Can import VAT be deferred to the VAT return?

Article 48 – Calculation of Tax under the Reverse Charge Mechanism on import of Concerned Goods or Concerned Services 1. For the purposes of import of Concerned Goods, Clause 1 of Article 48 of the Decree-Law shall apply if the following conditions are met: a. At the time of Import, the Taxable Person can demonstrate that they are registered for Tax. b. The Taxable Person has sufficient details for the Authority to verify the Import and the Tax which shall be due on the Import and is able to provide these as required. c. The Taxable Person has provided the Authority with its own Customs registration number issued by the competent Customs Department for that Import, such Customs Departments to verify the Import subject to the rules set by the Authority. d. The Taxable Person has cooperated with, and complied with any rules imposed by, the Authority in respect of the Import. 2. Where the conditions mentioned in Clause 1 of this Article are not met, the Taxable Person shall account for Tax in respect of the Import in accordance with Clause 1 of Article 50 of this Decision. 3. Where a Taxable Person who has a Place of Residence in the State receives a supply of Goods or Services with a Place of Supply in the State, from a supplier who does not have a Place of Residence in the State and does not charge Tax on that supply, the supply shall be treated as being of Concerned Goods or Concerned Services subject to Clause 1 of Article 48 of the Decree-Law. 4. Where Clause 1 of Article 48 of the Decree-Law applies, the Taxable Person must: a. Account for Tax on the value of the Concerned Goods or Concerned Services at the rate which would be applicable if the supply of the Concerned Goods or Concerned Services was made by a Taxable Person within the State. Cabinet Decision No. 52 of 2017 and its amendments – As published by the Ministry of Finance 37 b. Declare and pay the Due Tax in the Tax Return which relates to the Tax Period in which the Date of Supply for the Concerned Goods or Concerned Services took place. 5. Where a Taxable Person accounts for Due Tax in accordance Clause 1 of Article 48 of the Decree-Law, the Taxable Person shall keep the following documents relating to the supply: a. The supplier’s invoice showing details and the Consideration paid for the Concerned Goods or Concerned Services. b. In the case of Concerned Goods, a statement from the relevant Customs Department showing details and the value of the Concerned Goods.

Deferred payment to the time of filing VAT return In certain situations, an importer may be able to account for VAT in the VAT return which relates to the tax period in which the goods are imported. In order for this to occur, the importer must meet the following conditions:20 • • • • the importer is registered for VAT at the time of import; the importer has sufficient details for the FTA to verify the import and the VAT which is due on the import and is able to provide these as required; the importer has provided the FTA with its own Customs registration number issued by the competent Customs department for the import in question; and the importer has cooperated with, and complied with any rules imposed by the FTA in respect of the import. In practice, these conditions require that a VAT-registered importer registers their Customs registration number with the FTA prior to importing goods into the UAE (this can be done at the time of registering for VAT or at a later time). When any goods are subsequently imported into the UAE by this importer using the Customs registration number which is registered with the FTA, no VAT will be charged at the time of import and the goods will be released to the importer as soon as other customs formalities are completed. The applicable import VAT would then be prepopulated as output tax in box 6 of the importer’s next VAT return. It should be noted that the importer has an ongoing obligation to ensure that the VAT return reflects the correct VAT payable in respect of the import – as a consequence, the importer should review the correctness of the import VAT prepopulated in its VAT return and should make adjustments in box 7 of the VAT return, if necessary. VAT incurred on imports is treated as input tax of the importer, and the importer may be able to recover it in box 10 of its VAT return, if eligible under the normal VAT recovery rules as discussed in Part 2.7 of this Guide. Where the importer is entitled to recover the input tax in full, it will not represent a cost to the business. Payment at the time of import In situations where the conditions for deferring the payment of import VAT are not met – for example, the importer is not registered for VAT at the time of import – the importer would need to pay VAT to the FTA before the goods can be released to it by the relevant Customs department. This process requires the importer to use the FTA’s eServices portal to complete the VAT301 – Import Declaration Form for VAT Payment and to make the payment of applicable VAT. Please refer to the VAT Import Declaration User Guide for detailed guidance regarding accounting for import VAT by non-registered importers. 20 Article 48(1) of the Executive Regulation. 15

Article 64 Payment of Tax on Imports 1. Tax due on imported Goods shall be paid at the First Point of Entry and deposited in a special tax account, and transferred to the final Destination State according to the Customs Duties Automated Direct Transfer Mechanism in force within the framework of the GCC Customs Union; the Ministerial Committee may propose any other mechanisms. 2. Each Member State may, in accordance with the conditions and provisions determined by it, allow a Taxable Person to defer payment of Tax due on Goods imported for the purposes of the Economic Activity and to declare the same in his Tax Return. Tax due that has been deferred and declared shall be deductible according to the provisions of this Agreement.