If you run a business based in the United Arab Emirates (UAE) and plan to sell products or services in the U.S., understanding U.S. sales tax is crucial. This guide covers everything you need to know about U.S. sales tax for United Arab Emirates-based businesses to ensure compliance when entering American markets. You will learn about your obligations, registration, and filing requirements.

This sales tax guide explains U.S. sales tax basics, the concept of economic nexus, registration steps, and how to manage your sales tax responsibilities as a United Arab Emirates-based seller operating in the U.S. market. It is designed to simplify the sales tax rules and support your business growth with clear, practical advice.

Understanding U.S. Sales Tax

U.S. sales tax is a consumption tax charged on goods and certain services sold within individual states. Unlike the UAE’s VAT system, which applies a uniform tax nationwide at each transaction stage, U.S. sales tax rates and rules vary widely by state and locality. At present, 45 states and the District of Columbia charge a sales tax, while five states, including Delaware, Montana, New Hampshire, Oregon, and Alaska, are tax-free.

As of 2025, the average combined state and local sales tax rate in the U.S. is approximately 6.44%, with state rates ranging from 0% to over 9.55%. For instance, California has a base rate of 7.25%, while Indiana has a rate of 7%. Local jurisdictions have the authority to impose additional taxes, which can significantly increase the overall tax burden in certain areas. For example, in California, the combined state and local sales tax rate can reach up to 10.75% in some cities. Some states, such as Delaware, New Hampshire, Alaska, Montana, and Oregon, do not impose a statewide sales tax.

While VAT is collected at every point in the supply chain in the UAE, U.S. sales tax is generally collected only once from the end consumer. Additionally, VAT is overseen centrally by the UAE Federal Tax Authority. In contrast, each U.S. state administers and enforces its own sales tax independently. This state-level administration requires careful tracking of sales and tax liabilities by jurisdiction to ensure compliance.

Do United Arab Emirates-Based Sellers Pay U.S. Sales Tax?

Yes, United Arab Emirates-based sellers may need to pay U.S. sales tax, especially if they meet specific sales thresholds within individual states. Many states require remote sellers, including those without a physical presence, to register and collect sales tax once their annual sales exceed a set dollar amount (typically $100,000) or transaction count (often 200 transactions).

All business sizes are subject to these rules, whether they sell on platforms such as Shopify or Amazon, or directly through their own websites. Regardless of your business model, crossing economic nexus thresholds triggers tax collection responsibilities. Staying aware of your customers’ locations helps you comply efficiently.

Economic Nexus and Sales Tax Rules for United Arab Emirates-Based Businesses

Economic nexus U.S. sales tax United Arab Emirates-based businesses describes the obligation to collect state sales tax when your remote sales into a U.S. state are considered significant, even if you have no physical office or staff there. Following the landmark 2018 Wayfair Supreme Court ruling, nearly every state with a sales tax established its own economic nexus rules, dramatically expanding sales tax requirements for foreign sellers.

Therefore, if your United Arab Emirates-based business sells a significant amount of products or services to customers in certain states, you may be required to register, collect, and remit sales tax. As of 2025, 45 states and Washington, D.C., have implemented these rules. Failing to understand each state’s specific criteria can lead to costly penalties. Careful tracking of sales by state ensures compliance and protects against sales tax audits or fines for missed obligations.

Tax Registration Requirements for United Arab Emirates-Based Businesses in the U.S.

Once a United Arab Emirates-based business meets U.S. sales tax nexus requirements, registration in those states is mandatory. U.S. sales tax for United Arab Emirates-based businesses requires proper steps to ensure compliance and avoid statutory issues. Careful monitoring of each state’s rules ensures that key deadlines and required paperwork are not missed. Here are the tax registration requirements for United Arab Emirates-based businesses in the U.S.:

Step-by-Step Guide to Registering for Sales Tax in the U.S.:

  • Identify Nexus States: Review your U.S. sales data regularly to pinpoint states where you have a sales tax obligation based on economic or physical presence.
  • Obtain an EIN: Apply for an EIN through the IRS. This is necessary for sales tax filings, registration, and to meet tax authority requirements.
  • Choose a Registered Agent: Select a registered agent with a verifiable physical address in the relevant state. This agent will receive all state tax and sales tax compliance communications on your behalf.
  • Register with State Tax Authorities: Submit your sales tax permit application through each state’s official portal, like the Secretary of State or Department of Revenue. Registration unlocks your right to collect and remit taxes.
  • Maintain Compliance Records: Consistently organize registration confirmations, sales tax permits, and detailed sales records. Keeping these documents helps you manage filings and address statute of limitations matters if a state audits your business.

Every state has its own process and timeline for registering, so setting up a calendar for ongoing compliance is wise. Completing these steps enables your United Arab Emirates-based company to collect, report, and remit U.S. sales tax legally, minimizing risk and ensuring smooth business operations.

Collecting and Remitting U.S. Sales Tax

After registration, you must accurately charge and remit sales tax in a timely manner. Here’s how:

  • Charge Sales Tax at Checkout: Use sales tax software or e-commerce platform settings to calculate and collect the correct tax rate based on the customer’s U.S. location.
  • Remit Collected Taxes: Submit sales tax payments and returns to each state by the scheduled due dates, which may be monthly, quarterly, or annually.
  • Utilize a Sales Tax Platform: Consider using software like Commenda’s tax platform to automate the collection, filing, and payment processes.
  • Record-keeping: Maintain comprehensive records of taxes collected and remitted to facilitate audits and ensure compliance.

Compared to the UAE’s VAT system, where tax is included in every transaction stage, U.S. sales tax is charged at the final point of sale and remitted separately. Management tools simplify this complexity for cross-border sellers.

Filing U.S. Sales Tax Returns from The United Arab Emirates-Based

Do I need to register for U.S. sales tax as a business based in the United Arab Emirates? Yes, if your company sells to U.S. customers and meets specific economic nexus thresholds, registration may be required. An economic activity or physical presence in a U.S. state can establish a nexus between your business and a state.

Frequency of Filing

The frequency of filing sales tax returns varies by state and is typically determined by the volume of sales. Common filing frequencies include monthly, quarterly, or annual returns. A filing schedule will be assigned to you by the tax authority of each state once you register.

Remote Filing

Using the online tax portals for each state, you are able to electronically file your sales tax returns from abroad. Additionally, tax automation platforms can help manage filings across multiple states, ensuring compliance with varying state laws.

Common Mistakes to Avoid

  • Failing to register in states where you have nexus.
  • Missing or late filings can lead to penalties.
  • Incorrect application of tax rates due to varying state and local rates.
  • Improper handling of taxable and exempt sales without proper documentation.
  • Neglecting to update registrations when your nexus status changes.

Sales Tax Exemption Certificate

A sales tax exemption certificate allows certain buyers to purchase services or goods without paying sales tax. As a seller, you are responsible for obtaining and verifying these certificates to ensure that exempt sales are properly documented.

U.S. Tax Compliance for SaaS Businesses from the United Arab Emirates

U.S. sales tax compliance for SaaS businesses from United Arab Emirates-based companies involves specific challenges and requirements. Many U.S. states tax SaaS as a service, meaning you must carefully review state-specific rules before selling. Economic nexus rules apply to SaaS providers as well, with subscription sales potentially triggering tax obligations in states where your customers are located.

To comply:

  • Register for sales tax permits in all applicable states before launching sales.
  • Use reliable tax calculation software to apply the correct tax rate based on each customer’s location.
  • Maintain detailed records of invoices, sales tax exemption certificates, remittances, and any applicable exemptions.
  • Regularly monitor changes in state tax laws, since digital product taxation rules are frequently updated.

Staying abreast of evolving rules and meeting state requirements ensures your United Arab Emirates-based SaaS business remains compliant with U.S. sales tax for United Arab Emirates-based businesses. Careful management mitigates audit risks and penalties in the diverse U.S. sales tax landscape.

United Arab Emirates-Based Sales Tax Nexus in the USA: What It Means

United Arab Emirates sales tax nexus in the USA means having a tax obligation because of a business connection in a state. Nexus comes in two main forms:

  • Physical Nexus: Presence of employees, offices, or inventory in a U.S. state generates nexus.
  • Economic Nexus: Meeting sales revenue or transaction thresholds in a state triggers nexus even without physical presence.

Understanding nexus types helps you determine when to register and comply with state tax laws. Nexus laws protect states’ rights to collect sales tax and ensure fairness for local businesses.

How Commenda Helps United Arab Emirates-Based Businesses Stay Compliant

Commenda offers an automated sales tax platform designed specifically for United Arab Emirates-based businesses selling in the U.S. The platform simplifies compliance by tracking nexus thresholds, managing multi-state registrations, and automating filings. By eliminating manual errors and missed deadlines, you eliminate penalties.

With Commenda, you gain clear compliance tracking through a consolidated dashboard, enabling easy monitoring of your obligations across multiple states. The platform is designed to support cross-border sellers, offering accurate tax calculations and timely return submissions.

Commenda also offers dedicated support to guide you through complex sales tax requirements, ensuring your business remains compliant with U.S. sales tax laws. This lets you focus on growth without worrying about compliance risks.

Book a free demo with Commenda today to see how easy managing U.S. sales tax for United Arab Emirates-based businesses can be and streamline your tax processes with expert assistance.

FAQs: U.S. Sales Tax for United Arab Emirates-Based Businesses

Q. Do United Arab Emirates-based sellers need to collect U.S. sales tax on digital products?

Yes, depending on the state and product taxability, digital products may require sales tax collection.

Q. How is U.S. sales tax different from the United Arab Emirates-based VAT/GST?

U.S. sales tax is a state-level tax charged at the point of sale, while UAE VAT is a federal tax applied across the entire supply chain.

Q. What triggers economic nexus for United Arab Emirates-based businesses in the U.S.?

Typically, sales over $100,000 or 200 transactions in a state in a calendar year trigger nexus.

Q. How can a United Arab Emirates-based e-commerce business register for U.S. sales tax?

Identify nexus states, obtain an EIN, select a registered agent, register with state tax authorities, and maintain records.

Q. Are there any U.S. states where United Arab Emirates-based sellers don’t have to collect sales tax?

Yes, states like Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax.

Q. What tools help United Arab Emirates-based SaaS companies stay compliant with U.S. sales tax?

Platforms like Commenda, Avalara, and TaxJar automate tax calculation, registration, and filing.

Q. How often do United Arab Emirates-based businesses need to file U.S. sales tax returns?

Filing frequency varies by state, commonly monthly, quarterly, or annually.

Q. What are the penalties for not complying with U.S. sales tax laws as a United Arab Emirates-based seller?

Penalties include fines, interest on unpaid tax, audits, and possible suspension of sales privileges.