What's the difference between customs duty and VAT on imported goods?

Customs duty is charged at 5% on the CIF value (cost, insurance, freight) for most goods imported into the UAE, paid once at customs clearance, and it's not recoverable — it becomes part of the cost of the goods. VAT is also charged at 5%, but on a different value (CIF value plus the customs duty itself), and the key difference is that it's a recoverable input tax if your company is VAT-registered and uses the goods in a taxable activity.

Many companies mix the two up in their bookkeeping, or forget that customs duty gets folded into the VAT base — meaning VAT is calculated on a higher value than the goods' original price. There are also exemptions depending on the goods' origin (like GCC agreements or free trade agreements), which requires checking the item's own customs tariff code. At RASEEKH, we help you separate the two correctly in your books and make sure you recover the VAT you're entitled to without conflating it with the non-recoverable duty.