What is VAT?
Value Added Tax, or abbreviated to “VAT”.
VAT is an indirect tax that applies to sales and purchases i.e. it is a transaction based tax. VAT operates at each level of the supply chain from producer, manufacturer, wholesaler and retailer; this ultimately ensures that VAT is accounted for at each stage of the supply chain until it finally rests with the end user.
VAT Rates may vary depending on the destination country and items being delivered.
The rate of VAT that applies to most supplies of goods and services in the UAE is 5%.
How is VAT changed?
In order to charge VAT you must first be registered for VAT and obtain a VAT number.
Once you are VAT registered, you are bound by the VAT rules applicable to the country in which you are registered but it normally means that you must charge VAT (where applicable) on your sales and show this VAT on a tax invoice (please consult your tax advisor for specific advice regarding invoicing requirements).
Note: You should check VAT reporting and invoicing requirements in each country in which you register. Although these requirements are similar there can be notable differences.
Why is Amazon collecting UAE VAT on certain fees?
Under UAE VAT Laws, Amazon is required to calculate and collect UAE VAT on its fees related to transactions made by sellers, such as monthly subscription and Selling on Amazon fees. VAT will apply depending on the type of fee being assessed and is not necessarily dependent on the VAT status of the Seller.
All fees payable by you to Amazon pursuant to the Agreement entered into are exclusive of VAT and similar taxes, and you will be required to pay any taxes that Amazon is legally obligated to charge on such amounts. Amazon shall provide you with a Tax Invoice for all fees and applicable VAT payable by you.
How does Amazon calculate the UAE VAT on monthly subscription fees and Selling on Amazon fees?
Amazon will charge the standard rate of VAT of 5% as applicable on any Selling on Amazon fees in accordance with the nature of the supply to your country of residence.
Will Amazon provide me with a VAT invoice for any VAT charged on my Selling on Amazon fees?
Amazon will provide a regular invoice to sellers who are charged UAE VAT on their Selling on Amazon fees. Your invoice will be emailed to the primary email address we have on file for your seller account.
Am I required to charge VAT on my sales of goods through Amazon?
The obligation to charge VAT only extends to persons who are registered or are required to register for VAT in UAE. If you have a requirement to register for VAT, then you will need to consider the requirement to charge VAT on your sales of goods and services to customers in the UAE. Both individuals and companies carrying on business activities must determine their requirement to be registered for VAT.
Note: In addition to the requirement to charge VAT on sales, as a VAT registered person you may also be entitled to recover VAT incurred on business related expenses. This ensures that in the majority of situations, VAT is not a cost to registered business.
If you are VAT registered in the UAE and have received a VAT registration number issued by Federal Tax Authority (FTA), you can enter your information relating to VAT on Seller Central here.
Remember: It’s the responsibility of each Amazon Marketplace seller to ensure that they are VAT-compliant. You should seek professional advice if you are unsure of your obligations under VAT Laws.
Am I required to be VAT registered to sell on Amazon?
As a domestic seller, under UAE VAT Laws, you may either be required to register mandatorily, or may do so voluntarily. If you are VAT registered, you should provide Amazon with your VAT number.
If the total value of your supplies and imports made within the UAE exceeds the mandatory registration threshold of AED 375,000 during the previous 12 months; or you anticipate that the total value of your supplies or imports will exceed AED 375,000 in the next 30 days, then you must register for VAT.
If you are not already registered for VAT in the UAE, then you must monitor the value of your sales and imports on an ongoing basis to understand whether they result in a requirement to register for UAE VAT
Voluntary registration is an option available to businesses which do not have a turnover in excess of the Mandatory Registration Threshold but would still like to be registered for VAT.
You can voluntarily register for VAT in the UAE if:
What if I already have an income tax number in the UAE?
The VAT registration application is a standalone process and you will be issued with a Tax Registration Number (VAT Number) that is different to the number obtained in relation to other taxes. This number must be used for the purposes of conducting your VAT related business activities only.
Do I need to register for VAT in the UAE as an International Seller?
Yes. If you are a non-UAE resident selling goods that are located in the UAE to a UAE customer, then you will be required to register for VAT irrespective of the level of turnover from such sales.
A non-established business selling goods from the UAE shall be subject to a NIL VAT registration threshold. VAT registration will be effective from the date on which you started making sales in the UAE.
How can I apply for VAT registration and obtain a UAE VAT registration number?
In the UAE, you can register online on the tax authority's website. Registering for UAE VAT may lead to a number of associated compliance requirements, including the requirement to file returns and to issue UAE Tax Invoices to your customers. Consult your tax advisor for more information.
What is the Tax Policy?
Except as may be otherwise stated in the Agreement entered into, you will be responsible for determining whether taxes apply to the sale of your products on Amazon.ae. Amazon is not responsible to collect, report, or remit any taxes arising on any of your transactions.
However, if a taxing authority requires us to pay any of your taxes, you will promptly reimburse Amazon for such amounts paid.
What if I ship goods to the customer from a location outside the UAE?
If your products are shipped from outside of UAE, the recipient of the product may be required to pay, upon delivery, an amount related to assessed import VAT, and other import taxes or duties. Such taxes and duties are in addition to the sales proceeds collected by Amazon.
What about VAT as it relates to my product pricing?
All prices published on the Amazon.ae webpage must include the amount of any applicable VAT. You should consider the price for your products as inclusive of any VAT, customs duty, excise tax or other tax that you may be required to remit in connection with such sale.
Who will be responsible for issuing a Tax Invoice for my sales on Amazon?
As a seller on Amazon, it is your responsibility to comply with the VAT Law at all times. This includes issuing valid tax invoices for sales made to customers, collecting VAT (if applicable) and payment of VAT to the UAE Federal Tax Authority (“FTA”).
It is your sole responsibility to comply with all legal and VAT requirements for issuing Tax Invoices to buyers in respect of your sales transactions. If you are unsure as to whether you have to issue a Tax Invoice to the buyer, we recommend that your consult with your tax advisor.
How can I update my VAT number in Seller Central?
You can enter your information relating to your VAT registration in your Selling Central account by visting the VAT/GST Registration Numbers page.
What is considered a valid VAT number?
In general, a VAT number is valid only when the business name registered for the VAT number matches your legal name in Seller Central.
The business name registered for my VAT number does not match my Seller Central legal name because of a clerical mistake. What should I do?
We cannot accept VAT numbers that don't match your legal name. You must contact the relevant tax authority to either update your business name for the VAT number registered or request them to provide a new VAT number belonging to the legal name in your seller account.
You may also choose to change your business name in Seller Central, but this may (re)trigger the account verification process, and you will have to provide relevant proof to clear this verification.
What are my VAT obligations relating to return orders?
In case of return orders for which a refund is authorized to the customer, you are required to provide the customer with a valid Tax credit note.
What about VAT on shipping, payment method and gift wrap revenue?
We will determine the amounts charged to the customer for shipping, gift wrap services and payment method fee for Cash on Delivery orders through the FBA Program. These charges will be tax inclusive to the customer, and we will report them to you. Amazon shall issue you with a Tax Invoice for all fees and applicable Taxes payable by you. You shall be responsible to account for any applicable VAT on the shipping gift wrap charges and payment method fees charged to the customers.
Amazon offers customers two ways to pay for their orders -
Note that multi-tender purchases where the customer pays by debit or credit card but also redeems a gift card in part payment against the purchase price for the goods is treated as payment at the time of checkout.
If you are a VAT registered Seller in the UAE, then for the purposes of determining the timing of your VAT calculation and invoicing liabilities, you will be able to identify the method of payment selected by the customer for an order in your “Manage Orders” page in Seller Central. For debit or credit card payments, payment is received on the order date*.
*Note that Amazon undertakes checks for payment verification which may result in delayed processing of the order. You will able to view the payment verification status on the order in your “Manage Orders” page. During the verification process, Amazon places the order in “Pending” status. If an order is cancelled because payment authorization does not succeed or in case of fraud, this will show under your “cancelled” orders.