leverage Shopify in UAE

[Kaseem]

how can I leverage Shopify in UAE selling products like digital books, digital products or online courses as start up. should I aware of local rules and regulations of? if yes what are they? could you please let me know. It's quite hectic unless knowing a lot. 

[Yuparkoti]

@Kaseem 

Strategies with regard to digital products within Shopify in UAE

Open your store using shopify in uae

Shopify is can be used for the sale of digital products because it avails some important tools such as those for:

• Controlling digital downloads.
• UAE friendly payment processing through PayTabs and/or Telr among other gateways.
• Adapting storefronts to suit different customers.

Legalities applicable in UAE

Selling of digital products within the UAE is subject to various legal as well as regulatory matters. In relation to this, consider the following:

— Business licensing

1.   Free zone vs mainland license:

• Free Zones (e. g., Dubai Internet City, Dubai Media City): Ideal for eCommerce startups, as they allow 100% ownership without needing a local sponsor.
• Mainland: Requires a local sponsor or partner owning 51% of the business, unless you qualify for 100% foreign ownership in certain sectors.

1.   eCommerce license:

• To sell online, you need an eCommerce license issued by the Department of Economic Development (DED) or the respective Free Zone Authority.
• For digital products, you may need a Publishing or Media License depending on the content type.

1.   Cost of licensing:

• Licensing costs vary but typically range between AED 10,000–25,000 annually, depending on the Free Zone and business activities.

—VAT (Value Added Tax)

1.   VAT registration:

• The UAE imposes a 5% VAT on goods and services, including digital products.
• If your annual revenue exceeds AED 375,000, VAT registration is mandatory. If revenue exceeds AED 187,500, registration is optional.

1.   VAT on digital products:

• VAT applies to digital products sold within the UAE.
• If selling internationally, VAT may not apply, but you need to document the buyer's location and comply with the respective country's tax laws.

1.   Filing VAT returns:

• VAT-registered businesses must file returns quarterly via the Federal Tax Authority (FTA) portal.

 — Content regulations

1. Compliance with the National Media Council (NMC):

• Be sure that all educational courses, eBooks and other media in your digital products adhere to the content regulations in UAE.
• Do not include content which is:
• Politically insensitive.
• Offensive to any religion or culture.
• Associated with gambling or banned substances.

1. Approval for educational content

• Approval of educational courses may be required in some Free Zones (e. g. Dubai Knowledge Park) to ensure that they are in line with local requirements.

  — Data protection laws

1. Personal data protection

• United Arab Emirates has put in place the UAE Personal Data Protection Law 2022, just like GDPR in EU.
• See to it that your Shopify store does not collect too much personal data and explain clearly how it uses such data in a privacy policy that is easily accessible; also provide an opt-out or data deletion request mechanism for customers using the store.

1. Cross-border data transfers

• Ensure compliance with PDPL and obtain secure customer consent when keeping or handling client information external from UAE.

— Intellectual property (IP)

1.   Protect your content:

• Register any intellectual property originating from your intellectual property such as original eBooks, courses, or digital products with the Ministry of Economy to prevent cases of plagiarism.

1.   Avoid copyright violations:

• Ensure that you have the appropriate licenses for all third-party materials that are included in your products or store, such as images, music, or text.

— Payment Gateways

1.   Local payment integration:

• Integrate local and international payments on websites using UAE payment gateways e. g., PayTabs, Telr, or Checkout. com which complies with UAE Central Bank regulations.

1.   Currency & conversion:

• Set the prices in AED but allow them to pay using different currencies for customers around the world.

— Shipping & delivery

• With digital products, there’s no need for physical shipping. Even so, make sure that:
• Offer immediate download upon purchase at checkout stage
• Host digital files reliably and securely

— Key laws to keep in mind

There are a some important laws in UAE that will apply for your Shopify business:

1. Federal Law No. 2 of 2015 (Commercial Companies Law)

• This is the law that takes care of the licensing of business and company incorporation throughout U. A. E.

1. Federal Decree-Law No. 8 of 2017 (VAT Law)

• Value added tax at the rate of five percent on taxable supplies of goods and services shall be imposed in the UAE including digital products as provided under this Decree-Law.

1. Federal Decree-Law No. 45 of 2021 (UAE Personal Data Protection Law)

• The law protects individuals’ data and oversees how it is handled by organizations.

1. Federal Law No. 15 of 1980 (Publishing Law)

• Legislation concerning publishing and press content within the state

1. Federal Law No. 37 of 1992 (Copyright Law)

•   An intellectual property and copyright decree

— Ways to make it easier to follow the rules

1. Collaborate with a professional in setting up local businesses

• Such professionals will help you with licensing, VAT registration and compliance.

1. Pay special attention to free zones

• Digital entrepreneurs may find free zones such as DIC, FCC or SPC most favorable.

1. Leverage on Shopify’s integrated tools

• Turn on automated VAT calculations and other compliance tools provided by Shopify.
• Use digital download applications such as FetchApp or Sky Pilot to ensure smooth delivery process.

Hope this helps you well.

for more visit - https://tax.gov.ae/ar/default.aspx