Useful Tips on Import Tax in UAE
UAE Import Tax and Free-Trade Zones
Import tax is a duty collected when either a private individual or a company is importing goods into the country. Its rate typically depends on the value of the imported goods, their kind and the country of their origin. Import tax can also be referred to as import duty, customs duty, tariff, or import tariff. Import tax is raised for two reasons: it replenishes the budget of the local government; it helps to protect local production and manufacturers by means of charging import tax for imported goods. It also safeguards the country from shipping dangerous items that can threaten the health or lives of its citizens. The tax paid by import is added by the businesses to the price paid for the product by the ultimate consumer.
Import taxes are normally defined by the government. In some cases, they are regulated by international institutions such as World Trade Organization. Import tax differs from country to country depending on the trade relations with the state of the goods origin. The UAE is one of the most loyal countries of the world in terms of import taxes. The UAE import tax on the majority of the items is 5% only.
When is import tax in the UAE applicable?
The UAE import tax applies to those goods the value of which exceeds AED 1.000,- (about US dollars 272,-). 5% of import tax the is levied for shipments of this value and above. However, free-trade zones in UAE (Dubai, Abu Dhabi, Sharjah, Fujairah, Ajman, Ras Al Khaimah and Um Al Quwain and others) are exempt from the tax. Means if the business is operating from one of the free trade zones of the UAE – imports some items and goods and then sells such for export – there is no import tax levied.
What are free-trade zones and if there is import tax there?
Free-trade zones in the UAE are territories that enjoy a number of benefits like special corporate taxation and special import and export taxation modes. There are a number of such free zones in various emirates of the UAE including Dubai.
How many import modes are there in the UAE?
According to Dubai Customs Services, there are ten basic import modes that determine the rate of import tax in the UAE. They include:
- Import to Local from Rest Of World
- Import to Local from Free Zone
- Import to Local from Customs Warehouse
- Import to Local from Gulf Cooperation Countries
- Import for Re-Export to Local from Rest Of World
- Import for Re-Export to Local from Free Zone
- Import for Re-Export to Local from Customs Warehouse
- Import to Customs Warehouse from Rest Of World
- Import to Customs Warehouse from Free Zone
- Import to Customs Warehouse from Local (after Temporary Admission)
Source: Dubai Customs:
Import into Dubai and applicable Import Tax
Let us talk about import to Dubai in more detail. One of Dubai’s strength is that it has more than twenty Free Trade Zones. All of these zones are exempt from import tax for any types of goods, materials and equipment.
What documents are required when importing goods to the UAE?
To import goods to one of Dubai free trade zones a certain set of documents is customarily required:
- Delivery Advice
- Packing List
- Permit for Restricted Goods (If applicable) from the competent authority.
In some cases, you might also be asked to provide Airway Bill/House Airway Bill for Air Channel, Master Bill Of Lading/House Bill Of Lading for Sea Channel, Commercial Invoice and Certificate of Origin.
Let’s sum up all the above:
- Import tax is a duty imposed by a state when goods are brought into the country either by a private individual or by a legal entity.
- Import tax depends on the value of goods, their type and category, and the country of their origin. The applicable import tax rate It is regulated by the government.
- Import tax in the UAE is raised when the value of goods exceeds 1.000,- AED.
- Some specific areas in the UAE have the status of free trade zones. Such territories and companies acting there are exempt from taxation, including import tax.
- Dubai has more than twenty free-trade zones. On top of it, there are other free trade zones in other Emirates of the UAE.
General tax environment and the import tax regulations in the UAE are very business- friendly and attractive. It is one of the reasons, apart from the perfect legislation, location and other advantages why so many international companies choose it as the place to operate from.