UAE VAT Alert: FTA Clarifies Barter Transactions, Precious Metals, and Service Tax Rules

The UAE Federal Tax Authority (FTA) has recently issued important VAT Public Clarifications aimed at helping businesses comply with evolving VAT regulations. These updates, released in April and May 2025, address critical issues such as barter transactions, the reverse charge mechanism on precious metals and stones, and accounting for output tax on concerned services. Here’s a summary of the new clarifications and what they mean for your business.

On April 28, 2025, the UAE FTA issued VAT Public Clarification: VATP042, Value of Supply—Barter Transactions. The clarification states that the value of supply within a barter transaction is the market value of the non-monetary consideration received by a supplier, excluding the tax amount, while receipt of both monetary and non-monetary consideration includes the monetary part plus the market value of the non-monetary part, excluding the tax amount.
On April 30, 2025, the UAE FTA issued VAT Public Clarification—VATP043, Application of the Reverse Charge Mechanism on Precious Metals and Precious Stones between Registrants in the State for the Purposes of Value Added Tax, replacing Public Clarification VATP032 on Gold and Diamonds—Amendment to Tax Treatment of Making Service. The clarification lists out the goods within the scope of the domestic reverse charge to include precious metals, precious stones, and jewelry made.
On May 27, 2025, the UAE FTA issued VAT Public Clarification—VATP044 on Concerned Services – Accounting for Output Tax, Issuing Tax Invoices, and Input Tax Recovery Issue. This clarifies the requirement to account for the output tax and issue tax invoices in respect of concerned services and the documentary requirements for recovering input tax in respect of these services.

Why These Clarifications Matter

These VAT public clarifications help businesses:

Avoid errors in VAT reporting
Maintain compliance with current FTA requirements
Accurately value supplies in barter transactions
Correctly apply the reverse charge mechanism in specific trades
Ensure proper tax invoicing and input recovery for services

Need Help with VAT Compliance in the UAE?

Understanding and applying these changes correctly is crucial for staying compliant. At YUGA Accounting & Tax Consultancy, our VAT experts can help you:

Review your current VAT processes
Apply the reverse charge mechanism appropriately
Handle barter transactions as per FTA guidelines
Ensure your invoicing and documentation meet regulatory standards

📞 Contact us today to schedule a VAT consultation.

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Phone: +971 52 1952 532 / +971 4 240 1110

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