UAE VAT Public Clarification VATP045: Treatment of Imported Goods, Tax Invoices and Input VAT Recovery
The Federal Tax Authority (FTA) has issued VAT Public Clarification VATP045 to clarify the VAT treatment of certain goods imported into the UAE, including the accounting for output VAT, tax invoicing requirements and recovery of input VAT.
Importantly, the clarification applies only to concerned goods imported on or before 31 December 2025. From 1 January 2026, amendments to the UAE VAT Law mean that taxable persons are no longer required to issue tax invoices to themselves when importing these goods.
What are “Concerned Goods”?
For VAT purposes, “Concerned Goods” are goods imported into the UAE that would not have been exempt from VAT if they had instead been supplied within the UAE.
Examples may include:
- Machinery and equipment
- Spare parts
- Other taxable goods imported into the UAE
Where such goods are imported for business purposes, the UAE VAT rules may treat the taxable person as making a taxable supply to itself.
Accounting for Output VAT
Under Article 48(1) of the VAT Law applicable before 1 January 2026, a taxable person importing Concerned Goods was treated as making a taxable supply to itself.
Accordingly, the taxable person was required to account for the applicable output VAT on the imported goods, unless the goods would have been exempt if supplied in the UAE.
The VAT amount relating to imports is generally reflected in Box 6 of the VAT Return. Businesses should reconcile the pre-populated amounts with their internal import and accounting records for the relevant tax period.
Where discrepancies are identified, or where another person has imported the goods on behalf of the taxable person, the necessary adjustment should be made in Box 7 of the VAT Return.
Tax Invoice Requirement — Rules Applicable to Imports Before 1 January 2026
Under the rules applicable before 1 January 2026, a registered person making a taxable supply was generally required to issue a tax invoice within 14 days of the date of supply.
Because the importation of Concerned Goods was treated as a taxable supply by the taxable person to itself, the business was consequently required to issue a tax invoice to itself for Concerned Goods imported before 1 January 2026.
However, VATP045 provides an important practical concession.
The FTA accepts that a business does not need to issue a tax invoice to itself where all of the following conditions are satisfied:
- The business obtains and retains the invoice issued by the overseas supplier, showing the details of the Concerned Goods and the consideration paid or payable.
- The business obtains and retains a declaration issued by the relevant Emirate Customs Department showing the details and value of the Concerned Goods.
- The business verifies that the correct VAT amount is pre-populated in Box 6 of its VAT Return, or makes the necessary adjustment in Box 7.
Where these conditions are met, the business does not need to submit a separate application for an administrative exception from the FTA.
If the required overseas supplier invoice or relevant customs declaration is not available, this concession does not apply.
What Changed From 1 January 2026?
One of the most important points in VATP045 is that the underlying legislation has changed.
From 1 January 2026, taxable persons are no longer required to issue tax invoices to themselves when importing Concerned Goods.
As a result, VATP045 is specifically relevant to Concerned Goods imported on or before 31 December 2025.
Businesses should therefore distinguish between:
- Imports made on or before 31 December 2025: VATP045 applies, including its guidance on self-issued tax invoices and the related documentary requirements.
- Imports made from 1 January 2026: the amended VAT Law applies, and the previous requirement to issue a tax invoice to oneself no longer applies.
Recovery of Input VAT
A registered person may generally recover the related input VAT to the extent that the Concerned Goods are used, or intended to be used, to make taxable supplies.
Input VAT recovery remains subject to the applicable conditions and documentary requirements.
Businesses should obtain and retain appropriate supporting documentation, including:
- The overseas supplier’s invoice showing the details of the goods and consideration.
- The relevant declaration or statement issued by the Emirate Customs Department showing the details and value of the imported goods.
- Relevant import documentation and VAT records.
The fact that a business does not issue a tax invoice to itself does not, by itself, prevent it from recovering eligible input VAT, provided the required supporting documentation is retained and the other recovery conditions are satisfied.
When Can Input VAT Be Recovered?
VATP045 explains that input VAT may generally be recovered in the first tax period, or the immediately following tax period, in which the relevant requirements have been satisfied.
These requirements include obtaining and retaining the relevant supporting documents and satisfying the applicable payment conditions.
For this purpose, the recipient may be treated as having paid the consideration where it pays, or intends to pay, the consideration within six months of the agreed payment date, in accordance with the applicable rules.
Tax Credit Notes
For businesses that issued self-tax invoices for Concerned Goods under the rules applicable before 1 January 2026, VATP045 also addresses subsequent adjustments.
Where an adjustment is made to the relevant Concerned Goods after a self-issued tax invoice has been issued, the business may be required to issue a tax credit note to itself to reflect the adjustment.
Key Takeaways for UAE Businesses
VATP045 provides important guidance for businesses reviewing their historic import VAT treatment.
The main points are:
- Concerned Goods are taxable imported goods that would not have been exempt if supplied in the UAE.
- For imports made before 1 January 2026, the taxable person was generally treated as making a taxable supply to itself.
- The applicable output VAT must be properly accounted for and reconciled with the VAT Return.
- For imports made before 1 January 2026, a self-issued tax invoice was generally required unless the applicable concession or an administrative exception applied.
- The FTA accepts that a self-issued tax invoice is not required where the overseas supplier invoice, relevant customs declaration and correct VAT reporting requirements are satisfied.
- Eligible input VAT may be recovered to the extent the goods are used or intended to be used for taxable supplies.
- Proper supporting documentation is essential for input VAT recovery.
- From 1 January 2026, the requirement to issue tax invoices to oneself for the importation of Concerned Goods has been removed.
Conclusion
VAT Public Clarification VATP045 provides clarity on the UAE VAT treatment of Concerned Goods imported before the legislative changes that took effect on 1 January 2026.
While the clarification confirms the historical requirement to account for output VAT and addresses the circumstances in which self-issued tax invoices could be avoided, the most significant practical development for businesses is the removal of the self-invoicing requirement from 1 January 2026.
Businesses should nevertheless maintain robust import documentation and ensure that VAT reporting and input VAT recovery remain properly supported, particularly when reviewing transactions relating to periods before 1 January 2026.
