UAE Reverse Charge - IntroductionIn a recent development, the United Arab Emirates (UAE) Cabinet of Ministers introduced Cabinet Resolution No. (91) of 2023, implementing a domestic reverse charge mechanism for electronic devices. This resolution takes effect on 25 August 2023, and brings about changes in the way electronic devices are supplied and accounted for in the UAE.
What Falls Under Electronic Devices?Electronic devices, as defined in the resolution, encompass mobile phones, smartphones, computers, tablets, and their associated parts and components. The application of the reverse charge mechanism hinges on specific conditions that must be met.
When Does the Reverse Charge Apply?This reverse charge mechanism applies when:
- A VAT registered supplier in the UAE makes a supply of electronic devices to another registered recipient (B2B supply).
- The recipient intends to either resell these devices or employ them in the production or manufacturing of electronic devices.
- Prior to the supply date, the recipient must furnish the supplier with a written declaration. This declaration must confirm two key points: (1) the intended use of electronic devices for resale or manufacturing and (2) the recipient's VAT registration with the Federal Tax Authority.
- The supplier must not only receive and maintain this declaration but also verify the recipient's VAT registration through the approved methods established by the Federal Tax Authority.