VAT on advertising your agency rebills: how it should appear

Many businesses let their agency buy media for them, whether social ads, print, influencer fees or event space, and then see that spend on the agency's invoice. Whether 5% VAT should appear on that line comes down to a single question: whose name was the media bought in?

Agent or principal

The Federal Tax Authority's public clarification VATP013, Disbursements and Reimbursements, separates the two cases. An agency acting as your agent passes the cost on as a disbursement, which is not its own supply and sits outside VAT. An agency buying as principal, in its own name, recharges it as a reimbursement, which takes the same VAT treatment as the agency's main service.

When it is a disbursement

VATP013 looks for all of the following:

• You are the one receiving the goods or services.
• You are responsible for paying the supplier.
• The supplier's invoice is made out to you.
• You authorised the agency to pay on your behalf.
• The cost is clearly separate from the agency's own services.
• It appears as its own line at the exact amount, with no mark-up.

You then reclaim the VAT using the supplier's invoice addressed to you.

When it is a reimbursement

If the agency contracted in its own name, received the service and holds an invoice in its name that it must pay, the recharge forms part of its supply. The FTA's own example is a marketing services company incurring costs in its name and recharging them. For a UAE customer that usually means 5% VAT on the whole amount, media included.

Your ad accounts

• Spend on the agency's ad account, billed to the agency, is bought in the agency's name, and its recharge follows the agency's main supply.
• Spend on your own ad account, billed to you, never appears as media on the agency's invoice.
• Management fees and commissions are always the agency's taxable service, even when the media itself is a disbursement, and a disbursement cannot carry a mark-up.

Meta and your TRN

Meta's help centre says UAE advertisers who have not added a tax registration number to their ad account have been charged UAE VAT since August 2019. With a TRN added in payment settings, Meta stops charging VAT, and a VAT-registered business accounts for it under the reverse charge. We were unable to confirm which Google entity bills UAE ad accounts or how it treats VAT, so check your Google invoices.

Under e-invoicing

• Each invoice line carries its own VAT category, so a taxable fee and an out-of-scope disbursement can share one e-invoice, which the guidelines permit.
• E-invoices include an agent billing flag, describing an agent who is a registrant making a supply on behalf of a principal.
• Advertising platform bills are imported services and fall outside e-invoicing.
• Since 1 October 2026 a composite supply rule treats inseparable, interconnected parts of a supply as one, taxed by the main component.

What to agree with your agency

• Whose name media will be bought in, written into the contract.
• If the agency acts as your agent, supplier invoices in your name and written authority for it to pay.
• Media at cost on its own line, and fees on a separate line.
• Your TRN on every ad account you pay for directly.

It is worth settling this before the first campaign, because it decides who reclaims the VAT. If you want your current arrangement reviewed, ALXO is happy to look.