VAT Customs Duty in UAE: What You Need to Know in 2025
A strategic location, strong infrastructure, and advanced ports have made Dubai a major hub for international trade, connecting businesses from around the world. Dubai made the remarkable achievement of meeting its foreign trade target of AED 2 trillion in the non-oil sector in 2023, ahead of the scheduled period.
However, businesses should have a sound understanding of customs duties and other taxes to optimize pricing, costs, and profitability. This blog explains all that you need to know about the VAT customs duty in the UAE as a business starting in the world of international trade in the country.
VAT Customs Duty in UAE: Definition of VAT and Customs Duty in UAE?
An indirect tax imposed and collected at each stage of the supply of services and goods is called Value Added Tax, or VAT. It is the end consumer who bears the tax, while registered taxpayers levy the tax on behalf of the government.
Taxes charged on imported goods are called customs duties. The standard rate of import duty in the UAE is 5% of the goods’ value. This rate can vary based on the type of product. For instance, goods like tobacco and alcohol attract higher import taxes in the UAE.
VAT customs duty in the UAE is a way in which the UAE government diversifies its income sources. A remarkable source of revenue ensures that the government continues to offer a good standard of living to its citizens.
VAT Customs Duty in UAE: How to Calculate VAT Customs Duty in UAE for Imports and Exports (2025 Update)
Most goods imported into the UAE are charged a value-added tax (VAT) of 5%. The two rates that determine the VAT on a good are the applicable customs duty and the Cost, Insurance, and Freight (CIF) value. Thus, the formula of VAT is 5%×(CIF × (CIF value + Customs Duty).
VAT is crucial in determining the pricing of goods imported to the UAE. So, it influences the profitability of companies functioning in the Free Zone and local market in the UAE.
Also read: How to Calculate Import Duty and VAT in UAE: A Comprehensive Guide
How to Calculate VAT Customs Duty in UAE for Imports and Exports: Rate and Calculation of Import Duty in UAE
The import tax in the UAE for cargo in the general category is normally 5% of its CIF value. This is standard for most of the imported goods. Businesses can confirm this by checking the classification of the goods under the HS Code for Customs Duty in the UAE.
Customs Duty Calculation in the UAE by Cargo Category
- Tobacco & Tobacco Products—100% of the CIF value
- Seafood, Livestock, and Meat—0%
- Dry & Fresh Fruits, Vegetables, Grains & Seeds, and Coffee & Tea—0%
- Chemicals, Medicines, Vaccines, Gases, Health Supplements, and Used Personal Effects—0%
- Some Stationery, Printed Books, and Pictures for Children—0%
How to Calculate VAT Customs Duty in UAE for Imports and Exports: VAT Exemption in the UAE
The following is a list of goods and services that usually enjoy VAT exemption in the UAE:
- Residential Properties: Deals and rentals of residential structures after the first supply
- Financial Services: Services that do not require an explicit fee or return are subject to VAT exemption
- Transportation: Intra-city flights, local public transport, and other domestic passenger transport
- Bare Land: Dealings of undeveloped land
- Healthcare and Education: Private education, specifically higher education, and healthcare services, such as preventative care
How to Calculate VAT Customs Duty in UAE for Imports and Exports: UAE Customs Regulations for Importers & Exporters
The following are a few UAE customs regulations for importers & exporters:
- Exporters and importers must stick to:
- 5% customs duty on most goods (CIF value)
- higher rates of 50% on alcohol and 100% on tobacco products
- Importers must categorize their goods using internationally recognized Harmonized System (HS) codes to determine their duty rates.
Essential Documents Needed for Both Importers and Exporters:
- Commercial Invoice
- Certificate of Origin
- Bill of Lading
- Packing List
- Airway Bill (AWB)
- Proforma Invoice
- Insurance Certificate
- Customs Declaration
- Import/Export License
- Letter of Credit (L/C)
- Shipping Bill
- Bill of Entry
Additional documents based on types of goods include:
- Licenses and Permits
- Certificates of Conformity
- Inspection Certificate
Tips to Reduce VAT and Customs Duty Costs in UAE
As a general rule, VAT is not imposed on goods traded between two free zones. This exemption makes business-to-business (B2B) transactions within these zones cost-effective.
Other strategic ways to reduce import costs:
- Use Free Trade Agreements (FTAs) to significantly lower import duties on specific products based on their origin.
- Optimize shipping and packaging to reduce the weight and volume of shipments and lower freight charges.
- Negotiate with suppliers and carriers to save costs and improve efficiency.
- Ensure accurate tariff classification and customs declarations to avoid overpaying tariffs and reduce import costs.
- Explore duty drawbacks to reduce costs and improve profitability.
- leverage technology to reduce errors, streamline processes, and save time and money.
- Use intermodal transportation to reduce transportation costs and increase profitability.
- Optimize supply chain management to avoid delays and reduce costs.
VAT Customs Duty in UAE: Conclusion
You can have a great business opportunity by importing goods into the UAE. But to ensure accurate cost calculations and smooth operations, you should have a good understanding of the Dubai import tax system.
Ryan Worldwide, with its customs clearance in Dubai, UAE, service, simplifies your customs clearance process. Our professionals, knowledgeable in VAT customs duty in the UAE, act as your customs brokers in Dubai to help you stay compliant even with updated customs regulations.
Contact us today for assistance in customs clearance while you focus on other key aspects of your business:
Phone: +9714 2528468 or +971559020985
Email ID: info@ryan-worldwide.com
Also read: Third-Party Logistics Provider: Choosing the Best in 2025
