VAT ON INTERNATIONAL CARGO
The introduction of the VAT in the UAE on 1st January,2018 have subjected goods and cargo imported in UAE to VAT.
PROVISIONS WITH REFERENCE TO INTERNATIONAL CARGO AS PER CABINET DECISION NO. (52) OF 2017 ON THE EXECUTIVE REGULATIONS OF THE FEDERAL DECREE-LAW NO (8) OF 2017 ON VALUE ADDED TAX
As per the Executive regulation Article 33 which deals with Zero-rating international transportation services for Passengers and Goods, which states as follows :
"1-The supply of international transportation Services for Passengers and Goods and Transport-related Services shall be subject to the zero rate in the following cases:
a)Transporting passengers or Goods from a place in the State to a place outside the State.
b)Transporting passengers or Goods from a place outside the State to a place in the State.
c)Transporting passengers from a place in the State to another place in the State by sea or air or land as part of a supply of an international transport of those passengers if either or both the first place of departure, or the final place of destination, is outside the State.
d)Transporting Goods from a place in the State to another place in the State if the Services are supplied as part, or for the purpose, of the supply of Services of transporting Goods either from a place in the State to a place outside the State or from a place outside the State to a place in the State. "
EVIDENCES FOR TAKING BENEFIT
However in order to take benefit of this cause you need to have proper evidence for the transaction which provides evidence that the goods are imported for someone and which shall mainly include the following:
“Commercial evidence” shall include any the following:
2-Bill of lading.
4-Certificate of shipment.
The evidence obtained as proof whether official or commercial, must identify the following:
2-The consignor and your relationship with consignor with Agreement,
6-The mode of transport and route of the export movement.
TYPES OF VAT RATE THAT ARE TO BE APPLIED ON FREIGHT AND COURIER SERVICES WHICH IS IN RELATION TO INTERNATIONAL CARGO
SITUATION 1 :
Movement of ships domestically besides exporting and importing documents and parcels and paying custom duties on behalf of the customers.
RATE OF VAT : Movement of goods domestically in UAE is subject to 5% VAT
Exporting of documents and parcel is categorised in the same way as exporting goods to outside the GCC Countries that have implemented VAT, hence they are subject to VAT @ 0 rate.
If the goods are firstly imported by a taxable person from outside the GCC and the goods are then moved to another GCC member state,
VAT would be payable at the first point of import and it would be recoverable at the destination country.
For import of documents and parcel
RATE OF VAT : if we assume that the questioner company is registered for VAT, it would need to account for VAT under the reverse charge mechanism and therefore the company would have to charge VAT on the value of the imported goods at 5% but it should be in a position to claim a deduction for the same as input VAT which is subject to the normal rules of VAT recovery.
For custom duties,
RATE OF VAT : VAT would apply at 5% on the value of imported goods inclusive of customs duty.