United States

United Arab Emirates VAT for electronically supplied services

The United Arab Emirates (UAE) formally known as the Trucial States is a federation of seven individual states. The UAE is most commonly known for its iconic skyscrapers and palm-shaped islands.

The following content has been reviewed as of Mar. 12, 2018.

Legislative effective date 

Jan. 1, 2018

Name of tax

Value-added tax (VAT)

Statute of limitation

Five years, tax evasion 15 years 

Standard rate of VAT

5 percent

 

Electronic supplies

Services which are automatically delivered over the internet, or an electronic network, or an electronic market place (i.e., a distribution service which is operated by electronic means, including a website, internal portal, gateway, store, or distribution platform).

Electronic services are taxed for UAE VAT purposes where they are used and enjoyed regardless of the place of contract or payment.

Registration

For resident suppliers, registration is mandatory if the taxable turnover exceeds US$ 100,000. However, voluntary registration may be possible if taxable turnover exceeds US$ 50,000.

For non-resident suppliers, registration is only required for B2C transactions but there is no registration threshold. This means that all e-service revenue generated by a non-resident supplier in a B2C transaction is taxable in the UAE and the non-resident supplier has an obligation to register.

For non-resident suppliers providing e-services in a B2B contract (defined as a customer that is VAT registered in the UAE) then no VAT needs to be charged as the customer will self-assess.

Customer identification

Business customers should provide their tax registration number (TRN) to verify that they have the capability and obligation to self-assess VAT. This number can be verified by the supplier on the Federal Tax Authority website.

All other customers are deemed to be end consumers without the capability or obligation to self-assess VAT and fall into the B2C category.   

Customer location

Customer location is defined as the place where the customer uses and enjoys electronic services. There are no documented rules, as yet, to define what this means but in the absence of other supporting information it is likely that individuals and non-taxable organizations that are ordinarily resident in the UAE will be assumed to be using and enjoying the services in the UAE.

Supplier identification

Suppliers are located at their usual place (country) of residence or where they are established—if they operate from more than one location.

In a supply chain involving several businesses, it is necessary to identify which business is making the supply of digital services to the final consumer. That business will be liable to account for the VAT that is due where the consumer belongs.

Procedural matters

UAE B2B customers may be required to self-assess VAT by applying the reverse charge for services received, even if the (nonresident) supplier is VAT registered in the UAE.

UAE VAT registration is required for e-services provided to non-taxable consumers. The process for registering a non-resident business for VAT purposes is quite involved and includes the need to open a local bank account as well as providing a range of supporting documentation.

Tax invoices must be issued by a VAT registered supplier.

Tax is collected through the submission of periodic VAT returns, submitted and paid on-line via the Federal Tax Authority’s website.

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