Freight Shipping between US and UAE | Rates – Transit times – Duties and Taxes

How to calculate duties & taxes when importing from US to UAE?

Understanding and estimating duties and taxes when importing from the US to UAE can feel like navigating through a maze, but don't fret - it is actually more straightforward than you might think. The calculation of these charges needs several key pieces of information - country of origin, the HS Code, the Customs Value, the applicable tariff rate, and any additional taxes or fees that may apply to your goods. To kick-off the process, your first step is to pinpoint the country where your goods were manufactured or produced, as this will guide you towards the correct HS Code. Simply put, it's your map for the sometimes winding roads of global shipping!

Step 1 - Identify the Country of Origin

Identifying the 'Country of Origin' - your first step to calculating duties and taxes. So, why does this detail matter?

First, it's the basis for the Harmonized System (HS) Code, the global standard for categorizing traded products. You get that wrong, your entire calculation could be off. Second, it's your compass in navigating Free Trade Agreements. The one between the US and UAE can directly affect your duty rates, sometimes reducing them to zero!

Third, it's your heads-up for any import restrictions specific to the UAE. Every country has its own regulation, and some products from the US might not be welcome in the UAE. Fourth, it's proof for Customs. They want concrete evidence, and you have to provide it. Lastly, it's your decision-maker for planned costs. Razor-sharp estimations rely on getting the basics right - and this is as basic as it gets.

Remember, each detail can make or break your costs and efforts in clearing UAE customs. Be thorough, accurate, and stay informed! It's all about working smarter, not harder. Time spent now saves you time and money later!

Step 2 - Find the HS Code of your product

The Harmonized System Code, commonly known as the HS Code, is an internationally standardized system of names and numbers that classifies traded products. These codes are vital for both exporting and importing goods as they form the foundation for customs declarations, helping customs authorities to understand what is being shipped. They are essential for determining the applicable duties, taxes, and regulations for the goods.

Getting the correct HS Code isn't always straightforward, but don't worry, we're here to help. The most straightforward method is to simply ask the supplier. They're generally very familiar with the goods being imported and the regulations surrounding them.

However, if this isn't an option for you, we have an easy step-by-step guide on how to find the code yourself. You can use the Harmonized Tariff Schedule - an HS lookup tool. First, input the product name into the search bar. Once you've done that, you can find your HS code in the 'Heading/Subheading' column.

Remember, accuracy is absolutely crucial when determining your HS Code. Incorrect codes can lead to shipment delays, and in worst-case scenarios, fines. So, ensure you're double-checking the details to avoid potential errors.

To make things even clearer for you, here's an infographic showing you how to read an HS code. Make good use of it - it's one more tool to make your shipping experience smoother.

Step 3 - Calculate the Customs Value

In the world of imports and exports, the customs value of your goods is unique. It's like the secret ingredient in a recipe, it just tops everything off. Remember, it's not just the price you paid for your products. Instead, it also includes the cost of international freight and any insurance expenses you paid on the move. Let's say you bought a batch of t-shirts from a US manufacturer for $1000, paid $200 for shipping, and insured the goods for another $30, your customs value—known as CIF (Cost, Insurance, and Freight) value—will be a total of $1230. This CIF value will be the base on which the UAE customs duty will be calculated. Pay special attention to how these values are tallied, it can make all the difference when it comes to securing a smooth customs clearance.

Step 4 - Figure out the applicable Import Tariff

Import tariffs are essentially a tax imposed on goods imported into a country. In the UAE, the most common type is an ad valorem tariff which is calculated as a fixed percentage of the value of the goods, including the cost of freight and insurance.

To identify the applicable import tariff, you'll need your product's Harmonized System (HS) Code which was identified earlier. Here's how you can go about this:

1. Refer to the UAE's Federal Customs Authority website or consult with your freight forwarder or customs broker.
2. Once you've found the correct tariff, you'll need to calculate your cost, insurance, and freight (CIF) value to get your final landed cost.

Let's use a real-life example so you can better understand this process. Imagine you're importing wooden furniture, specifically oak tables, from the US with an HS code of 940360. You find out that the ad valorem tariff rate for this product in the UAE is 5%.

If your total CIF cost is USD 10,000, the import tariff would be 5% of USD 10,000, which equals USD 500. This means your final cost to land these items in the UAE would be USD 10,500.

Remember, incorrect tariff classification can lead to increased costs and delays, so ensure that your information is accurate for a smooth customs clearance process!

Step 5 - Consider other Import Duties and Taxes

Beyond your standard tariff rates, there are various additional import duties and taxes you might need to consider. Let's illustrate with some hypothetical scenarios:

1. Excise duty: If you're importing tobacco from the US into UAE, you might be subjected to an excise tax. In this hypothetical scenario, let's say the excise duty rate is 100%, and your goods cost USD 10,000. Your excise duty payable would be 100/100 10,000 = USD 10,000.

2. Anti-dumping tax: If American goods are sold in the UAE at a much lower price than they are in America, an anti-dumping duty can be imposed to protect local industries. For instance, if you're importing cheap steel, you might have to pay an anti-dumping duty.

3. VAT: Here is the big one. The UAE has implemented a VAT rate of 5% for most goods and services. Using our previous example, for goods worth USD 10,000, the VAT amount might be 5/100 10,000 = USD 500.

Remember, these figures are theoretical and used for clarifying the concept - actual rates may vary. And while these extra costs might feel overwhelming, managing them properly helps in seamless import operations. As always, seeking advice from a customs expert can make things smoother.

Step 6 - Calculate the Customs Duties

Understanding how to calculate customs duties in the UAE for goods sent from the US is crucial for budgeting. Calculating these duties relies on the principle 'Customs Value plus VAT, Anti-Dumping Taxes and Excise Duty equals Total Duty.'

First, take a shipment with a custom value of $20,000, suppose you are not liable to pay VAT. UAE Customs Duty is 5% of the customs value, so you'll owe $1,000.

Next, consider a shipment with a custom value of $30,000 and 5% VAT in UAE. You'll calculate the 5% Customs Duty on $30,000 which is $1,500. Add to that the VAT, which is 5% of the new value ($30,000 + $1,500 = $31,500), adding another $1,575 for a total of $3,075.

Finally, imagine a custom value of $10,000 with a 15% anti-dumping tax, 5% VAT, and 50% Excise Duty. You'll owe $500 in Customs Duty, $1,500 in Anti-Dumping Tax, and $5000 in Excise duty. VAT is 5% of the new total ($10,000 + $500 + $1,500 + $5,000 = $17,000), so add $850 for a total of $8,350.

Keep in mind, at DocShipper we manage every step of your customs clearance worldwide, ensuring you won't overpay. Reach out to us for a free, no-obligation quote within 24 hours.

Bill of Lading

Navigating the seas of international shipping between the US and UAE? The Bill of Lading is your trusty compass. This vital document signifies the transfer of ownership from the seller to the buyer. Think of it as a contract for your cargo's journey, outlining the type, quantity, and destination of goods. Opting for an electronic release, affectionately known as a 'telex', can shave off precious hours, accelerating the overall shipping process. If you're shipping by air, the Air Waybill (AWB) is your counterpart to keep track. To sail smoothly through this process, make sure all relevant details on your Bill of Lading or AWB are correct and consistent with other shipping documents. After all, precision is the key to a hassle-free shipping experience.

Packing List

Shipping between US and UAE? You'll need an accurate Packing List. This document details your shipment, from the number and type of items to their weight and dimension. It's like your shipment's biography. Whether you're shipping construction equipment via sea freight or designer garments via air, authorities will look at your Packing List. Its precision is key. Imagine you're sending 100 t-shirts. If your Packing List states 90, your shipment could be held during customs clearance. In the worst-case scenario, you might face penalties or delays.

Remember, accuracy saves time and money, sparing you the trouble of customs mishaps in both the US and UAE. Keep it accurate, detailed, and legible. Avoid packing surprises; let your Packing List tell your shipment's complete story.

Commercial Invoice

When shipping goods from the US to UAE, a vital component for your Customs Clearance process is the Commercial Invoice. This document details your shipment - it should itemize the goods, include their HS codes, declare the total value, as well as buyer and seller information. Maintaining consistency in this information across all shipping documents will fast-track your clearance process, avoiding undesirable delays. For instance, if you're exporting automotive parts, ensure the description aligns with your Packing List and Bill of Lading. So, don't underestimate the power of a well-prepared Commercial Invoice – it can be the passkey to a smooth sailing customs experience!