UAE VAT Alert: New Reporting Requirements for E-commerce Firms

E-commerce companies operating in the UAE need to be aware of a new Value Added Tax (VAT) compliance requirement. From July 1st 2023, certain e-commerce companies are required to specify in their VAT returns the emirate where they deliver the order. In this blog, we will provide you with more information on the UAE VAT compliance requirement for e-commerce companies. VAT consultants in Dubai can assist you further with ensuring compliance. Read ahead for more information.

Does the VAT Requirement apply to all e-commerce firms?

The new UAE VAT compliance requirement applies only to e-commerce businesses that generate AED 100 million and more in a calendar year. As per the new requirement, e-commerce suppliers are required to report on orders in the emirate in which the supplies of the goods or services are received by the customer. It means the supplier needs to clearly state in the VAT returns whether the delivery occurred in Dubai, Abu Dhabi or any of the other emirates. Earlier, such e-commerce sales reporting was done in the emirate where the e-commerce company is located. Avail of VAT consulting services in Dubai to know more about this new reporting requirement.

What do e-commerce businesses need to keep in mind?

Taxable persons supplying goods and services through e-commerce mediums need to assess whether they fall within the new Emirates’ reporting mechanism. The assessment can be performed with the help of tax agents in Dubai, UAE. If they are making taxable supplies through an electronic commerce medium exceeding the AED 100 million thresholds, they need to update their internal controls, processes and systems to monitor and track the location/address details of the customer to prove the Emirate in which the supply is received and report it accordingly in the VAT return.

What is e-commerce as per UAE VAT Regulations?

The Federal Tax Authority has issued a Public Clarification VATP033 that defines e-commerce for Emirates’ reporting requirement. As per VATP033, e-commerce is defined as “the process of selling goods or services through electronic means, an electronic platform, a store in social media, or electronic applications in accordance with criteria and conditions determined by the Minister of Finance”.

What is the definition of an electronic commerce medium?

As per VAT P033, electronic commerce covers electronic means, an electronic platform, a store in social media, or electronic applications. It can be a website, portal, gateway, interface, platform, marketplace, API and similar applications. In view of the latest technological developments. Electronic media also covers a broad range of concepts, such as stores in the metaverse, smart kiosks, robotic devices, etc.

Only taxable supplies made through electronic commerce shall be considered. Therefore, for the calculation of the threshold of AED 100 million calendar year, only such taxable supplies shall be taken into account. VAT advisers in Dubai can help you further.

How to determine if a supply is made through an e-commerce medium?

The FTA will treat a supply of goods and services as an electronic service supply made via an Electronic Commerce Medium if it meets all of the following conditions:

  1. The Goods and Services are listed or advertised on the Electronic Commerce Medium
  2. The goods and services are ordered through the Electronic Commerce Medium, regardless of whether the payment is made online or not
  3. In the case of a supply of goods, the goods are delivered to a location specified by the customer whereby this location is not owned by the supplier nor operated by that supplier
  4. In the case of a supply of services, the services are provided, or the right to receive the services is granted to the customer with minimal or no human intervention

Consult with the Best VAT Consultants in Dubai, UAE

If you are a taxable person supplying goods and services through an Electronic Commerce Medium, you must assess whether they fall within the new Emirates’ reporting mechanism for VAT in the UAE. Taxable persons making taxable supplies through Electronic Commerce Medium who are subject to meeting the threshold of AED 100 million must assess the changes related to record-keeping to prove the Emirate in which the supply is received and to report the same in the VAT return. This could be a tough process for you for which VAT consultants in Dubai such as Jitendra Chartered Accountants (JCA) can offer assistance.

JCA has a team of highly qualified and experienced tax experts who can help you assess your current tax position, advise on the appropriate tax treatment, prepare clarification requests, or represent you in front of the FTA as registered tax agents in the UAE. We can also assist you with complying with the UAE corporate tax law, Economic Substance Regulations (ESR) Ultimate Beneficial Ownership (UBO) and Anti-Money Laundering (AML) Law. You can call us to discuss your specific tax requirements with JCA and determine the way forward.