“The Federal Tax Authority (FTA) has recently issued Cabinet Decision No. 91 of 2023- Application of the Reverse Charge Mechanism on Electronic Devices among Registrants in the State for the purposes of Value Added Tax”.

Summary of key points of the Ministerial Decision:

Definition of Electronic Devices

Mobile phones, smart phones, computer devices, tablets and pieces and parts thereof.


Transaction covered: Electronic Devices supplied to a UAE VAT registered recipientof goods. Conditions:Such goods would either be resold or used in producing or manufacturing Electronic Devices by recipient. Transaction not covered: Electronic Devices subject to zero rate of VAT in terms of Clause 1 of Article 45 of Federal Decree Law No. 8 of 2017 on Value Added Tax and its amendments. Responsibility to account for VAT:By Recipient of goods under reverse charge mechanism (RCM).

Documentary evidence required to be maintained by recipient and supplier for applicability of RCM

Recipient’s responsibility

  • To submit written declaration indicating intention of use of such goods is to either resell or use in producing or manufacturing electronic devices.
  • Written declaration confirming beingUAE VAT registered.

Supplier’s responsibility

  • Receive and keep declaration providedby the recipient of goods.
  • Verify that the recipient of electronic devices is UAE VAT registered.


Other Key points

Non-submission of declaration by recipient:Payment of Tax by recipient under RCM would not be applicable. Accordingly, supplier should charge applicable UAE VAT to the recipient of such electronic goods. Pieces and Parts of Electronic Devices: Minister of Finance shall issue a decision to specify the criteria that should be followed in determining the pieces and parts related to Electronic Devices. Date of Applicability:60 days from date of publishing in official gazette (30 August 2023)

PKF Comments

Through the subject Cabinet Decision, FTA has expanded the transaction list which fall under the purview of domestic RCM in UAE VAT. Earlier, transactions pertaining to supply of goods involving oil, natural gas, hydrocarbons, and bullion, with similar terms and conditions such as that provided for Electronic Devices, were part of the domestic RCM provision. Typically, Authorities impose VAT levy under domestic RCM with an objective to curb VAT fraud such as the one seen in European Union where the objective is to curb the missing trader fraud committed by creatingmultiple layers of transactions or to collect VAT from the organised sector business when they transact business with non-organised sector business (typically seen in India, where VAT liability under RCM is to be paid in cash) However, the objective so far behind introducing certain transactions undertaken by specific industry, under purview of domestic RCM, seems to be to ease cash flow requirement (arising out of payment of Output VAT and recovery of Input VAT by set-off or refund from Authority under forward charge mechanism, as compared to, a simple ‘account for’VAT under RCM) of the businesses involved as well as to promote the industry involved. Businesses must carefully examine the transactions and applicability of reverse charge mechanism if it is dealing in supplies of electronic devices toa UAE VAT registered dealer.

How can PKF help?

  • Businesses in the UAE must imbibe the new VAT regulations and establish for themselves a tailor-made VAT-oriented business system. PKF UAE brings world-class capabilities and high-quality service to clients helping them to align their working model to government reporting and compliance requirements.
  • Our role as tax advisers include:
    • Analyzing the impact of VAT on your business – A complete analysis of the VAT effect on your business helps us provide tailor-made solutions for the financial, operational, and legal aspects of your business.
    • Advising on managing the VAT transaction process – Our expert advice will help your business manage VAT transactions effectively without any room for errors.
    • Invoicing under VAT – We help you to create and manage invoices in accordance with the VAT System.
    • Advising on VAT related compliances as required by UAE VAT Law –
      • Assistance in compiling of information regarding VAT return.
      • Assistance in preparing and filing VAT return.
      • Assistance in communication with the Federal Tax Authority (FTA) for tax related queries and processes (such as refund application, voluntary disclosures) and during tax audits conducted by the FTA.
      • Any other VAT related queries and compliances.
  • With more than four decades of experience, PKF UAE ensures full guidance on how businesses can duly comply with VAT. While the ultimate responsibility and accountability to comply with the law are with the business, PKF UAE canadvise at every stage of your business operations. PKF UAE works with an agenda that not only helps your business meet the required VAT standards but also provides inclusive solutions to run the business effectively.


You may email us or can contact any of our team members relating to your queries on this subject:

Stany Pereira
Managing Partner
Shailesh Kumar
Director- Tax Services
Mradul Gupta
Senior Manager
Megha Lohia
Assistant Manager

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