Implications of VAT on Imports

  1. What does import mean?

Import is the arrival of goods or receipt of services from abroad into the state from (Implications of VAT on Imports) outside.

  1. Who is an importer?

An importer is a person whose is enlisted as the importer of the goods for customs clearance purposes. With respect to services, it is the recipient of these services.

  1. Who is liable to be registered?

The importer whose taxable supplies made and import received exceed AED 375,000 for the last 12 months.

  1. What do concerned goods and concerned services mean?

Concerned goods and services are referred to those goods and services that are not exempt from the VAT.

  1. What is the input and output tax regarding import?

Tax paid by a Person or due from him when conducting an import is called input tax.

Tax charged by a Person on a taxable supply is called output tax.

  1. On what import goods VAT is payable?

VAT shall be imposed on all import of goods except as specified in the Executive Regulation of the Decree-Law as exempted and zero-rated goods.

  1. What is the rate of VAT on Import?

A standard rate of 5% shall be imposed.

  1. Does custom duty is exempt if  VAT is paid?

VAT is in addition to customs duty. The VAT is calculated on the total import value which includes freight, insurance, and customs duties.

  1. What if goods are exported for completion of manufacturing then reimported?

In such case, the value of supply reimported will be the value of the Services rendered. However, these goods are to be transferred temporarily from the domestic market into a zone designated by authority or outside the State for completing the manufacturing or repair in order to re-import them into the state.

  1. What is a reverse charge mechanism?

The liability to pay VAT (VAT Implication) is on the supplier, however, if the supplier is unregistered and outside the state than this liability falls upon registered importer.

  1. Is VAT (Implications of VAT on Imports) applicable on import or export to GCC countries?

As a general rule, these export or imports are not subject to VAT.

  1. What will be the place of import, if goods are transferred to other GCC countries after import in one?

The place of import for Goods shall be the State of the First Point of Entry if goods are transported to other GCC state after import in one.

  1. What is the benefit of registered Importers for VAT ?

The benefit of registration and getting Tax Registration Number (TRN) is

  1. If goods are imported into UAE then VAT can be paid via Tax return.
  2. If goods are imported in the state and then exported to another country then VAT to be paid at the time of Tax Return.
  3. Import of goods into the designated zone or transferred in between from one to another designated zone has no VAT applicability.
  4. What if an Importer is not registered?

The consequences of not being registered are

  1. The person has to pay VAT at the time of import.
  2. VAT is to be paid at the time of import on goods that are imported then exported to other countries.

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