Guide to Customs Clearance and Duty Tax in the UAE

In 2024, UAE foreign trade soared to $817 billion, creating massive opportunities for e-commerce sellers entering the market. But importing comes with its challenges! Customs clearance in UAE can quickly turn a routine order into an expensive hassle. 

The UAE is perfectly positioned in the center of the trade route, making it a global hub. However, without a solid grasp of UAE customs regulations, businesses can be at risk of delays, penalties, or even rejected shipments, which can hurt profits and customer satisfaction. With the proper knowledge, you can avoid surprises and streamline your shipping process.

In this guide, we will walk you through:

• How UAE customs clearance works and the documents you need
• Import duty rates & exemptions to help you calculate costs upfront
• Common customs challenges and how to avoid them
• Best practices for a faster, hassle-free clearance process

By the end, you’ll know exactly how to ship to the UAE without delays, hidden costs, or unnecessary stress.

What is Customs Clearance?

Customs clearance in the UAE is the process of authorizing imported goods to legally enter the country.  This framework ensures that merchandise crossing UAE borders complies with local regulations and that relevant duties and taxes are paid before release. 

The customs clearance process for international shipping in the UAE begins when goods arrive at ports or airports and continues until they receive authorization for delivery to the consignee. This includes document verification, possible physical inspection, pre-arrival submissions, and payment of relevant duties before goods are delivered to the final destination.

Locad’s Global Reach

For e-commerce companies, smooth customs processing directly affects supply chain timelines, inventory management, customer satisfaction, and profitability. With a good understanding of the customs procedures, businesses can avoid expensive delays, surprise charges, and potential legal issues that can interfere with business operations. 

The UAE has become a global trade hub because of its prime location in the heart of the air cargo routes and smart investments in customs systems. Electronic processing and risk-based scanning also make importing smoother and faster. For businesses, this means quicker clearance, less paperwork, and fewer delays, especially if they have a good track record.

Understanding Import Duty in UAE

In the UAE, import duty is a customs tax applied to goods brought into the country, managed by the Federal Customs Authority (FCA). While a standard 5% rate on the Cost, Insurance, and Freight (CIF) value is common, your business should be aware of potential exemptions and varying rates for specific goods. Understanding these regulations is essential for smooth import operations and accurate cost projections.

How is Import Duty Calculated in the UAE? 

Import duty in the UAE is predominantly structured as a percentage of imported goods’ CIF (Cost, Insurance, and Freight) value. This includes product cost, insurance, and shipping fees until they reach a UAE port.

Formula: 

Import Duty = (CIF value) x (Customs Duty Rate)

For example, if you import goods with a CIF value of AED 10,000, the standard customs duty would be:
AED 10,000 × 5% = AED 500

• The standard duty rate for most commercial goods in the UAE is 5% of the CIF value, making it one of the more competitive rates globally!
• At the same time, some products, like Alcoholic beverages, face a 50% duty, while tobacco products have a steep 100% duty due to revenue and public health policies. 

VAT Considerations for Imports in the UAE

As of 2018, the UAE imposes a 5% Value-Added Tax (VAT) on imported goods. This tax is calculated based on the CIF value and customs duty. 

• For VAT-registered companies, the tax can generally be recovered as input tax as long as they have accurate documentation and adhere to Federal Tax Authority (FTA) rules.
• The UAE has integrated customs declarations with VAT accounts through electronic systems, which allows businesses to process imports more easily.

The easiest way to make the process smooth is to ensure your customs documents accurately reflect product values and details. 

Types of Goods and their Import Duty Rates in the UAE:

Here’s a quick look at the various goods and services, along with their customs duty rates in the UAE:

Goods Exempted from Duty Rates

The UAE grants import duty exemptions for several reasons, including trade facilitation, economic diversification, social development, and regional integration. 

Goods Category	Import Duty Rate
Essential Food Items	0%
Medicines and Medical Devices	0%
Educational Materials	0%
Renewable Energy Equipment	0%
Precious Metals (Raw)	0%
Industrial Inputs and Manufacturing Components	0%
Goods from GCC Countries (with 40% local content)	0%

It is also important to note that goods imported to UAE Free Zones have the added advantage of 100% foreign ownership, zero corporate tax, and exemptions from customs duties on imports and exports. 

With Locad’s warehouse strategically located in Dubai South  Free Zone, you can store closer to your customers, enjoy seamless end-to-end fulfillment, and significantly reduce import duties, helping you save more while expanding your business! 

Documents Required for Customs Clearance in the UAE

Proper and accurate documentation is the key to hassle-free custom clearance in the UAE. Here’s what you need for most imports:

1. Commercial Invoice: This must include the details of the exporter and importer, such as company names, addresses, contact information, and tax ID numbers. It should list product descriptions, quantities, unit prices, and total value in an organized format, preferably in English.
2. Packing List: This should include detailed information about each package, including size, weight, and type of packaging. It assists customs in checking the shipment against the commercial invoice.
3. Bill of Lading (sea freight) / Airway Bill (air freight): A receipt issued by the shipping company proving that the goods have been picked up for shipment.  It also acts as a contract recording title ownership.
4. Certificate of Origin: This document verifies where the goods were manufactured. An authorized authority, typically the Chamber of Commerce, must issue the certificate. 
5. Import Permit (if applicable): You need a permit to clear customs for some regulated items, such as food, pharmaceuticals, telecom devices, and cosmetics. 

Special Documentation Rules

Here are a few more things you should know beforehand:

• For Dubai Free Zone shipments, original invoices are required.
• For Abu Dhabi, documentation depends on shipment value.
• Commercial importers must provide a valid Importer or Exporter Code and associate their UAE VAT TRN (Tax Registration Number) with customs clearance in UAE.
• UAE offers a Temporary Admission procedure if you temporarily import goods for an event or exhibition. 

Steps Involved in Customs Clearance in UAE

You must follow a structured customs clearance process to import to the UAE, ensuring efficient regulatory compliance. Here’s a step-by-step guide to make things easier: 

Step 1: Get Ready Before Shipping

Before the goods arrive in the UAE port, double-check a few things: 

• Register with the UAE Federal Customs Authority to get a customs business code.
• Compile all the necessary documents.
• Comply with UAE import regulations for your commodities.
• Obtain pre-approvals if your goods fall under restricted categories.

Step 2: Goods Arrive in the UAE

After your shipment arrives in UAE ports or airports, here’s what happens:

• The carrier notifies customs of its arrival.
• A Bill of Lading or Airway Bill is presented to register the shipment.
• Goods are transferred to an inspection area or holding facility while awaiting clearance.

Step 3: Submit the Documents

Here, you or your customs broker must:

• Present all documents necessary for verification.
• Electronic platforms such as the Dubai Trade portal can be used for speedy processing.
• Provide more information if customs authorities ask for it.

Step 4: File a Customs Declaration

• Fill out and file the customs declaration with all the shipment information.
• Await approval. Once approved, the status changes to “Pending Tax Payment.”

Step 5: Customs Inspection (If Required)

After the documents are submitted: 

• Customs decides whether the physical examination is necessary (due to risk assessment or random inspections).
• If chosen, cooperate fully and arrange your goods properly to expedite the process.

Step 6: Pay Duties and Taxes

1. Import duties and VAT are computed by the system based on your declaration.
2. You can pay via e-Dirham, e-guarantee, or other approved means.
3. For VAT, adhere to the Federal Tax Authority’s procedures for easy processing.

Step 6: Pay Duties and Taxes

And that’s it. 

• After payment verification, customs releases an order.
• You can then arrange for dispatch to the point of final delivery.
• Also, confirm whether there are any post-clearance procedures if necessary.

But how long does customs clearance take in the UAE? The time taken for each step will depend on the type of goods you plan to import and multiple other factors. 

So, Why Should E-commerce Sellers Choose Locad? 

By partnering with Locad, you can streamline the entire process, from transportation and storage in the destination Warehouse in the Free Zone to inventory management, fulfillment, and last-mile delivery! 

Here’s how:

Destination Warehouse in the Free Zone: Locad’s ambient warehouses in mainland Dubai and the free zone in Dubai South bring you closer to your customers in the UAE. Choosing Free Zone warehouse and fulfillment services helps you avoid import duties and taxes while seamlessly serving the UAE mainland and other GCC countries.

Inventory Management: You get real-time insights into the inventory levels, letting you map the SKU journey to prevent stock-outs or overstocking.  This visibility ensures that you maintain compliance with UAE customs regulations, as accurate inventory tracking helps ensure that all goods are appropriately accounted for and cleared through customs.

Batch and Expiry Management: Batch management streamlines the pick-and-pack process and allows you to create product bundles and kits that offer your customers a unique unboxing experience.

Marketplace integrations: Locad integrates with prominent marketplaces in the UAE, including Amazon, Magento, Shopify, and WooCommerce. This helps you stay active wherever your customers are. 

Multiple Last Mile Carriers: By partnering with multiple last-mile carriers, Locad ensures customers are happy and satisfied with on-time same-day or next-day delivery. The Locad Logistics Engine auto-assigns the Cheapest-first carrier based on your requirements while giving you the choice to select from multiple last-mile partners to ensure efficiency and cost-effectiveness.

Value-Added Services: You get Labeling, Kitting, Unloading, Customized Packing, Inserts, and GWP (Gift with Purchase). During the holiday season, you can also add a gift wrap, making the unboxing experience personalized and unique! 

100% SLA Maintenance: The SLA dashboard gives you a bird’s-eye view of the entire fulfillment journey. It shows how your orders are being processed efficiently, on time, and up to market standards. 

Conclusion

Handling customs clearance in the UAE can be complex! The UAE’s efficient customs system demands attention to accurate documentation and compliance.

With the right logistics strategy and a trusted partner like Locad, you can simplify customs, reduce delays, and keep your supply chain running smoothly. Whether expanding in the UAE or across the GCC, smart fulfillment and efficient inventory management will help you scale confidently.