How to Apply the VAT Reverse Charge Mechanism on AWS and Google Cloud Invoices
Self-assessing VAT on cloud service invoices received from foreign providers under the reverse charge mechanism in Jordan.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cost of Revenue / R&D Expense | Expense (+) | 5,000.00 | - |
| VAT Input (Reverse Charge) | Asset (+) | 800.00 | - |
| VAT Output (Reverse Charge) | Liability (+) | - | 800.00 |
| Accounts Payable / Cash | Liability (+) | - | 5,000.00 |
💡 Accountant's Note
In Jordan, a registered SaaS company buying digital services from AWS, Google, or other foreign providers must self-assess VAT. The input and output entries net to zero but both must appear on the return.
Practitioner & Systems Framework
💻 ERP Architecture
Configure a reverse charge tax code in the ERP for purchases from foreign digital service providers. When a foreign invoice is posted, the system should automatically generate both the VAT output (liability) and VAT input (recoverable asset) entries. Include both amounts in the monthly VAT return — Box for output tax and Box for input tax. The net cash impact is zero for fully VAT-registered companies.
⚠️ Audit Flags
ISTD increasingly audits reverse charge compliance — many SaaS companies fail to apply it to foreign cloud services. Auditors will request a list of all foreign digital service providers and verify that reverse charge VAT was self-assessed on each invoice. Failure to apply reverse charge results in penalties even though no net tax is due.
📄 Required Documentation
Foreign supplier invoices (AWS, Google, Stripe, Salesforce), reverse charge self-assessment calculations, VAT return showing both output and input reverse charge boxes, list of foreign digital service providers subject to reverse charge, and tax advisor confirmation of applicable foreign services.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.