Value added tax is the Gulf's equivalent of GST. The UAE introduced it at 5% in January 2018; Saudi Arabia introduced it at 5% the same year and raised it to 15% in July 2020. For a seller on noon, VAT appears in two places: on the price the customer pays, and on the fees noon charges you for selling. How much of that you must handle yourself depends on whether you are a local VAT-registered business or an Indian seller using noon's cross-border (global store) programme.
How it works
For a locally registered seller (a UAE or KSA entity with a tax registration number), the customer price is VAT-inclusive. On a AED 105 sale in the UAE, AED 5 is VAT that you collect and remit to the Federal Tax Authority, and AED 100 is your taxable revenue. Noon's referral, fulfilment and advertising fees are invoiced to you plus VAT at the local rate, and that VAT is recoverable as input tax on your return. In KSA the same sale at SAR prices carries 15%: a SAR 115 sale contains SAR 15 of VAT.
For Indian sellers on noon's global store programme, noon's Seller Help Centre states that noon collects the applicable VAT in both the UAE and KSA and pays it to the authorities, and that VAT or other import-related charges will not appear on the seller's invoice. Only the VAT applicable to marketplace fees (UAE 5%, KSA 15%) is reflected in the seller's invoice and financial statements. In practice, an Indian seller sees the fee VAT as a cost line rather than a recoverable credit, because they have no Gulf VAT registration to claim it against.
Worked example (Indian seller, UAE): an item sells for AED 100 net of customer VAT. Suppose noon's referral fee for the category is 15% (AED 15) and the fulfilment fee is AED 8, giving AED 23 in fees. VAT at 5% on fees is AED 1.15, so total deductions are AED 24.15 and the payout is AED 75.85. The same fees in KSA would attract VAT at 15%: AED 3.45 on AED 23, so a payout of AED 73.55 on the same AED 100 sale. Referral and fulfilment figures here are illustrative; use the category rate card in Seller Lab.
Why it matters for sellers
The ten-point gap between UAE and KSA VAT changes both your shelf price and your fee cost. A product priced identically in both markets earns less in KSA after fee VAT, and the customer-facing price must absorb a higher tax. Sellers who copy UAE pricing into KSA without adjusting for VAT lose margin on every order.
How to manage it
- Price each market separately; build 15% VAT and 15% fee VAT into your KSA model from day one.
- Read the "Payments & Fees" statement in Seller Lab for each country; fee VAT is shown as its own line.
- If you set up a local entity, register for VAT once you cross the mandatory threshold so fee VAT becomes recoverable.
- Keep noon's tax invoices; they are your evidence of VAT paid on fees.
- Recheck rates annually; VAT rates and thresholds are set by government and can change.
Blooprint's noon account management service builds country-specific pricing for Indian brands. Start with how to sell on noon for the global store setup.