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Customs & Compliance/
14 min read
/28 April 2026
UAE Import Duties & VAT: What Every Importer Needs to Know
The UAE applies a standard customs duty of 5% on most imported goods, calculated on the CIF value — the combined cost of the goods, the freight to bring them to the UAE, and the insurance covering them in transit. On top of this, VAT at 5% applies to most imports. For a typical commercial shipment, the total tax cost at the border is therefore around 10% of the landed value before duties — though exemptions, preferential trade agreements, and free zone rules can significantly change that figure.
This guide explains exactly how UAE import duties and VAT work, what is exempt, how free zones affect the calculation, and what European exporters shipping into the UAE need to know.
How UAE customs duty is calculated
UAE customs duty is assessed on the CIF value of imported goods. CIF stands for Cost, Insurance, and Freight — it is the declared value of the goods themselves plus the cost of shipping them to the UAE port of entry plus the insurance premium covering them in transit.
This is important regardless of which Incoterm you have agreed with your supplier. Even if you buy on EXW or FOB terms — meaning the freight and insurance are your cost, not the seller's — UAE customs still calculates duty on the CIF value. You will need to declare the actual freight and insurance figures alongside the goods value when filing the customs declaration.
Worked example
You import a consignment of mechanical components from Germany:
- Goods value (cost): AED 50,000
- Sea freight Dubai: AED 4,000
- Insurance: AED 300
- CIF value: AED 54,300
Customs duty at 5%: AED 2,715
VAT at 5% of (CIF + duty): 5% × (54,300 + 2,715) = 5% × 57,015 = AED 2,851
Total duty and VAT payable: AED 5,566
Effective tax rate on goods value: ~11.1%
This calculation is the starting point for every UAE import. The variables — exemptions, GCC origin, free zone status — are applied on top of this baseline.
UAE customs duty rates by category
The standard rate is 5%, but a number of categories attract different rates or are exempt entirely.
| Category | Duty rate | Notes |
|---|---|---|
| Most commercial goods | 5% | Default rate for manufactured goods, machinery, equipment, textiles, electronics |
| Alcohol (licensed importers) | 50% | Only importable by licensed distributors |
| Tobacco and tobacco products | 100% | Applies to cigarettes, cigars, shisha |
| Pork products (licensed channels) | 0% | Zero duty but only available through licensed importers for non-Muslim consumers |
| GCC-origin goods | 0% | Under GCC customs union — requires valid certificate of origin |
| UK-origin goods | Reduced rates (category-dependent) | Under UK–UAE CEPA (2022) — requires UK certificate of origin |
| Most pharmaceutical products | 0% | Medicines and pharmaceutical preparations |
| Essential foodstuffs | 0% | Includes fresh fruit and vegetables, certain grains and dairy |
| Agricultural inputs | 0% | Seeds, fertilisers, certain livestock feeds |
| Military and defence equipment | 0% | Government imports only |
| Personal effects (returning residents) | 0% | Subject to conditions and quantity limits |
For goods not clearly covered by an exemption or special rate, the default is 5%. When in doubt, your customs broker will apply the rate that corresponds to the HS code classification of your goods — the rate is attached to the code, not to a general description.
VAT on UAE imports
The UAE introduced VAT at 5% on 1 January 2018. It applies to most goods imported into the UAE, calculated on the CIF value of the goods plus any customs duty payable.
Who pays import VAT
Import VAT is paid at the point of customs clearance, alongside customs duty. If you are the importer of record — meaning your company name is on the customs declaration — you pay the VAT at the border.
VAT recovery for registered businesses
If your business is registered for UAE VAT, import VAT is generally recoverable as input tax through your VAT return — meaning you pay it at the border but reclaim it when you file. The net VAT cost to a registered business on standard-rated goods is therefore zero (assuming the goods are used for a taxable business purpose).
If your business is not registered for UAE VAT — either because your annual taxable turnover is below the mandatory registration threshold of AED 375,000, or because you are a foreign business with no UAE VAT registration — you cannot recover the import VAT. It becomes a real cost.
The mandatory registration threshold for UAE VAT is AED 375,000 in annual taxable supplies. Voluntary registration is available from AED 187,500. For most businesses importing regularly into the UAE, VAT registration is both required and commercially sensible.
Zero-rated and exempt imports
Some categories of goods are zero-rated for UAE VAT purposes — meaning VAT applies at 0%, effectively exempt but technically within the VAT system. Key zero-rated categories include:
- Most food items for human consumption (with specific exceptions)
- Prescription medicines and medical equipment
- Goods exported from the UAE (VAT is charged at 0% on exports) A separate category — VAT-exempt supplies — applies to certain financial services, residential property, and bare land, but these are less relevant for most import transactions.
Excise duty — the third tax layer
Beyond customs duty and VAT, certain categories of goods are subject to UAE excise duty — a consumption tax applied to goods considered harmful to health or the environment. Excise duty is applied on top of customs duty and before VAT is calculated.
Current UAE excise duty rates:
| Category | Excise duty rate |
|---|---|
| Carbonated drinks | 50% |
| Energy drinks | 100% |
| Tobacco products | 100% |
| Sweetened drinks | 50% |
| Electronic smoking devices | 100% |
| Liquids used in electronic smoking devices | 100% |
If you are importing any of these categories, factor excise duty into your landed cost calculation. It is applied to the CIF value and substantially changes the economics of these products.
Duty calculation for GCC-origin goods
The UAE is a member of the Gulf Cooperation Council (GCC) customs union, which covers Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE. Goods that genuinely originate in another GCC member state are admitted into the UAE free of customs duty.
To claim the zero-duty rate, the importer must present a valid GCC certificate of origin confirming that the goods were manufactured or substantially produced in a GCC country. The certificate must be issued by a recognised chamber of commerce or trade authority in the country of origin and must reference the specific shipment.
Goods that are merely transshipped through a GCC country — imported from outside the GCC, stored in a GCC free zone, and then re-exported — do not qualify for the GCC preferential rate unless they have been substantially transformed in that country.
UK–UAE CEPA preferential rates
The UK–UAE Comprehensive Economic Partnership Agreement (CEPA), which came into force in May 2023, provides preferential tariff rates on a range of goods originating in the United Kingdom. For eligible goods, UAE customs duty is reduced from the standard 5% to rates that vary by product — in some cases to zero.
To claim the CEPA preferential rate, the importer must present a valid certificate of origin confirming UK origin. The goods must also meet the rules of origin criteria specified in the CEPA — these define what level of processing in the UK is required for goods to qualify as "UK-origin."
The CEPA covers a significant proportion of UK exports to the UAE, including machinery, chemicals, food and beverage, and certain finished goods. If you are a European or UK exporter selling into the UAE and your goods originate in the UK, it is worth checking whether a preferential rate applies before pricing your goods for the UAE market. The difference can be meaningful — 0% vs 5% on a large shipment is a real commercial advantage to offer UAE buyers.
The FTA does not currently have an equivalent agreement with the EU, meaning EU-origin goods pay standard 5% duty. UAE–EU FTA negotiations are ongoing as of 2026 — check the latest position before planning a major import programme from the EU into UAE.
How free zones affect duty and VAT
Importing goods into a UAE free zone — Jebel Ali (JAFZA), Dubai Airport Free Zone (DAFZA), Dubai Multi Commodities Centre (DMCC), Sharjah Airport International Free Zone (SAIF), and more than forty others — is treated differently from mainland UAE imports.
Goods imported into a free zone from outside the UAE:
- No customs duty at the point of entry into the free zone
- No UAE VAT at the point of entry into the free zone
- Duty and VAT only become payable if and when goods move from the free zone into the UAE mainland (this is treated as a new import event)
Goods re-exported from a free zone to another country:
- No customs duty or VAT — goods leave the UAE without ever entering the mainland customs territory
Goods transferred between free zones:
- Generally treated as outside UAE customs territory — no duty triggered
This makes free zones the preferred structure for businesses using the UAE as a regional distribution hub — goods can be stored, consolidated, or lightly processed in a free zone and distributed across the GCC, East Africa, or Europe without incurring UAE import duty. Duty only enters the picture for the portion of goods that ultimately sells into the UAE mainland market.
Practical implications for European exporters
If you are a business in the EU or UK exporting goods to the UAE, here is what the duty and VAT picture means for your transactions.
Pricing for UAE buyers: When quoting UAE customers on DAP or DDP terms, you need to factor in the UAE customs duty (5% of CIF) and import VAT (5% of CIF + duty) that your buyer will pay at clearance. If your buyer is UAE VAT-registered, they can recover the VAT — so the real cost to them is the 5% duty plus your freight. If they are not VAT-registered, the full ~10% is a cost.
Selling DDP into UAE: If you agree DDP terms and are acting as importer of record in the UAE, you are responsible for paying the customs duty and VAT at clearance. For EU or UK businesses without a UAE presence, this requires either appointing a UAE-registered customs agent to act as fiscal representative or establishing a UAE entity. VAT paid by a non-UAE-registered importer is generally not recoverable.
Certificate of origin: For UK exporters, always include a valid UK certificate of origin with your shipment if your goods qualify for CEPA preferential rates. Without the certificate, the standard 5% rate will be applied by default — the preferential rate is not applied automatically.
Invoice accuracy: UAE customs checks declared goods values against market benchmarks and databases. Undervaluing goods on the commercial invoice to reduce duty is treated as customs fraud under UAE Customs Law No. 8 of 2015. The risk is not worth the saving — and UAE customs has become significantly more sophisticated in detecting undervaluation in recent years.
How VELO helps with UAE duty planning
Understanding the full duty and VAT picture before a shipment arrives saves money and avoids clearance delays. VELO's customs team provides duty calculation as part of every shipment quote, including assessment of GCC and CEPA preferential rates where applicable, free zone vs mainland routing options, and VAT registration guidance for first-time UAE importers.
For European businesses setting up a UAE import programme, we also advise on the operational structure — whether a free zone entity, a mainland import setup, or a third-party distribution arrangement makes sense for your volume and product type.
Frequently asked questions
What is the customs duty rate in the UAE?
The standard UAE customs duty rate is 5% of the CIF (Cost, Insurance, and Freight) value of the imported goods. Exceptions include alcohol at 50%, tobacco at 100%, GCC-origin goods at 0%, pharmaceutical products at 0%, and essential foodstuffs at 0%. UK-origin goods may qualify for reduced rates under the UK–UAE CEPA signed in 2022.
How is UAE customs duty calculated?
UAE customs duty is calculated as a percentage of the CIF value — the cost of the goods plus the freight cost to bring them to the UAE port plus the insurance premium. For example, goods worth AED 50,000 shipped to Dubai with AED 4,000 in freight and AED 300 insurance have a CIF value of AED 54,300. At 5%, the duty is AED 2,715.
Is there VAT on imports into the UAE?
Yes. UAE VAT at 5% applies to most imports, calculated on the CIF value of the goods plus the customs duty amount. Businesses registered for UAE VAT can recover import VAT as input tax through their VAT return. Businesses not registered for UAE VAT cannot recover it — it becomes a real landed cost.
What goods are exempt from UAE import duty?
Goods fully exempt from UAE customs duty include: pharmaceutical products, essential foodstuffs (fresh produce, certain grains and dairy), agricultural inputs, GCC-origin goods (under the GCC customs union), and goods imported by government entities for military or defense purposes. Some personal effects brought in by returning UAE residents may also be exempt subject to conditions.
Do EU goods pay duty when imported into the UAE?
Yes. There is no free trade agreement between the UAE and the European Union as of 2026, so EU-origin goods are subject to the standard 5% customs duty rate. UK-origin goods may qualify for reduced rates under the UK–UAE CEPA (2022) with a valid UK certificate of origin. UAE–EU FTA negotiations are ongoing — check the current status before planning a large import programme.
How does UAE VAT work for foreign businesses importing into the UAE?
Foreign businesses acting as importer of record in the UAE are responsible for paying import VAT at customs clearance. If the business is not UAE VAT-registered, this VAT is not recoverable and becomes a cost. Foreign businesses with significant UAE import activity should consider UAE VAT registration — the mandatory threshold is AED 375,000 in annual taxable supplies, with voluntary registration available from AED 187,500.
How do UAE free zones affect import duty?
Goods imported directly into a UAE free zone are not subject to UAE customs duty or VAT at the point of entry. Duty only becomes payable if those goods are subsequently moved from the free zone into the UAE mainland, at which point a new customs declaration must be filed and standard duties paid. Goods re-exported from a free zone to another country are not subject to UAE duty at all.
What is excise duty in the UAE and which goods does it apply to?
UAE excise duty is a consumption tax applied to goods considered harmful to health. Current excise-liable categories include carbonated drinks (50%), energy drinks (100%), tobacco products (100%), sweetened drinks (50%), and electronic smoking devices and liquids (100%). Excise duty is calculated on the CIF value and applied before VAT, significantly increasing the landed cost of these product categories.
Related guides
- UAE Customs Clearance: The Complete 2026 Guide
- Incoterms 2020 Explained: A Plain-English Guide for Importers and Exporters