Customs Valuation and Indirect Exports

Customs Valuation

The customs value is the basis for calculating import VAT. It is based on the transaction value method.

Transaction Value

The transaction value is the price actually paid or payable for the goods, plus:

1. Transport costs: Freight to the UAE border
2. Insurance: Marine/air insurance to the UAE border
3. Commissions: Selling commissions (but not buying commissions)
4. Packing costs: Cost of packaging and labor for packing
5. Royalties and license fees: Related to the goods being imported
6. Proceeds of resale: That accrue to the seller

What is NOT Included

• Buying commissions (paid by the buyer to their agent)
• Import duties and taxes themselves
• Transport costs after the UAE border (inland transport)

Alternative Valuation Methods

If the transaction value cannot be determined, the FTA/Customs may use:

1. Transaction value of identical goods: Based on a previous import of identical goods.
2. Transaction value of similar goods: Based on similar goods.
3. Deductive method: Based on the resale price in the UAE, less transport, duties, and profit.
4. Computed method: Based on the cost of materials, processing, and profit.

Indirect Exports

When a non-resident purchaser buys goods in the UAE and exports them:

1. Time limit: The goods must be exported within 90 days of the supply.
2. Documentation: The supplier must obtain evidence that the goods were exported (customs declaration, transport documents).
3. VAT treatment: If conditions are met, the supplier can zero-rate the supply. If not, the supply is standard-rated at 5%.

Worked Example

A Saudi tourist buys AED 50,000 of electronics from a Dubai retailer and exports them to Saudi Arabia within 90 days. If the retailer obtains the export documentation, the supply is zero-rated. If the documentation is not obtained, the supply is standard-rated at 5% (AED 2,500 VAT). The tourist may also be eligible for a tourist VAT refund.