- The Federal Tax Authority (FTA) in the United Arab Emirates (UAE) has issued a public clarification on implementing the Reverse Charge Mechanism (RCM) on electronic devices among tax registrants.
- The RCM will transfer the liability for Value Added Tax (VAT) on supplies of electronic devices from the registered supplier to the registered recipient, provided they are supplied for resale or used in manufacturing.
- The new decision will come into effect on October 30, 2023, and is in line with a Cabinet Decision regarding the Application of the RCM on Electronic Devices for VAT purposes.
- The FTA aims to update legislation and tax procedures to improve the efficiency of the tax system and support taxpayers in meeting their obligations.
- The clarification specifies that the RCM applies to mobile phones, smart phones, computer devices, tablets, and their parts and pieces, but excludes devices operating through physical means.
- The decision also covers all types of computers, servers, and tablets, but excludes e-readers without additional features.
- If the requirements specified in the Cabinet Decision are not met, the regular rule for VAT calculation applies, potentially resulting in the registered recipient being unable to recover input tax.
- The RCM does not apply when electronic devices are acquired for personal use or for use within a business without the intention to resell.
- The FTA’s clarification provides detailed information on compliance requirements for the RCM on electronic devices among registrants.
- Stakeholders are invited to check the new Public Clarification on the FTA’s official website.
Source: tax.gov.ae
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
