Try the live demo
No install needed
- User
- admin
- Password
- demoAdmin123
- POS PIN
- 1234
Demo data refreshes nightly to keep the sample company clean.
Open live demoReverse charge VAT in the UAE, explained with examples
Normally the seller charges VAT. Under reverse charge the buyer accounts for it instead, so the VAT appears twice on your return and cancels out. This guide shows when it applies, which boxes to use, and how Zeyto records it.
Screenshot from the Zeyto demo company, with sample data.
The idea
How reverse charge works
Normally the seller charges VAT and the buyer recovers it as input VAT. Under reverse charge the buyer accounts for the VAT instead. The FTA's return guide says services received from foreign suppliers belong in Box 3 of the VAT 201 (supplies subject to reverse charge), and the VAT you can recover goes in Box 10. A fully taxable business ends up with the same VAT in both boxes, so the net effect is zero, but both lines must appear on the return.
Read more
Imports of goods declared to UAE customs are different: the import VAT is reported in Box 6 (or corrected in Box 7), not Box 3. The recoverable side is again Box 10. One more point from the Academy lessons: there is no domestic reverse charge for ordinary construction work. Reverse charge applies to imported goods and services, and to listed domestic supplies such as metal scrap and precious metals and stones.
Worked examples
Two examples with real numbers
- Foreign consulting: a UAE company is billed AED 20,000 by a foreign firm that charges no UAE VAT. Self-accounting at 5% gives AED 1,000 of VAT. Box 3 shows value 20,000 and VAT 1,000; Box 10 shows value 20,000 and recoverable VAT 1,000. Net effect on VAT payable: 1,000 minus 1,000 = 0.
- Imported goods: goods arrive with a customs value of AED 60,000 and import VAT of AED 3,000 on the declaration. Recording it puts AED 3,000 in Box 6 (output side) and AED 3,000 in Box 10 (input side). Net effect is zero if you recover all input VAT.
- The goods themselves are entered through the supplier's purchase invoice, so stock and payables are not booked twice.
In Zeyto
Recording reverse charge, purchase side
Zeyto has five UAE tax codes: SR5, ZR, EX, RCM and OOS. RCM is reverse charge at 5%, reported in Box 3 on the sale side and Box 10 on the purchase side.
- 1Use RCM Self-AccountingOpen Purchase, RCM Self-Accounting, then New. It opens a Taxable Journal set to Reverse charge (RCM).
- 2Enter one lineEnter the expense account, the supplier, an RCM tax code, the taxable base and the same amount in Debit.
- 3Let Zeyto build the entryZeyto debits the expense and credits payables for the base, and debits VAT Input and credits VAT Output for the VAT.
- 4Record imports separatelyFor imported goods use VAT, Import VAT (Box 6/7). Enter the customs declaration number, customs value and the VAT.
- 5Check the worksheetOpen the Return Worksheet for the period and confirm the same VAT appears in Box 3 or 6 and in Box 10.
Sales side
Selling under reverse charge
An item can belong to an RCM category in Zeyto (Settings, RCM Categories). When you add it to a sale, Zeyto checks the category, the customer's 15-digit TRN and, where the category requires one, a valid declaration from the customer, recorded in Sales, RCM Declarations. If all pass, the line switches to the category's reverse-charge code, shows an RCM tag, and the invoice charges no VAT on that line. The value is reported in Box 3.
Read more
This is the only case where Zeyto changes a line's tax code by rule. For everything else the customer does not change the code, and you must change a line yourself, for example to zero-rated for an export.
A purchase invoice coded RCM does not declare the VAT A Purchase Invoice line coded RCM records the value with no VAT and does not declare the VAT. A voucher from RCM Self-Accounting does. If you only code the purchase invoice, Box 3 and Box 10 will miss the VAT. Rules change, so check the FTA website before you file. This page is general information, not tax or legal advice, and was last reviewed on 8 November 2026.
Go deeper
Learn more
Related lessons and guides.
Related guides and pages
- UAE E-InvoicingUAE e-invoicing dates from the Ministry of Finance, what an accredited service provider does.
- UAE VAT FilingZeyto handles UAE 5% VAT end to end: tax invoices, input and output ledgers, reverse charge.
- e-Invoicing 2027What UAE e-invoicing means for your ERP: the Ministry of Finance dates, seven questions to ask any vendor.
- VAT 201 return guideHow to prepare a UAE VAT 201 return: what each box means, a worked example.
- UAE tax invoice requirementsWhat a valid UAE tax invoice must show: the 14-day rule, the fields on a standard invoice, simplified invoices.
- VAT registration and TRNUAE VAT registration thresholds (AED 375,000 mandatory, AED 187,500 voluntary), the 30-day rule.
Buying guides
- ERP Software UAEOffline-capable ERP for UAE businesses: sales, purchase, POS, inventory, accounting, UAE VAT and reports on your own server.
- Trading ERP UAEZeyto ERP for UAE trading companies: quotations, sales orders, purchase, GRN, landed cost, inventory, VAT, receivables.
- VAT POS DubaiZeyto POS for Dubai retail and service counters: VAT invoices, barcode billing, returns, refunds, day-end cash closing.
UAE e-invoicing roadmap
Get invoices, VAT and data fields in order first
Zeyto is built around UAE VAT, structured invoice data and local validation. The connection to an Accredited Service Provider is on the roadmap and not released yet.
Install the trial
Your own PC
Run Zeyto cloud, private cloud, on-premise or on a local server, with desktop shell, browser access and the mobile app.
Talk to Zeyto
Sales, support, partners
Send your industry, branch count, users and reporting needs. We route you to the right person.
FAQ
Straight answers
Which VAT 201 boxes does reverse charge use?
Services received from foreign suppliers go in Box 3 with the recoverable VAT in Box 10. Imports of goods declared to UAE customs are reported in Box 6 (or corrected in Box 7), again with the recoverable side in Box 10.
Does reverse charge cost me any cash?
For a fully taxable business the VAT reported in Box 3 or 6 and the VAT recovered in Box 10 are the same amount, so the net effect on VAT payable is zero. Costs linked to exempt supplies are not recoverable, so a partly exempt business may pay.
Is there a reverse charge for construction work?
Not domestically. Reverse charge applies to imported goods and services and to listed domestic supplies such as metal scrap and precious metals and stones. A foreign design or specialist service bought from outside the UAE may fall under reverse charge.
Where do I record the import VAT in Zeyto?
Use VAT, Import VAT (Box 6/7). Enter the customs declaration number, customs value and the VAT. Enter the goods themselves through the supplier's purchase invoice.
Can I use Zeyto offline for this?
Yes. Zeyto is offline-capable, so posting vouchers and preparing the worksheet work on your own server during internet outages. Filing on the FTA portal needs a connection.
See reverse charge posted in Zeyto
Open the demo and post an RCM Self-Accounting voucher.