Why UAE Focuses on Agent-Based Imports
UAE stands as a global trading hub with top logistics and clear rules. The UAE government supports trade by updating tax regulations often. VAT applies to most goods and services used in the UAE. Sometimes, VAT-registered agents import goods on behalf of other VAT-registered persons. This helps businesses with customs clearance and paperwork.
When an agent imports goods for a business, tax amounts on those goods automatically show in the agent’s VAT report. Many companies hire agents to manage imports and follow all UAE customs and tax laws. Some companies even let their customers act as agents for imports, based on business agreements.
How Is VAT Accounted for During Imports by Agents in UAE?
The agent must submit all import documents to get customs clearance. Agents use their own Tax Registration Number (TRN) when importing goods. The value of these imported goods shows up in the agent’s VAT return form (Form 201). The VAT return automatically calculates the VAT on imported goods and adds it to the agent’s net tax payable.
In the VAT return, you’ll find a special field (Box 6) where the system puts the value of imported goods. This helps agents and tax authorities track VAT easily.
Who Can Recover VAT on Imports Handled by Agents?
Only the actual owner of the goods has the right to recover the VAT paid during import. The Federal Tax Authority (FTA) says agents can’t claim input VAT for goods they import on behalf of someone else. Even if the agent’s VAT return shows the imported goods, only the owner can claim the VAT refund.
How Can the Owner Recover VAT on Imports by Agents?
There are two main ways the owner can recover VAT when an agent imports goods:
1. Adjustments in VAT Returns by Both Agent and Owner
- The agent and owner must have a written agreement.
- Both the agent and the owner enter adjustments in their VAT returns.
- The agent enters a negative adjustment to remove the value of the goods from their VAT return.
- The owner enters a positive adjustment to include the goods in their VAT return.
- This way, VAT is removed from the agent’s report and added to the owner’s.
- The owner then claims the VAT as per normal recovery rules.
2. Tax Invoice Issued by Agent to Owner
- Sometimes, both parties agree not to make adjustments in VAT returns.
- The agent pays the VAT to the FTA for the imported goods.
- The agent then issues a tax invoice or statement to the owner. This statement should show:
- Date of the statement
- Date of import
- Name, address, and TRN of the agent
- Details of imported goods
- Amount of VAT paid
- The owner reimburses the agent for the VAT and claims the input tax on their own VAT return.
Example: VAT Recovery When Agent Imports Goods
Let’s say Agent “A” imports taxable goods worth AED 100,000 for Company “B”. Both “A” and “B” are VAT registered. “A” submits his TRN for customs clearance. The VAT is AED 5,000.
- Scenario 1:
Both agree to adjust their VAT returns.- “A” removes the value with a negative adjustment.
- “B” adds the value with a positive adjustment and claims the VAT.
- Scenario 2:
Both agree not to adjust VAT returns.- “A” pays the VAT, then issues a tax invoice to “B.”
- “B” reimburses “A” and claims the input VAT using the invoice.
Key Points to Remember
- Agents import goods using their TRN, but only owners can recover input VAT.
- Written agreements help both parties adjust VAT returns properly.
- Tax invoices allow owners to claim VAT without adjustments in the return.
- Always keep clear records and proper documentation for compliance.
Common VAT Mistakes in Agent Imports
- Agents claiming VAT refunds for goods owned by someone else.
- Owners failing to enter positive adjustments in VAT returns.
- Missing or incomplete tax invoices for VAT reimbursement.
- Delayed or inaccurate reporting to FTA.
Mubarak Al Ketbi (MAK) Auditing Can Help With VAT on Imported Goods 🥇
Mubarak Al Ketbi (MAK) Auditing helps UAE businesses handle all VAT matters. We guide clients through import VAT, agent agreements, and recovery rules. Our services include:
- Advising on agent-based import structures
- Preparing written agreements between agents and owners
- Checking VAT returns for compliance
- Helping owners recover input VAT correctly
- Issuing compliant tax invoices and statements
- Reviewing your import documents for FTA audits
- Training staff on VAT reporting and adjustments
For more information:
- Visit our office: Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates
- Contact/WhatsApp: +971 50 276 2132
