A painting entering the UAE pays five per cent duty on its landed cost, and VAT on top.

Two charges meet a painting at the border of the United Arab Emirates, and two different authorities collect them. Customs duty is a Gulf Cooperation Council charge, run by the customs department of each emirate. Value added tax is a federal charge, run by the Federal Tax Authority. A shipment can clear one and be stopped by the other.

Published by ArtisDomus, written by Polina Surina.

Three questions follow. What is charged? On what value? And what must a private owner produce? For what happens before the work leaves Europe, and what an ATA carnet covers, see moving a collection from Europe to the Gulf.

Under Article 9 of the Common Customs Law of the GCC States, imported goods pay the duties set in the customs tariff and other applicable fees. Goods exempted under that Law, under the Unified Economic Agreement of the GCC Arab States, or under any other international agreement within the Council framework are excluded. So every charge on a painting at the border must trace back to the tariff or to an exemption.

The tariff rate can be ad valorem (a percentage of the value), specific (an amount per unit), or both (art. 10). Duties are imposed, changed and removed by each Member State’s own legal instrument, subject to Council resolutions and the international agreements in force (art. 11). A resolution changing the duties must state the date the change takes effect (art. 12).

Four articles fix which day’s tariff applies. They matter for a work that waits somewhere before clearance. Imported goods pay the duties in force on the day the customs declaration is registered, unless the resolution amending the tariff says otherwise (art. 13). The same rule applies when duty falls due because a warehousing period has expired (art. 14). Goods taken from free zones and duty-free shops into the local market pay the tariff in force at that time (art. 15). Damaged goods are charged on their value on the day the declaration is registered (art. 18).

Article 29 covers goods with no line in the tariff. Goods not mentioned in the customs tariff, the Harmonized System and the explanatory notes are classified on the advice of the World Customs Organization. Goods under national subheadings are classified within the Common Customs Tariff of the Council’s member States.

The Common Customs Law leaves customs value to the Rules of Implementation (art. 26). Article (1) of those Rules sets the general provisions and the bases. Paragraph I.5 turns a purchase price into a customs value: freight, insurance and other relevant charges up to arrival at the port of destination in the GCC States are added. Discounts or deductions agreed between buyer and seller after the date of import do not reduce the transaction value (paragraph I.7). Credit balances from earlier consignments do not count either. The Agreement on Customs Valuation governs how the article is read and applied (paragraph I.8).

The bases form a ladder, taken in order (paragraph ii of Article (1)). The first is the transaction value of the imported goods. If that cannot be used, customs try, in turn, the transaction value of identical goods, then of similar goods, then the deductive value and the computed value. If none works, they use reasonable methods that follow the general principles and provisions of the Valuation Agreement, with more flexibility. The importer may ask for deductive and computed value to be applied in reverse order.

Dubai Customs gives the same ladder in its own words, plus the definition that decides most private cases. Transaction value is the price actually paid or to be paid for the goods when sold for export to the importing GCC country. The customs value of goods imported to Dubai is based on CIF (cost, insurance, freight), under the Common Customs Law of the GCC States and its rules of implementation. CIF includes transport, insurance and related charges up to the place of import.

Apply that to an ordinary collection. A work bought at auction last year has a price actually paid. A work given, inherited or held for thirty years has none, so the first rung of the ladder is closed to it. Its value will be built from identical or similar goods, or by a reasonable method. Someone other than the owner will build it, unless the owner arrives with a valuation.

Two articles cover a dispute between owner and officer. If the value is disputed because of a difference in description, origin or any other reason, the matter goes to the director (art. 62(a)). If the director backs the officer and the owner does not accept it, it goes to the director general, who settles it or refers it to the valuation committee. The director may release the goods in dispute, unless they are prohibited, against a deposit equal to the duties and taxes set by customs (art. 62(b)). The valuation committee is made up of officers of the administration and set up by resolution of the director general (art. 61). The importer has fifteen days to appeal against a decision raising the value (art. 61). The days run from registration of the declaration, or from the date of the valuation notice sent by registered mail. The right to go to court is unaffected.

Write down fifteen days. The clock starts at registration of the declaration, whatever day the owner learns of the decision. The work is usually still in a shed while it runs.

The federal customs authority, the Federal Authority for Identity, Citizenship, Customs and Port Security, sets out the UAE’s position on the customs union. The GCC Supreme Council approved the Customs Union at its 23rd session in Qatar in December 2002, and the union started on 1 January 2003. The common tariff is 5 per cent on all foreign goods imported from outside the Union. There are two kinds of exemption: 417 goods on the approved schedule, and exemptions under the Unified Customs Law. Tobacco and its derivatives carry 100 per cent duty, ad valorem or specific, under the unified tariff schedule.

In Dubai the rate is 5 per cent of the CIF value (cost, insurance, freight). The exceptions are alcohol, at 50 per cent, and cigarettes, at 100 per cent.

Goods exempted in the GCC Common Customs Tariff are exempt from customs duties and taxes (art. 98). So the list of exemptions sits inside the tariff. Whether a painting is exempt depends on the schedule of 417 exempted goods.

Dubai Customs also has an Integrated Customs Tariff page. It describes the tariff as the single reference for classifying goods traded across borders. The tariff is based on the Harmonized System of the World Customs Organization and uses a unified 12-digit structure adopted by the GCC.

Article 103(a) of the Common Customs Law exempts personal effects and used household items from duty. It covers nationals living abroad, and foreigners coming to live in the country for the first time. It applies subject to the conditions and controls set by the director general. Article 103(b) exempts personal effects and gifts carried by passengers, provided they are not commercial and meet the conditions in the Rules of Implementation.

The Rules set a figure for passengers. Their personal effects and gifts are exempt if the value does not exceed 3,000 Saudi riyals or the equivalent in another GCC currency (Article (19)). The items must be personal and in non-commercial quantities (Article (20)). The passenger must not be a frequent traveller through that customs office or a trader in the items. Everything exempt under this head stays subject to the prohibitions and restrictions of the Common Customs Law and each Member State’s national law (Article (21)). Dubai Customs uses the same threshold in dirhams. Gifts worth up to AED 3,000 are exempt, and passengers must declare all kinds of goods worth more than AED 3,000.

The first head, used household items on taking up residence, can carry a picture. Dubai has set its conditions since 2006. Customs Policy DCP (8) of Dubai Customs, Conditions and Controls for exempting Personal Effects and Household Items, is dated 30 January 2006 and in force from 1 March 2006. Its Article (1) limits the exemption to two groups. One is nationals living abroad, on their final return to live in the country. The other is foreigners coming to live in the country for the first time.

Article (3) of the policy says who applies these conditions and what happens outside them. Branch operations and customs centres may approve the exemption, with every facilitation that speeds up clearance under these conditions. Disputes and clear breaches go to the Customs Tariff and Origin Department to settle. New personal effects and household items are not exempt, and duty is collected on them under the customs law and tariff. Declarations in these cases need no commercial invoice or certificate of origin attached.

The policy does not name paintings. Two of its terms decide the question in practice. Condition 6 asks for quantities that fit the furnishing of a house, which is a test about a household. Article (3)(3) excludes anything new, so a recent purchase is out whatever else is true of it. The customs centre decides under Article (3)(1), and an owner who disputes the decision goes to the Tariff and Origin Department under Article (3)(2).

The exemption also links the two charges, in the owner’s favour.

VAT was introduced across the UAE on 1 January 2018 at a standard rate of 5 per cent. It applies to imports of goods and services, so that domestic providers of the same goods and services keep a level playing field. The Executive Regulation defines the standard rate as the rate in Article 3 of the Decree-Law.

Some goods are not treated as imported at all (art. 47, Executive Regulation). Paragraph 1(a) covers goods under customs duty suspension under the GCC Common Customs Law. There are four cases: temporary admission, goods in a customs warehouse, goods in transit, and imports the same person will re-export. This applies only if the importer gives a financial guarantee or cash deposit equal to the tax due, when the Authority asks for one. Paragraph 1(b) covers goods brought into a designated zone from outside the State.

Paragraph 2 matters for a household move, because it links the tax to the customs exemption. No tax is due on imports exempt from customs duty under the GCC Common Customs Law in four categories. The first is goods imported by the military and internal security forces. The second is personal effects and gifts carried by travellers. The third is used personal effects and household items brought by UAE nationals returning from abroad, or by expats moving to the UAE for the first time. The fourth is returned goods. So a painting with the Article 103 exemption pays no import VAT either, and one that fails it pays both charges.

Everyone else follows Article 48 or Article 50 of the Executive Regulation. Article 48(1) applies the reverse charge of Article 48(1) of the Decree-Law, under which the importer accounts for the VAT in its own tax return. Four conditions must be met. At the time of import, the taxable person can show they are registered for tax. They hold enough detail for the Authority to verify the import and the tax due, and can provide it when asked. They have given the Authority their own customs registration number for that import, issued by the competent customs department. And they have cooperated with the Authority and complied with its rules on the import. That person then accounts for tax on the value of the goods at the domestic rate (art. 48(4)). The tax is declared and paid in the return for the period of the supply.

Article 50(1) covers the private owner, who pays at the border. It applies to an importer not registered for tax, and to a taxable person who does not meet the conditions of Article 48(1). The tax must then be paid to the Authority before release, by that person or on their behalf. Customs departments must work with the Authority to make sure the tax is settled before release (art. 50(2)).

Article 50(4) to (8) covers an owner who uses an agent. Take an owner not registered for tax who imports through an agent. The agent acts for the owner and is registered for tax in the State. In that case the agent is responsible for paying the tax. The tax is reported and paid through the agent’s return as if the agent were the importer. The agent may not recover as input tax any tax paid for another person. The agent must issue a statement. It gives the agent’s name, address and tax registration number, the date of the statement, the date of import, a description of the goods and the tax paid. That statement counts as a tax invoice. An owner who never receives it has paid tax with no document to prove it.

Dubai Customs sets out what a temporary import costs up front. The entity bringing goods in for a temporary purpose should hold a customs business code based on its licence from the relevant mainland authority. The declaration for temporary admission should give the reason for it. A deposit equal to the customs duty on the item under the tariff applies. It is refunded when the goods are re-exported within the time allowed for temporary admission. Goods under an ATA carnet need no deposit, and temporary admission then lasts 6 months or until the carnet expires, whichever is shorter.

Three things follow for a work coming for a season. The money still has to be found, since the deposit equals the duty. The tariff still applies, since the deposit is calculated from it. And the rule on a mainland licence is written for an entity, so a private owner must settle how it applies before booking the crate.

For what a carnet covers, which Annexes the Gulf states accepted and why a private residence falls outside them, see moving a collection from Europe to the Gulf. For VAT, goods under temporary admission are not treated as imported (art. 47(1)(a), Executive Regulation). This applies only if a guarantee or cash deposit equal to the tax due is given, when the Authority asks for one.

Customs Policy DCP (21) of Dubai Customs, dated 23 December 2008 and made under Articles 52 to 59 of the Common Customs Law, covers the examination and inspection of goods. Goods are examined at the customs office, stores and warehouses (Article (8)). They may be examined outside the customs office, at the owner’s expense and against the set service charges, in four cases. The first is sensitive, fragile or perishable goods such as furniture, glass and glassware, artistic masterworks and antiquities. The second is personal effects and household items for personal use. Customs keep the right to inspect at the customs office if they see fit or if required.

Article (9) puts the costs on the owner: moving the goods to the place of examination, unpacking, repacking and all other work needed. The owner is responsible for the goods until they reach the place of examination. Goods in customs warehouses or at the place of examination may not be moved without the customs office’s approval. Examination takes place only with the owner or the owner’s representative present (Article (10)).

Under Article (1), the owner or representative must be told the date and place of examination. The customs officer may examine all or part of the goods. The customs office may also send them to specialist agencies for analysis, to verify their kind and specifications. Article (7) requires full inspection in four cases. One is mixed goods imported in irregular packages without detailed packing lists. A crate packed without a list will be opened completely.

These rules are set by each emirate. Abu Dhabi Customs describes itself as a government entity responsible for implementing customs policies approved by the relevant authorities in the United Arab Emirates. So two emirates can run different procedures under the same Gulf law, and these Dubai policies apply in Dubai.

ArtisDomus works through five steps, in this order.

The same pattern sits behind all five. The customs charge is about a consignment, its value and its dates. The tax charge is about a person: whether they are registered, and whether the goods were exempt from duty. Both are answered from the inventory, the invoice file and the owner’s residence papers. A collection that records only what a work is cannot answer either; it also needs what was paid, when, by whom and to whom. For what France asks before the work leaves, and how the two ends meet, see moving a collection from France to the UAE.

A summary of the law. It is not legal or tax advice.