In relation to e-commerce, the Federal Tax Authority (FTA) has emphasized the necessity for taxpayers to adhere to correct, emirate-specific Value Added Tax (VAT) reporting standards.
The Authority stated that a number of people now have extra responsibilities to fulfil when completing their VAT returns as a result of recent modifications to the VAT legislation in the United Arab Emirates, notably regarding the reporting of the VAT returns of e-commerce supplies.
The FTA emphasized that enterprises must carefully consider whether they are subject to the new reporting requirements, warning that failure to comply or compliance with the revised reporting when not necessary may lead to errors and expose them to potential fines.
According to the FTA, “qualifying registrants” must report supplies made through e-commerce in box 1 of their VAT return as of July 1, 2023, and in the VAT return for the first tax period beginning on or after that date. This reporting is based on the Emirate in which the customer receives the supply of goods or services. They must also keep the pertinent supporting documentation. In general, the taxable business must disclose its supplies in the Emirate where its fixed establishment connected to the supplies made is located if a taxpayer is not a qualifying registrant or if a supply is not an e-commerce supply.
The Authority urged the taxpayers to consider the pertinent laws and the FTA’s clarifications before submitting their subsequent VAT returns in order to ascertain whether they produced goods for e-commerce in the fiscal year that ends on December 31, 2022, or if these e-commerce supplies had an aggregate worth of more than AED 100 million over the preceding calendar year.
The Federal Tax Authority noted that the FTA’s Tax Administrations System (“EmaraTax”) will ask taxpayers to respond to a set of two questions to verify whether they are in fact qualifying registrants with respect to the new e-commerce supplies reporting requirement in order to help them prepare a correct VAT return. This extra check will help taxpayers submit accurate VAT reporting, preventing any penalties or later revisions.