UAE-based Shopify stores will have VAT applied to their Shopify bills starting November 19, 2022. VAT (Value Added Tax, a consumption tax) is charged due to legal requirements in the UAE.
Scope and impact:
VAT applies only to Shopify invoices (e.g., subscription fees), not to product/order taxes. Selling only to the USA does not change this billing VAT requirement.
Exemptions and requirements:
You can be exempt from VAT on Shopify bills by providing a valid UAE VAT ID.
If you select “I don’t have a VAT number” or leave the field empty, VAT will be charged on your Shopify bills.
How to update tax details:
Go to Settings > Billing > Tax Registration to enter your VAT ID. The in-app notification also links directly to this page.
Timing and status:
Existing merchants receive at least 30 days’ notice before VAT is applied to invoices.
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I am just starting to build the Shopify store. I am living in UAE but I only plan to sell in the USA. I am getting this notification:
“Your store will be subject to UAE VAT as of November 19, 2022
Your store address is in the United Arab Emirates, which requires the collection of Value Added Tax (VAT). Your Shopify bills will be subject to VAT as of November 19, 2022.”
Can someone please explain to be what this means? Will the 5% VAT be deducted from my Shopy monthly subscription of $29/month or will this 5%VAT be deducted from every product I sell on my store?
We are now required by law to charge merchants in the UAE VAT on their Shopify bills. Merchants in the UAE jurisdiction will begin seeing this tax on their bills from November 19th, 2022. This only applies to your Shopify bills and does not affect taxes on orders/products.
You can be exempt from this tax if you provide your valid VAT ID. Existing merchants will receive a notification about this at least 30 days prior to the taxes being applied to your invoices. The button within the notification will direct you to your billing settings, or you can navigate there yourself (Settings > Billing > Tax Registration). There, you will have the opportunity to enter your VAT ID. If you choose the I don’t have a VAT number option, or don’t choose any option, you will be charged VAT on your Shopify bills.