Import Of Goods via customs-Learn import of goods via customs with Reach Accountant

Introduction

Imports of Goods via Customs in UAE

Import is the process of bringing goods into the UAE from a foreign country, into a free trade zone or in the Emirates of UAE by following country’s legal requirements in terms of licensing, documentation and permissions. Licensing is very crucial as it allows you to be an importer. A valid trade license should be issued by UAE license issuing authority and being registered with the Customs department for import of goods via customs in UAE. With the inception of VAT, goods and cargo imported into UAE shall be charged at 5% VAT.

Learning from the Post

• Introduction to import of goods via customs in UAE
• Classification of Import of Goods via customs in UAE
• Treatment of Customs duty for Import of Goods via custom in UAE
• Tariffs for Import of goods via customs in UAE
• Customs Tariff for GCC for import of goods via customs in UAE
• Different Scenarios for Registered Importers for VAT for import of goods via customs in UAE
• Non-Registered Importers for VAT for import of goods via customs in UAE
• Updating TRN in UAE Customs Department
• Determining Value of Customs duty for import of goods via customs
• Procedures for Import of goods via customs in UAE
• Banned items
• Import of goods under Tax Return in VAT Form 201
• Adjustments to goods imported into UAE
• Learn import of goods via customs with Reach Accountant
• Conclusion

Classification of Import of Goods via customs in UAE

Depending on where goods are destined for, the U.A.E. can be classified as Mainland Customs Zones or Free Trade Zones . Imports can be classified under various heads as mentioned below

Treatment of Customs duty for Import of Goods via custom in UAE

Import for the local market: Goods from other countries are imported into the local market after the payment of customs duties or being duty-free depending on case to case basis.

Import for re-export: At times Goods can be imported into the country for being re-exported to other countries. In this case the importer must pay customs duty as deposit which will be refunded upon presentation of proof of re-exportation of goods within 18 months.

Temporary admission: Goods imported from abroad for the purpose of exhibitions ,seasonal markets, and similar events or in construction projects and scientific research and should be returned in the same condition in which they were imported. Customs duties are suspended till the specific period of time for stipulated. These goods which are under the customs duty suspension will also not attract import VAT.

The supplies which come under customs duty suspension are:

• Goods entering UAE under temporary admission
• Goods which are placed in a customs warehouse
• Goods entering UAE in transit
• Goods imported which are intended to be re-exported by the same person who imported them

Import  in Free Zone

General arrangements:

• The importer must obtain a valid code importer by the Dubai Customs.
• The goods must comply with the activity indicated in the license company.
• The goods must reach the destination within 72 hours from the customs declaration date.
• The goods must not be opened, modified or distributed prior to their arrival in the free zone.
• The goods have to be checked as they enter the zone or are transferred in stores.

Import from the Free Zone in the UAE / GCC

This type of process facilitates companies to sell in the Free Zones their products to local companies based in the UAE or in the GCC countries. Customs duty will be applied in accordance with current rates.

Import for Re-export from Free Zone: This type of transaction is processed to enable Free Zone companies to sell their goods to local businesses in the UAE operating with commercial licenses valid on the basis of a mechanism of import for re-export.
This process ensures local importer a derogation period of 180 days to export the goods purchased by the company Free Zone. A deposit is required equivalent to customs tariff imposed on the value of the invoice. The repayment of the deposit is made in whole or in part if it receives proof of export, filed within the time period assigned for this type of transactions.

Tariffs for Import of goods via customs

When the final destination of goods is U.A.E.’s Customs Zones then it is subject to duty under the GCC’s Common Customs Law. If the goods are destined for Free Trade Zones then it is exempt from duty. The U.A.E. has about thirty seven Free Trade Zones.

Goods imported into Free Trade Zones are exempt from duties.

Re-exports from U.A.E. Free Trade Zones to a third market destinations beyond the GCC Customs Zones are also exempted from any duty.

When goods are imported into UAE with the intention of re-exporting them as a fully or partially to another country, a Deposit or Guarantee equal to the applicable tariff amount on the goods shall be secured in lieu of Customs Duty. For this procedure, the Declaration Type “Import for Re Export to Local from ROW” needs to be cleared. Currently this declaration is limited to those with a value higher than AED 20,000 except in case of vehicles.

Customs Tariff for GCC for import of goods via customs in UAE

Goods imported directly into Mainland Customs Zones or to a Free Trade Zone for sale in the U.A.E. and/or re-exports to GCC Countries are subject to customs import tariff as per GCC Common Customs Law that prescribed framework for the UAE’s Import Regulations. Goods can be moved intra-GCC as Customs Offices allowing movement of foreign goods from one member state to another. Therefore a Statistical Export Declaration should be approved from the exporting GCC country for inward movements of such goods and a copy of the same must be submitted to the Customs Office of importing country carrying the “Makasa Stamp” (set-off mechanism) on the Declaration in order to avoid the repeated payment of Customs Duty at the destination Country. The Declaration type “Import to Local from GCC” needs to be cleared for such transaction.

Therefore GCC Customs Union has equalized the duties paid upon entry of an item to any member state, regardless of the country of destination within the GCC. For example, an item imported into the U.A.E for re exporting in to the Saudi market is subject to the 5 percent duty once it enters the U.A.E. market.  In theory, the trader needs not to pay customs duties again to take the item across the border into Saudi Arabia.

Different Scenarios for Registered Importers for VAT for import of goods via customs in UAE

1. Recipient must file returns and pay the VAT due at the time of filing VAT return for the below

• Importing taxable goods into UAE mainland.
• Importing and then exporting the goods to another country 

2. Non Applicability of VAT :VAT is not applicable on the below

• A traveler importing goods valued up to AED 3000.
• Importing returned goods (being certain exported goods which came back into UAE) into UAE mainland.
• A UAE National living abroad or expat coming into the UAE for the first time importing used personal effects and household items.
• The military and internal security forces Importing goods into UAE mainland.
• Importing goods into a VAT designated zone.
• Transferring goods from one VAT designated zone to another VAT designated zone.

 Non-Registered Importers for VAT  for import of goods via customs in UAE

Non-registered importers are those who import goods without being registered for VAT.

Below are few scenarios mentioned

• Import goods from outside UAE to UAE mainland
• Import into UAE to export the goods outside the UAE to another country and it is not considered under customs duty suspension
• Import to export the goods outside the UAE to a GCC Country that has implemented VAT and it is not considered under customs duty suspension

The process below applies for the above scenarios:

1.Customs Declaration

The importer shall prepare and submit the customs declaration through standard procedures and

• Provide the necessary details about all the goods being imported;
• Submit Customs Declaration for processing by Customs.

Once the declaration is approved, it moves to a “Pending Tax Payment” status

2.Await settlement by the Customs

The customs official shall validate the declaration details, settle and approve the declaration. The importer will receive the approval notification.

Once the declaration is sent to FTA, the customs system will not allow any further editing of the form. The only state that the declaration form can change to is either “approved” or “declined”.

3.Create an e-Services account

Taxable persons who are not registered but are importing goods to the UAE will first have to create an e-Services account. The sign up process includes the following steps:

• Sign up as a new user;
• Verify your e-Services account; and,
• Complete the verification by using your e-Services account.

4.Login to FTA portal and make the Payment for VAT due

Non-registered importers have to pay the applicable taxes before clearing the goods. Import VAT is calculated on the value of the goods inclusive of any customs duty and excise tax that may also be due. The importer shall log in to the FTA e-Services portal to proceed with and confirm the payment.

Transfer goods from one VAT designated zone to another VAT designated zone and  Import goods into the UAE under duty suspension by Non Registered Importer for VAT

The below process should be followed

1.Customs Declaration

The importer shall prepare and submit the customs declaration via standard procedures and do the following:

• Provide the necessary details about all the goods being imported;
• Submit Customs Declaration for processing by Customs.

Once the declaration is approved, it moves to a “Pending Tax Payment” status

2.Obtain e-Guarantee (Financial Security)

• Obtain an e-Guarantee equal to the value of VAT due from your Bank
• Obtain the reference number of the e-Guarantee.

Once the declaration is sent to the FTA, the customs system will not allow any further editing of the form. The only state that the declaration form can change to is “approved” or “declined”.

3.Create an e-Services account

Taxable persons who are not registered but are importing goods to the UAE will first have to create an e-Services account. The sign up process includes the following steps:

• Sign up as a new user;
• Verify your e-Services account; and
• Complete the verification by using your e-Services account.

4.Login to FTA portal and complete the VAT Import Declaration form

The importer shall log in to the FTA e-Services portal to submit the e-Guarantee number.

Updating TRN in UAE Customs Department

To ensure import Shipments are cleared promptly through UAE Customs it is very essential that you update your correct TRN (Tax Registration Number) with the UAE Customs Department either by yourself or by your clearing agent in UAE.

Default to update the correct TRN will result in shipments being held by UAE Customs until the importer processes the VAT payment manually through the FTA website. TRN can be updated through any of the methods mentioned below.

Method 1:

Update your customs registration number on your profile with the FTA by logging onto the FTA’s e-Services portal

Method  2:

Complete the VAT declaration using your TRN directly on the FTA’s e-services portal:

• ​Submit your customs declaration following standard procedures customs declaration number.
• ​Login to the FTA’s e-services portal using the username and password linked to your TRN.
• ​Navigate to the VAT tab on FTA eServices Portal and click on “VAT301 – Import Declaration Form for VAT Payment”, enter the port of entry, customs declaration number, and declaration date, then fetch the TRN number.

​Complete the declaration process and submit the form. Following this process, the FTA will electronically update the customs declaration at the customs department that the VAT payment has been completed.

Method 3:

• ​Provide the customs department office with your TRN.
• ​The customs department officer can verify the TRN by logging onto the e-Services portal. Once the customs department office verifies the TRN, the customs department can update your TRN on the customs department system gateways.

Determining Value of Customs duty for import of goods via customs

The customs duty for most items is calculated on CIF value at the rate of 5 percent.  Imports of liquor are subject to a 70 percent customs duty on their CIF value while imports of tobacco products are subject to 100 percent on their CIF value.  Many essential items including staple foodstuffs and pharmaceuticals are allowed duty free status.  CIF value will normally be calculated by reference to the commercial invoices covering the relative shipment, but customs is not bound to accept the figures shown therein and may set an estimated value on the goods, which shall be final, as far as duty is concerned.

Procedures for Import of goods via customs in UAE

The following documents should be presented for custom clearance of imported goods
– Delivery order from a shipping agent addressed to a company licensed in the UAE;
– Original bill of loading (for seaports);
– Original invoice from the exporter addressed to a licensed importer in the country detailing total quantity, goods description and total value for each item (in triplicate); *
– Copy of the trade licence of buyer and seller;
– Certificate of origin approved by the Chamber of Commerce in the country of origin detailing the origin of goods; *
– Transport certificate; *
– The customs entry declaration;
– A form or letter of exemption from customs duties in cases where exemption requirements are fulfilled, including a Local Purchase Order (LPO);
– Detailed packing list: weight, method of packing and HS code for each individual article contained in the shipment; *
– Import permit from the competent agencies in the event of importing restricted goods; *
– A health or phytosanitary certificate or, for processed goods, an export certificate confirming that the product is fit for human consumption;
– A halal certificate for meat ingredients; *
– A non-radiation certificate for some products (optional for European products); *
– Transport documents that are required for import clearance.

Documents with a * must be attested by the Embassy of the United Arab Emirates and the Chamber of Commerce in the country of origin of the products.

Specific Import Procedures

All imported meats – beef and poultry products – require a health certificate issued by the country of export and a “halal” slaughter certificate issued by an approved Islamic center in that country.

With the exception of food, all shipments of goods to the U.A.E. require “legalization” of documents. This is a two-step process:
Documents must be verified by Akin Gump Strauss Hauer & Feld LLP, the UAE Embassy’s exclusive Verification Agent.
Upon completion of the verification process, documents must be legalized by the UAE Embassy for a fee.

Banned items

The UAE is very strict in dealing with the import of banned items and the illegal import of restricted items into the UAE.

List of banned items includes (not limited to):

• controlled/recreational drugs and narcotic substances
• pirated content
• counterfeit currency
• items used in black magic, witchcraft or sorcery
• publications and artwork that contradict or challenge Islamic teachings and values
• exotic, protected and endangered animals and certain breeds of dogs
• gambling tools and machines.

Restricted Imports:  Alcoholic beverages, tobacco products, pork products
Prohibited Imports:  Irradiated food products

Import of goods under Tax Return in VAT Form 201

Imported goods which is cleared through UAE customs, needs to be declared in  VAT Return form 201 box no. 6 ‘Goods Imported into the UAE’ under the ‘Sales and All other Outputs’

The box no. 6  includes the net value and the output VAT due on the goods which have been imported to UAE. The value and output VAT will be auto-generated, depending on imports, which have been declared under customs registration number, which is linked to TRN. The amount which is payable as  VAT will include customs value as defined in the Customs legislation including value of insurance, freight, customs fees (if any) and applicable Excise Tax on the import of the goods into the UAE.  VAT will be calculated on the net value, which is inclusive of all the above taxes and charges.

The box no. 6 is also facilitated with an option ‘View Details’. On clicking, it shows the list of customs import declaration made for the specific tax period.

Custom Import Declarations

It shows the list of customs declaration along with the customs declaration number, Customs Authority, Import Date, Total value subject to VAT and Total VAT due on the goods imported. On clicking ‘Detail’ under Action, it further details HSN code, CIF value, customer duty, value subject to VAT, applicable VAT rate and the VAT amount.

The details in box no. 6,  are auto generated you should  cross check the values which have been included in this box and match the values you expected to declare, based on the import declarations submitted during the tax period. If there is any difference, it should be reported in box no. 7 of the VAT form 201 during Tax Return filing.

This box will also feature the details of imports made by an agent on behalf of non-registered persons. If an agent who imports goods into the UAE on behalf of non-registered persons, it is the responsibility of the agent to pay the tax in respect of import of goods. Therefore, such imports will also appear in this box.

Adjustments to goods imported into UAE

If there is any differences in  values populated in box no. 6 regarding goods imported into the UAE, like fsome  imports are excluded or appear to be incorrect, then such adjustments need to be rectified and declared in box no. 7 ‘Adjustments to goods imported into UAE’ of VAT Return form 201.

The difference in box no. 6, either value or output VAT can be adjusted. The amount of adjustment to be reported in box no.7 could be positive or negative, and the taxpayer should be in the position to justify the adjustments when enquired by the FTA.

For instance, if you have imported goods worth 2 million AED plus VAT, and this particular import does not appear within box no. 6, this can be manually included in box no. 7 (i.e. 2 million) and the respective VAT amount.

If you have imported any goods subject to the 0% VAT rate that are not subject to the standard rate of VAT of 5% but its auto generated as 5% VAT, then  use box no. 7 to adjust the VAT amount accordingly, by default all the  imports will be assumed to be subject to the 5% VAT rate.

Please note, that it is the taxpayer’s responsibility to identify such adjustments and accordingly adjust them in box no. 7 of the VAT Form 201 during Tax Reutrn Filing. Similar adjustment needs to be done in case of the agent importing goods on behalf of the non-resident

Learn how to record import of goods via customs in UAE with Reach Accountant Online Video

Conclusion

• Imports of goods into the UAE through UAE customs needs to be captured in box no. 6.
• Imports of goods from agents on behalf of an unregistered person should be reported.
• In order to identify and report the adjustments, use the ‘View Details’ option available in box no 6. Check the total imports under “Amount (AED)” and the respective output tax under “VAT Amount (AED)” in box no. 6 and compare them with the import declarations submitted during the tax period.