As a small and medium business owner, every day brings a multitude of strategic and commercial decisions that must be made to ensure the ongoing prosperity of your enterprise. This can leave limited time for complex operational issues such as navigating taxes. However, managing cost and taxes, especially if you are importing and exporting goods, requires an assessment of your business direction and strategy.
Navigating a country’s tax rules is complicated enough for most of us but if you’re also shipping goods cross borders, you will have to understand other governments’ rules and regulations, as well as your own.
Understanding that small businesses are operating in a customer centric environment where business requirements are continuously evolving, the UAE has strategically focused on offering a range of support and solutions to meet the needs of the entire SME ecosystem and this includes taxes and customs arrangements. Other examples include the launch of long-term residency permits to entrepreneurs and investors, and a new rule whereby foreign expats can completely own their businesses in free zones as well on the mainland economic zone, spanning 122 economic activities across 13 sectors.
In Dubai, specifically, much depends on whether your business is set up in the local market or in a free zone, of which there are over 30 to choose from. Businesses registered here are exempt from paying tax for a period that can be extended.
If a company’s business model is to set up a hub in Dubai where goods are imported from the rest of the world for distribution to the rest of the Middle East/Asia, setting up an operation in the Free Zone may be a good option because duties may differ at the time of import. If the operation in the UAE is predominantly to buy & sell goods locally then it makes more sense for the business to be registered as a local company where duties and taxes apply.
Dubai has also made considerable efforts to ensure that importing goods during Expo 2020 Dubai is as simple as possible, in line with the government’s aim to strengthen the Emirate’s position as an international hub, support local businesses, and foster economic growth. Participating countries have been assigned with two Custom codes which can be used as appropriate:
Free Zone Code – this is the ideal option for goods imported for exhibition or demo purposes where the items will ultimately go back to their origin. During or after the event, the commercialization of these goods are permitted however duties and taxes must be paid and customs declaration processes need to be followed. Customers registered in the Free Zone must follow Dubai Customs Free Zone regulations.
Local Market Code – this option is used for commercial purposes where goods incur duties and taxes on import. It is worth noting that in 2018 the UAE introduced Value Added Tax (VAT) at the rate of 5%, which will continue to be utilised to provide high-quality public services.
Feeling overwhelmed yet?
That’s to be expected, but the good news is that while this is a critical area for all businesses, entrepreneurs don’t need to master every aspect of taxes and duties on their own.
Driven by our purpose of moving the world forward by delivering what matters, our customers can make use of our decades of experience on customs brokerage, import and export processes, including duties and taxes. We can advise on everything from shipping options to documentation and custom clearance requirements at origin and destination, ensuring a smooth shipping journey, timely delivery and the avoidance of extra storage and other related charges.
As a small business, you will first be assigned a dedicated manager whose responsibility is to fully comprehend your business needs. Based on this initial assessment we will then put together tailor-made solutions, depending on your specific requirements.
We understand that you have a million other things to focus on when running your own business, and we use our local and international expertise combined with cutting edge technology to simplify the process in every respect, taking one worry off your hands.
Our job is to make cross-border logistics and supply chain management easier, so you can focus on what you do best!