UAE implements reverse charge mechanism on supply of electronic devices

On 25 August 2023, the United Arab Emirates (UAE) Cabinet of Ministers issued Cabinet Resolution No. (91) of 2023 which implements a domestic reverse charge mechanism on the supply of electronic devices.

Electronic devices are defined as: mobile phones, smart phones, computers, tablets, and their parts and components.

The new reverse charge mechanism will apply where the following conditions are met:

• a VAT registered supplier makes a supply of electronic devices to a registered recipient in the UAE (B2B supply);
• The recipient intends to resell or use such devices to produce or manufacture electronic devices;
• Before the date of supply, the recipient has provided the supplier with a written declaration stating (1) that the electronic devices will be used for resale or the production or manufacturing of electronic devices, and (2) that the recipient is registered for VAT purposes with the Federal Tax Authority; and
• The supplier should receive and retain the declaration received from the recipient and verify that the recipient is registered for VAT purposes according to the ways approved by the Federal Tax Authority in this regard.

The Decision will be effective from 30 October 2023.

key takeaway

The reverse charge mechanism will come into effect on 30 October 2023 so the aforementioned businesses should act promptly to align their processes and make the necessary adjustments in their accounting and reporting systems to avoid any discrepancies and ensure compliance with the new provisions. This proactive approach is essential to navigating the changes efficiently, maintaining streamlined business operations and avoiding penalties.