VAT ON E-COMMERCE

A supply of goods in the e-commerce context involves purchasing goods through an electronic platform, such as a website or a marketplace. Once the goods are purchased, they are then delivered to the recipient.

Depending on the location of the supplier, the recipient, and the goods, the supply may take any of the following basic forms:

• • A supply by a resident supplier to a recipient in the UAE, with goods being delivered from either inside or outside the UAE;

• • A supply by a resident supplier to a recipient outside the UAE, with goods being delivered from either inside or outside the UAE;

• • A supply by a non-resident supplier to a recipient in the UAE, with goods being delivered from either inside or outside the UAE; and

• • A supply by a non-resident supplier to a recipient outside the UAE, with goods being delivered from either inside or outside the UAE.

In each of the above scenarios, the supplier has to consider the impact of VAT on the sale of the goods. In addition, where the goods are physically imported into the UAE from outside the UAE, the importer has to consider the impact of the VAT charged on import of the goods.

The basic place of supply rule for goods is that, if the goods are located in the UAE when supplied, then they are treated as supplied in the UAE. Similarly, if the goods are located outside the UAE when they are supplied, the place of supply is outside the UAE. Where the supply involves the export of goods from the UAE to a place outside the GCC Implementing States (which is currently, any other state outside the UAE), the place of supply is in the UAE.

The table below summarises the VAT treatment of various scenarios involving supplies of goods by a supplier who is resident in the UAE and a supplier who is not resident in the UAE.

For the purposes of this table, it has been assumed that the supply takes place before or at the time the goods are dispatched, that is, in the location from which the goods are delivered. Supplier is a UAE resident and a taxable person*