Selling on Amazon’s UAE marketplace can help your business reach millions of potential customers. However, if your sales exceed a threshold set by the government, you have to register for Value Added Tax (VAT).
In this article, we will discuss step-by-step:
- When Amazon sellers in UAE need to register for VAT
- How to complete the VAT registration process
- Rules to follow for VAT compliance
- What happens if you do not register
We have also answered some frequently asked questions. Read on to learn more.
When Should You Register for VAT in UAE Because of Amazon Sales?
You must register for VAT if your total sales on Amazon UAE crossed AED 367,000 (about USD 100,000) in the past 12 months.
You also need to register if you reasonably expect that your sales will exceed this number in the next 30 days.
Some types of businesses have lower thresholds. For example, the VAT registration limit is AED 187,500 (about USD 51,000) for companies operating in Dubai’s Creative Clusters Authority.
Please check where your 12-month sales on Amazon UAE currently stand. If you have exceeded the right threshold for your business, you should immediately register for VAT.
Step-by-Step Process to Register for VAT in UAE
Follow these steps to register your business for VAT:
Step 1) Get Your Documents Ready
You need to submit certain documents to register for VAT. These include:
- Trade license
- Bank account details
- Financial records
- Contracts related to your business activities and transactions
Step 2) Fill Out the VAT Registration Form Correctly
The government provides an online VAT registration form. Fill it out accurately with help from a VAT consultant. Key details you need to provide correctly include:
- Your business activity and structure
- Owners’ names and contact information
- Bank account used for receiving payments from Amazon sales
- Estimates of your annual taxable revenue
Errors can lead to processing delays.
Step 3) Receive Confirmation of VAT Registration Eligibility
The government reviews your form and documents. If approved, you receive a confirmation letter stating your eligibility. This can arrive:
- Within 5 working days for many businesses
- Instantly in some cases
- In 20 working days maximum for some business activities
Step 4) Get Your TRN
Within 20 days from eligibility approval, you get your Tax Registration Number (TRN). This 11-digit number must be on your Amazon invoices.
Rules to Follow After Getting VAT Registered
Once registered, you must follow certain rules:
File VAT Returns
You must file monthly or quarterly VAT returns declaring your Amazon UAE sales, tax collections etc. Late filing can lead to penalties.
Issue Tax Invoices
For all taxable Amazon UAE supplies, you must provide buyers valid tax invoices including TRN, product details etc.
Maintain Accounting Records
Your business must record sales, purchases and expenses accurately. You must retain supporting documents for at least 5 years.
Appointing VAT consultants ensures ongoing compliance without errors or missed deadlines.
What Happens If You Don’t Register for VAT?
If you were required to register but did not, here are the consequences:
Penalties and Fines
The government can impose fines of up to AED 20,000 for non-registration. Additional penalties apply for any VAT non-compliance.
Amazon Seller Account Restrictions
Amazon may freeze payment of your funds or even suspend your seller account for not providing valid invoices with TRN.
Loss of Customer Trust
As an unregistered seller, you cannot provide proper tax invoices. This causes you to lose credibility and trust.
In Conclusion
We hope this detailed, easy-to-understand article helped you learn all about VAT registration rules for Amazon UAE sellers. Please contact us if you need personalized advice or solutions tailored for your business. Stay compliant and continue growing your e-commerce success!
Frequently Asked Questions
Yes, if your business is VAT registered, you can add appropriate VAT charges on your Amazon UAE product listings. Ensure the tax is accurately calculated based on the type of product.
Yes, if your total sales specifically on Amazon UAE have crossed the VAT registration threshold, you need to register with the UAE tax authority. Sales in other countries are not counted for UAE VAT registration.
No, you need to obtain a separate UAE TRN even if your business is registered elsewhere. Without local registration, you cannot comply with UAE VAT laws.
No, penalties may still apply as per UAE tax laws if you have delayed registration. However, good record keeping proving this was an inadvertent oversight may help reduce penalties.
Yes, as your sales are targeting local UAE customers, you need VAT registration once you exceed the threshold regardless of being in a free zone.
