These can be summarized based on the nature of supply whether it is a supply of service or is a supply of goods.
Situation 1: Supply of service
Given below are few instances to understand the impact of above-discussed factors in determining the Value Added Tax (VAT) accounting treatment in e-commerce transactions where supply is a service
• When the place of supply is inside UAE and the supplier is UAE resident, VAT will be applicable and shall be accounted for by the supplier even if the recipient is registered or not.
• When the place of supply is inside UAE and supplier is outside UAE, VAT will be applicable and shall be accounted for by the supplier if the recipient is not registered.
• When the place of supply is inside UAE and supplier is outside UAE, VAT will be applicable and shall be accounted for by the recipient if the recipient is registered. This is where the reverse charge mechanism gets activated.
• In case of a supply of services, when a place of supply is outside UAE, then UAE VAT will not be applicable, irrespective of the status of supplier or recipient.
