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4 June 2025
VAT Public Clarification (Concerned Services)

FTA issues Public Clarification on Concerned Services - Accounting for Output Tax, issuing Tax invoices, and Input Tax recovery.

The Federal Tax Authority (FTA) recently issued Public Clarification under UAE VAT law that discuss the VAT treatment on Concerned Services - Accounting for Output Tax, issuing Tax invoices, and Input Tax recovery. We have summarized below the key UAE VAT positions discussed in the Public Clarification:

Public Clarification (VATP044) clarifies the need to account for Output Tax and issue Tax invoices with respect to Concerned Services and the documents essential for recovering Input Tax regarding these Services.

Sr. No. Topic Comments
1 Coverage of VATP044
  1. Concerned Services (Imported) received from Outside UAE where the Place of supply is in UAE.
  2. VAT registered businesses in the UAE receiving such services are deemed to have such supplied these services to themselves and must account for output VAT using the Reverse Charge Mechanism (RCM).
  3. Registrant must issue self-invoice for accounting and paying VAT.
2 VAT Treatment
  1. This is where the recipient of imported service account for the VAT applies Reverse charge mechanism by issuing self-invoice.
  2. This ensures fair tax treatment for services consumed in UAE, even when supplied by vendor located outside UAE who has not obtained VAT registration in UAE.
3 Issuing Tax Invoices
  1. Registrant must issue a tax invoice to themselves within 14 days from the date of supply.
  2. No need to issue self-invoice when overseas supplier has issued invoice with the details of:
    • Supplier & Recipient details
    • Date of issuance of document and date when service provision ended
    • Description and consideration
    • Payment terms, if applicable
4 Input VAT Recovery
  1. The service was acquired for taxable business use.
  2. Registrant must pay the supplier within 6 months from the date of issued invoice. Timely payment to supplier avoids losing the right to reclaim VAT.
  3. Input VAT can be recovered in First tax period of receipt/payment or the immediate tax period. The detailed clarification is provided in VAT Public Clarification Timeframe for recovering input tax (VATP017)
5 Documents Retention Emphasis proper documents such us- valid invoices, payment proof and any other related document like vendor agreement helps ensure a smooth audit process and reduce the risk of penalties.


Our Comments
The said Public Clarification gives clear guidance on VAT for imported services. It highlights the need for proper documents, on-time payments, and using the reverse charge correctly. Businesses should review their processes to stay compliant and recover VAT effectively.
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