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11.1. VAT on the Supply of Goods by Non-Residents

Non-resident persons carrying on economic activities through a fixed establishment are required to register for VAT. Non-resident persons without a fixed establishment making taxable supplies in UAE are required to register unless there is a UAE resident person responsible for accounting for VAT on the supplies. There is no registration threshold for non-resident suppliers without a fixed establishment. If there is no resident representative and a non-resident supplier is not registered in UAE, then the supply of goods is subject to VAT under the reverse charge mechanism. The recipient of the goods is responsible for charging VAT under reverse charge. This includes supplies from non-residents that are resident in the GCC Member States.

Digital Supplies

A non-resident without a fixed establishment in UAE providing electronic goods within the UAE to a non-VAT-registered customer in UAE (B2C) is required to register for VAT. In case of imports i.e., supply of goods electronically (through a website or marketplace) by a non-resident supplier without a fixed establishment in UAE, the VAT is payable by the UAE customer (registered or non-registered) on import on a reverse charge basis.

Supplies of electronic goods may either be made directly or through electronic marketplaces. “Electronic marketplace” means a distribution service which is operated by electronic means, including by a website, internet portal, gateway, store, or distribution platform, and meets both of the following conditions:

  • Allows suppliers to make supplies of electronic services to recipients; and
  • The supplies made by the marketplace must be made by electronic means.

Electronic marketplaces may sell goods or services themselves, as well as act as intermediaries between the supplier and the recipient of goods or services. The VAT obligation differs based on the functions performed by the electronic marketplace as given below:

  • Where an electronic marketplace supplies goods or services in its capacity as a principal supplier (for example, it buys and then sells goods)- The electronic marketplace is treated as the supplier of those goods for VAT purposes, and such electronic marketplace is required to comply with the VAT rules and obligations that apply to suppliers of those goods; and
  • Where an electronic marketplace does not act as a principal supplier of goods, and it acts as an intermediary which enables the sale of goods in the form of:
    • a disclosed agent- the supply is treated as made directly by the supplier to the recipient; and
    • an undisclosed agent- there are two supplies for VAT purposes, one from the supplier to the intermediary, and the other from the intermediary to the recipient.