Ecommerce VAT guide by the FDA notifies the VAT treatment of the supply of goods and services through electronic means, such as over the internet or a similar electronic network.
All goods and services that are bought online are subject to a 5% value added tax if their delivery address is in the UAE, and if the products are used locally, the FDA provided update guidance making it clear that all electronic service supplies including ebooks, music, magazine, games, movies and other services delivered digitally are subject to tax if they are delivered to local accounts or consumed locally.
FDA Director General Khalid al boustani mentioned that in light of increasing importance of the e commerce sector, clear mechanism for procedures have been identified. Other services subject to VAT include the purchase of domain names, website advertising, distance learning courses, safety training or live stream broadcasts of a range of content, including sports, entertainment, culture, political, artistic and scientific events.
This applies to services delivered through phones, websites, mobile apps and other digital platforms. The FDA said that its new guide, which is available on its website clarifies whether companies or individuals delivering services need to register for the VAT or not, and whether such registration is compulsory or voluntary. It also deals with issues surrounding residency and allowance of taxable expenses.