UAE Federal Tax Authority: Online Shopping Purchases Subject to VAT

Press release

Published January 21st, 2018 - 09:28 GMT

The Federal Tax Authority (FTA) has confirmed that all purchases made through online shopping sites are subject to the 5 percent value-added tax (VAT).

The Federal Tax Authority (FTA) has confirmed that all purchases made through online shopping portals are subject to the same 5% Value Added Tax (VAT) as any other purchase made through traditional outlets if the products purchased online are received within the United Arab Emirates.

The Authority explained in an awareness flyer issued today that according to Federal Decree-Law No. (8) of 2017 on Value Added Tax and its Executive Regulations, all online sales are subject to VAT where a seller’s supplies exceed the mandatory registration threshold of AED375,000 over the previous 12 months or the coming 30 days.

Background Information

Federal Tax Authority

By virtue of this Federal Law by Decree a public federal authority shall be established under the name of the Federal Tax Authority. The headquarters of the authority shall be located in the city of Abu Dhabi. The authority shall be in charge of managing and collecting federal taxes and related fines, distributing tax-generated revenues and applying the tax-related procedures in force in the UAE.

The authority shall be managed by a board of directors chaired by the Minister of Finance and a sufficient number of members to be appointed and remunerated by a Cabinet resolution, based on the chairman’s nomination. The authority shall have an independent annual budget that shall be deemed as public funds and exempted from all taxes and fees.