The Federal Tax Authority (FTA) has clarified the criteria and conditions for the electronic filing of UAE tax returns by qualified taxpayers.
Criteria and conditions for electronic commerce supplies
According to article 2 of Clarification VATP033 No. 26 of 2023, a supply of goods or services will be deemed to be made by electronic means if all the following criteria and conditions are met:
- the goods and services are listed or advertised in an electronic commerce medium;
- the goods and services are ordered through an electronic commerce medium, whether or not payment is made online;
- in the case of the supply of goods, the goods are delivered to a location specified by the customer and which is not owned or operated by the supplier; and
- in the case of a supply of services, the services are provided or the right to receive the services is granted to the customer with minimal or no human intervention.
According to the clarification, "e-commerce" is defined as "the process of selling goods or services through electronic means, an electronic platform, a social media shop or electronic applications, in accordance with the criteria and conditions established by the Minister of Finance". Support for e-commerce covers a wide range of concepts, such as metaverse shops, intelligent kiosks, robotic devices, etc.
Amendments to the UAE Declaration for E-commerce Supplies by Qualified Registrants
Qualified registrants are required to declare taxable supplies made through e-commerce in box 1 of the VAT return according to the emirate in which the goods or services are received by the customer, and to keep the relevant supporting documents. However, the FTA will accept the customer's place of residence as the default factor.
Qualifying registrants are defined as taxable persons supplying goods and services via e-commerce and whose turnover exceeds AED 100 million in a calendar year.
Once a registrant has been classified as a Qualifying Registrant and is subject to the relevant reporting obligations, it will be required to comply with the reporting mechanism clarified above for the following period(s):
- 18 months from the first fiscal period beginning on or after 1 July 2023 for registrants that exceeded the AED 100 million threshold in calendar year 2022; and
- 2 years from the first tax period of the calendar year beginning after the date on which the registrant exceeded the AED 100 million threshold for any year after 2022.