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E-Commerce

Due to the tremendous demand for convenience the industry for eCommerce is expected to be the preferred choice consumers. In the UAE, the market is expected to be valued at AED36.7bn by 2018.

With the continued and expected growth of the eCommerce Industry; VAT introduction will have implications to businesses in this sector, to maximize their recoverable VAT and manage costs of compliance.

Here are some of the FAQs related to eCommerce Industry:

 

Who are classified as E-commerce?

The Electronic Commerce or E-commerce Industry conducts its’ business activities with the use of electronic systems such as the electronic communications technologies and other computer networks.

At TaxWorx, we have assessed all these factors to provide a total solution from invoice, transactional VAT treatment to real time VAT reporting to manage your VAT compliance to the FTA requirements.

Import

As a VAT registered business, you are responsible to pay for the VAT (Input tax) from your imported Goods and Services, but you can redeem it in full through reverse charge.

Export

VAT (Output tax) is Zero rated when you export your Goods and Services outside the UAE. However, if the bill to address for your exported services is a UAE VAT registered business, you may charge 5% VAT.

 

Domestic

VAT is applicable when purchasing and selling taxable goods and services with their respective rates.

Exemption

If you purchased VAT exempt Goods and Services, VAT (Output tax) is not applicable.

Partial Exemption

If you purchased supplies for your business operations FTA will provide a fair computation for partial exemption; and purchases for your business expenses can be redeemed in full.

Implications

As an eCommerce Business dealing with fast phase transactions with a great volume of AR & AP, automation and digitisation will significantly help timely and accurate reporting with increased control on cost of compliance. Ensuring you have correctly structured invoices, manage the treatment of transactions correctly, document management & archiving and reporting model will help simplify these challenges reduce risks of noncompliance.
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