You are a business located in UAE, and are using Fetchr to move your products to KSA. Fetchr does cash on delivery (COD) as well as prepaid or credit card (CC) deliveries for you.
I. Import VAT and Customs Duties of Goods
Will I be impacted by VAT?-
As per the transitional provisions of the Implementing Regulations of the KSA (Refer Article 79 point no.7) “Prior to introduction of the Electronic Services System in all the Member States a Taxable Person who receives Goods into the Kingdom from another Member State shall be deemed to have imported the Goods into the Kingdom and Tax will be collected in accordance with the provisions for other imports”.
And according to the Article 33 of the KSA law from January 1st, 2018, there will be an Import VAT of 5% on Commercial Invoice (CI) value of goods (termed as Total Amount in Fetchr Systems) that will be charged at the port by the authorities.
Please note that Import VAT is calculated on the Total Amount which is pushed by the client to Fetchr system.
Will I be impacted by Customs Duties?+
Yes. For all products that cross the threshold provided by the KSA government, there will be Customs Duty on the Total Amount value.
Please note custom duties vary extensively, however Fetchr’s system will calculate customs duty at a flat % on the Total Amount
This % is average of customs cost based on the nature of product moved for the client and country of delivery.
How is VAT and Customs duty calculated by Fetchr?+
Import VAT will be calculated on CIF (Cost of product, insurance and Freight) + Customs Duties + Excise value.
Fetchr pays the % Customs and % Import VAT at the port on the Total Amount pushed by the client to Fetchr’s system.
Total Amount (pushed by client to Fetchr) = SAR 1,000
Customs - 5% on 1,000 = SAR 50
Import VAT - 5% on 1,050 = SAR 52.5
Note that customs duty and Import VAT are not a charge by Fetchr, these are from the KSA governments and it is compulsory to be compliant with these government regulations to do business.
What is the Total Amount?+
Total Amount is an ALL INCLUSIVE value pushed to Fetchr system same as Commercial Invoice (CI) issued to the customer.
Fetchr will calculate % customs and % Import VAT on Total Amount value, deduct the taxes and duties paid on your behalf from the Total Amount and remit the difference back to client.
This is because Fetchr pays the Customs Duty and Import VAT at the port of entry into the country.
**The currency for Total Amount should always be that of the delivering country, if not Fetchr will reserve the right to convert to the local country currency and Fetchr will carry forward the same value for the rest of the process**
Customer Location = KSA; Currency of Total Amount = SAR
Customer Location = UAE; Currency of Total Amount = AED
Can I undervalue my products at the port in order to pay less tax?+
No, undervaluing products is illegal and Fetchr does not support or recommend any such transaction and does not accept any responsibility for any penalties, and fines or loss thereof.
Definition of the customs value according to GCC customs law “the transaction value is the price actually paid or payable for the goods when sold to an importer of any of the GCC countries”.
Cash on Delivery (COD) Value = Commercial Invoice (CI) Value = Total Amount (TA) Credit Card/Prepaid Value = Commercial Invoice (CI) Value = Total Amount (TA)
All my deliveries are prepaid or credit card. Does Import VAT and Customs duty impact me?+
Yes. Import VAT and Customs Duty are charged on all orders (prepaid/credit card orders) by the government.
Clients will push Total Amount at which they made a sale to the customer which is an all-inclusive value (inclusive of VAT, Customs duty, excise, other costs) to the Fetchr system. Fetchr will then calculate % customs and % Import VAT on Total Amount value and invoice the same to the client which is to be paid on receipt.
This is because Fetchr pays the Customs Duty and Import VAT at the port for the client.
How do I plan for Import VAT and Customs Duties?+
It is advisable to hire tax consultants to address tax optimisation at your end. Please note that VAT is not a cost of doing business, it is always borne by the end customer.
This implies that the Total Amount pushed by client to Fetchr is inclusive of all “cost, insurance and freight as well as taxes such as VAT and Customs duty.”
How do I pay for VAT and Customs Duties?+
The below are the three steps of paying customs and Import VAT in UAE and KSA.
- Fetchr pays the duties and taxes on behalf of the client at the port on the Total Amount.
- Fetchr calculates the duties and taxes paid at the port on the Total Amount
- Fetchr will recover the VAT and Customs duty from the COD collected. If the COD amount is less than the duties paid by Fetchr or if you are an only Credit Card (CC) client, then Fetchr will invoice the same amount which is to be paid immediately upon receipt of the invoice (no credit period).
II. VAT on Cross Border Delivery Service
Will there be VAT on Fetchr’s Cross Border Delivery Services?-
No. There will NOT be any VAT on the services provided by Fetchr since cross border deliveries are charged at 0% as per the law Cross Border Delivery Service is defined as
Fetchr picks up the products from UAE and directly delivers it to the end customer in KSA.
For any further clarification, please contact your respective Fetchr account managers to confirm the pricing of our services.
As a client, I request Fetchr to do multiple deliveries. Will I be charged VAT on all deliveries?+
If Fetchr charges you additionally for the 2nd or 3rd delivery attempt - then there will be a 5% VAT on all the additional deliveries.
Who should be the Consignee on the Airway bill?+
The consignee should ALWAYS be the end customer on all deliveries, the consignee must NEVER be Fetchr.
Cash on Delivery order - End Customer
Prepaid order - End Customer
In case of non-compliance, the order will not be processed by Fetchr until rectified
III. Invoicing for International Delivery Service
What are the steps when there are goods returned by customer or reverse logistics?-
According to the customs regulations, returned goods are exempted from VAT. This means, if Fetchr is returning the products back to the client due to unsuccessful delivery, there will NOT be VAT on such deliveries provided required documents are submitted.
Will the invoicing from Fetchr look different?+
Yes. It will now comply with the VAT law of KSA.
How can I comply with the law?+
Please click here and fill out the form with the requested details which will make our clients compliant.