Importation of goods from outside the UAE into the UAE mainland is subject to VAT. The treatment of the same is however different depending on whether the importer is registered or not registered.
When a VAT-registered person imports goods, he may, account for the VAT in the tax return (“VAT return”), rather than paying actually at the time of importation of the goods. However, when a person not registered for tax imports goods, VAT needs to be paid before the goods are released to the person.
Question: If a VAT-registered importer imports goods via an importing agent or through a customer of such importer, how should the import VAT auto-populated in the VAT return of the agent or customer be adjusted
Where a VAT registered importing agent imports goods on behalf of a VAT registered owner, the import VAT will be auto-populated in the VAT return of the agent.As the importing agent is not the owner of the goods at the time of importation, it is unable to recover VAT incurred on the importation. Instead, the owner of the goods is able to recover this VAT, subject to the normal VAT recovery rules.
To that purpose, the importing agent and the owner of the goods would be required to make adjustments in Box No. 7 of the VAT return. The importing agent would make a deduction of the value of goods imported and the owner would declare the value of goods imported. Thus, the value of the imported goods will be reflected in the VAT return of the actual owner of the goods. The owner would then be entitled to recover the import VAT.
The owner and the importing agent need to agree in writing to make the adjustments as stated above. Both parties will need to retain the evidence of this written agreement as records, in addition to any other required records, including customs documentation.
Where the owner and the importing agent do not wish to make the adjustments stated in the preceding paragraphs, the importing agent may issue a statement to the owner as prescribed in Article 50(7) of the Executive Regulations. The statement will be considered as a Tax invoice for the purpose of recovering input tax by the owner and can be recovered via Box 9 of the tax return.
The VAT registered importing agent who acts as the importer of record should make a negative adjustment in Box 7 of the VAT return and at the same time the VAT registered owner of the goods would be required to make a positive adjustment in Box 7 of the VAT Return to include the value of goods imported on its behalf by the importing agent. The owner of the goods would be entitled to recover the import VAT as per its normal VAT recovery position.