Order management
RFQ
Applicability of Reverse Charge Mechanism on Electronic Devices
New VAT Reverse Charge Mechanism (‘RCM’) applicable on local (UAE) supplies of qualifying electronic devices – 2023 issued under Cabinet Decision No 91 of 2023 read with VAT Public Clarification No. VATP034.
Qualifying Electronic Devices have been defined as mobile phones, smart phones, computer devices, tablet devices, and their connected pieces and parts. For the parts and pieces of Electronic Devices, the Minister of Finance shall issue a decision that will specify the criteria that should be followed in determining the pieces or parts related to Electronic Devices
Please note: You are only eligible for exemption once your declaration form is approved by us. The approval process may take up to two business days upon receipt. *Download Declaration Form HERE
So what does this mean?
Under the new rules, sellers of such qualifying electronic products will no longer be required to charge VAT on their supplies to VAT- registered buyers who intend to resell the goods or use in producing or manufacturing qualifying Electronic Devices. “Resell” is to be understood as being a part of the business of the Recipient of the Electronic Devices to trade in such devices. The resale by the Recipient of the Electronic Devices can be at a wholesale or retail level. Electronic devices purchased for personal consumption would not fall under the ambit of new rules for RCM.
The New Mechanism is effective from 30 October 2023 as mentioned in Cabinet Decision No. 91 of 2023 From this date, the supplier shall not be responsible for accounting for VAT on the supply of qualifying Electronic Devices to registered customers in the UAE who intend to use these qualifying Electronic Devices for resale or in producing or manufacturing qualifying Electronic Devices. Whereas the registered recipient shall be responsible to account for VAT under RCM and to comply with other tax obligations subject to the conditions mentioned below.
To summarize, the new decision will result in the following (subject to meeting specified conditions):
1. The supplier of the Electronic Devices will not have any UAE VAT obligations resulting from the supplysale of qualifying electronic devices;
2. The recipient of the qualifying Electronic Devices will have the responsibility of accounting for VAT on the value of the electronic devices and meeting all UAE VAT obligations resulting from the supply.
What are the conditions for the recipient (buyer) of qualified Electronic Devices?
The application of the New Mechanism under RCM is subject to meeting the following conditions by the buyer of the qualifying electronic devices before the date of supply:
1. The recipient should submit a written declaration to the supplier of the qualifying Electronic Devices confirming its intent to resell or use the Electronic Devices to produce or manufacture qualifying Electronic Devices and and confirming its VAT registration with FTA in the UAE.
What are the conditions for the supplier of Electronic Devices?
The application of the New Mechanism under RCM is subject to the supplier of the qualifying Electronic Devices meeting the following conditions before the date of supply:
1. The supplier should receive and retain the written declarations from the buyer; and
2. The supplier should verify the VAT registration status of the recipient of the Electronic Devices.
What do I need to do?
DOWNLOAD DECLARATION FORM HERE >>
*After downloading, kindly complete the necessary details, attach the below supporting documents and email to: support@tradeling.com
Supporting Documents:
1. TRN/VAT Certificate
2. Valid Trade License
3. EID copy of signatory
4. Proof of authorized signatory – the declaration form must be signed by an authorized signatory (trade license with manager/director name, a letter confirming that the person signing is authorized)
Feel free to reach out with any inquiries or uncertainties. We’re here to address your questions and unique situations to find the best way forward.
