Assembly and production in the UAE without customs clearance of imported raw materials and components - is this possible?

The Antwort Law office in Dubai is two years old, and in honor of this we are continuing a series of useful articles about the UAE, based on the cases of our clients. We help them deal with local and international legal, tax and banking issues.

Today we will consider one of the key issues for companies engaged in production and assembly in the UAE, namely the possibility of importing raw materials and components without paying customs duties and other taxes at the border, or, more simply, without customs clearance.

The main tool that allows companies to import raw materials and components without paying customs duties is Free Economic Zones (FEZ). There are several such zones in the UAE, including Jebel Ali Free Zone (JAFZA), Dubai Airport Free Zone (DAFZA) and others. In these zones, companies are provided with significant tax and customs benefits:

1) Tax-free import: companies registered in the SEZ can import raw materials and components without paying customs duties and VAT.

2) Zero income tax rate: in most SEZs there is no income tax or it is significantly reduced.

3) Export benefits: goods produced in the SEZ and exported outside the UAE may be exempt from taxes and duties.

Import and production procedure

1. Registration in a Free Economic Zone: Companies must be registered in one of the Free Economic Zones. The process includes submitting an application, submitting a business plan, and leasing office or industrial space.
2. Import of raw materials: Once registered, the company can import the necessary raw materials and components without paying customs duties.
3. Manufacturing and Assembly: Manufacturing processes can be carried out within the SEZ using imported raw materials.
4. Export of products: Finished products can be exported without paying duties and taxes if they leave the UAE.

Dubai and the other emirates of the UAE have an important position in the global supply chain, making them an ideal location for manufacturing and logistics, and responsible management and timely action will help minimize tax liabilities and ensure compliance with new regulations. At Antwort Law, we are ready to help you navigate these complex changes and provide solutions to suit your needs:

• Consultations on registration: We will help you register a company in one of the FEZs, select the optimal zone and prepare all the necessary documents.
• Legal support: We will provide full legal support, including assistance in obtaining licenses and permits.
• Transaction support: We will help in drawing up contracts for the supply of raw materials and components, as well as in the customs clearance process.

For more detailed advice and assistance, please contact our office in Dubai. We are ready to offer you comprehensive solutions for successful business in the UAE.

Lidia Ivanova

International lawyer
Antwort Law