VAT ON IMPORTED GOODS IN UAE: The Government of UAE introduced the Value Add Tax (VAT) on 1st January 2018 and then VAT became due on the import of goods. In UAE the business which is registered for VAT is able to postpone the payment for import VAT calculation of VAT due on their VAT returns through a reverse charge Mechanism on the other side which importers are not registered with the VAT they are required to pay cash on the point of imports.
VAT ON IMPORTED GOODS IN UAE
The Federal Tax Authority (FTA)and the customs department of UAE are working together to collect the VAT on the import of goods.
it simply means that if a business is registered with VAT so the business must have to provide its VAT registration number Which is also known as TAX REGISTRATION NUMBER or TRN to the Customs Department at the time when you are submitting the customs import announcement and then the Customs Department is going to verify the TRN validity on their systems.
when the TRN is going to be valid then your shipment is cleared without any payment on which VAT required on the imports and the business are registered with VAT we know that they are facing some problems of importing of goods due to the difficulty of the Customs Department just because of verifying the TRN number on their systems. as a result, the business is knowing that their imported goods are getting stuck on the border and not being cleared by the Customs Departments. We all understand that the FEDERAL TAX AUTHORITY and the CUSTOMS DEPARTMENT are working together to fix this issue immediately.
However, in the meantime steps can be taken to facilitate the clearing of imported goods. In case when your TRN doesn’t recognize the system of the Customs Department as valid, Then you should take the following action :
- First, you have to log in to FTA eService by using your User credentials.
- Second, go to the VAT section on the navigation bar at the top of the Page.
- Third, you have to open the form (VAT301) which is known as the Import Declaration form for VAT payment. Basically, this form is normally used in the case of NON-Registered Importers.
- Fourth you must have to enter the port entry, Customs Declaration number, and also the date of declaration and then you have to click on the next button.
- Fifth on this screen you have to go to the “Fetch associated registration number” to settle the TRN in the declaration form.
- In The End, you have to complete the remainder of the declaration form and then submit the form.
- Last but not least then you have been taken to several payment options with the help of the “Fetch Registration Number” option, Then you should see an option to postpone payment of VAT in the tax return you have to select this option and then submit the form.
Following these instructions, The FTA must electronically update the Customs Declaration on the Customs Department’s system to show that the VAT payment has been completed. Then the due VAT on the import of goods should automatically be settled as a liability on the return of your VAT for the period of tax as normal.
Where if you are using a freight forwarding agent to import goods on your behalf using your TRN then you may need to complete the declaration process remotely before the shipment arrives at customs or makes alternative arrangements to complete the process. and if the forwarding agent uses his own TRN to declare the shipment, He will not be able to recover the VAT paid for declaring the shipment, as the input tax is not attributable to him.
You may need to follow this process several times until the FTA updates your TRN at the Customs Department and if once your TRN number is updated in the system of the Customs Department then you should be able to go back to the original process of adding your TRN on the Customs import declaration.
Related Links
Exempt Supplies in the UAE | VAT on consultancy services | VAT on Free zone companies | VAT Registration in the UAE | VAT on Export from UAE to GCC Countries | Audit Services