Accounting for Ecommerce
UAE 2026

As the chart above shows, accounting for e-commerce businesses involves tracking inventory, recording sales and returns, and reconciliations. Inventory tracking involves recording purchases, landed cost, and stock at Fulfilled by Amazon (FBA) or Third-Party Logistics (3PL). Recording sales and returns requires you to post invoices with revenue and FIFO cost of goods sold (COGS) and credit notes that reverse revenue and restock the unit. Reconciliation is simply the act of matching settlements and payouts with bank deposits.

In the Amazon Settlement Report issued every two weeks, the FBA fees will be itemized as referral fee, fulfilment fee, monthly storage, advertising spend, and any reimbursements. These fees must be recorded as separate expense lines or as COGS sub-accounts, depending on your chart of accounts, at reconciliation time, not at the moment of sale. You must also verify that the settlements equal the bank transfers minus fees.

For every market settlement report, you must record revenue for each auto-created invoice, record refunds per credit note, post the fees in the respective expense accounts, and reconcile the net transfer with settlements minus any fees. Amazon settles biweekly, Shopify per payout cycle, and WooCommerce per gateway payout. Since variance is cheap to fix the same week as opposed to later in the month, you should try to reconcile in short cycles.

Returns must be posted by creating a Credit Note with the “Sales Return” toggle on. This reverses revenue and cost of goods sold (COGS), and restocks the unit. You can find the necessary data for credit notes in each platform’s return record. Since platforms like Amazon, Shopify, and WooCommerce do not auto-sync returns into your accounting system, you will need to configure a Zoho Flow workflow if you want it automated.

Since Amazon and Shopify invoice their fees from outside the UAE (typically Luxembourg, Ireland, or the US), they fall under the Reverse Charge Mechanism (RCM). So, VAT-registered UAE sellers must self-assess 5% Output VAT and recover the same amount as Input VAT on VAT returns. This has a net-zero cash impact, but it must still appear in the VAT filings. Sales to UAE customers are standard-rated supplies carrying 5% VAT, while exports outside the GCC are zero-rated supplies carrying 0% VAT.

Since FIFO is IFRS-compliant, audit-friendly, and naturally captures landed cost (freight + customs + insurance) per shipment lot, it is commonly used by UAE e-commerce sellers carrying real stock. However, if you deal in high-velocity homogeneous goods, the weighted average method can work, although it may blur cost lots and obscure the true margin. In our flow chart, we assume the FIFO method, wherein each Bill creates a cost lot, landed costs adjust that lot, and the FIFO cost of goods sold (COGS) is posted when the Invoice is created. Ideally, you should set the costing method once at the item level since switching later is painful.

Business-to-business (B2B), business-to-consumer (B2C), consumer-to-business (C2B), and consumer-to-consumer (C2C) are the four types of e-commerce.

Infrastructure, relevancy, insights, optimized for conversions, merchandising, integration, and user experience are the 7 pillars of e-commerce.

Retail accountants specialize in ensuring accurate recordkeeping for high-transaction-volume businesses and deliver valuable financial management insights relevant to retail businesses.