In brief
As per Dubai Customs Notice No.17/2020, since 25 October 2020 all the Dubai-based Free Zone Companies (either located in fenced or unfenced Free Zones) holding a Customs Code from Dubai Customs, are obliged to submit a Customs Declaration called “Goods Consumption within FZ,” at least on a quarterly basis through the Dubai Trade portal. This is in order to report the goods imported (e.g., Transited in) under their Customs Code which are used or consumed within such Free Zones (e.g., Not Transited out).
Which kind of goods shall be cleared through the “Goods Consumption within FZ” Customs Declarations?
There could be different types of goods to be cleared through the “Goods Consumption within FZ” Customs Declarations and their categorization as “non-dutiable” or “dutiable” will depend on the purpose for which they have been imported by the Free Zone Company.
A non-exhaustive list of the “non-dutiable” and “dutiable” goods categories are illustrated below:
Non-Dutiable |
Dutiable |
Building equipment and materials used in construction projects |
Goods sold to local market (retail or wholesale) |
Packaging materials |
Damaged materials suitable for sale |
Machinery, equipment, and spare parts for facility’s operation and maintenance |
Other goods not categorized as “non- dutiable” |
Petrol, oil, and lubricants used in production |
|
Office equipment and supplies |
|
Damaged materials not suitable for sale |
|
Others decided by Dubai Customs |
Which are the consequences of being non-compliant?
In the case of non-compliance, Dubai-based Fee Zone Companies run the risk of being targeted for an audit by Dubai Customs. If audited, they would not have sufficient support for proper customs procedures for goods imported (Transited in) into the Free Zone, and those that do not have a corresponding Outbound Customs Declaration (Transit out) as they have been consumed or used in the Free Zone.
Consequently, these goods may be considered as missing goods utilized for a different purpose by the Free Zone Company, for instance sold into the UAE local market without paying the corresponding customs duties, triggering the imposition of fines.
Looking ahead
Dubai-based Free Zone Companies should ensure that “Goods Consumption within FZ” Customs Declarations are submitted at least on quarterly basis, so that the goods imported (Transited in) under their Customs Codes for consumption or use within the Free Zone are cleared from any customs duty liability, mitigating risks in case of being targeted for a Customs Audit in the future.
We are happy to discuss your specific circumstances with you and determine the way forward should you have any questions or concerns in this regard. Please get in touch with any of the Indirect Tax and Customs professionals below.
