CUSTOMS DUTIES
IN DUBAI, ABU
DHABI & THE UAE

WHAT IS THE DIFFERENCE BETWEEN TAX AND CUSTOMS DUTY?

A tax is placed on all types of goods sold or services provided in the country, both imported or exported, and taxation is considered a source of income generation for governments. On the other hand, a duty is a type of tax yet imposed only on goods being imported into the country, and its main purpose is to protect economies upon different aspects. Both taxes and duties are charged to the importer on his shipments that must be paid to the relevant authorities and adds on to the overall landed cost to be paid for a good imported to the country.

WHAT IS THE DIFFERENCE BETWEEN A TAX AND A CUSTOMS DUTY?

A duty is imposed to all goods being imported (except to exempted items), and it may vary depending on the nature of the good. A tariff is however, an additional fee charged on selected goods imported to the country generally in aim to discourage the import of those goods to protect local economies and jobs. Imported goods are classified using the HS and HTS code to determine the applied duty and tariff levied on the shipment.

Follow this link that contains the unified custom duty for GCC states on all goods.

WHAT IS IMPORT DUTY RECOVERY?

Importers of goods into the country are eligible for refund when they can demonstrate and prove that the amount they paid is in excess of the required duty, this is known as import duty recovery. 

WHAT IS DUTY DRAWBACK?

Duty drawback is a form of import duty recovery, where the paid duty is refunded on goods that is only transiting through a country and are being re-exported out of the country. The business will need to provide certain proof documents for exit of goods.

WHAT IS A COUNTERVAILING DUTY?

Countervailing duties are special duties and tariffs granted by the International Trade Commission on special cases, where governments may provide aid and assistance to certain countries’ domestic industries to enable them to export their products for lower prices.

WHAT ARE ANTI-DUMPING DUTIES?

Anti-dumping duties are special duties charged to protect local industries from the imported foreign goods that may be sold in the domestic market at a lower value than the fair market price. The duty is used to eliminate the cost of dumping, and is determined by calculating the difference between the cost of production or price of the good in the country of origin and the price of the good sold in the local importing country.

FACTORS TO DETERMINE SUBJECTIVITY TO CUSTOM DUTY IN UAE

The United Arab Emirates levies custom duties on commercial goods based on the following factors:

• Whether the business is registered onshore or in a free zone.
• Nature of the goods being transported.
• Source and destination of the goods being moved.
• Trade agreements between the UAE and exporting country.
• Other laws and regulations.

WHAT IS THE CUSTOM DUTY RATE IN THE UAE?

The custom duty rate is 5% of the value of the good plus cost, freight, and insurance (“CIF”) value which includes the cost of transport until arrival of the goods to port of destination. However, the duty may vary on some goods such as 50% on alcohol and 100% on tobacco products. 

All commerce businesses are required to register with customs, to declare the value of the imported goods along with the supported invoice and certificate of origin, and obtain clearance for the movement of goods in and out of the country through submitting a customs declaration form under the following regimes; import, export, transit, transfer, or temporary admission. Fees vary based on the custom declaration type and shipping channel. 

Businesses will be provided a Client Customs Code from the customs authority at the emirates at which the business is based in. The client customs code will be valid in accordance with the license expiry date and can be renewed annually. The code acts as an approval for the business to either import or export, which facilitates goods transportation and shipment and prevention from potential legal risks and fines.

Businesses can also request to obtain a warehouse license to store goods under the supervision of the Customs Department for a specified period without paying customs duty, by paying a cash or bank guarantee of AED 25,000 – AED 150,000 depending on the type of the warehouse chosen, private or public and providing the required documents including audited reports and ownership certificate. 

REFUND OF DEPOSIT

In cases of export of goods, a deposit equal to the custom duty is imposed on the goods. The customer may submit a refund of deposit or release of guarantee paid in lieu of customs duty upon provision of a proof document that the goods were re-exported; including the following documents: exit/entry certificate, copy of export declaration, copy of manifest, copy of airway bill or copy of lading, based on the mean of transport.

EXEMPTIONS FROM CUSTOM DUTIES

• Personal and used items are considered duty-free and not subject to any custom duties.
• Shipments exported from the country to any other country.
• National factory shipments are considered duty free under the industrial exemption.
• Imports of the diplomatic and military corporations and bodies.
• Imports of charities.
• Imports originated from GCC or Arab countries, subject to providing certificate of origin.
• Imports originated from GCC countries are considered UAE local goods, subject to proof to a certain percentage that the raw material used in manufacturing the good is originated from in the GCC.
• Shipments under the World Customs Organization Approved Coordinator.

PROHIBITED AND RESTRICTED GOODS

Prohibited and restricted goods are goods for import or export that are prohibited or restricted under the provisions of the Common Customs Law and may only be released subject to the approval of the competent authority.

PROHIBITED GOODS INCLUDE:

• All types of narcotic drugs.
• Gambling tools, machinery, and related products.
• Nylon fishing nets.
• Live swine.
• Used, reconditioned, and inlaid tires.
• Radiation and nuclear contaminating substances.
• Goods that contradict Islamic faith and public morals.

RESTRICTED GOODS INCLUDE:

• Live animals, plants, fertilisers, and insecticides.
• Ammunitions, arms, explosives, and fireworks.
• Banned medicine.
• Printed material, publications, and media products.
• Alcoholic beverages.
• Rough diamonds.
• Transmitters and radio products.
• New tires.
• E-cigarettes and electronic hookah.
• Nuclear energy-related products.

CUSTOMS INSPECTION

There are two types of inspection carried out by customs’ officers to verify the documents against the shipment; internal inspection which is carried out by the customs’ officers at the port, and external inspection which is carried out at the warehouse or storage facility of the importer/exporter. 

VIOLATIONS AND FINES

WHAT ARE THE RISKS RELATED TO CUSTOMS DUTIES SERVICES IN THE UAE?

Through careful planning and professional advice, the minimal risks connected to Taxes in the UAE can be reduced. You can handle the Tax legislations and procedures easily with the assistance of professional consultants, ensuring adherence to legislations and reducing potential risks.

For an expert consultation, contact Creation Business Consultants via email [email protected] or call +971 4 878 6240 today.