The digital economy is an important part of global trade, and this sector continues to grow constantly. However, the application of Value Added Tax (VAT) on digital services can be complicated, especially if it is supplied internationally. The UAE VAT Law includes provisions to discuss the complexity of digital services, which it classifies as electronic services.
According to the Article 23 of Cabinet Decision no 53, electronic services are “services automatically delivered over the internet, or an electronic marketplace, or an electronic network.”
Business entities need to understand whether their supply of services is ‘electronic services’ and should know if it will be treated under the regime of VAT in the UAE. You can have a consultation with the best VAT service providers in Dubai to make a proper assessment regarding the VAT treatment of electronic services.
In this blog, we will share our expertise on the VAT treatment of electronic services in the UAE for your assistance and compliance. Keep reading to get into depth on this topic.
Which Supplies Are Covered By The Term ‘Electronic Services’?
You need to follow the definition given in the Law seriously to know if your supply is an electronic service or not. Here, you must understand that the services must be delivered automatically to be classified as an electronic service. It means the delivery of the service should be through an automated system. The Law gives a list of services that can be seen as supplied electronically:
- The updating and supply of software.
- Supply of web hosting, domain names, and remote maintenance of equipment and programs.
- The supply of text, images, and information provided electronically like photos, electronic books, screensavers, and other digitized documents and files.
- The supply of online magazines.
- The supply of films, music, and games on demand.
- Live streaming via the internet.
- Services of an equivalent type that have a similar function or purpose.
- The supply of advertising space on a website and any rights associated with such advertising.
- Place of supply of electronic services
- You need to establish the place of supply to determine if a supply will be taxed in the UAE.
Place Of Supply Of Electronic Services
You need to establish the place of supply to know if a supply will be taxed or not in the UAE. Special rules are made in Article 31 of the Federal Decree-Law No. 8 of 2017 on VAT to make the place of supply of Telecommunication and Electronic Services. However, it is advisable to consult with the VAT service providers in Dubai to accurately determine the place of supply.
As per Article 31 of the Decree Law, the Place of Supply is:
- In the state, to the extent of the enjoyment and use of the supply in the state.
- Outside the State, to the extent of the enjoyment and use of the supply outside the State.
Consult With The Top VAT Consultants In Dubai, UAE
The VAT treatment of electronic services can be complicated for taxable persons. However, it can be easy with the help of the VAT consultants in Dubai such as ebs. We are one of the best accounting and bookkeeping firms in Dubai. We provide the best tax assistance in UAE with proper guidance about new tax regimes. Talk to us about your VAT-related matters with us and get the best VAT advice.
ebs likewise offer services, such as accounting and bookkeeping services, VAT services, Auditing, Due Diligence audit services, and many more.
Feel free to contact us with any additional inquiries or requests for accounting services. A free discussion will be given to you by our specialists, who will answer your request immediately.