U.S. Sales Tax Rules for UAE Travel Agents

U.S. Sales Tax Rules for UAE Travel Agents: What you actually need to know

At Antravia AE, we work with travel agents and DMCs across the UAE who are expanding their portfolios to include U.S. destinations and inbound American clients. One of the first questions they ask is whether they need to deal with U.S. sales tax.

The answer depends on what you’re selling, where you’re registered, and how your contracts are structured. The rules are unlike VAT in the UAE, they vary by state, not federally, and mistakes can lead to significant penalties, even for non-U.S. businesses.

This blog breaks down the essentials of U.S. sales tax for UAE travel sellers serving American clients or selling U.S.-based travel products.

First, what is U.S. Sales Tax?

Sales tax in the U.S. is not federal; it’s state-level. There are more than 10,000 individual tax jurisdictions once cities and counties are included.

Most services sold internationally are not subject to U.S. sales tax. But once you sell a hotel night, car hire, or tour taking place on U.S. soil, you may create a taxable sale.

Some states tax all in-state travel services; others apply “economic nexus” thresholds that trigger obligations even for overseas businesses once they exceed $100,000 in sales or 200 bookings.

What Counts as a Taxable Sale?

Sales tax may apply when:

• You sell a hotel, car hire, or tour that takes place in the U.S.

• You book U.S. land components on behalf of U.S. residents.

• You exceed a state’s nexus threshold (often $100,000 or 200 transactions).

Purely international products, such as flights and cruises departing outside U.S. ports, are generally exempt, but each state differs.

Do you have “Nexus” in the U.S.?

“Nexus” means a sufficient connection for a state to require you to register and remit tax.

You may have nexus if:

• You operate through a U.S.-registered entity (LLC or branch);

• You use a U.S.-based fulfilment partner or staff within that state;

• You meet a state threshold in sales or transaction volume.

Each state’s rules vary. You don’t automatically trigger nexus just by serving U.S. clients, but if you sell U.S. hotel or land packages directly, that’s different.

We’ve helped UAE clients assess nexus risk, determine which products are taxable, and align records under IFRS and UAE corporate tax frameworks.

What about Hotels, Tours, and Cruise Add-Ons?

If you sell U.S. hotels, car hire, or attractions, you may need to collect sales tax in the state where the service takes place.

Example: if your Dubai agency sells a California self-drive itinerary and pays U.S. hotels directly, you could be viewed as the seller of record and liable for California sales tax.

However, if you book through a U.S. DMC or platform that collects tax on your behalf, your obligation may shift. The key is contract clarity, who invoices the client and who remits tax.

Are Flights and Cruises Taxable?

Flights and most cruises are not taxable at the agency level.

• U.S. domestic and international flights are subject to federal excise tax, handled by the airline or GDS.

• Cruises departing from U.S. ports are generally exempt, but add-on items (hotels, transfers, excursions) may be taxable.

Do You Need to Register for U.S. Sales Tax?

Only if you meet nexus thresholds or sell taxable U.S. services.
There’s no single federal registration; you must register state by state. Some allow non-U.S. registration online; others require local representation.

Failing to register once eligible can lead to back-dated tax assessments and penalties, even for foreign companies.

What if You use a Host or U.S. Partner?

If your bookings go through a U.S. host agency or consolidator who invoices the client and collects tax, they’re likely responsible.
But if you invoice under your own brand or issue client receipts, you may still carry liability. Always verify how sales tax and refunds are handled in your supplier agreements.

Final Antravia Thought

U.S. sales tax can seem complex, but most UAE travel businesses only face exposure when they sell U.S. land arrangements directly.

At Antravia AE, we help agencies and DMCs identify where exposure begins, structure contracts correctly, and align with UAE corporate tax and IFRS reporting.

If you’re unsure whether U.S. sales tax applies to your business, book a one-off consultation with Antravia AE. We’ll review your structure and give you a clear roadmap to stay compliant.

📎 Read the full U.S. guide at Antravia.com