According to Cabinet Decision No. 91 of 2023, the newly introduced reverse charge mechanism applies to local supplies of electronic devices where the recipient intends to resell the devices or use them to manufacture or produce electronic devices, provided the conditions and requirements are met. An “Electronic Device” refers to mobile phones, computers, tablets and their spare parts.

In accordance with the new decision on local electronic device supplies, suppliers are not required to calculate VAT on supplies of electronic devices and should not include the supplies in their VAT returns if the supplies are to a VAT registered recipient in UAE intending to either resell the electronic devices or manufacture electronic devices. The recipient should be responsible for VAT obligations related to the supply.

The following requirements must be met in order to use the special reverse charge mechanism of supplies of e-devices:

• The recipients of electronic devices are registered for VAT with the Federal Tax Authority. Recipients must also provide a written declaration stating the intention of the supply of electronic devices.
• The suppliers of electronic devices should store the written declaration received from the recipient and to verify that the recipient is VAT registered.

The new decision will take effect on 29 October 2023. Electronic device suppliers should assess the VAT implications of the newly introduced reverse charge mechanism and make the necessary changes to their systems.