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