Common mistakes with agency fees, VAT and invoices

Most fee disputes with an agency are not about the headline fee. They come from three things that were never written down: whether VAT is on top, what ad spend is included, and what the invoices will look like. This page lists the mistakes I would avoid. It does not say what agencies charge, because no official source gives that and I will not guess. It is general guidance, not tax or legal advice.

Comparing with and without VAT

If one quote shows a fee with VAT and another without, the totals cannot be compared. Ask every agency to state fees excluding VAT, the VAT amount and the total. The Federal Tax Authority states that the mandatory registration threshold is AED 375,000 and the voluntary threshold is AED 187,500^[1], so some suppliers will charge VAT and some may not. The Authority describes VAT as a tax on consumption levied at each stage of the supply chain and borne by the end consumer^[3]. Whether you can recover it depends on your own VAT position, which is a question for your adviser.

Mixing fees with ad spend

A single monthly figure that includes both the agency fee and the advertising budget hides what you are paying for the work. Ask for them as separate lines, and for the platform spend to be visible in your own account. In Google Ads, Billing is a distinct access level and can add or edit forms of payment and make payments^[4], so you can keep the payment method in your business’s hands.

Invoices that do not match

The Authority’s 2022 guide on tax invoices says a tax invoice must be issued within 14 calendar days of a taxable supply. A full tax invoice must show the words “tax invoice”, a sequential or unique number, the issue date, the supplier’s name, address and tax registration number, your name and address (with your registration number if you are registered), a description of the services, the VAT rate and the amount payable in dirhams^[2]. A simplified invoice can be used where the recipient is not registered for VAT, or where the VAT-inclusive price is AED 10,000 or less, and it has fewer details. Check the first invoice against the contract and against this list, and raise any gap at once. The same guide says errors on tax invoices should be corrected through tax credit notes or additional tax invoices.

Foreign currency

Some agencies and platforms bill in another currency. The guide says that where an invoice is issued in a foreign currency the amount must be converted into dirhams using an exchange rate approved by the Central Bank^[2]. If your contract is in a foreign currency, ask how and when the conversion is made.

Several items in a month

A retainer often includes more than one charge: management, a set-up fee, and extras. The guide says a summary monthly tax invoice must be issued if the supplier makes more than one supply to the same person in the same calendar month^[2]. Ask whether you will receive one invoice a month or several, and make sure each line matches the contract.

A check each month

• Does the fee match the contract, line by line?
• Is VAT shown separately, with the agency’s registration number?
• Is the ad spend on the invoice the same as the spend in your platform account?
• Has anything been added that you did not agree in writing?

The wider reading order is in what an agency contract in the UAE should say, and the agency contract checklist has the fee and VAT questions ready to score. If you have an invoice question, you can ask me, bearing in mind that I am a supplier.