What is a “Qualifying Registrant” for e-commerce purposes?

The ever-expanding realm of e-commerce presents an abundance of growth opportunities for businesses operating in the UAE, but it also increases their tax-related complexities. UAE as a supreme ecommerce landscape has already implemented VAT (Value added tax) regulations for businesses to ensure both fairness and transparency. The term "Qualifying Registrant" under this tax framework refers to taxable entities that must fulfill the requirements set out by the Federal Tax Authority in order to ensure accurate VAT reporting in the United Arab Emirates.

What is a "Qualifying Registrant" for e-commerce purposes?

In the ecommerce landscape of UAE, “Qualifying Registrant” refers to taxable persons or businesses who are engaged in the supply of goods and services through electronic ecommerce channels. However, there is a crucial determiner as declared by the FTA, i.e. the turnover of these businesses must exceed AED 100 million supplies. This threshold applies regardless of the business's location, i.e. even if the business is not physically located in the UAE, if its e-commerce supplies reach UAE customers and exceed the threshold, the business becomes a Qualifying Registrant. This distinction has triggered a range of obligations and responsibilities that businesses in the UAE are required to fulfill to comply with the VAT laws.

 You can also read: Implication of VAT on Financial Institutions Engaged in SWIFT Transactions

Guidelines for Emirates Reporting as per VATP033

In 2023, the FTA released a VAT public clarification VATP033, outlining the reporting requirements for e-commerce supplies in the nation. Through VATP033, FTA highlighted the need for e-commerce businesses to carefully assess whether they are subject to the new reporting requirements to remain in compliance with the UAE VAT regulations.

The clarification lays forth the requirements and standards that are required to be met for the supply of goods or services to be categorized as being supplied via an electronic commerce medium. This medium can be a website, interface, gateway, portal, marketplace, platform, API, or any other similar application that facilitates the sale of goods and services.

The conditions and criterion as clarified by the FTA in Public Clarification VATP033 are:

• The goods and services are required to be listed or advertised on an Electronic Commerce Medium.
• The goods and services must be ordered by the customers via the Electronic Commerce Medium, regardless of whether the payment is made online or not.
• In the case of a supply of Goods, the Goods must be delivered to a location that is specified by the customer. However, this location must not be owned or operated by the supplier.
• In the case of a supply of Services, the Services are provided to the customers, or the right to receive the Services is granted to the customer with little to no human intervention.

The amended VAT regulations also require the taxable persons i.e. the qualifying registrants to report and keep records of their e-commerce supplies according to the Emirate in which the supplies are received by the customers. This, thus, necessitates a more detailed breakdown compared to standard reporting. Moreover, the qualifying registrants must also abide by the FTA-approved reporting periods, as specified by the authorities.

The general rule which is to be kept in mind is that, where a taxable person has no any fixed establishment in UAE then the standard rated supply should be reported in the respective emirate in which the supplier might have the place of establishment.

If the taxable person doesn’t have both, fixed establishment and place of establishment, then the standard rated supply will be reported in the concerned emirate where the supply is to be received.

Navigate e-commerce VAT with Confidence

As a taxable person supplying goods and services through an Electronic Commerce Medium, you need to assess whether you fall within the new Emirates’ reporting mechanism for VAT in the UAE. By understanding the new reporting requirements of a qualifying registrant, you can effortlessly comply with the FTA's regulations and reporting requirements, ensuring both transparency and adherence to the law in the dynamic world of e-commerce taxation in the UAE.

CDA’s VAT assistance in UAE

Navigating through multiple tax laws and staying compliant with all the regulations might be exhausting and time-consuming. Businesses aiming to grow to new heights require professional tax consultation and assistance, which can provide them with streamlined services and a framework contributing to the growth. CDA is one of the professional tax consultants who has a team of expert tax advisors in the UAE who are well aware of the rules and regulations of the land and are ready to sort out all the tax-related issues of their clients.

The team at CDA can provide your firm with tax registration services, tax consultancy services, tax return filing services, tax compliance, etc. To explore more about our services, contact CDA now.