If you sell online in the UAE, you charge 5% VAT on most sales to UAE customers once you are VAT registered, and your imported stock counts towards the AED 375,000 registration threshold. The money that lands in your bank from Amazon, noon, Shopify or your payment gateway is not your revenue. Your revenue is the gross sale, and the fees deducted along the way are expenses, often with VAT you can reclaim. Get those two ideas right and most e-commerce bookkeeping falls into place.
This guide is for founders who have just got their e-commerce licence and for sellers who are already trading and want cleaner books.
Just got your e-commerce licence? Do these first
The licence lets you trade. It does not set up your tax position. In your first weeks:
- Register for corporate tax within three months of incorporation, even if you expect no profit. Our new company checklist walks through the first year, and we can handle the corporate tax registration for you.
- Open a business bank account and keep it separate from personal spending.
- Set up accounting software with your sales channels, payment gateway and bank connected.
- Start tracking stock from the first purchase order, including freight and customs costs.
- Watch the VAT threshold every month, especially if you import.
The VAT threshold counts your imports
You must register for VAT when your taxable supplies in the UAE plus your imports pass AED 375,000 over the previous 12 months, or will pass it in the next 30 days. You can register voluntarily from AED 187,500.
The imports part catches people out. A seller who brings in AED 200,000 of stock and sells AED 180,000 in the same year can already be over the line. Our VAT registration service can check where you stand.
Selling through a marketplace: whose sale is it?
The FTA's E-Commerce VAT Guide explains that the VAT treatment depends on how the marketplace acts:
- As a disclosed agent (selling in your name and on your behalf): the sale is yours. You account for VAT on it. The marketplace's commission is a separate service to you, which is normally subject to 5% VAT if supplied in the UAE.
- In its own name (an undisclosed agent): there are two supplies, one from you to the marketplace and one from the marketplace to the customer.
- As a buyer and reseller: the marketplace is simply your customer.
Read your seller agreement to see which applies, and keep a copy for your records.
Who issues the invoice? A VAT-registered marketplace acting for you can issue the tax invoice to the customer, showing its own details as long as it also shows your name and TRN. There can only be one tax invoice per sale, so if the marketplace issues it, you do not issue another. You still account for the VAT and keep the records.
Payouts: book the gross, not the net
This is the most common mistake in e-commerce books. Say you sell goods for AED 10,500 including VAT in a month on a marketplace, and it deducts AED 1,575 in commission, fulfilment and ad fees (including AED 75 VAT). You receive AED 8,925.
| What happened | How to book it |
|---|---|
| Sales to customers | Revenue AED 10,000, output VAT AED 500 |
| Marketplace fees | Expenses AED 1,500, input VAT AED 75 |
| Cash received | Bank AED 8,925 |
If you only record the AED 8,925 that reached your bank as "sales", your revenue is understated by over AED 1,000, your output VAT is wrong, and you miss AED 75 of input VAT you could reclaim. Over a year that adds up, and it is exactly the kind of mismatch an FTA audit looks for.
The same applies to payment gateways and buy-now-pay-later providers: record the sale in full and the processing fee as an expense.
Practical tip: download the settlement report for every payout, not just the bank statement. It shows each order, fee, refund and reserve, and it is what you reconcile against.
Cash on delivery
With cash on delivery, the courier collects from your customer and pays you later, minus its fees. In the books:
- record the sale when it is made, not when the courier pays you. VAT is due by reference to the date of supply, and the courier's settlement date does not change that
- treat the money the courier owes you as a receivable until it arrives
- book courier fees as an expense, with any VAT on them as input tax
- reconcile courier statements monthly, so failed deliveries and missing remittances get chased
Returns and refunds
When a customer returns goods and you refund them, issue a tax credit note. It reduces the output VAT you declared on the original sale. Keep it with the original invoice. Put the returned stock back into inventory, or write it off if it cannot be resold.
Importing stock
If you buy stock from overseas, import VAT of 5% applies on the customs value, including freight, insurance, customs duty and any excise tax.
- VAT-registered importers that have linked their customs registration number with the FTA do not pay import VAT at the border. It appears as output tax in the next VAT return, and you can usually reclaim the same amount as input tax in that return. Check the pre-filled figure is right.
- Unregistered importers pay import VAT through the FTA's e-services before the goods are released.
- If a clearing agent handles customs for you, make sure it declares your TRN on the import declaration. Otherwise you can lose the ability to account for the VAT in your own return.
Selling abroad
Goods you send to customers outside the UAE can be zero-rated if they leave within 90 days of the sale and you keep the right evidence. For exports from 15 November 2024, that means one of these combinations: a customs declaration plus commercial evidence (such as an airway bill), a shipping certificate plus official evidence, or a customs declaration showing a suspension arrangement. Without the evidence, charge 5%.
Selling to customers abroad often means other currencies. Our multi-currency bookkeeping guide covers exchange rates and gains and losses.
Digital products
If you sell downloads, software, online courses or subscriptions, VAT follows where the customer uses and enjoys the service. Sales used in the UAE are generally subject to 5% VAT, and sales used abroad are outside the scope of UAE VAT. Keep evidence of customer location, such as IP address, billing address or card country.
Stock: the part that makes or breaks your profit
The FTA expects businesses to keep inventory records, including stock quantities and values at the end of each tax period and the related stock counts. Beyond compliance, stock is where online sellers most often misread their profit.
- Record landed cost. Stock cost is the purchase price plus freight, customs duty and other costs to get it to your warehouse. Recoverable import VAT is not part of the cost.
- Use a consistent costing method, such as first-in-first-out or weighted average, which are both allowed under IFRS.
- Count your stock at least at each period end, and investigate differences.
- Write off damaged, expired or lost stock promptly, with a record of why.
- Do not expense stock when you buy it. It becomes cost of sales when you sell it. Expensing purchases makes a growing store look unprofitable and a shrinking one look healthy.
A monthly checklist for online sellers
- Download settlement reports for every marketplace and gateway
- Book gross sales, fees, refunds and reserves separately
- Reconcile each payout to the bank
- Reconcile courier COD statements
- Record purchases at landed cost and update stock
- Issue credit notes for returns
- Check the VAT threshold if you are not yet registered
- Keep export evidence for overseas orders
How TaxBox helps online sellers
TaxBox's Business Growth plan, from AED 1,490 per month on yearly billing, includes inventory accounting and multi-currency accounting, with VAT and corporate tax filing included. CEO Advantage adds advanced inventory accounting for larger catalogues. Every month we reconcile your marketplace and gateway payouts, book sales and fees at gross, keep stock and cost of sales up to date, and prepare your VAT return.
Compare plans on our pricing page, see what our monthly bookkeeping covers, or get an instant quote. Starting out? See outsourced accounting for startups. Already trading with messy books? Catch-up accounting gets you current.
For the VAT basics every registered business needs, read our VAT compliance checklist.
Frequently asked questions
Do UAE e-commerce sellers have to register for VAT? Yes, once taxable supplies and imports exceed AED 375,000 over the last 12 months, or are expected to in the next 30 days. Imports count towards the threshold, so a seller importing stock can cross it sooner than expected. Voluntary registration is possible from AED 187,500.
Should I record my Amazon or noon payout as revenue? No. Record the gross sales as revenue and the marketplace's commission, fulfilment and advertising fees as expenses. Recording only the net payout understates your sales, your output VAT and the input VAT you can reclaim on fees.
Who charges VAT when I sell through a marketplace? It depends on your agreement. If the marketplace acts as a disclosed agent, the sale is yours and you account for the VAT, while the marketplace charges you VAT on its commission. If it acts in its own name, there are two supplies. Check your seller agreement.
How does import VAT work for online sellers? A VAT-registered importer that has linked its customs registration number with the FTA accounts for import VAT in its VAT return under the reverse charge and can usually recover it in the same return. An unregistered importer must pay import VAT before the goods are released.
Are exports by UAE online sellers zero-rated? They can be, if the goods leave the UAE within 90 days of the supply and you keep the required evidence, such as a customs declaration plus commercial evidence like an airway bill. Otherwise VAT is due at 5%.
Sources
- Federal Tax Authority: E-Commerce VAT Guide (VATGEC1)
- Federal Tax Authority: Federal Decree-Law No. 8 of 2017 on VAT and its amendments
- Federal Tax Authority: VAT Import Declaration User Guide
- Federal Tax Authority: VAT Administrative Exceptions Guide (export evidence)
- Federal Tax Authority: Get to know your tax obligations (records and stock counts)
- Federal Tax Authority: Corporate Tax registration
This article is general information, not tax advice. Marketplace agreements differ, so check how yours is structured. Rules change, so check the Federal Tax Authority before you act. The payout figures are a simplified example.