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Reverse Charge Mechanism in Dubai UAE

RCM Integrated Software in UAE 2024

As we introduce RCM within the framework of our advanced software, we’ll explore key aspects, from the basics of RCM to the advantages it brings. Join us as we redefine the way businesses manage tax obligations.

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Understanding RCM

Navigating the intricate landscape of VAT regulations in the United Arab Emirates (UAE) requires a comprehensive understanding of the Reverse Charge Mechanism (RCM), a pivotal concept, especially in the context of cross-border transactions. In this detailed guide, we delve into the nuances of RCM, elucidating its significance, determining its applicability, and providing strategic insights for businesses involved in international trade.

Explore the dynamic realm of VAT compliance in the UAE with tailored perspectives aimed at facilitating seamless navigation of the Reverse Charge Mechanism. Beams ERP has incorporated the latest enhancements, including an update to seamlessly integrate the Reverse Charge Mechanism. Now, businesses involved in international trade can leverage Beams ERP to navigate and incorporate RCM into their financial processes, ensuring a more efficient and streamlined VAT compliance journey.

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RCM reverse charge mechanism

When is RCM Applicable in the UAE?

Import of Goods & Services:

  • From other GCC and non-GCC countries.
  • The supplier must be located in another country, with or without a business presence in the UAE.

Purchase from a Designated Zone:

  • Relevant for purchases made in designated zones.

Supply of Hydrocarbons

  • For resale by a registered supplier to a registered recipient in the UAE.

Energy Production and Distribution

  • Any form of energy supplied by a registered supplier to a registered recipient in the UAE.

Electronic Devices

  • The UAE’s Federal Tax Authority extends reverse charge mechanism to B2B sales of electronic devices.
  • Buyers bear the responsibility for tax remittance.



Reverse Charge Mechanism in VAT

In the intricate landscape of VAT, the Reverse Charge Mechanism (RCM) serves as a transformative paradigm, specifically manifesting in scenarios like cross-border transactions or engagements with non-resident suppliers, where the customary VAT payment responsibility shifts decisively from the supplier to the buyer. This process necessitates the buyer’s active involvement, including the autonomous calculation and direct remittance of VAT to the government, and potentially availing input credit benefits, all within a framework of meticulous documentation practices to uphold transparency and readiness for potential audits.

How Does Reverse Charge Mechanism Work?

  • Mr. John, a VAT-registered person in the UAE, acquires services from Tony, a non-UAE-based bookkeeper in Italy.


  • As Tony is not registered in the UAE, Mr. John records the reverse charge on his VAT return, accounting for the VAT under the reverse charge mechanism.

What Recipients Should Do in a Reverse Charge Transaction?

  1. Calculate VAT Amount:

Recipients need to calculate the tax amount to be paid to the government.

  1. Self-Accounting:

Self-account the VAT amount as output tax during the purchase.

  1. Declare in VAT Return:

Declare the transaction in the VAT return and, if applicable, claim input credit.

  1. Maintain Necessary Documents:

Keep invoices and relevant documents for future reference.

Elevate Your RCM Experience With Beams

The Beams ERP Advantages

Automated RCM Calculations

Discover the power of automation with Beams. Our software employs sophisticated algorithms to seamlessly identify transactions subject to RCM, eliminating the manual burden and reducing the risk of errors.

Real-time Compliance Monitoring

Stay ahead of compliance deadlines effortlessly. Beams’ real-time monitoring system ensures that you are well-informed about upcoming RCM obligations, empowering you to take proactive steps in meeting your tax responsibilities.

User-Friendly Software Interface

Navigating through the complexities of RCM compliance has never been more intuitive. Beams boasts a user-friendly interface, designed to simplify the often intricate process of managing reverse charge transactions.

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