In brief

The need for the Tax Authorities to have better control and oversight on e-commerce transactions and the respective tax revenues has prompted the UAE Ministry of State for Financial Affairs to issue a Ministerial Decision No. 26 of 2023 on the Criteria and Conditions for Electronic Commerce for Purposes of Keeping Records of Supplies Made (“Ministerial Decision“) in February 2023. This new reporting requirement is applicable for taxpayers whose e-commerce taxable supplies exceed AED 100 million in a 12-month period (i.e., calendar year).

Following this Ministerial Decision, the UAE Tax Authority has recently issued a VAT Public Clarification VATP033 which outlines the amendments to Article 72 of the UAE VAT Executive Regulations, clarifying what is meant by an Electronic Commerce Medium, and describing how e-commerce transactions should be split into Emirate-wise reporting for purposes of submitting the VAT return.

Key takeaways

  • Taxpayers who are supplying goods and services through an Electronic Commerce Medium should assess whether they fall within the new Emirates’ reporting mechanism for VAT reporting purposes.
  • Where taxpayers are making taxable supplies through an Electronic Commerce Medium in excess of the threshold of AED 100 million within a 12-month period (i.e., calendar year), they will be required to update their internal controls, processes and systems to monitor and track the location / address details of the customer to prove the Emirate in which the supply is received and report it accordingly in the VAT return.
  • The UAE Tax Authority has imposed an obligation on taxpayers who expect to fall within the ambit of this reporting requirement to inform them by 15 March 2023 via [email protected].

In more detail

This new UAE Emirate-wise reporting requirement is placing an obligation on taxpayers to split all its e-commerce transactions according to the Emirate in which the supplies are received. This will likely improve the allocation of tax revenue generated from e-commerce sales between the various Emirates and allows the Tax Authority to better enforce VAT compliance obligations.

In line with Ministerial Decision, a supply of goods and services would be considered an electronic service supply made via an Electronic Commerce Medium where all of the following criteria and conditions are met:

  • the goods and services are listed or advertised on an Electronic Commerce Medium (this is met where sufficient information is provided to inform a purchase including a description of goods and services, price information, etc.);
  • the goods and services are ordered through the Electronic Commerce Medium, regardless of whether the payment is made online or not (this is met when the order is fully executed on the online platform even if the consumer is redirected to a secure external payment link);
  • in the case of a supply of goods, the goods are delivered to a location specified by the customer where this location is not owned by the supplier nor operated by that supplier (this condition will not be met where the customer selects to pick up goods at the supplier location); 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 (this condition is not met where there is human intervention by virtue of chatbot).
VAT Public Clarification VATP003

The Public Clarification clarifies that “Electronic Commerce Medium” includes a broad range of concepts, such as stores in the metaverse, websites, online marketplace, smart kiosks, robotic devices, store in social media platforms etc., where there is limited human intervention to complete the e-commerce transaction.

In addition, it provides factors which can be taken into account by taxpayers to assess the Emirate in which the supply of e-commerce transaction should be reported for VAT return purposes which coincides with the place where the supply of goods or services are received:

  • For individuals, this place will be deemed to be the residential address of the consumer (this takes preference over Internet Protocol address or bank account details)
  • For business customer, this place will be the place of the establishment most closely connected to the supply
Undisclosed agent

The Public Clarification clarified that in terms of VAT liability, where the Electronic Commerce Medium operates as an undisclosed agent, the supplier shall be regarded as supplying the goods or services to the Electronic Commerce Medium, and the Electronic Commerce Medium operator shall be regarded as supplying the same goods or services to the customer. Therefore, the operator of the Electronic Commerce Medium shall be required to consider the supply to the end customer when determining the value of taxable supplies made by it through e-commerce. This scenario places an obligation on both the supplier and operator to undertake e-commerce Emirate-wise reporting.

Incidental supplies

Activities that support online transactions, such as payment systems, logistics for the delivery of goods and other similar platform services fall within the remit of an electronic commerce supply of goods provided these ancillary services are provided by the same supplier of the goods. The principles of supply of more than one component as stipulated in Article 4 of the UAE VAT Executive Regulations will apply. 

Threshold and timeline

The Public Clarification sets out more details on the calculation of the threshold, being the AED 100 million taxable supplies made through electronic commerce.

This new e-commerce reporting obligation is effective from 1 July 2023 or the first tax period following the calendar year in which the AED 100 million threshold was exceeded.  This information will be provided as an underlying declaration and split between e-commerce and non-ecommerce standard rated supplies and sufficient information must be maintained by the qualifying supplier of e-commerce transactions to prove the Emirate in which the supply was actually received.


The UAE Tax Authority has imposed an obligation on taxpayers who expect to fall within the ambit of this reporting requirement to inform them by 15 March 2023 via [email protected] as they will be conducting various awareness sessions and address any questions impacted taxpayers may have on this new reporting requirement.

For further information and to discuss what this development might mean for you, please get in touch with one of the Baker McKenzie contacts below.

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