VAT on E-commerce in the UAE

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VAT on e-commerce in the UAE: VAT on e-commerce in the UAE depends on the location of the supplier and recipient. 5% VAT will apply to online sales in the UAE.

Supplying goods in an e-commerce context involves purchasing goods through an electronic platform, such as a website or marketplace. Once the goods are purchased, they are delivered to the recipient.

The supply takes any of the primary forms, Depending on the supplier location:

The resident supplier supplies to a recipient in UAE ;
Supply to a Recipient by Resident outside the UAE;
Supply to a Recipient by non-Resident in UAE, Being delivered from both outside or inside the UAE with goods;
Supply to a Recipient by a non-Resident outside the UAE, Being delivered from both outside or inside the UAE with goods; In each of these situations, the supplier has to think about the VAT on good sales

VAT on E-commerce – Impact of VAT on E-commerce Business

Electric Services & Physical goods services for example software, mobile phone applications, etc, are subject to specific rules that regulate the way VAT is applied to them

Sales & purchases of Goods and services through e-commerce with regard to domestic sales and are subject to the standard 5% VAT
Purchases of services from overseas and Goods, subject to standard 5% VAT Rate
If the recipient is UAE of Goods or services and registered for VAT, then in that case recipient is expected to calculate the standard 5% using the reverse charge mechanism, by which method the taxable recipient calculates the due VAT instead of the non-resident supplier
If the recipient is not registered with the Tax authority for VAT, Then Standard 5% VAT will be charged and paid to the authority by the Agent or logistic company. The agent will be responsible for compliance with UAE VAT on behalf of a non-registered individual for all imports

The Federal Tax Authority has confirmed that all purchases from online shopping portals are subject to the same 5 percent Value Added Tax as any other purchases made through traditional outlets.

VAT Registration for Amazon Sellers

VAT on e-commerce in the UAE: For Amazon Sellers in UAE VAT registration is mandatory by FTA (Federal Tax Authority). It’s very important to register for VAT to Amazon Sellers before starting making sales in UAE, A lot of Businesses are moving towards digital platforms, Businesses in UAE selling through online channels must charge the standard rate of VAT which is 5%, As per Federal Tax Authority (FTA) Laws.

What is a Place of supply in the UAE?

For a supply to be within the scope of UAE VAT the supply have to take place in UAE. If supply takes place outside the UAE, the supply is considered outside of the scope of UAE VAT and hence VAT will not be applicable. The basic premise of the principle of supply of goods is that, if the goods are in UAE and are present at the same time of supply, they are supplied in the UAE.

if the goods are outside the UAE at the time of supply, the place of supply is outside the UAE. Where the supply involves the export of goods from the UAE to a place outside the GCC implementing states, the place of supply is in the UAE. For the purpose of services, the supply of electricity services is subject to a specific supply rule.

When should a resident person get himself registered?

A Resident person who is in the UAE is surely required to register for the VAT if there any of the following apply:

• the Taxable supply’s total value made within the UAE and imports into the UAE exceeded AED 375,000 over the previous 12-month

• the person anticipates that the taxable supplies’ total value made within the UAE and imports in the UAE will exceed AED 375,000 in the next 30 days.

However, a person can also seek voluntary registration. Seeking Voluntary Registration is similar to above except that the Taxable supplies Limit on and imports are set as AED 187500.

Any supply Value which is either exempt from VAT or is not in the scope of UAE VAT is not to be considered in the calculation.