E-services VAT obligations for offshore providers and marketplaces
On 1 January 2018, the United Arab Emirates (UAE) implemented a 5% Value Added Tax regime. This included requiring non-resident providers of digital or electronic services via the internet or similar electronic network to charge and remit VAT on their liable income. This liability was extended to electronic marketplaces. The obligation only related to B2C transactions; B2B transactions should be zero-rated and use the reverse charge. There is no requirement for a local Fiscal Representative.
The UAE is one of the six Gulf Cooperation Council (GCC) states that agreed in 2017 to introduce a VAT union. So far, only UAE, Saudi Arabia, Bahrain and Oman have introduced VAT and taxed non-resident digital services. Check VAT Calc’s global VAT and GST on digital services tracker to see which other countries have introduced indirect taxes on electronic services to consumers.
What services are liable to VAT in the UAE
Income from the following automated supplies to consumer
- Download and streaming video or music
- Digital images
- E-books and online journals
- Online gaming
- Live streaming services
- Telecoms services
- Mobile ringtones
- SaaS or cloud-based software, hosting, storage
- Automated e-learning
- Domain names and hosting
- Broadcast of political, cultural, artistic, sporting, scientific, educational or entertainment programs and events
Electronic marketplaces UAE VAT obligations
In addition to providers of digital services, foreign online marketplaces which facilitate the sale of digital services to UAE consumers may become liable for the VAT collections role on behalf of their third-party merchants.
VAT registration and compliance
There is no simplified registration and VAT filings regime in the UAE for non-resident digital services providers. They must apply online with the FTA as normal. VAT returns are generally required on a quarterly basis, with a filing date of the 28th of the month following the reporting quarter.
Non-residents may apply to the FTA for exemptions from the various UAE requirements on invoices and other obligations.
Africa & Middle East VAT on digital services
|Comments (click for details)||Rate||Date||Threshold||Comments|
|Cameroon||19.5%||Jan 2020||XAF 50 million|
|Egypt||14%||Sep 2016||EGP 500,000|
|Ghana||12.5%||Apr 2022||GHS 200,000|
|Kenya||16%||Sep 2013||-||Registration threshold removed 2023|
|Oman||5%||Apr 2021||OMR 35,000|
|Saudi Arabia||15%||Jan 2018||Nil|
|Senegal||18%||Jan 2023||Nil||Fiscal representative required|
|Sierra Leone||15%||SLE 100,000|
|South Africa||15%||Jun 2014||ZAR 1 million|
|Tanzania||18%||Jul 2022||Nil||Residents since Jul 2015|
|Tunisia||19%||Jan 2020||Nil||Withholding VAT; 3% Royalty Tax|
|Uganda||18%||Jan 2020||UGX 150m|
|United Arab Emirates||5%||Jan 2018||AED 375,000|