Import VAT & reverse charge
VAT on imports accounted for through your VAT return where you are registered, matched to every customs declaration.
Trading, import & export
For businesses that move goods across borders.
Imports, re-exports, goods sitting in a free-zone warehouse, suppliers in three currencies and a customs declaration for every shipment. The tax position of a trading company is decided in those details. We keep them straight.
What we do for you
Exports & re-exports
Zero-rating supported by the export evidence the law requires, so a VAT audit does not turn 0% sales into 5% sales.
Designated zones
Movements of goods in and between designated zones recorded correctly, including when goods leave for the mainland.
Inventory & landed cost
Freight, duty, insurance and clearing charges added to stock cost, so gross margin per product is real.
Free-zone Corporate Tax
Qualifying Free Zone Person conditions tested every year, including the de minimis limit on non-qualifying income.
Multi-currency books
Supplier and customer balances in USD, EUR, INR and others revalued properly at period end.
Where trading companies lose money on tax
Most VAT problems we see in trading companies come from documents, not from rates. An export that cannot be proven is taxed as a local sale. An import that was never reported under reverse charge is a penalty waiting for an audit. And stock that was never costed properly makes every margin report wrong.
- Exports zero-rated without the required evidence of export
- Imports not reported in the VAT return
- Customs declarations that do not match the purchase invoices
- Landed costs expensed instead of added to inventory
- Foreign-currency balances never revalued
VAT on imports and exports
Goods imported into the UAE are subject to 5% VAT. If you are VAT registered and have provided your Tax Registration Number to customs, the VAT is generally accounted for in your VAT return under the reverse charge mechanism instead of being paid at the border, so it does not hit your cash flow.
Exports of goods outside the GCC implementing states can be zero-rated, provided you keep official and commercial evidence that the goods actually left the UAE within the required time. We set up a simple export file for each shipment so the evidence is in one place.
Designated zones and the mainland
Certain free zones are listed as designated zones for VAT. Supplies of goods within or between designated zones can fall outside the scope of UAE VAT when the conditions are met. The moment goods move from a designated zone into the mainland, VAT is usually triggered. Many trading companies hold stock in a designated zone and sell into the mainland, so getting each movement right matters.
Corporate Tax for free-zone trading companies
A free-zone company can pay 0% Corporate Tax on its qualifying income if it meets the conditions of a Qualifying Free Zone Person: adequate substance in the zone, audited financial statements, compliance with transfer pricing rules, and non-qualifying revenue below the de minimis limit (5% of total revenue or AED 5 million, whichever is lower).
Trading in qualifying commodities and certain distribution activities from a designated zone can be qualifying activities, but sales to mainland customers often are not. We test the position every year rather than assuming it.
If you trade gold, jewellery or precious stones
Dealers in precious metals and stones are designated non-financial businesses under UAE anti-money-laundering law. That means goAML registration, customer due diligence and reporting of qualifying cash transactions. We handle the registration and set up the reporting routine.
FAQ
Questions,
answered.
If you are VAT registered and your Tax Registration Number is linked to your customs code, import VAT is generally declared in your VAT return under the reverse charge mechanism, so you account for it and recover it in the same return where you are entitled to. If you are not registered, VAT is usually paid at the time of import.
Exports of goods outside the GCC implementing states can be zero-rated, but only with the required evidence that the goods left the UAE. Without it, the sale may be treated as a local 5% supply. We keep an export evidence file per shipment.
Not automatically. 0% applies to qualifying income of a Qualifying Free Zone Person, which has conditions on substance, audited accounts, transfer pricing and the share of non-qualifying revenue. Income from mainland customers is often non-qualifying. We test the conditions each year.
Audited financial statements are required for Qualifying Free Zone Persons and for businesses with revenue above AED 50 million, and many free zones require them for licence renewal. We prepare the audit file and coordinate with your external auditor; the audit itself is performed by a licensed audit firm.
Yes. We record transactions in the original currency, convert them as required, and revalue open balances at each period end so the profit you report is correct.
Recent result
AED 36,000
of AED 40,000 in penalties waived for an IFZA free-zone company. We prepared the waiver request; the investor paid AED 4,000.
Not sure where you stand?
Send us your last VAT return or your trade licence. A chartered accountant will tell you what is in order and what needs attention. No obligation.