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UAE VATP013 – Disbursements & Reimbursements

Last modified: August 31, 2021
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The Federal Tax Authority published a VAT Public Clarification for the treatment of Disbursements and Reimbursements.


Expenses incurred in commercial transactions, where the person incurring them acts an agent of a third party and has a demand to receive the money paid.

The main principles to classify an expense as disbursement are:

  • The other party should be the recipient of the goods or services;
  • The other party should be responsible for making the payment to the supplier;
  • The other party should have received an invoice or tax invoice, as the case may be, in its own name from the supplier;
  • The other party should have authorized you to make the payment on his behalf;
  • The goods or services paid for should clearly be additional to the supplies you make to the other party;
  • The payment should separately be shown on the invoice and you should recover the exact amount paid from the supplier, without a markup.

Disbursements are out-of-scope for VAT treament.


Unlike disbursements, transactions where the person making the expense acts as a principal are characterised as reimbursements.

The main principles to classify an expense as reimbursement are:

  • You should have contracted for the supply of goods or services in your own name and capacity;
  • You should have received the goods or services from the supplier;
  • The supplier should have issued the invoice in your name and you are under the legal obligation to make payment for it;
  • In case of goods, you should own the goods prior to making the onward supply to the other party.

Reimbursements are subject to standard rate VAT.

Public Clarification

Date Published: July 2019

Status: In force

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