VAT is one of those things UAE founders set up once at launch and then forget about, until an accountant asks why the invoices don’t show a TRN or why the storefront prices exclude tax. The rate itself is simple. The UAE charges VAT at 5% on most goods and services. The difficulty is getting Shopify to show prices the way UAE rules expect, to produce invoices that meet the Federal Tax Authority’s requirements, and to handle customers in Saudi Arabia, where the standard rate is 15%.
This guide covers when you need to register, how to configure taxes in Shopify for a UAE store, what a valid tax invoice must contain, and what changes when you start selling into KSA through Shopify Markets. It is general information, not tax advice. VAT rules change and every business is structured differently, so confirm your own position with a UAE-registered tax agent or accountant before you rely on any of it.
When a UAE Shopify store must register for VAT
The Federal Tax Authority (FTA) sets two thresholds for businesses established in the UAE:
- Mandatory registration at AED 375,000. You must register if your taxable supplies and imports exceeded this amount over the previous 12 months, or if you expect them to exceed it in the next 30 days.
- Voluntary registration at AED 187,500. Below the mandatory threshold, you can choose to register once your taxable supplies, imports or taxable expenses pass this figure.
The FTA notes that these thresholds do not apply to foreign businesses, so if your company is set up outside the UAE, take advice before assuming you are under any threshold.
Two practical points for Shopify merchants. First, the forward-looking 30-day test matters if you are planning a big launch or a seasonal campaign such as White Friday or Ramadan, because a single strong month can push you over. Second, only charge VAT once you are actually registered. Charging 5% at checkout without a Tax Registration Number (TRN) creates problems you will have to unwind later.
Showing VAT-inclusive prices
UAE shoppers expect the price they see to be the price they pay. That is also the legal default: under the VAT law and its Executive Regulation, prices for taxable supplies must generally be advertised on a VAT-inclusive basis. A 2025 summary by UAE law firm Habib Al Mulla and Partners explains the narrow exceptions, such as exports and sales to VAT-registered businesses, where a price may be shown excluding VAT only if that is clearly stated.
For a typical direct-to-consumer store, that means your product prices, collection pages and ads should all show the VAT-inclusive amount. In Shopify, you do this in Settings > Taxes and duties by turning on the option to include tax in your prices. Shopify then works out the tax portion backwards from the price you entered. For an item priced at AED 105, Shopify records AED 100 as the net price and AED 5 as VAT, and the customer pays AED 105 at checkout with no surprise added at the end.
Before you switch this on, check that your product prices were entered as gross prices. If your catalogue was built with net prices and you flip the setting, every price on the site effectively drops by around 4.8%.
Configuring Shopify taxes for the UAE
According to Shopify’s guidance on tax services by location, the automated Shopify Tax service is available in the US, Canada, the UK and the EU, with a lighter Basic Tax service in a handful of other countries. Stores based in the UAE use Manual Tax, which means you set and maintain the rates yourself, or use a third-party tax app. Shopify also makes clear that tax is the merchant’s responsibility: it calculates what you configure, but it does not file UAE VAT returns for you.
A sensible setup for a UAE-registered store looks like this:
- Make sure the UAE is in a shipping zone. Tax settings are tied to the countries you ship to, so the UAE needs to be in one of your shipping profiles before you can configure it.
- Turn on tax collection for the UAE in Settings > Taxes and duties, and add your TRN wherever the admin asks for a registration number.
- Check the rate is 5%. Shopify pre-fills default rates, but you are responsible for confirming they are current. There are no separate emirate-level rates, so leave regional rates at zero and apply the 5% at country level.
- Turn on tax-inclusive pricing as described above.
- Decide how to treat shipping. Shopify has a separate setting for charging tax on shipping rates. Agree the correct treatment with your accountant and set it to match.
- Add tax overrides for any products your adviser confirms are zero-rated or exempt. The FTA’s e-commerce guidance gives qualifying medicines and medical equipment as the most likely zero-rated items for online sellers, so health and pharmacy stores in particular should review this.
Then place test orders, including one with a discount code and one with shipping, and check the tax lines.
Tax invoice requirements
Shopify’s default order confirmation email is not designed as a UAE tax invoice. The FTA’s guide to tax invoices says a tax invoice must be issued and delivered within 14 calendar days of the supply, and sets out what it must contain.
Full tax invoice
- The words “tax invoice” clearly displayed
- A sequential or unique invoice number
- The date of issue, and the date of supply if different
- Your name, address and TRN
- The customer’s name and address, plus their TRN if they are registered
- A description of the goods, with unit price, quantity, VAT rate and amount payable in AED
- Any discount, the gross amount payable and the total VAT, both in AED
Simplified tax invoice
You can issue a simplified tax invoice when the customer is not VAT-registered, or when they are registered and the VAT-inclusive amount is AED 10,000 or less. That covers most consumer orders. It must still show the words “tax invoice”, your name, address and TRN, the date of issue, a description of the goods, and the total amount and VAT charged.
In Shopify, the simplest route is usually Shopify Order Printer, which lets you build an invoice template in HTML, CSS and Liquid, or a dedicated invoicing app. Two details are easy to miss. If you sell in other currencies through Shopify Markets, the VAT amount still needs to be expressed in AED, along with the exchange rate used and its source. And if B2B buyers order from your store, you need a way to capture their TRN at checkout or in their customer account so it appears on a full invoice.
Keep an eye on electronic invoicing too. The UAE has announced a phased e-invoicing rollout starting in 2027, beginning with larger businesses, with smaller businesses following later. Published guidance so far focuses on business-to-business transactions, but check with your adviser how it applies to you before your phase begins.
Selling to Saudi Arabia through Shopify Markets
Saudi Arabia is the natural next market for many UAE brands, but its VAT is different. The standard rate in KSA is 15%, and the Zakat, Tax and Customs Authority (ZATCA) guideline on imports and exports confirms that VAT at 15% applies to goods imported into the Kingdom. How it reaches you depends on how you sell.
Shipping from a UAE warehouse
If you ship orders from the UAE to Saudi customers, the goods are imported into KSA and import VAT, plus any customs duty, is generally due at the border. On the UAE side, the FTA’s e-commerce VAT guidance says goods exported from the UAE can be zero-rated if they physically leave the country within 90 days and you keep official and commercial evidence of export. Other GCC countries are not currently treated as “Implementing States” for UAE VAT, so sales to KSA follow the export rules. Confirm the current position and your evidence requirements with your adviser.
The key commercial decision is who pays the import charges. If the customer pays the courier on delivery, you risk refused parcels and returns. If you want to collect duties and import taxes at checkout, Shopify offers this for eligible stores under Markets, but availability depends on your plan, payment setup and store location, and it cannot be used for a “Rest of world” shipping zone. Check what your admin offers before you promise duty-paid delivery.
Holding stock in KSA
If you use a Saudi warehouse or 3PL, your sales are generally treated as local supplies in Saudi Arabia, and you may need to register with ZATCA. Rules for non-resident businesses differ from those for local companies, so this is the point at which you need a Saudi tax adviser, not just a Shopify setting.
Setting up the Saudi market in Shopify
Create a dedicated Saudi Arabia market so you can price in SAR and control shipping separately. Shopify’s dynamic tax-inclusive pricing can show tax-inclusive prices based on the customer’s country, and both the UAE and Saudi Arabia are on its supported list. You enable it per market under Taxes and duties by choosing dynamic tax display. Note its limits: it only applies where tax collection is set up for that country, it does not adjust shipping rates, it ignores tax overrides and it does not adjust fixed prices you have set for a market. If you set fixed SAR prices, make sure those prices already reflect the tax you are responsible for.
A short checklist
- Track taxable sales monthly against the AED 375,000 and AED 187,500 thresholds.
- Register and receive your TRN before charging VAT.
- Enter gross prices and turn on tax-inclusive pricing in Shopify.
- Replace the default order email with a compliant tax invoice template.
- Before entering KSA, decide between cross-border shipping and local stock, and take Saudi tax advice.
Getting help with your Shopify tax setup
ConversionsKing builds and configures Shopify and Shopify Plus stores for brands in the UAE and the wider GCC. We can set up your tax settings, Markets, invoice templates and test orders so your store matches the position your accountant signs off. If you are launching a new store or moving from another platform, see our migration and launch service, or read more about working with our Shopify agency in Dubai.
