and foreign legal fees are common examples. They go in Box 3 and Box 10 of the VAT 201 return.

Which domestic supplies are under reverse charge in the UAE?

Supplies between VAT registrants of gold, silver, palladium, platinum, precious stones and qualifying jewellery (from 26 February 2025), mobile phones, computers, tablets and their parts (from 30 October 2023), and metal scrap (from 14 January 2026), where the buyer intends to resell them or use them in manufacturing or processing. Certain hydrocarbon supplies in the energy sector are also covered.

Do I still need to issue a self-invoice for reverse charge?

No. From 1 January 2026, Federal Decree-Law No. 16 of 2025 removed the obligation to issue self-invoices when applying the reverse charge. You must instead keep the supporting documents the Executive Regulation requires, such as the supplier's invoice showing the consideration and, for imported goods, the customs statement.

What happens if the buyer doesn't give the reverse charge declaration?

For gold, precious stones and metal scrap, the Cabinet decisions say the reverse charge then doesn't apply to that buyer, so the supplier charges VAT in the normal way. The buyer also can't treat the goods as used for making taxable supplies, which means it can't recover the VAT. Get the declarations in place before the first delivery.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 12 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Executive Regulation of the VAT Law and its amendments (consolidated, September 2026) — Federal Tax Authority / Ministry of Finance · accessed 12 October 2026
2. 2.Cabinet Decision No. 127 of 2024 on the reverse charge for precious metals and precious stones — Federal Tax Authority / Ministry of Finance · accessed 12 October 2026
3. 3.Cabinet Decision No. 153 of 2025 on the reverse charge for metal scrap — UAE Ministry of Finance · accessed 12 October 2026
4. 4.Ministry of Finance announces Cabinet Resolution on reverse charge for scrap-metal trading — UAE Ministry of Finance · accessed 12 October 2026
5. 5.FTA issues public clarification on reverse charge for electronic devices — Federal Tax Authority · accessed 12 October 2026
6. 6.Ministry of Finance to implement VAT law amendments starting January 2026 — UAE Ministry of Finance · accessed 12 October 2026
7. 7.VAT User Guide – Returns (Form VAT201) — Federal Tax Authority · accessed 12 October 2026
8. 8.UAE implements reverse charge mechanism on supply of electronic devices — DLA Piper · accessed 12 October 2026
9. 9.Cabinet Decision No. 40 of 2017 and its amendments — Federal Tax Authority / Ministry of Finance · accessed 12 October 2026