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HomeFinanceEssential Guide For Amazon Companies To Register VAT in UAE

Essential Guide For Amazon Companies To Register VAT in UAE

Online shopping has become a casual thing in the present-day world, thanks to technology. The availability of eCommerce platforms and Amazon fulfillment program has made it easier for the people to set up their businesses online yes! Many business owners and emerging entrepreneurs are running successful businesses on Amazon without getting stressed for technical aspects of website and inventory management. 

While every business owner needs to comply with the local and international laws. The Amazon companies based in UAE are required to register for VAT.  It is a compulsion for all eCommerce sellers to ensure VAT compliance as per the recent updates.

Didn’t you know about this? What’s next? You can read this blog post to get comprehensive information about VAT registration! Are you ready?

VAT registration guide for Amazon companies in UAE

Nevertheless, Value Added Tax (VAT) is recently imposed in the UAE along with a few other Gulf countries to stabilize the revenues. The chief objective is to reduce a burden on the oil and petroleum products. Basically, three types of VAT lists are created naming zero-VAT, VAT exempted and VAT imposed on the businesses. Owing to this, Amazon companies should comply with the regulations under the law to avoid penalties. It’s all based on the revenues and other requirements.

Let’s consider the detail for better understanding:

Threshold for Amazon Companies to register VAT

All the retailers and business companies must register for VAT if the turnover is Dhs 375,000 or more annually. Federal Tax Authority direct all the businesses that meet the minimum threshold should comply with the regulations and it is the same for the eCommerce business.

Therefore, the companies running online selling stores with Amazon should calculate their annual revenues accurately and comply with the UAE laws for VAT.   In a case that you are not sure about financial matters, take assistance from the best VAT consultancy in Dubai to breakdown the tax percentage for every product listed in amazon.

Don’t forget to enlist the tax registration number of your business in the amazon eCommerce account for creating a trust relationship with the clients and customers.

VAT charges on different supplies for online selling

It is imperative to understand that the medium used to sell the products has no impact on the taxability of the sold goods. Therefore, the same rules are applied to the taxable supplies as in the brick and mortar businesses. All the goods that are supplied over the internet is liable to VAT under the regulations of FTA.

Further, if the supplier is supplies are made in the UAE and supplier is registered under VAT, then VAT transactions are the same for eCommerce as imposed on traditional commerce. It is because the products displayed on the online platforms are delivered locally and so, standards charges of VAT (5 %) will be imposed.

However, the goods are considered zero-rated in a case that supplied are made outside the UAE. In this situation, the companies need to complete the paperwork necessary for maintaining international supplies from the non-VAT implementing countries. Based on the delivery destinations, it will be determined if the company needs to pay five or zero percent VAT filling under the UAE laws.

For example, if a company is selling books in the UAE using Amazon online platform, the company is required to add 5% VAT to the original price of the books. On the other hand, if the company is selling books outside the UAE for instance books are exported, no VAT is required. Most importantly, the business owners need to maintain proper record of selling and delivery to ensure transparency.

Don’t forget to keep the shipping invoices for completing the documents record for taxation compliance!

Tax invoice required for Amazon businesses

Generally, online goods are delivered using courier services. So, the companies should keep the invoices attached to their records. It is the basic requirement for business bookkeeping that you should ensure to link the invoices for transactions. Besides this, the eCommerce companies on amazon should provide the following information retrieved from the tax invoice:

·         Tax invoice issuance date

·         tax registration number (TRN), business name and address of the suppliers

·         TRN, name, and address of the purchaser if required

·         Goods supply date and description of goods

·         Information of sale deal items and discount the ratio in UAE currency

·         Consumers paid price in terms of the gross amount for the products in UAE currency

Running eCommerce business in UAE? Register for VAT!

Summing up, VAT registration is a must for the businesses that meet the minimum threshold. There is no exception for the online sellers because eCommerce is treated as the traditional businesses in the UAE. Therefore, amazon companies should consider complying with VAT regulations comprehensively to avoid strict fines and penalties.

If you are new to eCommerce and facing any difficulty in managing the documentation and apply for VAT services, you should hire the best VAT consultancy in Dubai to ensure effective compliance with tax obligations. Don’t forget to consider keeping your business secure with transparent records management!


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