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New VAT Reporting Rules for E-commerce in the UAE

New VAT Reporting Rules for E-commerce in the UAE

24 March 2023

Registration of a company in the UAE, as many people say, is considered one of the best solutions for entering international markets. But before launching an investment project, it is important to get familiar with the current legislation and current amendments that should come into force in the near future.

The UAE has adopted new VAT reporting rules for e-commerce. This new reporting requirement applies to taxpayers whose taxable e-commerce shipments in the UAE exceed 100 million dirhams over a 12-month period (i.e. a calendar year).

The Public Explanation states that “e-commerce tools” include a wide range of concepts, such as websites, online markets, robotic devices, stores on social media platforms, etc., where human intervention is limited. 

In addition, it clarifies the factors that can be taken into account by taxpayers to assess the emirate in which an e-commerce delivery or transaction must be specified for VAT refund purposes, which coincides with the place where the goods or services are received.

Companies considering the possibility of establishing an e-commerce business in the UAE should also be aware that the Public Explanation explains that the operator of e-commerce means is obliged to take into account deliveries to the end user when determining the value of taxable deliveries made by him through e-commerce. 

This scenario imposes an obligation on both the supplier and the operator to provide e-commerce reporting. Activities that support online transactions, such as payment systems, logistics for the delivery of goods and other similar services of the platform, fall under the competence of the delivery of goods for electronic commerce, if these ancillary services are provided by the same supplier of goods.

The new e-commerce reporting obligation comes into force on July 1, 2023, or from the first tax period following the calendar year in which the threshold of 100 million dirhams was exceeded.

This information will be provided as the main declaration and divided between shipments with a standard assessment for electronic and non-electronic commerce, and the relevant e-commerce transaction provider must store sufficient information to confirm the emirate in which the delivery was actually received.

 The Tax Administration has imposed an obligation on taxpayers who expect to be subject to this reporting requirement to inform them by March 15, 2023, as they will hold various information sessions and resolve any issues related to the new reporting requirement.

As a result of new legislative amendments, taxpayers who supply goods and services through e-commerce must now assess whether they fall under the new reporting mechanism for VAT purposes. 

For more information on how to obtain an e-commerce license in the UAE, and to find out if your business falls under the new requirements, leave an application in the form below and we will contact you soon.

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