Import and Export VAT for Oil & Gas in the UAE

The sector both imports and exports at scale: equipment imports pay 5% VAT at customs and recover in full, while product exports zero-rate with the evidence chain. Designated-zone storage and blending follow the zone rules, which matter enormously for trading operations. VAT at 5% is payable at import on the customs value, and for most producers, refiners, distributors, service companies and traders it is recoverable in full as input tax against taxable outputs. The customs declaration is the recovery evidence: without it, the input tax claim has no foundation. Where import volumes are material, the customs file becomes a standing part of month-end: declarations matched to purchase invoices, values agreed to payments, and the recovered import VAT reconciled to the return's input tax line.

Export zero-rating under Article 45(1) of the VAT Law applies to goods that genuinely leave the UAE, evidenced by customs declarations and shipping documents. A foreign buyer or a foreign delivery instruction does not export the goods; the paperwork proving exit does. For producers, refiners, distributors, service companies and traders, the typical export positions are set out below. Services exports zero-rate under the exported-services conditions rather than Article 45(1); goods exports use Article 45(1) with shipping proof.

Designated zones are specific areas listed in Cabinet Decision No. 59 of 2017 with their own VAT treatment for movements of goods. A free zone address alone is not a designated zone, and services remain taxable even where goods movements qualify. For producers, refiners, distributors, service companies and traders, the zone question is usually storage, movement or processing of goods: qualifying movements within and between designated zones follow the zone rules, while services, including anything done to the goods as a service, remain taxable.

Zero-rating without evidence is a domestic supply waiting to be reassessed. The file holds the contract, the customs declaration in the exporter's name or evidencing its export, the shipping documents proving exit, and proof of payment. VAT records must generally be kept for five years after the end of the tax period they relate to, and longer for specific categories such as real estate records. Invoices, contracts, import and export evidence, and the workings behind apportionment all sit inside that file. Agree indirect-export evidence chains before the goods move, not after.

Import VAT is input tax like any other: recoverable where the goods are used for taxable supplies, blocked where they feed exempt outputs, apportioned where the use is mixed. Product exports are zero-rated with customs declarations, shipping documents and contracts evidencing the exit. Exporters in a structural refund position should treat the refund process as a treasury routine with its own timetable and documentation standard. Timing matters too: import VAT is claimed in the period the import conditions are met, and export zero-rating is claimed when the export evidence exists, so the evidence file should track consignments from order to exit.

Equipment and goods brought in temporarily, for projects, events, exhibitions or trials, should use the proper temporary admission customs procedures so the VAT position matches the commercial reality. For producers, refiners, distributors, service companies and traders, the alternative, paying full import VAT and recovering it later, ties up cash and creates a recovery file for goods that were never really imported. Match the procedure to the facts before the goods arrive.

At import, customs duty and VAT are separate charges under separate legislation. VAT at 5% is calculated on the customs value, which includes the duty and the freight and insurance elements per the customs valuation rules; paying the duty does not pay the VAT, and the VAT is the amount recovered as input tax. For producers, refiners, distributors, service companies and traders, the clearing paperwork should show both charges distinctly, because the input tax claim is for the VAT only.