Two things travel under the name reverse charge in UAE VAT, and Section 10.5.1 of the Guidelines allows only one of them into the Electronic Invoicing System. Configuring the tax category against the wrong one produces Electronic Invoices for transactions the Guidelines place outside the system entirely.
Imports Are Outside the System
Article 48 of the VAT Decree-Law applies the reverse charge mechanism to Concerned Goods and Concerned Services imported by a Taxable Person for business purposes. The Guidelines state that the import of Concerned Services and Concerned Goods is not subject to any Electronic Invoicing requirements. The VAT reporting obligation under Article 48 continues as it stands, and the import stays outside the Electronic Invoicing System entirely.
For a business that imports services from overseas group companies or third-party providers, this removes a large population of transactions from the e-invoicing programme. The self-accounting entries in the VAT return remain exactly as they are today.
What the Category Is For
The reverse charge tax category should be used only where the mechanism applies to a supply of certain goods between two VAT Registrants under the VAT Decree-Law and the associated Cabinet Decisions. The goods the Guidelines list are:
- Electronic devices, under Cabinet Decision No. 91 of 2023;
- Precious metals and precious stones, under Cabinet Decision No. 127 of 2024;
- Crude or refined oil;
- Unprocessed or processed natural gas;
- Pure hydrocarbons;
- Metal scrap trading, under Cabinet Decision No. 153 of 2025.
Where the category applies, the supplier issues an Electronic Invoice that carries no VAT and includes a narrative specifying the reason the supply is subject to the reverse charge mechanism. The type of goods subject to the mechanism must also be included as a reference on the Electronic Invoice.
Free Text on a Structured Document
The narrative requirement is one of the few points in the Guidelines where a mandatory element of an Electronic Invoice is prose. Free text entered by whoever raises the invoice will vary across users, entities and months, and consistency is what makes the field usable as evidence later.
Treating both the narrative and the goods-type reference as attributes of the item rather than the transaction solves this. A product flagged in the item master as falling under Cabinet Decision No. 153 of 2025 carries its reference and its standard narrative into every invoice line automatically, and the wording stays consistent across the whole ledger. The alternative — a text box at invoice entry — produces a fresh phrasing of the same statement from each person who raises one.
The Condition That Sits in Your Counterparty’s Records
The mechanism requires both parties to be VAT Registrants. Your own status is a fact you hold; your customer’s sits in their records. Applying the category to a customer whose registration has lapsed, or who falls outside VAT registration altogether, produces an invoice carrying no VAT on a supply that should have carried it, and the shortfall is the supplier’s.
This makes counterparty registration status a controlled master data attribute for any business trading in the six listed categories, with a defined refresh point rather than a value captured once at customer creation. Where the recipient's own invoicing obligation on these supplies is the question, that sits separately from the tax category and is covered in the analysis of the domestic reverse charge self-invoice.