VAT for E-commerce in UAE

Jay Krishnan, Partner

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HLB HAMT - Accounting Firm in UAE

Phone:- +971 4 327 7775
Mobile:- +971 50 677 5860
WhatsApp:- +971 56 219 1607
Email:- dubai@hlbhamt.com

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    The citizens and business owners in the UAE are still processing the thought of being a VAT payer; it is applicable to every entity which has a minimum turnover of AED 375,000 per annum. The question of whether to pay VAT arises among the non-resident companies registered under the e-commerce online platforms as well.

    A company which is listed in the e-commerce online platform that sells goods in the UAE can be enlisted as VAT payer. In order to sell their products in the country a company (seller) should follow certain procedures:

    1. The seller should deliver its goods at the warehouses provided by the e-commerce companies.
    2. The e-commerce companies should hold the stock in its warehouses on behalf of nonresident seller.
    3. When a UAE based customer places an order, it is the e-commerce company that dispatches the goods (anywhere within the country).
    4. The e-commerce company will send the money to the seller after deducting their applicable commissions.
    • It is the seller who decides the price of the goods that is being sold through the platform.
    • The e-commerce company does not take responsibility of the goods or hold ownership and will not issue an invoice on behalf of the seller.
    • The customers who purchase goods might not be registered for VAT in the UAE.

    There are certain laws to be considered to register the sellers for VAT. Below Articles need to be studied and applied where a non-resident company/individual which sells their products through an agent and can be enlisted as a VAT payer in UAE.

    • Article 9 of the Decree-Law provides the rules for VAT treatment of supplies made through agents. Specifically:
      • The Supply of Goods and Services through an agent acting in the name of and on behalf of a principal is considered to be a supply by the principal and for his benefit.
      • The Supply of Goods and Services through an agent acting in his name is considered to be a direct supply by the agent and for his benefit.
    • Article 13 of the Decree-Law sets out the conditions that obligate persons to register for VAT.
    • Article 13(2) of the Decree-Law determines that persons, who do not have a place of residence in the UAE, may be required to register for VAT if they makes any taxable supplies in the UAE, unless there is another person in the UAE who is responsible for accounting for VAT on such activities. As such, for non-resident suppliers, the registration threshold is, in effect, nil.
    • Article 27(1) of the Decree-Law determines that the place of supply of goods will be the UAE if the supply is made in the UAE.

    Accordingly, a non-resident company that sells their products through an e-commerce online platform in the UAE should register for VAT. The e-commerce company only acts as an agent in dispatching the products and does not have the ownership of the goods. As most of the customers who purchase through such online platforms are not registered for VAT:

    • The seller should pay VAT and
    • The seller should also charge the customers on the taxable supplies.

     
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    Varun R Chandra
    Varun R Chandra
    07:38 25 Apr 21
    HLB Hamt is highly recommended! They have the quality of services that would satisfy your needs. I'm glad I found them.
    Giuseppe Assi
    Giuseppe Assi
    06:20 31 Jan 21
    I HAD A GOOD EXPERIENCE WITH HLB HAMT DUBAI. THEY HAVE A VERY PROFESSIONAL TEAM, GOOD QUALITY OF SERVICES, GOOD VALUE... FOR PRICE.I RECOMMEND THIS COMPANY.read more
    Mohamed Sheriff
    Mohamed Sheriff
    16:16 28 Jun 20
    Experience with HLB Hamt in audit experience is great pleasure. They deploy well qualified accounts team for audits.... And the amount of checking they perform give the management of the company confidence that internal controls are well in place. We are glad to see they have high standard of audit practices.read more
    218141 JOSEPH THOMAS
    218141 JOSEPH THOMAS
    16:20 23 Jun 20
    Professionally managed firm with commitment to the engagements taken. My company and its group are assigning our... requirements for last 12 years to HLB and we don’t have any negative remarks on any assignments.read more
    PMI
    PMI
    07:14 23 Jun 20
    In my opinion, HLB Hamt is one of the best professional firms in UAE after big4. Excellent client service, professional... and competent staff and timely delivery are their strength. Over the years they have developed the infrastructure and skill set to handle multiple verticals ie, audit, tax services, consulting, IT support etc.Wishing HLB Hamt team all the very best.read more
    RAVI CHOKSI
    RAVI CHOKSI
    08:28 21 Jun 20
    Thank you Team HLB hamt...Your internal auditing team put the good amount of time and inputs in helping the... organisation making considerable improvements throughout the organisational working structure and helps in building the better business.Thanks.read more
    Maharajan Subramaniam
    Maharajan Subramaniam
    18:17 06 Jun 20
    High-Performing IT Teams, I'm impressed with the knowledge level of their deputed staff, audit procedures, and... checklist adopted. Mr. Vimal especially understand the requirement and provide solution not only technical feasibility and also considered budgeting. We’re confident in their abilities.read more
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    Mohammed L
    08:07 05 Jun 20
    We have been working closely with them on payroll services for quite sometime.They provide very professional... services,experts in domain and excellent support. Would recommend them.Cheers.read more
    ROY ROSHAN VIVIAN
    ROY ROSHAN VIVIAN
    06:32 04 Jun 20
    Very professional team. Vimal has always given us good solution advice for various Software and IT Infra projects. We... are very Extremely satisfied working with him and his team. Wishing them success.read more
    Basil Daniells
    Basil Daniells
    05:55 03 Jun 20
    I have worked with HLB as a partner of Sage for about 2 years, they were dedicated to the success of the partnership... and kept aligned with the business plan that was agreed between our two companies. They are always ready to go the extra mile for a customer and don’t shy away from challenging circumstances. Keep up the good work and wish you all the success in the future.read more
    Amar Kashyap
    Amar Kashyap
    19:28 02 Jun 20
    Team of well qualified and organised professionals. Their reports are not based on numbers first they will understand... their client and their business. They are highly recommended and trust worthy.read more
    Radz de Jesus
    Radz de Jesus
    16:03 02 Jun 20
    We're glad to have found HLB Hamt to conduct the IT audit and risk assessment for our organization. We have learned a... lot from their team during that first project. And since then, we've continued to be in touch with them. Mr. Vimal especially is very good at presenting technical concepts in simple yet interesting ways that non-IT and business people alike would easily catch. We are very happy with the professionalism and quality of service they provide. They leave their clients nothing short of satisfied. Highly recommended.read more
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