VATP042: VAT on Barter Transactions in the UAE

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Website Last updated:

May 15, 2026

This Public Clarification outlines the UAE VAT treatment for barter transactions where goods or services are exchanged as non-monetary consideration. It confirms that barter involves at least two separate supplies, each subject to standard VAT rules. The clarification details the special valuation rules stipulated in Article 34 of the VAT Decree-Law, establishing that the value of the supply is the market value of the non-monetary consideration received. It also references Article 25 of the Executive Regulation for determining market value and confirms that both parties must issue tax invoices for their respective taxable supplies.

VATP042

VAT Public Clarification

Value of supply - Barter Transactions

Issue

In general, taxable persons receive monetary consideration for the supplies they make but consideration may also be received in the form of goods or services, i.e. non-monetary consideration.

Transactions which involve the exchange of goods and/or services, are known as barter transactions.

This Public Clarification clarifies the VAT treatment of barter transactions.

Summary

Barter transactions involve at least two supplies, i.e. each party makes a supply to the other.

Such supplies are subject to the general VAT rules, nevertheless, special valuation rules apply.

Generally, the value of the supply is the consideration less the tax amount.

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.

Where a supplier receives both monetary and non-monetary consideration, the value of supply is the monetary part plus the market value of the non-monetary part of the consideration, excluding the tax amount.

Detailed analysis

VAT Treatment

The VAT treatment of a barter transaction is the same as that of a supply made for monetary consideration.

For VAT purposes, the differences between a barter and non-barter transaction are that a barter transaction includes at least two supplies (i.e. each party makes at least one supply to the other party), and special valuation rules apply.

Each party within a barter transaction must evaluate the VAT treatment of the goods or services they are providing. A supply within a barter transaction can be:

A taxable supply subject to VAT at the standard rate of 5%.
A taxable supply subject to VAT at the zero-rate if all the relevant requirements for zero-rating are met.
A supply exempt from VAT if all the relevant requirements for exemption are met.
A supply outside the scope of UAE VAT, e.g. if the place of supply is outside the UAE.

Valuation of the supply

To the extent the consideration for a supply is monetary, such supply is not a barter transaction.

To the extent the consideration is non-monetary, the transaction constitutes a barter transaction, and the value of the supply is the sum of any monetary consideration received for the supply and the market value of the non-monetary part of the consideration, excluding the tax amount.

To determine the market value of the non-monetary part of the consideration, the following principles apply: