How to handle international transactions in UAE?
2026 compliance, VAT, customs & free zone insights
Navigating international transactions in the UAE demands precise handling of 5% VAT, 9% corporate tax, customs valuation, reverse charge, and transfer pricing. With over 100 double tax treaties, zero‑rated exports, and free zone incentives, the UAE offers huge advantages — but only if you master the documentation and compliance. One Desk Solution decodes the complexity.
Get instant expert support – Call / WhatsApp +971-52 797 1228 or chat with our compliance team.
📋 Table of contents — international transactions UAE 2026
🇦🇪 UAE tax landscape for global trade (2026)
Since 2018, 5% VAT applies; from 2023, 9% corporate tax on worldwide income for resident entities. Exports are typically zero‑rated, imports attract 5% VAT (recoverable) and often 5% customs duty. The FTA strictly enforces documentation. Free zones continue to provide CT exemption on qualifying income and simplified customs – crucial for re‑export hubs.
🌍 Mainland
- Export zero‑rated with proof
- Import VAT 5% + duty (recoverable)
- Reverse charge for services
- CT 9% on worldwide income
- Foreign tax credit via treaties
✨ Free Zone (QFZP)
- 0% CT on qualifying income
- No customs duty if goods stay in zone
- Deemed domestic if enter mainland
- Banking scrutiny higher
- Simplified customs declarations
📊 VAT: Zero‑rated exports vs import VAT at 5%
| Aspect | Exports (Zero-Rated) | Imports (VAT at 5%) |
|---|---|---|
| VAT Charged | ✅ None on sale; recover inputs | 🛃 Paid at customs or reverse charge; recover as input |
| Documentation | Export declarations, bills of lading, invoices | Customs forms, invoices, certificates of origin |
| Cash Flow Impact | 💰 Positive (refunds via FTA) | ⏳ Deferral schemes available |
| Free Zone Note | 📦 Duty-free if staying in zone | 🏭 Treated as domestic if entering mainland |
🔹 Reverse charge reminder: Imported services – UAE recipient self-assesses 5% VAT and recovers simultaneously if fully taxable. No cash outflow, but strict invoice rules.
📈 Corporate tax implications & double tax treaties
UAE resident companies pay 9% CT on taxable profits exceeding AED 375,000. Foreign income may be taxed in source country; UAE grants relief under one of 100+ double tax treaties. Qualifying Free Zone Persons (QFZP) maintain 0% on qualifying transactions, but beware: some international transactions with mainland or unrelated free zones may become non‑qualifying.
📎 Transfer pricing (TP): Cross‑border related‑party deals must be at arm’s length. If revenue > AED 200M, prepare master & local file; disclose all related‑party transactions > AED 40M in CT return. Penalties up to 300% of tax adjustment.
🛃 Customs duties & simplified procedures
Standard duty: 5% ad‑valorem on CIF value. GCC goods often exempt. No export duties. Businesses can apply for VAT & customs deferment (approved importer status) to ease cash flow. Free zones: suspension of duty and VAT while in zone; if moved to mainland, becomes taxable import.
HS code classification essentials:
- Commercial invoice, packing list, bill of lading / air waybill
- Certificate of origin for preferential rates
- VAT deferment: monthly/quarterly settlement
💱 Currency & payment compliance
UAE Dirham (AED) is freely convertible. Central Bank requires licensed exchange houses for remittances; AML/CFT checks apply. No exchange control, but large cross‑border transfers (> AED 55,000 often) require proof of funds. Free zone accounts face more rigorous documentation.
🏢 Mainland vs Free Zone: strategic choice for international trade
| Feature | Mainland | Free Zone |
|---|---|---|
| Ownership | 100% foreign allowed | 100% foreign |
| Tax / VAT | Full compliance (9% CT, 5% VAT) | CT exemptions on qualifying; simplified customs |
| Market Access | UAE-wide | Primarily international; restrictions on mainland |
| Setup Cost | Higher licensing | Lower, incentives |
| Banking | Easier local transfers | More scrutiny, longer process |
💡 our take: Pure re‑exporter? Free zone. Selling to UAE consumers or government? Mainland or establish a mainland presence.
📂 Documentation essentials for FTA & customs
- Tax invoice with TRN, zero-rating reason, “export”
- Bill of lading / air waybill, export declaration (Mirsal 2)
- Customs import declaration form, payment receipt
- Contracts for cross-border services (place of supply)
- TP policy documentation if revenue > AED 200M
- Retain all records for 5 years (FTA requirement)
⚠️ Common pitfalls and how One Desk Solution fixes them
🚫 Frequent mistakes
- Treating free zone to mainland as export → taxed as domestic
- Ignoring reverse charge on imported services
- Missing TP disclosure → huge penalties
- Incomplete export evidence → VAT recovery denied
✅ Pro compliance tips
- VAT register if turnover > AED 375K
- Apply for VAT deferment / customs guarantee
- Conduct annual transfer pricing health check
- Outsource to specialists: One Desk Solution handles reverse charge and FTA audits.
👔 Role of expert services: One Desk Solution – your strategic partner
One Desk Solution, Dubai’s top-rated VAT, corporate tax, bookkeeping and audit firm, provides 24/7 dedicated support. From VAT registration, import deferral, reverse charge accounting, to CT filing and TP documentation — we ensure FTA compliance. Our clients enjoy smooth customs clearance, maximum refunds, and audit‑proof records.
📢 Don’t let complex cross‑border rules slow your growth
Immediate assistance: +971-52 797 1228 (call & WhatsApp)
📌 Step-by-step: managing an international transaction (UAE)
VAT if >AED 375K, CT if profit >AED 375K
Export / import / service; zero‑rated or reverse charge?
Invoice, transport, customs, origin
Self-assess reverse charge, arm's length TP
VAT quarterly, CT annually
Partner with One Desk Solution
🔮 Future updates & best practices (2026)
As of February 2026, monitor FTA guidelines on transfer pricing documentation thresholds and potential changes to qualifying free zone income definitions. Best practice: automate VAT/CT compliance software, perform annual tax health checks, and subscribe to expert bulletins.
❓ Frequently asked questions – international transactions UAE
Goods exported from a free zone directly outside UAE are zero‑rated, provided the exporter keeps transport documents and customs evidence. If goods go to mainland UAE, it’s a taxable supply (5% VAT).
Registered businesses can claim input VAT on the customs import declaration as if it were a tax invoice. Must hold Form Bayan and proof of payment. Reverse charge services: self‑account and recover in same return.
Qualifying Free Zone Person (QFZP) enjoys 0% on qualifying income. However, income from non‑qualifying activities (e.g., certain transactions with mainland) is taxed at 9%. Foreign tax credits may apply per DTA.
FTA penalties: AED 500 per month for late registration, plus up to 300% of tax due for non‑payment. Professional advisors minimize risk.
Yes, but through a local distributor or by establishing a mainland entity. If you ship from free zone to mainland, it’s deemed an import (5% VAT + duty). Use a mainland company or designated zone.
