FTA Clarifies VAT on Imported Services: Output Tax, Invoices, and Input Tax Recovery

• The Federal Tax Authority issued Public Clarification VATP044 for VAT-registered businesses in the UAE.
• It provides guidance on accounting for VAT and recovering input tax for services received from outside the UAE.
• Concerned services are those received from abroad but considered supplied within the UAE and not VAT-exempt locally.
• Businesses must treat these services as taxable supplies to themselves using the reverse charge mechanism.
• For output tax, businesses must account for VAT on imported services and report it in Box 3 of the VAT return.
• Administrative relief allows retaining the supplier’s invoice instead of issuing a separate tax invoice.
• Input tax can be recovered if services are for taxable supplies, with supporting documentation and payment within six months.
• Documentation must show supplier and recipient details, service description, and payment terms.
• Businesses should review procurement processes, maintain accurate records, and ensure proper VAT compliance.

Source: nrdoshi.ae

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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