VAT for e-commerce in the UAE: place of supply, exports and electronic services

Goods sold online, delivered in the UAE

Domestic e-commerce is plain VAT: 5% on the price, a tax invoice (simplified is usually enough for consumers), and output tax in the period of supply. The platform doesn't change the analysis — a sale through your own site, a marketplace, or Instagram DM is the same supply. What online sellers actually get wrong is registration timing: the AED 375,000 mandatory threshold creeps up on a growing store month by month, and it tests rolling revenue, not the calendar year.

Goods shipped abroad

An export of goods is zero-rated — 0% VAT, with full input-tax recovery — but the rate is earned by evidence: official customs exit documents and commercial evidence of the shipment, retained per order. An online seller shipping GCC and international orders without an evidence file is sitting on supplies the FTA can re-rate to 5% wholesale. Zero-rated is a documentation standard, not a default.

Electronic services follow use, not the seller

For electronically supplied services — apps, SaaS, streaming, e-learning, digital downloads — the place of supply follows where the service is actually used and enjoyed. Sold to users in the UAE, they carry UAE VAT; genuinely used abroad, they can fall outside UAE VAT or zero-rate, evidence again deciding. The rule cuts the other way too: a foreign platform selling electronic services to UAE consumers must register for UAE VAT with no threshold — the first dirham counts.

The operational checklist

• Track the rolling-12-month revenue against AED 375,000 monthly, not annually
• Keep customs exit evidence per exported order, linked to the order number
• Classify each revenue stream: goods vs electronic services vs facilitation/commission — each has its own analysis
• Marketplace sellers: agree in writing who invoices the customer and who accounts for the VAT — the platform's terms decide whose supply it is
• COD and gateway settlements: reconcile collected VAT to the gateway payouts, where double-counting and gaps both hide

How Orbit applies this

Orbit ingests order and gateway data, classifies each line by destination and stream, holds zero-rating where the export evidence is missing, watches the rolling threshold, and reconciles collected VAT against settlements — the whole checklist above, running continuously.