The Federal Tax Authority (FTA) of the UAE has issued Public Clarification VATP044, which addresses the application of Value Added Tax (VAT) to services received from outside the UAE, as well as the requirements for tax invoices and the procedure for input VAT recovery.
1. If the place of supply of the imported service is considered to be within the UAE, and the service would not be exempt from VAT if supplied locally, the recipient of the service must:
- Be treated as making a taxable supply to themselves;
- Account for VAT under the reverse charge mechanism (Output Tax);
- Issue a tax invoice in their own name, unless an administrative exemption has been granted by the FTA;
A supplier invoice from abroad may be used as supporting documentation, provided it contains all necessary details and the VAT is correctly calculated under the reverse charge mechanism.
2. The recipient of the service is entitled to recover input VAT if:
- The service is used for the purpose of making taxable supplies;
- The recipient is VAT registered;
- Supporting documents are available (e...