Importing Juices & drinks with added Sugar into UAE: Customs Clearance Process

Importing sugary drinks into Dubai involves navigating customs clearance procedures and paying applicable taxes, including customs duties, value-added tax (VAT), and excise tax. Below is a detailed breakdown based on the UAE’s regulations, focusing on sugary drinks, also referred to as sugar-sweetened beverages (SSBs).

1. Customs Clearance Process

To import sugary drinks into Dubai, you must comply with the UAE’s customs regulations, managed by Dubai Customs and the Federal Authority for Identity, Citizenship, Customs, and Port Security (ICP). Key steps include:

• Registration: Importers must register with Dubai Customs to obtain a customs code, which is required for all customs transactions.
• Documentation: Provide the following documents for clearance:
  • Commercial invoice
  • Packing list
  • Bill of lading (Telex Release) or airway bill
  • Certificate of origin
  • Health Certificate from origin
  • Import permit (food regulatory)
  • VAT registration certificate (for sugary drinks))
  • Documents may need to be translated into Arabic or accompanied by certified translations.
• Inspection: Dubai Customs inspects shipments to verify the declared value and ensure compliance with regulations. Any discrepancies may result in additional fees.
• Payment: Taxes and duties must be paid via the Dubai Trade Portal or at designated Dubai Customs payment counters. Once confirmed, customs clearance is granted, and goods can be collected or delivered.
• Restricted Goods: Ensure sugary drinks comply with UAE food safety standards (e.g., GCC Standardization Organization standards). Certain ingredients may require prior approval from authorities like the Dubai Municipality.

2. Applicable Taxes and Duties

Sugary drinks are subject to three main taxes when imported into Dubai:

In the United Arab Emirates (UAE), excise taxes on sugary drinks are implemented to reduce consumption of unhealthy beverages and address public health concerns like obesity and diabetes. Below is a summary of the taxes on sugary drinks in the UAE based on available information:

Overview of Sugary Drink Taxes in the UAE

1. Initial Excise Tax (October 2017):

• A 50% excise tax was introduced on carbonated drinks (except unflavored aerated water).
• A 100% excise tax was applied to energy drinks, defined as beverages marketed for energy enhancement containing stimulants like caffeine, taurine, ginseng, or guarana.
• The tax aimed to discourage unhealthy consumption and generate revenue for public services.

• Expanded Excise Tax (December 2019 / January 2020):

• From December 1, 2019, the UAE extended the excise tax to include sweetened drinks at a rate of 50%. This was initially announced to take effect from January 1, 2020, but implementation began in December 2019.
• Sweetened drinks are defined as any product with added sugar or sweeteners, including:
  • Ready-to-drink beverages.
  • Concentrates, powders, gels, extracts, or any form that can be converted into a sweetened drink.
• Exemptions include:
  • Beverages with at least 75% milk or milk substitutes.
  • Beverages for special dietary needs or medical use, as defined by GCC Standardization Organization (GSO) standards.
• Sugars include sucrose, dextrose, fructose, glucose syrup, lactose, etc., and sweeteners include aspartame, sucralose, saccharin, and steviol glycosides.

Impact and Examples

• Price Increase Example: For a sweetened drink priced at AED 10 (excluding VAT and excise tax), the price after the 50% excise tax and 5% VAT would be approximately AED 15.75 (AED 5 excise tax + AED 0.75 VAT).
• Health Impact: Studies suggest the tax has been more effective in reducing consumption among lower-income groups, particularly children, due to price sensitivity. Doctors estimate significant healthcare cost savings over time, with a potential reduction in obesity, diabetes, and dental issues.
• Industry Response: Businesses are required to register taxable goods with the Federal Tax Authority (FTA) and ensure compliance with IT systems and processes by the implementation date. Some companies have reformulated products to reduce sugar content to avoid the tax.

Purpose and Effectiveness

• The excise tax is aimed at curbing consumption of products harmful to health and the environment while raising government revenue for public services.
• Evidence from the UAE and other GCC countries shows a positive effect in reducing soft drink sales growth, particularly in the UAE, Qatar, and Saudi Arabia. Complementary measures like education and marketing restrictions are recommended to enhance effectiveness.
• A 2019 report noted a significant drop in energy drink sales (up to 65% in the first 15 months post-tax), indicating behavioral changes among consumers.

Additional Notes

• The UAE was the second GCC country after Saudi Arabia to implement such taxes, with the policy aligning with regional efforts to combat non-communicable diseases (NCDs) like diabetes and obesity.
• The tax is applied at the point of production or importation, impacting manufacturers, importers, and stockpilers, who must register with the FTA to avoid fines.
• Public sentiment, as reflected in some reports, supports the tax for discouraging unhealthy habits, especially among youth, though affluent consumers may be less affected.

For the latest details or specific compliance requirements, businesses and consumers can refer to the Federal Tax Authority (FTA) website or the EmaraTax platform for digital tax services.

If you need further details, such as specific product classifications or recent updates, let me know, and I can search for real-time information or analyze relevant sources!

b. Value-Added Tax (VAT)

• Rate: A 5% VAT is applied to the total value of imported goods, including the CIF value, customs duty, and any other applicable fees.
• Reclaim: VAT-registered businesses can reclaim VAT paid on imports if the goods are used for business purposes.
• Calculation: Using the previous example (CIF value AED 10,000 + customs duty AED 500), the VAT base is AED 10,500, so VAT would be AED 525 (5% of AED 10,500).
• Note: Non-VAT-registered importers cannot reclaim this tax, increasing the cost.

c. Excise Tax

• Rate: A 50% excise tax is levied on sugar-sweetened beverages (SSBs), effective since December 1, 2019.
• Definition of SSBs: SSBs include any ready-to-drink beverages with added sugar or sweeteners, as well as concentrates, powders, gels, or extracts intended to be made into a beverage. This covers:
  • Soft drinks, sports drinks, and other sweetened beverages.
  • Any product with added sugar (e.g., sucrose, fructose, glucose syrup) or sweeteners (e.g., aspartame, sucralose) as defined by GCC Standardization Organization standards (GSO 148 for sugar, GSO 995 for sweeteners).
• Exemptions:
  • Beverages with at least 75% milk or milk substitutes.
  • Beverages for special dietary needs (per GSO 654 standards, e.g., medical or infant formulas).
  • Unsweetened fruit juices and unflavored aerated water.
• Calculation: The excise tax is based on the retail price or declared value of the goods. For example, if a sugary drink has a declared value of AED 10 per unit (excluding VAT and customs duty), the excise tax would be AED 5 per unit (50% of AED 10). For a shipment of 1,000 units, the total excise tax would be AED 5,000.
• Registration: Importers of SSBs must register with the Federal Tax Authority (FTA) as excise taxable persons and register their products on the FTA’s electronic system.

3. Total Cost Example

For a shipment of sugary drinks with a CIF value of AED 10,000 (1,000 units at AED 10 each):

• Customs Duty: AED 500 (5% of AED 10,000)
• Excise Tax: AED 5,000 (50% of AED 10,000, assuming the declared value aligns with the CIF value)
• VAT: AED 525 (5% of AED 10,000 + AED 500 = AED 10,500)
• Total Taxes and Duties: AED 6,025
• Total Landed Cost: AED 16,025 (CIF value + taxes)

If the importer is VAT-registered, they can reclaim the AED 525 VAT, reducing the effective tax burden to AED 5,500.

4. Additional Considerations

• Free Trade Zones (FTZs): Importing into an FTZ (e.g., Jebel Ali Free Zone) defers customs duties and excise taxes until the goods enter the UAE mainland. This can improve cash flow for businesses.
• FTA Compliance: Importers must ensure IT systems, processes, and staff are prepared for excise tax compliance by the implementation date. The FTA may conduct audits and impose penalties for non-compliance.
• Health Policy Context: The 50% excise tax on SSBs aims to reduce consumption due to health concerns like obesity and diabetes, which affect the UAE significantly (19.3% of adults have type 2 diabetes).
• Price Impact: The excise tax significantly increases costs. For example, a sugary drink priced at AED 10 (excluding taxes) would cost AED 15.75 after excise tax (AED 5) and VAT (AED 0.75).
• Regional Context: Other GCC countries like Saudi Arabia and Bahrain also impose similar SSB taxes, with Saudi Arabia pioneering the 50% tax in 2017.

5. Recommendations

• Verify Product Classification: Confirm whether your sugary drinks qualify as SSBs under GSO standards or are exempt (e.g., milk-based or dietary beverages). Consult the FTA’s guides for clarity.
• Engage Professionals: Work with customs brokers like Interlink Freight Agency Customs Broker or consultants to ensure compliance with documentation and tax calculations. They will also arrange door delivery.
• Register Early: Complete FTA registration for excise tax and Dubai Customs registration well in advance to avoid delays.
• Monitor Costs: Factor in all taxes (customs duty, excise tax, VAT) when pricing goods to maintain profitability.
• Check FTZ Benefits: Consider importing through an FTZ to defer taxes if your business model supports it.

6. Sources for Further Information

• Dubai Customs: www.dubaicustoms.gov.ae for customs procedures and forms.
• Federal Tax Authority: www.tax.gov.ae for excise tax registration and guides.
• UAE Government Portal: u.ae for customs and excise tax regulations.
• Passenger Customs Guide (Dubai): PDF available at www.dubaicustoms.gov.ae for exemptions on personal imports.

If you need specific assistance (e.g., calculating taxes for a particular shipment or verifying exemptions), please provide more details, and we can tailor the response further!

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