Public Clarification on Importation of Goods by Agents on behalf of VAT Registered Persons

Federal Tax Authority has issued a public clarification on the reporting adjustments for the import of goods by Agents on behalf of VAT Registered Persons. This Public Clarification discusses the adjustments that should be made in the VAT returns of the importing agent and the owner of the goods. The Public Clarification also discusses an alternative arrangement available for the importing agents and the owners.

How to make the Adjustments:

The VAT Registered importing agent who acts as the importer of record would be required to make a negative adjustment in Box 7 of the VAT Return, in order to nullify the amount prepopulated in Box 6 of the VAT Return. Simultaneously, the VAT registered owner of the goods would be required to make a positive adjustment in Box 7 of the VAT Return to include the value of goods imported on its behalf by the importing agent. The owner of the goods would be entitled to recover the import VAT in Box No. 10 as per its normal VAT recovery position.

This adjustment has been introduced to eradicate the problem faced by the importing agents in claiming the VAT Input incurred on importation, who are not the owner of the goods at the time of importation.

However, the owner and the importing agent need to agree in writing to make the above adjustments.  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 which are as below:

·       The name, address, and Tax Registration Number of the agent.

·       The date upon which the statement is issued.

·       The date of Import of the relevant Goods.

·       A description of the imported Goods.

·       The amount of Tax paid by the agent to the Authority in respect of the imported Goods.

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.


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