The UAE's e-commerce market is forecast to increase 60 per cent to more than $8 billion by 2025 from 2021, as consumers across the region continue to shift towards online retail, according to a new report.
More consumers in the Emirates made online purchases last year compared to 2020, the report by EZDubai, an e-commerce zone in Dubai South, and Euromonitor International found.
About 75 per cent of those surveyed said they shopped online in 2021.
“The growth of e-commerce that is witnessed in the UAE and the Mena [Middle East and North Africa] region encourages us to work harder and closer with our e-commerce players in order to boost the sector,” said Mohsen Ahmad, chief executive of the logistics district at Dubai South.
Government support is a key factor in supporting the advancement of the sector, he added.
The Covid-19 pandemic, which led to lockdowns around the world, hastened the move to digital services as consumers switched to cashless payments and online shopping. Globally, digital payments are expected to grow to $8.26 trillion by 2024, from $4.4tn in 2020, Statista said.
E-commerce in the Mena region is fast catching up with global powerhouses such as China, with many online retailers scaling up their services to avoid Covid-induced disruptions, the EZDubai report said.
The total e-commerce market size in the region is expected to reach $49bn in 2025, surging from $31.7bn last year.
The expansion of e-commerce in the region is being driven by strong internet penetration rates, high possession of digital devices, rising incomes, improving logistic advancements and the presence of global players in the market, the report said.
The fastest-growing sectors in the e-commerce industry over the next three years will be homewares and home furnishings, food and beverage and media products.
Foreign e-commerce — UAE consumers purchasing outside of the country — is also rising and is expected to reach 32 per cent of total e-commerce sales in 2025, from 23 per cent in 2019 to 26 per cent last year.
The report surveyed an undisclosed number of respondents in 13 countries, including the UAE, Algeria, Egypt, Iran, Israel, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia and Tunisia.
EZDubai, which was launched in January 2019, aims to attract online retailers and promote the emirate’s position as a hub for regional e-commerce.
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Men’s finals: 60kg - Amiran Papinashvili (GEO) bt Francisco Garrigos (ESP); 66kg - Vazha Margvelashvili (Geo) bt Yerlan Serikzhanov (KAZ)
KILLING OF QASSEM SULEIMANI
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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