[Global IDT Insights] FTA Clarifies VAT Obligations on Imported Services

Editorial Team – [2025] 175 taxmann.com 329 (Article)

Global IDT Insights provides a weekly snippet of tax news specifically related to Indirect Taxes from around the globe.

1. FTA Clarifies VAT Obligations on Imported Services

The Federal Tax Authority (FTA) has issued a Public Clarification (VATP044) to elaborate the compliance requirements related to services imported into the United Arab Emirates (UAE) that qualify as “Concerned Services.”

As per the clarification, Concerned Services refer to services imported from outside the UAE where the place of supply is within the UAE and which would not be exempt from VAT had they been supplied domestically. A registrant receiving such services is deemed to be making a taxable supply to itself.

Consequently, the registrant must account for the applicable VAT under the reverse charge mechanism and declare the value and related output tax corresponding to the tax period in which the supply occurs.

Further, a registrant making a taxable supply is required to issue and deliver a valid original tax invoice within 14 days from the date of supply. Since the registrant is treated as both the supplier and recipient of the Concerned Service, the requirement extends to issuing an invoice to itself.

However, the FTA may grant an administrative exception from the requirement to issue a tax invoice if sufficient records are maintained and it is impractical to issue or deliver one. In such cases, the registrant may rely on the invoice issued by the foreign supplier, provided it contains details such as:

• Supplier’s name and address
• Recipient’s name and address
• Issue date
• Service end date
• Description of the service
• Consideration including currency and payment terms

Where the foreign supplier fails to issue an invoice, an alternative document or a combination of documents containing the above particulars may be used, subject to FTA approval.

Furthermore, input tax may be recovered to the extent that the Concerned Services are used for making taxable supplies. This recovery is contingent on the retention of supporting documents, such as the supplier’s invoice. The input tax may also be recovered even if the registrant has not issued an invoice to itself, provided the overseas supplier’s invoice or equivalent documentation is maintained.

The clarification reiterates that it does not amend the law but reflects the current interpretation and application of it. Also, it is made effective from the date of implementation of the relevant legislation.

This clarification aims to ensure consistency in VAT treatment for services imported into the UAE and assist registrants in complying with documentary and reporting obligations under the VAT regime.

Source – Official News

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