Intricacies of Designated Zone in UAE and it's VAT and Customs Obligations
Hi,
I'd like to seek for clarification on our case, we are a manufacturing company in a designated zone and sold goods in the UAE mainland in DDP terms. Since it is in DDP, we are obligated to pay the VAT, and we made it in cash. The import license used was for the enduser (which is the client of our customer). I assume we need to adjust the amount paid in Box 7 in vat return? Also, do we need to issue an invoice with 5% tax, or we not required since it would technically be a double cash payment to tax authorities?
Thanking you in advance for your reply.
Replies
Regarding import in such cases where the customer details are being used to clear the goods, would suggest to go through the Public Clarification VATP012 - Importation of goods by agents on behalf of VAT registered persons and follow the same. Further, if the goods are sold on DDP basis then VAT needs to be charged as the supply is taking place in Mainland UAE after Customs Clearance. Since the VAT on import can be recovered by the owner of the goods in the VAT return, charging VAT on DDP sale will not amount to double payment of VAT.
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It may concern where in Customer portal, such imports also auto populated due to custom applicable and customer may pass adjustment in Box 7 and report goods imported under DDP in box 9 and can claim input ?
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The supplier and customer should do mutual adjustment with the supplier taking on the responsibility of disclosing import of goods instead of physically paying the VAT. The Customer can recover the input against VAT charged by the supplier on its DDP Tax invoice subject to normal recovery rules.
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