What is Reverse Charge Mechanism : VAT in GCC, Dubai, Saudi Arabia

What is Reverse Charge Mechanism : VAT in GCC, Dubai, Saudi Arabia

This charge is applicable on the imported of goods or services imported from outside the GCC countries this is called Reverse Charge Mechanism.

Under Revers Charge Mechanism in UAE VAT Law the payment of VAT is not made at the import stage/ point means there is Zero payment of VAT and the only responsibility / compliance requirement left is with the buyer to report the VAT on Purchases (Input VAT) and VAT on Sales (Output VAT) in their VAT Return for the period.

The unpaid reverse charge would have paid if the purchase was made inside UAE. So the buyer has to file the VAT return and to show the Input and Output tax therein. In other words we can say that the Reverse Charge is at zero percent

Article 48(1) of the VAT Law speaks as under: -

Article (48) (1) ReverseCharge 

1) If the Taxable Person imports Concerned Goods or Concerned Services for the purposes of his Business, then he shall be treated as making a Taxable Supply to himself, and shall be responsible for all applicable Tax obligations and accounting for Due Tax in respect of these supplies.

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