Import VAT
When goods are imported into the UAE, import VAT (5%) is due at the point of entry.
Calculation
Import VAT = 5% × (CIF value + customs duties + excise tax if applicable)
- CIF: Cost, Insurance, and Freight value
- Customs duties: May apply depending on HS code and origin (typically 0-5%)
- Excise tax: If the goods are excise products (e.g., tobacco, energy drinks)
Payment at Customs
Import VAT is typically paid to UAE Customs at the point of entry, before goods are released. Payment methods include:
- Cash
- Bank transfer
- eDirham
Reverse Charge for Imports
A registered importer authorized by the FTA may account for import VAT under the reverse charge instead of paying at customs:
- The importer accounts for output VAT (5%) and input VAT (5%) on the same VAT return.
- Net cash impact is zero if the importer is fully taxable.
- This improves cash flow — no need to pay cash at customs and wait for a refund.
Who Can Use Reverse Charge for Imports?
- Must be a registered taxable person.
- Must be authorized by the FTA for reverse charge on imports.
- The goods must be for business use (taxable supplies).
Customs Valuation
The customs value is based on the transaction value — the price actually paid or payable for the goods, plus:
- Transport and insurance costs to the UAE border
- Commissions and brokerage fees (except buying commissions)
- Packing costs
- Royalties and license fees related to the goods
Worked Example
A Dubai retailer imports electronics worth AED 100,000 (CIF). Customs duty is 5% (AED 5,000). Import VAT = 5% × (100,000 + 5,000) = AED 5,250. The retailer pays AED 5,250 to customs, then claims AED 5,250 as input tax on the next VAT return. If authorized for reverse charge, the retailer accounts for AED 5,250 output tax and AED 5,250 input tax on the return — net zero cash impact.