VAT Update: E-Commerce Guide

E-Commerce VAT Guide in the UAE

E-commerce (also known as “electronic commerce” or sometimes referred to as the “digital economy”) generally refers to supplies of goods and services over the Internet or a similar electronic network, with products and services being sourced or supplied by electronic means, such as through a computer, phone website or electronic applications such as portals.

The VAT treatment of supplies of goods and services through electronic means, such as over the Internet or a similar electronic network, in accordance with Article 73 of the Executive Regulation and provides general guidance concerning the application of the Decree-Law and Executive Regulation in respect of e-commerce in the United Arab Emirates.

E-commerce: Supplies of Goods

Depending on the location of the supplier, the recipient, and the goods, the supply VAT treatments are summarized by the FTA on the following table:

Supplier is a UAE resident and a taxable person*
Goods delivered from	Goods delivered to	VAT on supply	VAT on supply accounted for by	VAT on import**
UAE	UAE	5%	Supplier	No
UAE	Outside UAE	0% if export conditions are met; otherwise 5%	Supplier	No
Outside UAE	UAE	No	N/A	Yes
Outside UAE	Outside UAE	No	N/A	No

Notes: * Where the supplier is not registered for VAT, no VAT applies on the supply (it could apply on the import), unless the supplier has an obligation to register for VAT in accordance with the registration rules. ** The obligation to account for import VAT is on the “importer”, i.e. the person whose name is listed as the importer of the relevant goods for customs clearance purposes

Supplier is not a UAE resident
Residency status of recipient	Registration status of recipient	Goods delivered from	Goods delivered to	VAT on supply	VAT on supply accounted by	VAT on import***
UAE	Registered	UAE	UAE	5%	Recipient*	No
Any	Not registered	UAE	UAE	5%	Supplier**	No
Outside UAE	Any	UAE	UAE	5%	Supplier**	No
UAE	Registered	UAE	Outside UAE	0% if export conditions are met; otherwise 5%	Recipient*	No
Any	Not registered	UAE	Outside UAE	5% or 0% if export	Supplier**	No
				conditions are met
Outside UAE	Any	UAE	Outside UAE	0% if export conditions are met; otherwise 5%	Supplier**	No
Any	Any	Outside UAE	UAE	No	N/A	Yes
Any	Any	Outside UAE	Outside UAE	No	N/A	No

Notes: * Where a non-resident supplier is already registered for VAT in the UAE, it should account for VAT directly. Where the VAT on the supply is the obligation of the non-resident supplier who is not yet registered for VAT, the supplier must apply to register for VAT. The supplier may be subject to penalties for non-compliance. * The obligation to account for import VAT is on the “importer”, i.e. the person whose name is listed as the importer of the relevant goods for customs clearance purposes.

E-commerce: Supplies of Services

In accordance with the Article 23(2) of the Executive Regulation; for the purposes of VAT, “electronic services” mean services which are automatically delivered over the Internet, an electronic network, or an electronic marketplace, including:

supply of domain names, web-hosting and remote maintenance of programs and equipment;
supply and updating of software;
supply of images, text, and information provided electronically, such as photos, screensavers, electronic books and other digitized documents and files;
supply of music, films and games on demand;
supply of online magazines;
supply of advertising space on a website and any rights associated with such advertising;
supply of political, cultural, artistic, sporting, scientific, educational or entertainment broadcasts, including broadcasts of events;
live streaming via the Internet;
supply of distance learning; and
services of an equivalent type which have a similar purpose and function.

For a supply to fall under the special VAT rules for electronic services, the service must be automatically delivered over the Internet, an electronic network, or an electronic marketplace.

In accordance with Article 31(1) of the Decree-Law; the place of supply of electronic services is:

in the UAE, to the extent of the use and enjoyment of the supply in the UAE; and
outside the UAE, to the extent of the use and enjoyment of the supply outside the UAE.

The table below summarises the high-level indicative VAT treatment of various scenarios related to supplies of electronic services as per the FTA guidance:

A residency status of the supplier	Place of use and enjoyment	Registration status of the recipient	VAT on supply	VAT accounted by
UAE	UAE	Any	5% or 0% if specifically zero-rated	Supplier*
UAE	Outside UAE	Any	No	N/A
Outside UAE	UAE	Not registered	5% or 0% if specifically zero-rated	Supplier
Outside UAE	UAE	Registered	5% or 0% specifically zero-rated	Recipient
Outside UAE	Outside UAE	Any	No	N/A

Note: * The UAE-resident supplier will only be responsible for accounting for VAT on the supply where it is a taxable person in the UAE.

Supplies made through agents

Supplies of goods and services in the context of e-commerce, are often made using electronic platforms, portals, gateway or marketplaces (“electronic marketplaces”). Such electronic marketplaces will be considered as an Agent operating on behalf or for A principal, and may sell goods or services themselves, as well as act as intermediaries between the supplier and the recipient of goods or services. Depending on the marketplace being considered as an disclosed or undisclosed agent, will determine the VAT treatment.

If you require further clarification or need any help or support on this subject, do not hesitate to contact us.

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