VAT and imported goods in the UAE
Recommended actions to facilitate the clearing of imported goods
Following the introduction of Value Added Tax (VAT) in the United Arab Emirates (UAE) on 1 January 2018, VAT became due on the import of goods into the UAE. Businesses which are registered for VAT in the UAE are able to defer the payment of import VAT and account for the VAT due on their VAT returns via the reverse charge mechanism, whereas non-VAT registered importers are required to make cash payments of the VAT due at the point of import.
The Federal Tax Authority (FTA) and the UAE Customs Departments are working in collaboration to collect VAT on the import of goods. This means that where a business is registered for VAT, it should provide its VAT registration number (also known as a Tax Registration Number or TRN) to the Customs Department at the point of submitting the Customs import declaration. The Customs Department will verify the validity of the TRN on their system, and where the TRN is valid the shipment will be cleared without payment of the VAT being required at import.
We understand that VAT registered businesses are currently facing issues with the import of goods arising from problems with the Customs Department being able to verify the TRN on their system. As a result, businesses are finding their goods are stuck at the border and are not being cleared by the Customs Department. Our understanding that the Federal Tax Authority and the Customs Department are working together to resolve these issues as a matter of urgency, however in the meantime there are actions which can be taken in order to facilitate the clearing of imported goods.
If you find yourself in the situation where your TRN is not recognized on the Customs Department system as valid, you should take the following action:
- Login to the FTA eServices portal using the credentials associated with your TRN;
- Navigate to the ‘VAT’ section on the navigation bar at the top of the page;
- Click on the form “VAT301 – Import Declaration Form for VAT Payment”. This is the form which is normally used in the case of non-VAT registered importers;
- Enter the port of entry, customs declaration number, and declaration date, then click next;
- On the next screen, click the button to “Fetch associated registration number”. This will populate the TRN in the declaration form;
- Complete the remainder of the declaration form and click submit;
- You will then be taken to a number of payment options. By having a used the option to “Fetch associated registration number”, you should now see the option to defer the payment of VAT to the tax return. Click this option and submit the form.
Following this process, the FTA should electronically update the customs declaration on the Customs Department system to show that a VAT payment has been completed. The VAT due on the import should then be automatically populated as a liability on your VAT return for the tax period as normal.
Where you are using a freight forwarding agent to import goods on your behalf using your TRN, you may need to complete this declaration process remotely prior to the shipment arriving at the Customs Department or make alternative arrangements for this process to take place. If the forwarding agent uses his own TRN to declare the shipment he will not be able to recover the VAT paid, as the input tax is not attributable to him.
You may need to follow this process a number of times until the FTA has updated your TRN on the Customs Department. Once your TRN has been updated on the Customs Department system, you should be able to revert to the original process of including your TRN on the customs import declaration.