What are the new reporting obligations for e-commerce transactions and tax revenues in the UAE?

08 April 2023

Amritha Sethumadhavan

The UAE Ministry of State for Financial Affairs has issued a Ministerial Decision No. 26 of 2023 to improve control and oversight on e-commerce transactions and the corresponding tax revenues. The decision requires taxpayers whose e-commerce taxable suppliers exceed AED 100 million within a 12-month period to report their transactions Emirate-wise. This reporting obligation allows the tax authorities to enforce VAT compliance obligations more effectively and better allocate tax revenue generated from e-commerce sales between the various emirates.

The decision specifies criteria and conditions for electronic service supplies made through an electronic commerce medium, such as goods listed or advertised on an Electronic Commerce medium, goods ordered through an electronic commerce medium, goods delivered to a location specified by the customer, and services provided to the customer with minimal or no human intervention.

The UAE Tax Authority has recently issued a VAT Public Clarification VATP033, which outlines amendments to Article 72 of the UAE VAT Executive Regulations, clarifies what is meant by an Electronic Commerce Medium, and describes how e-commerce transactions should be split into Emirate-wise reporting for VAT return purposes.

The Public Clarification includes a broad range of concepts, such as stores in the Metaverse, online marketplaces, smart kiosks, robotic devices, and stores on social media platforms. The Public Clarification also clarifies that regarding VAT liability, where the Electronic Commerce Medium operates as an undisclosed agent, the supplier shall be regarded as supplying the goods or services to the Electronic Commerce Medium. This reporting obligation will take effect on 1 July 2023 or the first tax period following the calendar year in which the AED 100 million threshold was exceeded, and taxpayers expecting to fall within its ambit must inform the UAE Tax Authority by 15 March 2023.