Most agencies pass client media through their books at some point: social ad spend, a print booking, an influencer fee, a venue. Whether that line carries 5% VAT is one of the questions agencies ask most often, and the answer turns on one thing: who bought the media, and in whose name.
The FTA's test
The Federal Tax Authority's public clarification VATP013, Disbursements and Reimbursements, splits recharges in two. If you act as your client's agent, the recharge is a disbursement: it is not a supply by you, and it is outside the scope of VAT. If you buy as principal, in your own name, the recharge is a reimbursement, and it takes the same VAT treatment as your main service.
Signs of a disbursement
VATP013 expects all of these:
- The client is the one receiving the goods or services.
- The client is responsible for paying the supplier.
- The supplier's invoice is in the client's name.
- The client has authorised you to pay on its behalf.
- The cost is clearly additional to your own services.
- It is shown separately on your invoice, at the exact amount, with no mark-up.
The client then recovers the VAT using the supplier's invoice, which is addressed to them.
Signs of a reimbursement
If you contracted in your own name, received the service and hold an invoice addressed to you that you are legally liable to pay, the recharge is part of your own supply. The FTA's own example is a company providing marketing services that incurs costs in its own name and recharges them. For a UAE client that normally means 5% VAT on the full amount, media included.
What this means for ad accounts
- Spend on the agency's own ad account, billed to the agency, is bought in the agency's name. Rebilling it follows the agency's main supply.
- Spend on the client's own ad account, billed to the client, does not pass through your invoice as media at all.
- A handling fee or commission is always your own taxable service, even when the media is a disbursement. A disbursement cannot carry a mark-up.
Meta and the reverse charge
Meta's help centre says that since August 2019, ads bought by UAE advertisers who have not added a tax registration number to their ad account are charged UAE VAT. Add your TRN in payment settings and Meta stops adding VAT. As a VAT-registered business you then account for it yourself under the reverse charge. We could not confirm which Google entity bills UAE ad accounts or how it handles VAT, so check your own Google invoices.
What e-invoicing changes
- Every line carries its own VAT category, so a 5% fee and an out-of-scope disbursement can sit on the same e-invoice. The guidelines allow taxable and non-taxable lines together.
- The invoice's transaction type includes an agent billing flag, defined as an agent who is a registrant making a supply on behalf of the principal.
- Your ad platform bills are imported services and sit outside e-invoicing entirely.
- Since 1 October 2026 the Executive Regulation also has a composite supply rule: parts of a supply that are interconnected and cannot be separated are taxed as one, by their main component.
A checklist
- Decide, per client, whose name media is bought in, and write it into the contract.
- Where you act as agent, get supplier invoices in the client's name and the client's written authority to pay.
- Show media at cost on its own line, with any fee on a separate line.
- Add your TRN to every ad account you pay for.
The VAT calculator on this site splits any amount into its net and VAT parts, which helps when you rebuild a media recharge line by line.
