Reverse Charge Mechanism for the supply of electronic devices

Introducing a special reverse charge mechanism for the supply of electronic devices.


Article (1) – Definitions

The New Decision defines electronic devices as mobile phones, smart phones, computer, and tablet devices, along with their associated spare parts.


Article (2) – Description of the new mechanism

When a supplier sells electronic devices to a registered recipient in the UAE, and the recipient plans to either resell these devices or use them in the production of electronic devices, the following rules come into play:

  • The supplier is not responsible for calculating VAT on the electronic devices or including it in their VAT return.
  • The recipient of electronic devices is in charge of calculating the VAT on the value of the devices they receive and handling all VAT obligations related to the supply, including calculating the due VAT.


Article (2) – Conditions for the recipient of electronic devices

Before the supply date, they must provide the supplier with a written declaration stating their intent for the use of the electronic devices and confirming their VAT registration with the Federal Tax Authority.


Article (2) – Conditions for the supplier of electronic devices

Suppliers of electronic devices should receive and retain the declaration provided by the recipient and ensure that the recipient is VAT registered, following the methods outlined by the Federal Tax Authority.


Key Points to Consider

The New Decision clarifies the following:

  1. The new mechanism does not apply when the supply of electronic devices is subject to a 0% VAT rate, as specified in UAE VAT legislation (e.g., exports).
  2. The new mechanism does not apply if the recipient of electronic devices fails to submit the required written declarations.

Additionally, it’s crucial to note that the New Decision implies that the recipient of electronic devices may face limitations on recovering associated VAT if the mentioned written declarations are not submitted.


The effective date of this new decision is set for 60 days after its publication in the official gazette, which means it becomes operational starting on October 29, 2023.


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