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Article (1) � Definitions

• Electronic devices have been defined in the New Decision as mobile phones, smart phones, computer and tablet devices, and their connected spare parts.

Article (2) � Description of the new mechanism

• The New Mechanism is applicable on the local supplies of Electronic Devices to VAT registered recipients having the intention to resell or use the goods to produce or manufacture electronic devices.

• The New Decision stipulates that the application of the New Mechanism will result in the following (subject to meeting specified conditions):

1. the supplier of the electronic devices will not have any UAE VAT obligations resulting from the supply;
2. the recipient of the Electronic Devices will have the responsibility of accounting for VAT on the value of the electronic devices and meeting all UAE VAT obligations resulting from the supply.

Article (2) � conditions for the recipient of electronic devices

• The application of the New Mechanism is subject to meeting the following conditions by the recipient of the electronic devices before the date of supply:

1. the recipient should submit a written declarations to the supplier of the electronic devices confirming its intent to resell or use the  electronic devices to produce or manufacture electronic devices and confirming its VAT registration with the Federal Tax Authority.

Article (2) � conditions for the supplier of electronic devices

• The application of the New Mechanism is subject to the supplier of the electronic devices meeting the following conditions before the date of supply:

1. the supplier should receive and retain the written declarations referred above; and
2. the supplier should verify the VAT registration status of the recipient of the electronic devices.

Key considerations

• The New Decision has clarified the following:

1. the New Mechanism is not applicable where the supply of the  electronic devices is subject to VAT at 0%, as specified in the UAE VAT legislation (e.g. exports).
2. the New Mechanism is not applicable where the recipient of the electronic devices does not submit the written declarations referred above.

Furthermore, it is important to note that the New Decision suggests that the recipient of the electronic devices could have restrictions on the recovery of the associated VAT if the written declarations referred to above are not submitted.