VAT Implications: Importing of Goods By VAT Registered Persons In UAE 

By modernizing its logistics infrastructure and streamlining global trade, the UAE has emerged as a pivotal hub for business activities in the Middle East. The UAE government’s diligent efforts have fostered a controlled development of imports and exports, ensuring that we consistently adhere to global best practices. This robust system is designed to provide you, as a VAT-registered person, with a seamless experience in managing your imports and VAT obligations. 

The Dubai Value Added Tax (VAT) is levied on goods and services purchased or acquired in the UAE. In some instances, imports may be handled by VAT-registered agents acting on behalf of VAT-registered persons. If the agent orders goods for a taxable person, the value of the order is automatically charged to the VAT account. When it comes to imports, companies engage other companies to act on their behalf and carry out all necessary procedures. There are also cases where companies pay the entire price of the imported goods to their customers, as per their agreement. In such cases, they assume the role of product owners and employees. These procedures are in place to ensure that you, as a VAT-registered person, can navigate the import process with ease and confidence. 

What is the VAT accounting procedure when an agent imports goods in the UAE?  

The agency must submit all import documents for customs procedures. For imports, the employee must provide the Tax Registration Number (TRN) when ordering goods. When the agency issues the TRN, the price of the imported goods is recorded in the following declaration (Form No: 201). It calculates the income tax of employees and the value-added tax of imported goods. A special section has been added to the VAT declaration below (box 6) to calculate the value of imported goods quickly. 

Who can claim VAT on goods imported into the UAE by an employee?  

The Federal Tax Authority (FTA) has clarified that the owner of the goods is the only party eligible to claim VAT on imported goods. Even if an employee assists in the import process and adds the value of the goods, they cannot claim VAT. This clarification underscores the importance of the owner’s role in the process and helps to avoid any misunderstandings. 

How can a business owner collect VAT when importing goods through an agent in the UAE? 

In the 9 VAT declaration form 201 of the owner of the goods, the editing field is placed as follows (box number: 7). Changes must be made in writing by the owner and the agent, with payment for the added value based on a written agreement between the two. The agent must make a negative adjustment to subtract the taxable value of the imported goods, but the owner must adjust the positive value to reflect the amount of the goods subject to VAT. Once both parties include these changes in the VAT declaration for imported goods, the agent is prepared to exclude them from the agency’s statement, which will be reflected in the owner’s VAT declaration letter. Property owners can then claim back the VAT by the general rules for VAT refunds.  

  • The agent sent a tax receipt to the owner for importing VAT.  

The owner and the employee may agree to keep the tax return the same. In these cases, employees must pay VAT via FTA, calculated on the VAT-chargeable value of imported goods. Where VAT has been paid on behalf of the owner, the agency can send a letter to the owner containing the following information:  

  • Date of issue 
  • Date of import 
  • Name, address, and TCN of the agency,  
  • Details of the import VAT number paid.  

This declaration is a statement issued by the owners and refunded to the employee. It can be considered a receipt for taxes used to collect income tax from you by the general law on the recovery of value-added tax. 

Best VAT Consultant in Dubai, UAE   

Businesses operating in UAE have gained an accurate understanding of VAT consequences of importing goods through an agent for a VAT-registered person in the UAE or another tax accounting method for the importation of products. If you are still having questions, get in touch with ebs chartered accountants. They will receive professional  VAT consultancy in Dubai to help you clear any doubts about tax consequences of imported goods. 

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