UAE’s tech, electronics suppliers need to relook their VAT processing on B2B deals after Oct. 30

UAE’s tech, electronics suppliers need to relook their VAT processing on B2B deals after Oct. 30

The switch to Reverse Charge Mechanism (RCM) on B2B supplies of tech and electronics will bring much needed relief to UAE traders and exporters.

As in the gold and jewellery sector, this arrangement means VAT on supplies of tech and electronic devices need not be charged by the suppliers. Instead, this should be accounted for by the buyers in their VAT returns.

But suppliers and traders in electronics should tread carefully on this reverse charge mechanism facility considering the implementation challenges.

Both buyer and supplier should comply with certain conditions. The VAT-registered buyer should also give a written declaration:

Indicating that the intent of the supply of electronic devices is for the purpose of reselling or to use in producing/manufacturing electronic devices; and The buyer is VAT-registered with UAE’s FTA. The supplier should receive and retain the declaration. The supplier should also verify and confirm that the buyer is VAT-registered.

Is it mandatory to follow RCM?

As the reverse charge mechanism facility is subject to compliance requirements, one needs to examine whether the facility is optional or mandatory. Could either the supplier or the buyer opt out from their obligations and charge VAT on the supply as is done now?

The recent public clarification raises an interesting