Application of the Reverse Charge Mechanism on Electronic Devices among Registrants in the State for the purposes of Value Added Tax
Issue
Cabinet Decision No. 91 of 2023 on the Application of Reverse Charge Mechanism on Electronic Devices among Registrants1 in the State for the purposes of Value Added Tax (“Cabinet Decision No. 91”) has introduced a distinct VAT treatment for certain supplies that relate to Electronic Devices and requires both recipient and supplier to implement a number of compliance requirements.
This Public Clarification intends to clarify the purpose of the updates in the legislation, the goods in scope and the practical implications of the compliance requirements introduced.
Summary
Registrants supplying Electronic Devices to other registrants who intend to use these Electronic Devices for resale or manufacturing, will not account for VAT on such supplies, and Due Tax on the supplies will be accounted for under a reverse charge by the Recipient of Goods (“Recipient”). If the requirements specified in Cabinet Decision No. 91 are not met, the default rule of the supplier accounting for VAT would apply but this could result in the recipient not being able to recover input tax under Article 54(1) of the Federal Decree Law No 8 of 2017 on Value Added Tax (“Decree Law).2
Cabinet Decision No. 91 was issued under the mandate provided by Article 48(8) of the Decree Law.3
VATP034 – Reverse Charge Mechanism on Electronic Devices – 06 10 2023 Download the complete