UAE is one of the largest exporters among the gulf countries. Moreover, UAE ranks 20th when globally remarked as the largest importer of goods and 29th as the largest exporter. Thus, imports and exports form a major part of the country’s economy.
Previously, UAE practiced a tax-free economy, but keeping in mind the socio-economic transformations in the world, UAE announced the introduction of VAT payments in the year 2018. Since then, the end consumers have to pay a value-added tax of 5% on various goods and services that are available in the market. And hence, the companies associated with trades and supplies are bound to pay VAT on customs duty in UAE.
The introduction of VAT was announced for the betterment of the country’s infrastructure and also for implementation of swift developments and advancements in the economy. Thus, it was a calculated and effective measure undertaken by the Government of UAE, following which many other gulf nations like Kuwait, Saudi Arabia, Qatar, Oman and Bahrain also introduced VAT on various goods and services in their state.
Exports and Imports of Goods– Definition
- Goods and Services that are supplied from the confines of UAE to another person or company that is located beyond the borders of the state are called exports of goods and services.
- Whereas, the goods and services that are brought into the precincts of UAE from beyond the borders are called import of goods and services.
Exports and Imports of Goods –Percentage of VAT applicable
- Although exports of goods are a taxable business, yet when exports of goods are carried out to a GCC VAT implementing state or to unregistered as well as registered recipients of a GCC VAT implementing state then the amount of VAT applicable is 0%. Also, many goods that are installed or assembled outside the state are charged on 0% VAT.
- Imports in the country are charged with 5% VAT with an exception on precious metals that are charged with 0% VAT. The same percentage of VAT is applied on to domestic goods to ensure that the VAT applicable at both the segments is equally distributed.
- Any import that takes place between the United Arab Emirates and a person registered under VAT or not registered under VATare bound to pay the VAT on customs duty.
- Moreover, goods that are trans-shipped from UAE to other gulf countries or goods that are first imported to the UAE and then exported to any other countries are also liable to pay value-added taxes to the Government.
Note that an important key to remember to is file return on input taxes so that you can recover as much as you can. Since large-scale business operations like imports and exports are based with a huge margin of profit as well as loss, the UAE Government is lenient in showcasing consolations by handing over the tax recovery claims to the suppliers of goods.
A successful business or trade is one that keeps a record of its income and expenditure. Therefore, do maintain a record for the imports and exports you carry out along with the amount of VAT paid for at least 5 years. These invoices are not just yearly records but legal proofs that you as a trader has to abide by the rules and regulation implemented by the Government for the welfare of the state and to act in the interest in safeguarding the duties of traders.
GCC Fillings is one such website that can educate you with vital knowledge and information on VAT and other core segments of business registration within the confines of UAE. Therefore, if you have any business-related queries, you can always feel free to contact us. Our expert advisors and recipients are exclusively available 24×7 for serving you with proper knowledge and information in the field of commerce.