VAT Payment through e-guarantee in UAE

Tally Solutions | Updated on: February 5, 2020

In our previous article 'Process for unregistered persons to pay VAT on import', we learnt the process for unregistered persons to pay VAT on import in specified scenarios. In this article, let us understand the scenarios in which an unregistered person has to pay VAT on import using an e-guarantee and the process for the same.

Scenarios for VAT Payment through e-guarantee

• Transfer of goods from one VAT designated zone to another VAT designated zone
• Import of goods into UAE under customs duty suspension. Customs duty suspension is applicable for certain specified goods on which the importer has to pay zero customs duty or customs duty at a reduced rate.

Let us now understand the process by which unregistered persons have to pay VAT in these cases.

Process for VAT Payment on Import

1. Customs declaration

The importer should prepare and submit the customs declaration in the respective Customs portal and do the following:

• 1.Provide the necessary details about all the goods being imported
• 2.Submit customs declaration for processing by Customs

Once the declaration is approved, it moves to 'Pending tax payment' status.

Note: Once the Customs declaration is sent to the FTA, the customs system will not allow any further editing of the form. The status of the declaration form can only be changed to either 'Approved' or 'Declined'.

2. Obtain e-guarantee (Financial security)

The importer should obtain an e-guarantee from their bank. The process for this is:

• Obtain an e-guarantee from the bank for a value equal to the value of VAT due
• Obtain the reference number for the e-guarantee

3. Create an e-Services account on FTA portal

Unregistered persons should create an e-Services account on the FTA portal to pay VAT on import. The sign-up process is as follows:

• Sign up as a new user by entering your email ID and a unique password
• You will receive an email at the registered email ID asking you to verify your email ID
• Once your email ID is successfully verified, your e-Services account will be created and you can login to the FTA e-Services portal

4. Login to the FTA portal and complete the VAT import declaration form

The importer should login to the FTA e-Services portal and submit the e-guarantee number obtained from the bank. This e-guarantee number has to be submitted in the Form VAT 301- Import declaration form for VAT payment. Once the submission of e-guarantee number is processed, the customs clearance process can be completed.

The steps for submission of e-guarantee number in the FTA e-Services portal is explained in detail in our article 'Process to submit e-guarantee in FTA portal'.

Hence, the process of VAT Payment on import by unregistered persons is different from the process for registered persons. In certain specified scenarios of import, the unregistered importer has to obtain an e-guarantee from the bank and submit the same in the FTA e-Services portal.