The UAE is one of the world’s largest markets for cars, both for personal use and commercial purposes. With its booming automotive industry, many car dealerships and individuals look to import vehicles from international markets to meet the diverse needs of UAE residents. However, importing cars into the UAE comes with its own set of customs duties and taxes that all importers need to understand. Whether you are a car dealer or an individual buyer, knowing the financial obligations and legal requirements is essential to avoid penalties and ensure a smooth import process.
In this guide, EasyCars will break down the customs duties and taxes for imported cars in the UAE and how they impact car dealers and buyers.
Understanding Customs Duties in the UAE
When importing a car into the UAE, one of the most significant costs is the customs duty. The UAE imposes customs duties on most goods entering the country, and vehicles are no exception.
1. Customs Duty Rates for Imported Cars
In the UAE, customs duty on imported cars is generally 5% of the vehicle's CIF value (Cost, Insurance, and Freight). The CIF value represents the total cost of the car, including the purchase price, insurance, and shipping costs.
For example, if a car is bought for AED 100,000, with an additional AED 5,000 for insurance and AED 7,000 for freight, the total CIF value would be AED 112,000. In this case, the customs duty would be 5% of AED 112,000, equating to AED 5,600.
This 5% duty applies to most car imports, whether for personal use or commercial sale. However, it's important to note that certain vehicles, such as electric cars, may be subject to different rates or exemptions, depending on the latest government policies.
2. VAT on Imported Cars
In addition to the customs duty, Value Added Tax (VAT) is also applicable to imported cars in the UAE. The standard VAT rate in the UAE is 5%, and it is calculated on the total value of the car, including customs duty. This means that VAT is charged not just on the car's price but also on the customs duty amount.
For example, if the customs duty for a car is AED 5,600, as calculated in the previous example, the total value subject to VAT would be AED 112,000 (CIF value) + AED 5,600 (customs duty), equaling AED 117,600. VAT of 5% on AED 117,600 would be AED 5,880.
So, in addition to the customs duty, importers will need to pay VAT on top of the duty, adding to the overall cost of bringing cars into the UAE.
3. Customs Clearance Fees
Importers must also account for customs clearance fees when importing cars. These fees cover the administrative and processing costs for clearing the vehicle through customs. The amount varies based on the port of entry, the shipping method, and other factors.
Typically, customs clearance agents will assist in processing the paperwork and ensuring compliance with UAE customs regulations. Importers can expect to pay an additional fee for this service, which can range between AED 500 and AED 2,000 depending on the specifics of the shipment.
Required Documents for Importing Cars
To import a car into the UAE, certain documents must be submitted to the customs authorities for processing and clearance. These documents ensure that the car is legally imported and complies with UAE regulations.
Key Documents Required:
- Bill of Lading (BOL): This document provides details about the vehicle, the shipper, and the consignee. It is essential for the shipping and import process.
- Commercial Invoice: This document shows the car's price and helps calculate the CIF value.
- Certificate of Origin: This certificate states where the car was manufactured and is used to confirm the origin of the imported vehicle.
- Export Certificate: The country from which the car is exported usually issues an export certificate, certifying that the car is leaving the country legally.
- Insurance and Freight Receipts: These documents help calculate the CIF value of the car for customs purposes.
Having all the required documents in order is essential to avoid delays in the customs clearance process.
Taxes and Exemptions for Different Vehicle Types
While the standard customs duty is 5% of the car’s CIF value, certain vehicles may qualify for reduced rates or exemptions. Understanding these exemptions can significantly impact the overall cost of importing vehicles.
1. Electric Vehicles
The UAE government has made a push toward promoting environmentally friendly transportation options, including electric vehicles (EVs). To encourage the adoption of EVs, the government has introduced various incentives and tax exemptions.
As of the latest policies, electric cars are exempt from customs duty in the UAE. This exemption applies only to fully electric vehicles, while hybrid vehicles are still subject to customs duty at the standard 5% rate.
By reducing the cost of importing electric vehicles, the UAE aims to increase the adoption of eco-friendly cars and support its sustainability goals.
2. Classic and Vintage Cars
Car enthusiasts importing classic or vintage cars into the UAE may be eligible for special exemptions or reduced customs duty rates. To qualify for these exemptions, the car must meet specific criteria, such as being a certain age (typically over 30 years old) and being maintained in original condition.
Classic car importers should consult the UAE Federal Customs Authority to confirm the eligibility of their vehicle for any special duty rates or exemptions.
3. Cars for Temporary Use
Some individuals and businesses may need to import cars temporarily, such as for an exhibition, event, or business project. In such cases, the UAE offers temporary admission of vehicles without the full customs duty.
However, importers must provide a bank guarantee or insurance equivalent to the full customs duty and VAT amount, which will be refunded upon the re-export of the vehicle. This process allows cars to enter the UAE for a limited time without incurring the total cost of import duties and taxes.
Customs Procedures for Car Dealerships
For car dealerships operating in the UAE, navigating customs procedures is a crucial aspect of running a successful business. Dealerships that regularly import cars for resale need to streamline their import processes to ensure efficient operations.
1. Pre-Clearance and Customs Brokers
Many car dealerships in the UAE choose to work with customs brokers to handle the complexities of the import process. Customs brokers are licensed professionals who specialize in clearing goods through customs, including imported vehicles.
By working with a customs broker, dealerships can expedite the clearance process, reduce paperwork errors, and ensure compliance with all customs regulations.
2. Storage and Inspection Fees
Once a car is imported into the UAE, it will need to undergo inspection to ensure it meets local roadworthiness standards. Importers may also incur storage fees if the vehicle remains in a customs warehouse for an extended period.
The Roads and Transport Authority (RTA) or other relevant local authorities will typically handle vehicle inspections to certify that the car meets UAE safety and emissions standards. Dealerships should account for both inspection fees and potential storage costs when planning their import logistics.
Final Word,
Importing cars into the UAE involves navigating a range of customs duties, taxes, and regulations. Understanding these financial obligations is crucial for both individual car buyers and dealerships to ensure a smooth and compliant import process. From the 5% customs duty to VAT and customs clearance fees, the costs can quickly add up, making it essential to plan accordingly.
By understanding the full scope of customs duties and taxes for imported cars in the UAE, you can make informed decisions, avoid costly mistakes, and successfully navigate the complexities of the UAE automotive market.
We hope you enjoyed reading this article. To read more articles like this, please visit the EasyCars latest news page here.
DISCLAIMER – The content within this blog does not constitute professional advice and is intended to be general in nature. Please consult with all relevant parties prior to making any decision.
About EasyCars,
EasyCars by Jeal is a UAE Motor Industry Specific, Dealer Management Software that automates the daily tasks of running a motor dealership. Using the latest technologies, EasyCars removes frustrations experienced at the dealership - opening the doors to future growth.
EasyCars features include Simple Stock Management, Automated Advertising, Automatic VAT Calculations, Xero Accounting Integration, Facebook Automotive Inventory Ads, Dealer Websites and Business Reporting in the one central management software.
To learn more about EasyCars or to arrange a no-obligation free demo of the software, please submit the form below.