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UAE’s Cabinet Subjects Electronic Devices to Domestic Reverse Charge

September 15, 2023

On September 26, 2022, Federal Decree-Law No. 18 of 2022 was issued, amending the Federal Decree-Law No. 8 of 2017 on Value Added Tax for the first time. Federal Decree-Law No. 18 of 2022 introduced various amendments to the Federal Decree-Law No. 8 of 2017, one of which was the introduction of a new Clause 8 to Article 48 on the subject of “Reverse Charge”.

The newly introduced Clause 8 to Article 48 of the VAT Decree-Law empowered the UAE’s Cabinet of Ministers to “issue a decision specifying other Goods or Services that are subject to the reverse charge and specify the relevant conditions and provisions”, thereby empowering the Cabinet to extend the scope of the Reverse Charge Mechanism to encompass additional goods and services in addition to those previously prescribed within that same article of the VAT Decree-Law.

Recently, on August 25, 2023, the UAE’s Cabinet of Ministers has issued Cabinet Decision No. 91 of 2023, subjecting a new category of goods to obligatory reverse charge treatment for VAT purposes. On the basis of Cabinet Decision No. 91 of 2023, supplies of electronic devices are now subject to mandatory reverse charge, albeit at slightly differing rules from those applicable under Article 48 of the VAT Decree-Law or those applicable to the supplies of gold and diamond between registrants in the UAE.

Based on international practices, it is assumed that the introduction of an obligatory reverse charge treatment on electronic devices is for the purposes of effectively combatting tax evasion schemes, such as the infamous missing trader fraud (MTF).

Article 1 of Cabinet Decision No. 91 of 2023 defines Electronic Devices as Mobile Phones, Smart Phones, Computers and Tablets, and their parts, while Article 3 of the same Decision specified that the Minister of Finance will issue a separate Decision detailing the criteria for determining what qualifies as “part” of an Electronic Device.

Cabinet Decision No. 91 of 2023 was published in the Official Gazette of the UAE on August 30, 2023, to be effective after 60 days of publication. This means that the new Cabinet Decision will govern supplies where the date of supplies falls on or after October 29, 2023. As the provisions of Cabinet Decision No. 91 of 2023 are somewhat reliant on the suggested Ministerial Decision, it is likely that the Minister of Finance will issue the relevant Ministerial Decision before the effective date of Cabinet Decision No. 91 of 2023. However, if that proves not to be the case, persons involved in transactions of Electronic Devices will still be required to apply the newly introduced Reverse Charge Mechanism at least to supplies of Electronic Devices.

In accordance with the above, suppliers of electronic devices need to carefully re-evaluate their tax obligations in light of the newly introduced Cabinet Decision imposing reverse charge for VAT purposes on the supplies of electronic devices, ensuring full compliance with the new requirements to avoid potential administrative penalties and criminal liability.

As the UAE’s Federal Tax Authority (“FTA”) usually provides clarification on newly introduced legislative amendments to the realm of taxation in the UAE, it is anticipated that the FTA will follow the same approach and issue some form of guidance or clarification elaborating on the new requirements under Cabinet Decision No. 91 of 2023.

In conclusion, the rapidly evolving landscape of tax legislation, exemplified by the recent Cabinet Decision No. 91 of 2023, underscores the critical importance of staying informed and adaptable in the realm of taxation. As tax laws continue to evolve, businesses and individuals alike face complex challenges that demand diligent attention and proactive measures.

The introduction of mandatory reverse charge for electronic devices serves as a testament to the UAE’s commitment to combat tax evasion schemes and maintain fiscal integrity. It is essential for suppliers in this sector to carefully reassess their tax obligations, ensuring full compliance with the newly imposed regulations to mitigate potential administrative penalties and legal liabilities.

While understanding and complying with the tax laws may be complex, doing so is critical for maintaining the financial health and reputation of businesses, as well as the economic stability of the UAE. If you are unsure about your obligations, it is recommended to seek advice from a legal/tax professional.
This Article is prepared by Mohamed El Baghdady, Head of Tax and Financial Crimes, and Marwan Alnooryani, Senior Tax Associate, at Habib Al Mulla & Partners Law Firm.

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For further information, please contact, Mohamed El Baghdady, Head of Tax and Financial Crimes, on mohamed.elbaghdady@habibalmulla.com.


Mohamed El Khatib

Principal Partner – Head of Disputes


Mohamed ElBaghdady

Senior Associate

Marwan Alnooryani

Senior Associate

Basem Ehab


Kholoud Hafez


The content provided in this article is intended for informational purposes only and does not constitute legal advice. While every effort has been made to ensure the accuracy and completeness of this information, the article does not offer a guarantee or warranty regarding its content. The matters discussed in this article are subject to interpretation, and legal outcomes may vary based on specific facts and circumstances. We recommend that readers seek individual legal counsel before making any decisions based on the information provided. If you require specific legal advice, please contact us directly.

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