Reverse Charge Supplies in VAT Form 201
Under VAT in UAE, on certain notified supplies, the recipient or the buyer of goods or services is responsible to pay the tax to the Government, which is known as the reverse charge mechanism. In UAE VAT, the following supplies are under reverse charge:
- Imports of concerned goods or concerned services for business purposes
- Taxable supply of any crude or refined oil, unprocessed or processed natural gas, or any hydrocarbons for resale or to produce and distribute any form of energy by registered supplier to registered buyer in the State of UAE
- Supply of goods or services by a supplier who does not have a place of residence in the state to a taxable person who has a place of residence in the State of UAE
To know more about reverse charge supplies, read VAT Reverse Charge Mechanism
The details of output VAT which the recipient is liable to pay on reverse charge supplies need to be furnished in box no 3 ‘Supplies subject to reverse charge provisions’ under ‘Sales and All other output’ section of VAT form 201. However, any import of goods subject to reverse charge that has been declared to UAE customs need to declared in box no 6 ‘Goods imported into UAE’. This implies that box no 3 will be mostly used to declare the details of services imported and the import of goods not declared via UAE Customs.
As shown in the above image, the recipient needs to declare only the net value the value of reverse charge supplies and applicable VAT amount. The value and the output VAT of the following type of reverse charge supplies should be included in the box no 3 ‘supplies subject to the reverse charge provisions’.
- Services received from foreign suppliers which are subject to the standard rate of VAT
- Services received from foreign suppliers which are subject to the zero rate of VAT
- Goods received which are subject to the reverse charge provisions and have not been declared to UAE customs (For example, import through an import declaration)
- Local supplies subject to the reverse charge provisions (For example, specific supplies within the oil and gas industry)
Please note, imports of goods into the UAE which are subject to the reverse charge provisions have been declared to UAE customs and therefore should be reported in Box 6 of the VAT Form 201.
Key points for Furnishing Reverse Charge Supplies in VAT Return Form 201
- The box no is only to declare the output VAT liability on reverse charge supplies discussed above
- The eligible input VAT on these supplies needs to be reported in Box 10 of the VAT return form 201
- Ensure that import of goods declared via UAE Customs is not declared in the Box no 3