Imports under UAE VAT Law
When goods or services are received from outside UAE into UAE, the supply is called an import.
Are imports taxable ?
Imports are taxable under the UAE VAT Law. When a person registered under VAT in UAE imports goods or services, the importer has to pay VAT on imports on reverse charge basis. This is in addition to customs duty levied on imports. The scenarios of import can be divided as follows :
- Import by a person registered under VAT
- Import by a person not registered under VAT
- Goods trans-shipped via UAE to other GCC countries
- Goods imported to UAE and exported to other countries
What is the VAT rate applicable on imports ?
On imports, VAT rate of 5% will be applicable. The only exception is import of precious metals, on which VAT rate of 0% is applicable. The rate of VAT applicable on imports is kept same as the VAT rate applicable on domestic supplies, in order to ensure that imports are taxed equally as domestic supplies.
Can input tax be recovered on imports ?
Yes, the tax paid by the recipient of the supply on imports is eligible for input tax recovery.
Are records of imports required to be maintained ?
Yes, records of imports are required to be maintained for minimum 5 years from the end of the year to which the invoices pertain.Hence, exports and imports are integral activities for traders in UAE. Knowledge of compliance under VAT is essential for these businesses to accurately meet the compliance requirements as well as utilise the benefits of VAT.