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UAE FTA Clarifies Reverse Charge Mechanism on Electronic Devices for VAT-registered Entities

  • UAE FTA released VAT Public Clarification (VATP034) on Reverse Charge Mechanism (RCM) on Electronic Devices
  • RCM is effective from 30 October 2023
  • RCM is applicable to VAT-registered entities in the UAE for certain Electronic Devices
  • Suppliers do not charge VAT on supplies, recipients account for the tax due
  • RCM only applies in B2B transactions for devices intended for resale or production
  • Mobile phones, smartphones, computers, tablets, and their components are included, while other electronic items are excluded from RCM
  • Ministerial Decision No. 262 of 2023 establishes criteria for VAT treatment of Components related to Electronic Devices
  • Components necessary for operation or production of Electronic Devices are subject to RCM
  • Components that enhance functioning but are not necessary or SIM cards are not subject to RCM
  • Sellers and buyers may need to include contractual language in written declarations to mitigate risks
  • Input VAT is not deductible for the buyer if RCM is not applied by the seller.

Source: Aurifer

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.


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