VAT on Imports and Customs Duty

Value Added Tax or VAT is payable at the point of importation to the UAE. Any imported good is liable to VAT with the same rate which applies to a similar good that’s sold in the UAE. For instance, goods that are considered zero-rated for the purpose of VAT in the UAE are still zero-rated if imported.

VAT, as well as customs duties, are payable at every importation. Value of all imported goods for VAT purposes if increased by:

  • Amount of Customs duty or Excise payable related to the importation
  • Any insurance, handling, and transportation costs incurred between the place of introduction to the UAE
  • Costs for onward transportation to the final place of destination

Read also: How To Charge VAT In UAE

Can input tax be claimed for imports (VAT on Imports)

Input tax for imports can be claimed by an importer registered for VAT in UAE. A tax that’s paid, including Excise or Customs duty, paid by the entity receiving an imported supply will qualify for input tax recovery. Records pertaining to all transactions are to be maintained for a minimum of five years, starting from the end of the year on the year of the invoice date.

Take note: there are certain goods that are not taxable for VAT but Customs duty still has to be paid. This includes the following goods:

  • Goods that internal security and military forces import, including military transport vehicles, spares, arms and ammunitions, and other related materials and equipment
  • All used personal belongings like household items brought in UAE by UAE nationals that return to the country or those belonging to expats coming to reside in UAE
  • Personal effects and gifts belonging to travelers to UAE that have no commercial nature, subject to certain regulatory conditions
  • Goods returns which are exported from UAE or goods that are exported from UAE temporarily for finishing or repair and are returned to UAE

UAE businesses and residents can declare the aforementioned goods to be VAT exempt or expect from VAT upon import.

What are the tax obligations of importers in the UAE?

If you’re registered for VAT in UAE, either through mandatory or voluntary VAT registration:

TransactionTax Obligation
Import taxable goods to UAEPay VAT via a tax return
Transfer taxable goods to a VAT designated zone from a VAT designated zoneVAT isn’t applicable
Import taxable goods to UAE then export onto another countryPay VAT via tax return
Import taxable goods to any VAT designated zone in UAEVAT isn’t applicable

If you’re not VAT-registered in UAE:

TransactionVAT obligation
Import taxable goods to UAE mainlandPay VAT on point of importation
Transfer taxable goods to a VAT designated zone from a VAT designated zone in UAE

 

Provide an eGuarantee
Import to UAE then export taxable goods onto another country with no customs suspensionPay VAT on the import
Import taxable goods to a UAE VAT designated zoneVAT isn’t applicable
Traveler or tourist bringing in taxable items valued not more than AED 3,000VAT isn’t applicable
Import taxable goods to UAE with duty suspensionProvide an eGuarantee
Import returned goods to UAE mainland being certain the exported goods came back to UAEVAT isn’t applicable

 

Internal security and military forces importing taxable supplies into mainlandVAT isn’t applicable
UAE national living overseas or expat planning on living in UAE importing used household items and personal effects for the very first timeVAT isn’t applicable

An e-guarantee is a procedure in which non-applicants may file in VAT. Providing an eGuarantee to the Federal Tax Authority involves the following steps:

  • Submission and preparation of customs declaration
  • Approval and validation of declaration details by Customs officers. Upon approval, a notification will be sent to the importer and the FTA.
  • Obtaining eGuarantee from a financial or banking institution where value is equal to VAT amount due for imports
  • Creation of an eService account
  • Payment of VAT

Read also: Expert Tips For A Timely VAT Return Filing In UAE

There will be a confirmation email sent to the FTA, as well as the importer upon successful submission of an eGuarantee. Under UAE VAT legislation, the import of goods will be under the reverse charge mechanism. Registered businesses importing goods have to settle VAT dues during the time of VAT return filing. Payment of VAT will be deferred to the date on which VAT return has to be filed; however, the value of goods in which VAT has to be paid will be determined during the time of clearance from the Customs authority.

For domestic supplies, the value of supplies will be the transaction value following the consideration of various duties and costs associated with each import.

For further clarification regarding UAE VAT policies and VAT on imports, consult with VAT Registration UAE. The firm has a team of reputable regulated tax agents in Dubai that can support all aspects related to VAT in the UAE. Talk to our team today!