Cabinet Decision No. 91 of 2023, released in the official gazette under issue No. 758 on August 30, 2023, unveils a unique reverse charge mechanism for local electronic device supply. This concept outlines the specific criteria and prerequisites crucial for implementing VAT through this reverse charge system. The operational commencement of this decision is slated for 60 days after its publication in the official gazette, and it is planned to come into effect on October 29, 2023.

In accordance with the newly defined parameters, an electronic device encompasses mobile phones, smartphones, computers, tablets, and their associated spare parts. This will implement a fresh VAT application method for electronic device transactions, which can be summarized as follows:

In cases where a supplier delivers electronic devices to a registered recipient within the UAE, with the recipient's plan being either resale or use the devices in the production or manufacturing of electronic devices, the following regulations shall govern:

• The supplier is exempt from VAT calculation concerning the electronic device supply, and it should not be included in their VAT return.
• The recipient of electronic devices is responsible for computing the VAT based on the value of the devices received and must fulfill all VAT obligations pertaining to the supply, including determining the owed VAT for such supplies.

In order to implement the special reverse charge mechanism, the following conditions must be satisfied:

1. Before the supply date, the recipient of electronic devices is required to offer the supplier a written declaration mentioning two aspects: (1) their purpose for obtaining electronic devices and (2) their VAT registration status with the Federal Tax Authority.
2. The supplier of electronic devices must receive and retain the declaration from the recipient and confirm the recipient's VAT registration status using the procedures provided by the Federal Tax Authority for this purpose.