LISTEN TO THIS ARTICLE
In accordance with the Unified Customs Tariff for GCC countries, customs duty on goods imported into GCC countries is generally levied at 5%. Exceptions include alcohol, which is taxed at 50%, and cigarettes, which are taxed at 100%. Goods originating from GCC countries are treated as national products and are thus exempt from customs duty. However, goods imported from non-GCC countries attract import duties at prescribed rates.
To enhance the competitiveness of the national industry, foster export growth, and attract foreign investments, the Cooperation Council for the Arab States of the Gulf has exempted industrial inputs from customs duties. This article discusses the exemption and the conditions required for eligibility.
History
The Cooperation Council for the Arab States of the Gulf granted the exemption to manufacturing plants during its 22nd session in Oman in December 2001. In 2009, the council published the 'Amended Controls for Exemption of Industry Inputs from Customs Taxes "Duties" in GCC Member States.' The council has authorized the Financial & Economic Cooperation Committee (FECC) to interpret and amend these controls in accordance with the requirements of GCC customs union and economic variables.
What’s exempt and for how long?
Duty exemption covers the following items required for immediate industrial production:
1. Plant, machinery and equipment
2. Raw materials
3. Semi-manufactured goods
4. Packing materials
This exemption remains valid as long as the plant is operational and satisfies the underlying conditions.
What are the conditions?
To avail the benefit of the exemption, the manufacturing plant shall satisfy following conditions:
- Possess a valid industrial license from the competent authority
- Apply to the competent authority for exemption using Form A for imports from non-GCC countries or Form B for imports through GCC countries.
- Keep record of plant, machinery, equipment, raw materials, semi-manufactured goods and packing materials
- Annually submit audited financial statements to the competent authority
What about goods imported through GCC free zones
Goods imported through GCC free zones do not qualify for national goods exemption. However, such goods used for industrial production are still eligible for industrial duty exemption. To avail this, the manufacturing plant must satisfy the above conditions and submit the application using Form B.
Conclusion
The GCC's exemption of industrial inputs from customs duties aims to boost industrial competitiveness, encourage export growth, and attract foreign investments by reducing financial burdens for manufacturers. However, manufacturing plants must meet specific conditions: maintaining valid industrial licenses, applying for exemptions through the appropriate forms, keeping detailed records, and submitting annual audited financial statements.
This balanced approach provides significant incentives to industrial players while maintaining regulatory oversight, stimulating industrial growth, and ensuring that exemptions benefit compliant entities, thus supporting the GCC's broader economic development objectives.
Disclaimer: Content posted is for informational and knowledge sharing purposes only, and is not intended to be a substitute for professional advice related to tax, finance or accounting. The view/interpretation of the publisher is based on the available Law, guidelines and information. Each reader should take due professional care before you act after reading the contents of that article/post. No warranty whatsoever is made that any of the articles are accurate and is not intended to provide, and should not be relied on for tax or accounting advice.
