Specific VAT Reporting in e-Commerce
In its VAT Public Clarification VATPO33, released on February 24, 2023, the FTA placed a greater focus on e-commerce supply reporting. A person or firm covered by the new taxation system that deals with sound and service delivery above AED 100 million is referred to as a “qualifying registrant,” according to the FTA clarification notice.
Eligible registrants must save any relevant supporting paperwork and record e-commerce supplies in box 1 of the VAT Return as of July 1, 2023, in accordance with the Emirate in which clients receive the supply of goods or services.
The FTA additionally pointed out that companies should carefully assess if they are required to comply with the new reporting standards. Errors and penalties may result from noncompliance with the updated reporting requirements or from complying when it is not necessary.
Supplies will only come under the e-commerce medium when they meet the following conditions
• The products and services are available online.
• Whether or not the payment is done online, the products and services are ordered through the Internet.
• The provider does not own or run the place if the client designates for the items to be delivered.
• If the client asks for services, those services are provided, or the client is allowed to obtain those services with little to no help from a human.
Insight of New Guidance
Qualifying registrants must notify the Emirates of the AED 100 million threshold as well as the regular rate suppliers for both e-commerce and non-e-commerce as of July 1, 2023.
The amount specified in each of the relevant Emirates fields under box 1 of the VAT return will continue to reflect the total standard-rated supply for each Emirate, including e-commerce and non-e-commerce.
There are two new requirements that registrants need to follow:
• For 18 months following the first tax-paying period for registrants whose annual revenue exceeds AED 100 million, beginning on or after July 1, 2023.
• The business must have been owned by the registrant for a minimum of two years following the first tax period in which the registrant’s AED 100 million threshold was surpassed.
The Federal Tax Authority declared that two questions will be prepared by its tax administration system, “EmaraTax,” to confirm registrants’ eligibility for the new rules pertaining to e-commerce supplies. Taxpayers will benefit from this in preparing an accurate VAT return.
Taxpayers can guarantee that their VAT file is accurate and avoid penalties or modifications later on by performing this double-check.