The UAE Ministry of Finance (MoF) has announced the introduction of the Value Added Tax (VAT) across the country, effective January 1, 2018.

VAT is a form of indirect tax on the consumption or use of goods and services, applied at the point of sale, and charged on applicable transactions.

A registered business collects the VAT charged to customers on the supply of goods and services, and pays VAT on goods and services purchased from its suppliers. The difference between the VAT collected from customers and the VAT paid to suppliers is then remitted to the Federal Tax Authority (FTA).

VAT has been introduced across the UAE at a standard rate of 5%. Certain supplies of goods and services are subject to a 0% VAT charge, while some are exempt (Refer to Federal Decree-law No (8) of 2017 and the Executive Regulations for more details)

VAT is a general consumption tax, and applies to the majority of transactions of goods and services, unless specifically exempt by law. FedEx Express will apply and collect VAT, where applicable on its services, from January 1, 2018. Rates and charges on all existing FedEx Express contracts are VAT exclusive.

A business must register for VAT if their taxable supplies and imports exceed the prescribed “mandatory registration threshold.” Additional information for businesses can be found at https://www.tax.gov.ae/en

VAT-registered businesses generally:

• must charge VAT on taxable goods or services they supply;
• must issue a valid VAT invoice for the supply of goods and services. To be considered as a valid VAT invoice, the document must follow a specific format as mentioned in the legislation;
• may reclaim any VAT they’ve paid on business-related goods or services; and
• maintain business records which will allow the government to check that they are compliant.

In order to share your Tax Registration details with FedEx, please download the template, fill in the details, attach the completed template, and send it to uae@fedex.com together with the supporting documents. Additional information including Frequently Asked Questions can also be found in the link. General information about VAT in the UAE can also be found at https://tax.gov.ae/en/.

In order for us to continue serving you following the implementation of VAT on January 1, 2018, the following tax registration details are required:

1. FedEx Account Number
2. Name of your company
3. Registered office address
4. Tax Registration Number
5. Copy of Tax Registration certificate (if available)

The Tax Registration Number is important for 2 reasons:

• To ensure VAT benefits, your Tax Registration Number needs to be listed on the Tax Invoice provided by FedEx Express after January 1, 2018.
• The Tax Registration Number will also help to facilitate the clearance of goods at the time of import and avoid delays in clearance.

FedEx requires a copy of the tax registration certificate to verify the information provided, and avoid any administrative errors in invoicing.

To ensure your tax registration details are entered correctly into our systems, it is important to update your tax registration information in the FedEx template. Once updated, it should be emailed to uae@fedex.com along with a copy of your Tax registration certificate (if available).

If you have submitted incorrect information, you can re-submit the correct details along with the supporting documents to uae@fedex.com.

Yes. You can submit your Tax Registration Number with the supporting documents to uae@fedex.com when you receive them.

• Legal entity name: FedEx Express International B.V. (Dubai Branch)
• Registered address: FedEx Express, 2nd Floor, Sunset Mall, Jumeirah Beach Road, PO Box 9239, Dubai, United Arab Emirates
• Tax Registration number: 100019089000003
• For a copy of the FedEx Tax Registration certificate, please contact your FedEx Territory Manager, or write to uae@fedex.com.

No. Additional contracts are not required. Rates and charges on all existing FedEx Express contracts are VAT exclusive. FedEx Express will apply and collect VAT, where applicable on its services from January 1, 2018.

Yes, VAT applies on goods imported into the UAE (subject to certain exemptions), irrespective of where you are located. VAT charges on goods imported are primarily the liability of the importer or consignee. Depending on the arrangement between you and the importer or consignee, you may be liable to pay the applicable VAT charges in the UAE.

You can claim credit on VAT paid in the UAE only if you are registered with the FTA, and have been issued a Tax Registration Number.

As per the Cabinet Decision No. (59) of 2017, the import of goods in any of the listed Designated Zones will not be subject to VAT on the value of goods imported. A Designated Zone refers to a free zone specified by a decision of the Cabinet upon the recommendation of the Minister, for the purpose of the VAT Law.

If you are located in a free zone that is not listed as a Designated Zone, the import of goods will be subject to VAT (on the value of the goods imported).

FedEx Express will not charge VAT on value of goods imported in Designated Zones from January 11, 2018, after the decision of the Cabinet was released.

However, please note FedEx services provided to you in a Designated Zone are not exempt, and may be eligible for VAT, depending on the nature of services.

If you do not pay VAT on the import of goods, the goods are unlikely to be released by the Customs Authorities. There may also be penalties for non-compliance, as per the VAT regulations.

For shipments with customs declared value above AED 1,000:

• If you are registered with the FTA and you have a Tax Registration Number, you are required to pay your VAT liability on import of goods at the time of filing your VAT return. Please ensure you have linked your Customs Number (i.e. importer code) with your Tax Registration Number. FedEx will not pay VAT on your behalf at the time of clearing your goods.
• If you are not registered with the FTA and you do not have a Tax Registration Number, FedEx will advance the VAT liability as assessed by FTA on your behalf.

For shipments with customs declared value of AED 1,000 and below:

• FedEx Express will pay the VAT liability at the time of clearing the imported goods on your behalf, irrespective if you are registered with a TRN with the FTA.
• FedEx will issue a Tax Invoice for import VAT paid on your behalf. FedEx is in the process of adapting its IT systems to account for this change. In the interim, you will receive a separate “request for payment” for VAT on the value of goods imported, in addition to the “request for payment” for other clearance charges.
• Please note that due to the implementation of a new law, there may be potential clearance delays.

The VAT on the value of imported goods is calculated as follows:

• For non-document shipments without a declared value, a standard VAT charge of AED 50 will apply.
  
• Documents will not attract VAT on import in the UAE

You may link your importer code with your TRN by:

• Logging into Dubai Trade website www.dubaitrade.ae/ using your user name and password.
• Navigate to ‘User Management’ and then ‘VAT profile’. Follow the steps to link your Mirsal2 (M2) importer code provided to you by Dubai Customs in the VAT Registration letter with your TRN.
• It is important that you enter the M2 importer code in the correct format (i.e. caps lock, hyphen etc.). Any other format will be treated as unregistered for VAT on the Custom’s systems.

For further assistance on linking your TRN with your importer code, please contact Dubai Trade Customer Service.

If your importer code is not linked to your TRN, you will have to complete the VAT declaration form using your TRN directly on the FTA e-services portal https://eservices.tax.gov.ae/. The process is as follows:

• Login to the FTA e-services portal using the username and password linked to your TRN.
• Navigate to the VAT tab on the FTA e-services portal and click on ‘VAT301 – Import Declaration Form for VAT Payment’, enter the port of entry, customs declaration number and declaration date, then fetch the TRN number.
• Complete the declaration process and submit the form.
• Following this process, the FTA will electronically update the customs declaration at the customs department that the VAT payment has been completed.