Are you an online retailer in UAE? This blog may help you to understand VAT on Ecommerce retail sales in UAE. VAT for UAE Ecommerce sellers remain one of the most important considerations.
If you are running an online retail business in UAE, then it is important for you to gain an appropriate understanding of the impact of UAE VAT on your online sales.
Generally speaking, Ecommerce sales and purchases in UAE are considered as domestic transactions. Therefore, those transactions are subject to UAE standard VAT rate of 5 percent.
Are you making a supply for VAT purposes?
It’s also important for ecommerce sellers to understand the place of supply of their online sales in UAE. Simply put, the place of supply is the place where the supply is considered to take place for the purposes of VAT. So, if you are an overseas importer selling in UAE through your website but have the fulfilment in UAE whereby you stock your products, then effectively your place of supply appears to be UAE. But if your circumstances are such that the place of supply of your products are outside the UAE then it may be that your supplies are considered what we call as ‘outside the scope of VAT’.
VAT on dropshipping
I give you another example where a business is conducted as dropshipping. This is where the ecommerce sellers do not keep any product in the stock in UAE. Let’s say you’ve an online shop or website where USA consumers buy products online. Although you are selling from UAE online, but you get your supplier in another country say China to ship directly to the USA where the customer is based. Clearly what happened here is that the products never touch the UAE borders. As soon as this situation is true, there will be no UAE VAT on the sales of the goods.
If you need any help in accounting, bookkeeping, VAT and other taxes, fee free to contact ERAA Consulting Limited.