FTA clarifies self-invoicing requirement for recipients of Concerned Services

Under UAE VAT regulations, when a non-resident supplier provides services to a UAE-based recipient who is engaged in business activities, such services are classified as ‘Concerned Services’ or ‘Imported Services’^{1 2}. These are treated as taxable supplies in the UAE, and the recipient is required to account for VAT under the reverse charge mechanism³

Following the publication of Public Clarification VATP036 on SWIFT Messages on 2 February 2024, there was notable uncertainty in the market regarding whether taxable persons were broadly required to self-issue tax invoices for all Concerned Services received from non-resident suppliers⁴. This ambiguity prompted the issuance of Public Clarification VATP041 on 14 April 2025⁵, which clarified that the administrative tolerance to not issue a tax invoice applied only to SWIFT services and not to other types of Concerned Services. However, despite this clarification, confusion persisted as to whether taxable persons were still required to issue tax invoices for all other Concerned Services, in the absence of a similar administrative tolerance.

With Public Clarification VATP044 on Concerned Services, published on 26 May 2025, the Federal Tax Authority (FTA), provided further clarity. It confirmed that a UAE-based recipient is not required to issue a tax invoice to itself for Concerned Services, provided that:

• The recipient obtains and retains the original invoice issued by the overseas supplier;
• The invoice reflects the relevant details and the consideration paid;
• The recipient correctly accounts for VAT under the reverse charge mechanism; and
• Sufficient documentation is maintained to substantiate the particulars of the supply.

 

Self-issuing tax invoices for Concerned Services

As a general principle, taxable persons that are registered for VAT purposes are required to issue and deliver a tax invoice to the recipient within 14 days of making a taxable supply⁶. Where a UAE taxpayer receives Concerned Services from abroad, the recipient is required to account for VAT under the reverse charge mechanism. As a result, the UAE recipient is regarded as supplying the Concerned Service to itself and is therefore in principle required to issue and deliver a valid tax invoice to itself in respect of each Concerned Service received.

However, where there are (or will be) sufficient records available to establish the particulars of any supply or class of supplies, and that it would be impractical to require the issuance and/or delivery of a tax invoice by the taxable person, the FTA may determine that a tax invoice is not required to be issued in certain cases⁷.

Considering the administrative burden to issue tax invoices to itself in the case of Concerned Services, the FTA accepts that the UAE recipient is not required to issue a tax invoice to itself in respect of Concerned Services if it obtains and retains the invoice issued by the overseas supplier reflecting the details and the consideration paid for the Concerned Service, provided that the recipient accounts for the correct VAT amount under the reverse charge mechanism in respect thereof and retains sufficient information to establish the particulars of such supplies.

Furthermore, the FTA clarified that if the supplier did not issue an invoice, a document containing the following details will be regarded as the supplier’s invoice:

• the name and address of the supplier of the Concerned Service, e.g. a foreign entity supplying the service from outside the UAE,
• the name and address of the recipient,
• the date the document was issued,
• the date the service ended,
• description of the service supplied,
• consideration for the supply, including the relevant currency and, where applicable, payment terms.

The FTA finally also clarified that where the overseas supplier does not issue an invoice or combination of documents that are collectively regarded to be an invoice, the UAE recipient of the Concerned Services will remain liable to issue and deliver a valid tax invoice to itself in respect of each Concerned Service received. Failure to do so may result in the recipient being ineligible to recover input VAT on the Concerned Services.

 

Key takeaway

The FTA has provided much-needed clarity on the invoicing and record-keeping requirements for Concerned Services. Where a valid invoice, or equivalent documentation, is issued by the overseas supplier, UAE recipients are not required to self-issue tax invoices. However, in the absence of such documentation, the obligation to self-invoice remains, and failure to comply may jeopardize input VAT recovery. Businesses should review their documentation processes to ensure compliance and avoid unnecessary administrative burdens.

 

Reference

• VAT Public Clarification on Concerned Services – Accounting for Output Tax, issuing Tax Invoices, and Input Tax Recover (VATP044)
  
  

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¹Article 1 of Federal Decree-Law No. (8) of 2017 on Value Added Tax (UAE VAT Law) defines Concerned Services as: “Services that have been imported, where the place of supply is considered to be in the UAE, and would not be exempt if supplied in the UAE”.
²Article 30(2) UAE VAT Law
³Article 48(1) UAE VAT Law
⁴Please refer to our previous article FTA issues public clarification on input tax recovery using SWIFT messages | DLA Piper.
⁵Public Clarification VATP041 repealed and replaced Public Clarification VATP036.
⁶Article 65(1) and 67(1) UAE VAT Law
⁷Article 59(7)(b) of Cabinet Decision No. (52) of 2017 on the Executive Regulation of the Federal Decree-Law No. (8) of 2017 on Value Added Tax (UAE VAT Executive Regulations).