What is VAT treatment for used mobile phones purchased and sold to individual customers?

The VAT treatment for used mobile phones purchased and sold to individual customers depends on the specific regulations of the country in which the company is VAT-registered.

If the company is VAT-registered, it will generally charge VAT on the full selling price of the used mobile phones when sold to individual customers.

The company will also need to account for VAT on the purchase of the used mobile phones (if VAT was paid on the purchase), and this can offset the VAT charged on the sale.

The VAT charged on the sale is based on the applicable VAT rate in the country (e.g., 5%, 10%, or 20% depending on local laws).

When purchasing used mobile phones, the company may or may not be able to reclaim VAT, depending on whether the seller is VAT-registered and whether VAT was applied to the original purchase.

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The change in VAT treatment for used mobile phones in the UAE, specifically the implementation of the Reverse Charge Mechanism (RCM), came into effect on October 30, 2023.

No VAT is charged on the sale of used mobile phones to individual customers.

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Welcome.

Under VAT laws in the UAE, VAT should be applied on the sale of used mobile phones if the company is VAT-registered.

However, there may be specific exemptions or reliefs available for the sale of used goods under certain conditions.

For accurate advice on the VAT treatment for used mobile phones, it is recommended to consult our Legal Consultation Centre.

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According to UAE VAT law, the sale of used mobile phones to individual customers is subject to VAT at the standard rate of 5%.

This means that the company must charge and collect 5% VAT on the sale price of the used mobile phones.

However, if the company is selling used mobile phones as part of its business assets, then it may be eligible for a VAT exemption under the margin scheme.

This means that the company will only be required to pay VAT on the difference between the purchase price and the selling price of the used mobile phones, rather than on the full selling price.

Dear Questioner,

Thanks for your inquiry!

If your company is VAT-registered and sells used mobile phones to individual customers:

1- VAT on Purchase: You may recover VAT on used phones purchased from VAT-registered businesses.

2- VAT on Sale: You will charge VAT on the full sale price of the mobile phones to individual customers unless a special scheme (like the VAT Margin Scheme) applies.

3- VAT Margin Scheme: If available in your jurisdiction, you may be able to apply the Margin Scheme, charging VAT only on the profit margin (difference between purchase price and sale price) instead of the full sale price.

Ensure compliance with local VAT regulations, and consider consulting a tax advisor for specific guidance.

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Mo. Salah

- Ensure that suppliers are registered: When purchasing used phones, it is advisable to deal with registered suppliers to ensure that input tax can be recovered.

- Comply with legal requirements: All laws and regulations issued by the Federal Tax Authority must be adhered to to ensure compliance and avoid penalties.

For more details, it is advisable to visit the Federal Tax Authority website.

Dear Client,

Thanks for your question! I hope you are doing well. I will assist you in this matter.

In UAE, VAT-registered companies must charge 5% VAT on sales of used mobile phones to individual customers, just like new phones.

They must issue proper VAT invoices and report the sales in their VAT returns.

Input VAT on purchases for resale can be recovered if valid tax invoices are available and the purchases are for making taxable supplies.

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ABDUL WAHIED