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Importation of goods by agents on behalf of VAT registered persons

VAT Public Clarification – Importation of goods by agents on behalf of VAT registered persons

When a VAT registered importing agent imports goods on behalf of a VAT registered owner, the import VAT amount would be automatically pre-populated into Box 6 of the VAT Return of the importing agent.

As the importing agent is not the owner of the goods at the time of importation, it is unable to recover VAT incurred on the importation. Instead, the owner of the goods is able to recover this VAT, subject to the normal VAT recovery rules. To that purpose, the Federal Tax Authority expects certain adjustments in the VAT returns of both the importing agent and the owner of the goods.

The importing agent and the owner of the goods would be required to make adjustments in Box No. 7 of the VAT return. The importing agent would make a deduction of the value of goods imported and the owner would declare the value of goods imported.

As a consequence, the value of the imported goods will be reflected in the VAT return of the actual owner of the goods.

The owner would then be entitled to recover the import VAT (as declared in Box No. 7 of the VAT Return) in Box No. 10 of the VAT Return as per its normal VAT recovery position.


Record-keeping:

The owner and the importing agent need to agree in writing to make the adjustments stated in the preceding paragraphs. Furthermore, both parties will need to retain the evidence of this written agreement as records, in addition to any other required records, including customs documentation.
Alternative arrangement:

Where the owner and the importing agent do not wish to make the adjustments stated in the preceding paragraphs, the importing agent may issue a statement to the owner as prescribed in Article 50(7) of the Executive Regulations. The statement will be considered as a Tax invoice for the purpose of recovering input tax by the owner and can be recovered via Box 9 of the tax return.

This article is based on the public clarification issued by FTA . to access FTA website click here

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