Vendor’s VAT requirements for Amazon UAE

For Non-Residents to become a vendor on Amazon in the UAE, one must register for UAE VAT. Is this true?

If you are a non-resident of the UAE, that is, if you do not have a place of establishment or fixed establishment in the UAE, and your company is based outside the UAE, your business is categorised as an international company or foreign or non-resident business. As a vendor, if you identify as a non-resident business, you must mandatorily register with the Federal Tax Authority (FTA) to sell your products or services in the UAE through Amazon, irrespective of the level of turnover. Non-registration or late registration of UAE VAT will lead to hefty penalties.

What is the ruling on VAT registration for Amazon vendors based in the UAE?

Unlike international companies, it is not binding on resident businesses to register for UAE VAT to commence sales through Amazon. For UAE-resident company’s VAT registration, mandatory or voluntary registration criteria needs to be fulfilled. Once your total sales (including Amazon) meet or exceed an annual turnover of Dh375,000, or if you expect your total sale to meet or exceed AED 375,000 in the next 30 days, you qualify for mandatory VAT registration. You must then register with the FTA on mandatory basis and get your TRN to comply with the UAE VAT laws and to continue selling your products and services on Amazon UAE. Voluntary registration limit is AED 187,500.

Are there any penalties for non-registration of VAT?

UAE VAT Law requires that any business eligible for mandatory VAT registration must get themselves registered within the period specified by the FTA. As a non-resident vendor, if you register your business after making sales on Amazon UAE, you will incur a penalty of AED 20,000 for non-compliance of procedure.

As a resident vendor, if your sales on Amazon meet or exceed the mandatory VAT registration turnover of AED 375,000, you have 30 days from reaching the mandatory registration limit, to register for VAT and obtain a TRN. If you fail to register within these 30 days, your business will have to pay a late registration fine of AED 20,000.

— The author is a VAT expert and tax consultant at Shuraa Tax International