VAT IMPACT ON SHIPPING SERVICES

VAT IMPACT ON SHIPPING SERVICES

 

 1. VAT COMPLIANCE :

 

A) WITH RESPECT TO GOODS :

♦Responsibility of VAT Compliance is on the Importer/ Exporter

♦In case of Export of Goods, VAT is Zero Rated

♦In case of Import of Goods, Reverse Charge Mechanism applies and liability will fall on the Importer

 

B) WITH RESPECT TO SERVICES :

♦Responsibility of VAT Compliance is on the Shipping / Logistics Company

 

2. PROCEDURE FOR IMPORT :

 

A) FOR REGISTERED IMPORTER           

                                 

♦Goods shall be cleared by using Importer’s  Custom Code &  TRN

♦Importer shall pay VAT using Form 301

 

B) FOR UNREGISTERED IMPORTER

♦ Goods shall be cleared by using Clearing Agent’s Custom Code & TRN

♦ Clearing Agent’s shall pay VAT using VAT 301 or cash payment.However, neither the Agent nor the Importer can recover the paid amount as Input Credit

♦ Agent has to issue a statement to the Unregistered Importer to recover VAT from the Importer

 

3. LIST OF SERVICES PROVIDED BY LOGISTIC SERVICE PROVIDERS :

 

◊AIR FREIGHT, SEA FREIGHT , LAND TRANSPORT

◊WAREHOUSING/THIRD PARTY LOGISTICS

◊INSURANCE

◊EXPORT INSPECTION

◊DOCUMENTATION,REPACKAGING,CUSTOM CLEARANCE

◊IMPORTER ON RECORD

 

4. VAT APPLICABILITY ON INTERNATIONAL TRANSPORT SERVICES :

 

A) ZERO RATED SERVICE

♦ When service is provided relating to import or export of goods to and from U.A.E in a single chain of transaction

♦ Importing Clearing Delivering

 

B) STANDARD RATED SERVICE

♦ When service is provided relating to import or export of goods to and from UAE including storage facility

♦ Importing Clearing Storing ⇒ Delivering

♦ First leg till Import Clearance is Zero Rated

♦ Second leg from Storing till Delivery is Standard Rated

 

NOTE: If any service is provided to the client who does not have a place of Residence in UAE then it will be treated as Export of Service and is a Zero Rated Service

 

5. VAT APPLICABILITY ON COURIER SHIPMENTS :

♦ Courier Company charges Import VAT to Importer in addition to their Service Charges

♦ Importer can claim VAT as Input VAT based on the Statement issued by the Courier Company

 

NOTE : While making import of Shipment through Courier, the Courier Company uses their own Customs Code and TRN to clear the Goods

 

6. VAT APPLICABILITY ON LAND TRANSPORT SERVICES :

A) WITHIN U.A.E

♦ Not a part of International Transportation

♦ Standard Rated

 

B) AS A PART OF INTERNATIONAL TRANSPORT

♦ Forming a part of a Single Chain of Service

♦ Zero Rated

 

C) FROM ONE DESIGNATED ZONE TO ANOTHER/GCC COUNTRIES

♦ VAT has to be paid on the Goods at the Point of Entry into U.A.E Mainland by the Shipping Agent Using Form 301

♦ Once the Goods exit U.A.E/enter the other Designated Zone, the Shipping Agent has to cancel Form 301 by submitting Entry/Exit Documents

 

7. VAT APPLICABILITY ON WAREHOUSING AND LEASING :

 

A) WAREHOUSING

♦ Provision of storage space is treated as supply of service

♦ Standard Rated

♦ Example: Storage, handling, packing/co-packing & Other value added services

 

B) LEASING

♦ Lease/Sub-Lease of whole of premises is treated as supply of Goods

♦ Standard Rated

♦ If the premises is located in Designated Zone, it is out of scope

 

NOTE:

♦ In a Single facility, Storage Space is provided to multiple clients and charged based on area used.

♦ An entire facility is leased to a Single Client and handling services are also provided

 

8. OUT OF SCOPE OF VAT APPLICABILITY :

♦ High Sea Sales of Goods / Cross Trade

♦ Provision of Service relating to Transportation of Goods involved in High Sea Sales / Cross Trade

 

 

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