The Challenge
"I only need to invoice AED 5,000, right? The rest is just a straight swap for my accounting fees, so there is nothing else to report."
Mr A, an accountant in Dubai, agreed to buy a sofa priced at AED 10,000 from a furniture retailer. He would pay AED 5,000 in cash, and settle the remaining AED 5,000 by providing the retailer with a year of accounting services instead of money.
Our Approach
- Identified the barter structure — recognised that the deal involved two separate supplies, not one part-payment.
- Mapped both taxable events — the sofa sale by the retailer and the accounting services supplied by Mr A each attract VAT in their own right.
- Corrected the invoicing — guided Mr A to issue a proper tax invoice for his AED 5,000 of accounting services, separate from the retailer's invoice for the sofa.
Under UAE VAT law, a transaction settled partly or wholly in goods or services rather than cash is still a supply for consideration, and each side of the exchange must be valued, invoiced and taxed independently.
The Result
Mr A issued a correct tax invoice for his AED 5,000 accounting services and confirmed the retailer separately accounted for VAT on the AED 10,000 sofa sale, bringing the full barter arrangement into line with FTA requirements.
The Takeaway
"If you settle a bill with goods or services instead of cash, you have not avoided VAT, you have created two supplies that both need invoicing."
