Get to Know the Customs Procedures of GCC's Free Zones

If you're looking to set up a company in one of the GCC's many free zones, it's important to understand the customs procedures that will apply to your business.

The Common Customs Law of the GCC lays out the rules and regulations for customs procedures in the region's free zones. In this article, we'll take a closer look at some of the most significant procedures, so you can be sure to stay compliant with the law.

Overview of the Common Customs Law

The law is based on the premise that free trade should be encouraged among member states, and that goods should be able to move freely between them. This is achieved by ensuring that there are minimal restrictions on trade, and by implementing a common customs procedure.

In this article, we'll give you a brief overview of the key procedures that apply to free zone businesses.

GCC Free Zone Procedures

When you're doing business in a GCC free zone, it's important to be aware of the customs procedures and regulations. The Common Customs Law of the GCC, which consists of Articles 77 to 88, pertaining to Reference Code 0304, sets out the procedures for goods entering and exiting free zones. Being aware of these responsibilities under customs procedures can make it easier for you.

Customs Regulations: UAQFTZ

The Umm Al Quwain Free Trade Zone (UAQFTZ) is subject to the same customs regulations as the other free trade zones in the UAE and the Gulf Cooperation Council (GCC) states. This means that goods and raw materials can be imported into and exported from the free trade zone without paying customs taxes, and there is no maximum limit for goods or materials to remain within the zone. The transfer of goods between different free trade zones is also exempt from customs taxes. However, if goods manufactured in the free trade zone are brought into the mainland, they are subject to the unified customs tariff of the GCC countries, which is usually 5%.

Goods from the local market can be stored in free trade zone warehouses for an unlimited period of time, and goods received from foreign markets can also be stored and then re-exported without any time restrictions. However, there are some prohibited materials that are not allowed to be imported or stored in the free trade zone, including explosives, hazardous materials, and materials that violate intellectual property laws, as well as radioactive materials, weapons, drugs, goods that are subject to boycotts, and materials that are considered to be immoral or disruptive to public order.

Controls at Free Zones and Duty-Free Shops

The GCC Customs Union has strict controls on what goes in and out of the free zones and duty-free shops. They help to ensure that the free zones and duty-free shops remain tax-free zones.

1. Free zones and duty-free shops should have been officially designated as such and notified to all GCC States.

2. Goods may be placed in free zones and duty-free shops without the need to pay customs taxes/duties.

3. Foreign goods re-exported from inside the country to free zones or duty-free shops may be accepted into the country, subject to export restrictions and customs procedures at re-exportation.

4. Goods leaving/entering these areas should be treated as foreign goods.

5. Goods that are infringing or prohibited under national laws or legislation shouldn't be deposited in free zones or duty-free shops.

6. There is no restriction on how long goods can remain deposited in these areas.

Goods that are prohibited from entering the free zones and duty-free shops

The following goods are prohibited from entering the free zones and duty-free shops: flammable goods (other than fuel), radioactive materials, weapons, ammunition, and explosives, of any type. Goods violating commercial, industrial, literary, and art regulations, drugs (narcotics), of all kinds and derivatives thereof, goods originating in an economically boycotted country; and goods prohibited from entering the GCC Customs Union or the country of final destination or transit.

Items that require approval from the Director General

Items listed in the unified customs declaration and manifest cannot be transported or imported into free zones/duty-free shops without approval by the Director General.

Compliance Documentation

Documents to be attached to the customs declaration: 

1. Original invoice  
2. Original certificate of origin 

Additional Documents: 

1. Delivery order (for air or sea importation) 
2. Bill of Lading (for air or sea importation) 
3. Manifest (for importation by land) 
4. Packing List for Multiple Goods (several articles indicating the HS code as well as the international code for chemicals or hazardous goods to be indicated).  

Compliance Procedures

1. The customs declaration shall be completed with the knowledge of the owner of the goods, his representative, or the authorized customs broker. 
2. All relevant documents shall be attached. 
3. A financial security or bank guarantee in an amount equivalent to the amount of customs taxes and duties applicable to the goods at the time of clearing the goods via a customs port of a country other than the country licensing the free zones and duty-free shops should be presented upon payment of other applicable charges. 
4. The goods shall be subject to inspection and examination based on risk assessment criteria. The printing of the customs declaration shall be completed according to the format applicable at the customs office. 
5. Issuance of the exit order and release of the goods. 

To Conclude

You are now well-versed in the customs procedures of GCC's free zones, but it is important to note that there are compliance regulations that must be met in order for businesses to operate in these zones.

The first and most important regulation is that all businesses must obtain a trade license from the relevant authorities. This license must be renewed on an annual basis, and businesses must provide proof of compliance with all applicable laws and regulations.

In addition, businesses must maintain accurate records of all imports and exports and declare any changes in their business activities to the authorities. Failure to comply with these regulations can result in fines or other penalties.