Goods received from outside countries to the UAE are called Imported Goods in the UAE. The next logical question asked is whether imports are taxable in the UAE?

Well, Goods or Services that are termed as imports to the UAE are taxable as per VAT. When an entity in the UAE is registered under VAT and imports goods or services from other countries, the importer is required to pay VAT levied on imports on the basis of reverse charge. Now, what does reverse charge mean? To understand this it is better if it is understood as to what a forward charge is?

When goods are supplied, the goods or services supplier is usually accountable to collect the tax amount and pay to the Federal Tax Authority (FTA). This process of paying taxes and the amount so collected is termed as the forward charge. Now, for the reverse charge, the person receiving the supply is responsible to pay to the Federal Tax Authority, the tax levied on the supply. For imports, since the supplier is from a country outside the UAE and thus not registered in the UAE, the responsibility on the importer who has a VAT registration in the UAE, to pay VAT on the import.

The rate of VAT that is applicable to imports is normally 5%. Except for precious metals imported to the UAE for which 0% VAT is applicable. The rate of VAT for imports is the same as the rate of VAT on domestic supplies. This is to guarantee imports being taxed at the same rate as domestic supplies.

For those who are worried if input tax is claimed on imports? There is no need to worry since the tax that is paid, by the person receiving the imported supply, qualifies for input tax recovery.

All records pertaining to imports are needed to be maintained for 5 years minimum, from the year-end, for the year of the invoice date.

There is no VAT levied on certain imported goods in the UAE, as mentioned below: However, Customs duty would still have to be paid on a few of these goods.

  • Goods that the military and internal security forces import, such as arms & ammunitions, military transport vehicles and spares as well as other materials and equipment.
  • Gifts and Personal effects belonging to travellers to the UAE, including tourists, having no commercial nature and subject to certain conditions.
  • All used personal belonging including household items that are brought in the UAE by those UAE nationals returning to the UAE or belonging to the Expats newly coming to live in the UAE.
  • Goods Returned. Those goods that are exported from the UAE are returned, or such goods exported from the UAE temporarily, for repair or finishing and are returned to the UAE.

Hence, UAE residents and businesses can take note of these goods which are exempted from VAT on import.

VAT is charged apart from the customs duty levied on imported goods. There can be the following situations of transactions and its implications on VAT accordingly:

  • A person importing has VAT registration
  • A person importing does not have a VAT registration
  • Goods that trans-shipped through the UAE and in transit to other GCC countries
  • Goods that are imported to the UAE for being exported to outside countries

Export of Goods and Services, as well as imports, are essential for most traders in the UAE. Therefore, it is very pertinent and imperative for them to be knowledgeable enough to comply with the provisions of VAT as well as get the benefits, extended under VAT. For those traders and businesses not having the knowledge and the requisite expertise on VAT, there are GCC Filings. GCC Filing is a renowned CA Firm in the UAE which can help in the area for VAT Registration and compliance.

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