Duty and import VAT are charged on a customs value that starts from the invoice price but adds freight, insurance, royalties and other costs. Markets differ on where freight stops counting: the GCC values goods on a CIF basis and the UK adds costs up to the UK border. The delivery term agreed in the sales contract decides who pays those costs and who acts as importer, so valuation and Incoterms choices should be made together.
Transaction value and what must be added
Most markets value imports by transaction value, the price actually paid or payable. In the UK, Method 1 must be tried first and covers over 90% of imports liable to ad valorem duty; five further methods apply in order if it cannot be used. Costs of transport, insurance, loading and handling to the UK border are added, as are selling commission, royalties and licence fees that are a condition of sale, assists such as free tooling or design work, and any share of resale proceeds paid to the seller.
In Dubai, customs value is based on the CIF value under the GCC Common Customs Law, so freight and insurance to the point of entry are part of the duty base. Importers should keep the evidence behind every value: HMRC expects records for at least 4 years.12345
Import VAT sits on top of duty
Import VAT is usually charged on the customs value plus duty. In the UK the VAT value also includes incidental costs up to the first UK destination, and the standard rate is 20%. Saudi Arabia charges import VAT at 15% and the UAE's standard VAT rate is 5%. For a VAT-registered importer this is often recoverable, but it is a cash cost at the border.6789
Low-value consignments and delivery terms
Low-value e-commerce rules have tightened. From 1 July 2026 until 1 July 2028 the EU charges a flat EUR 3 customs duty per article line on distance sales of goods valued at EUR 150 or less, and the US has suspended the USD 800 de minimis exemption for most shipments, which now need formal or informal entry.
Standard trade terms (Incoterms) allocate freight, insurance, risk and import formalities between buyer and seller. A term under which the seller delivers duty paid makes the seller the importer in the destination market; terms under which the buyer clears import leave the buyer responsible for valuation and duty. The chosen term should match who is registered with customs and who can recover import VAT.1011
| Market | Valuation basis | Import VAT rate | Source |
|---|---|---|---|
| United Arab Emirates (Dubai) | CIF value under the GCC Common Customs Law | 5% standard rate | Dubai Customs; Federal Tax Authority |
| Saudi Arabia | GCC Common Customs Law (CIF basis not separately confirmed) | 15% | ZATCA |
| United Kingdom | Transaction value plus costs to the UK border | 20% on customs value plus duty and incidental costs | HMRC |
| EU (low-value distance sales) | Flat EUR 3 per article line for goods of EUR 150 or less, 1 July 2026 to 1 July 2028 | Member state rate | French customs |
| United States (federal) | De minimis exemption suspended for most modes | Not covered | CBP, Federal Register |
Decisions to make
- Which delivery term will we use for each market, and does it match who is registered as importer?24The term decides who pays duty and import VAT and who must value and declare the goods.
- Do we pay royalties, licence fees or provide tooling or designs to the manufacturer?3These may have to be added to the customs value in the UK.
- Are we relying on low-value import reliefs for direct-to-consumer sales?1011The EU now charges a flat EUR 3 per article line and the US has suspended de minimis for most shipments.
- Can the importing entity recover import VAT?87At 15% in Saudi Arabia and 20% in the UK, unrecovered import VAT is a significant cost.
Documents usually needed
- Sales contract stating the delivery term and named place
- Commercial invoice showing price, currency and any discounts
- Freight and insurance invoices
- Royalty, licence and tooling agreements
- Valuation workings kept for at least 4 years in the UK
Common mistakes
- Declaring an ex-works price without adding freight and insurance where the market values on CIF or to-border terms
- Leaving royalties and assists out of customs value
- Agreeing delivered duty paid terms without a local registration
- Pricing direct-to-consumer sales on de minimis reliefs that have ended
- Treating import VAT as a cost when it could be recovered by a registered importer
What this guide does not yet confirm
These points need checking with a qualified local professional before you rely on them.
- The ICC Incoterms rules could not yet be checked; the explanation of delivery terms is general and carries no claim.
- US customs valuation (19 USC 1401a), including whether international freight is excluded, could not be confirmed on an official page.
- India's Customs Valuation Rules and Saudi valuation practice could not yet be checked.
- The WTO Customs Valuation Agreement text could not yet be checked.
Sources and review status
Each statement is numbered to the source it was checked against. We use official sources where we can, and each statement says whether it was checked against an official or a secondary source. Sources last checked on 19 October 2026. None of it has been professionally reviewed yet: it is research checked against official and secondary sources by WONE Global, not legal or tax advice.
HMRC sets six customs valuation methods, which must be tried in order starting with Method 1 (transaction value), with Methods 4 and 5 usable in either order and Method 6 (fall-back) as the last resort. UK imports. Method 1 is based on the price paid or payable by the buyer to the seller and, according to HMRC, is used for over 90% of imports liable to ad valorem duty.
Under UK Method 1, costs of transport, insurance, loading and handling connected with delivering the goods to the UK border must be added to the price, while delivery charges beyond the border may be deducted if shown separately. UK imports valued under Method 1.
Under UK Method 1, selling commission and brokerage, royalties and licence fees that relate to the goods and are a condition of sale, assists supplied free or at reduced cost, and the seller's share of resale proceeds must be added to the price. UK imports valued under Method 1. Buying commission shown separately can be excluded.
The customs value of goods imported into Dubai is based on their CIF value according to the Common Customs Law of the GCC States. Dubai; the Common Customs Law applies across the GCC.
Reused from market guide claim ae-trade-g02.
HMRC requires importers to keep the documents and information used to establish customs value for at least 4 years. UK imports; documents must be produced to customs officers on request.
UK import VAT is charged on the customs value plus incidental expenses up to the goods' first destination in the UK, plus customs duty and any excise duty or other import charges except VAT itself. UK imports. Royalties and licence fees and prompt-payment discounts still available at import can be left out of the VAT value.
The standard VAT rate is 20%, with a 5% reduced rate and a 0% rate for items such as most food and children's clothes. Some supplies, such as financial and property transactions, are exempt.
Reused from market guide claim gb-tax-007.
Import VAT at the standard rate of 15% applies to goods imported into Saudi Arabia, and services received from non-residents are subject to the reverse-charge mechanism. VAT on imports and imported services.
The guideline states the reverse charge on imported services and the 15% standard rate; collection mechanics at the border were not confirmed on the ZATCA imports guideline, which could not yet be checked. Reused from market guide claim sa-trade-001.
The standard VAT rate is 5%. Federal. Zero-rated and exempt supplies apply under the VAT law and executive regulation.
The FTA page shows the 5% rate through its VAT calculator rather than in a statement of law. The rate is set by Federal Decree-Law No. 8 of 2017, which could not yet be checked here. Reused from market guide claim ae-tax-012.
From 1 July 2026 until 1 July 2028, distance sales of imported goods valued at EUR 150 or less bear a flat EU customs duty of EUR 3 for each article line in the declaration, replacing the previous duty relief. Based on Council Regulation (EU) 2026/382 of 11 February 2026. Excludes consumer-to-consumer consignments of EUR 45 or less, business-to-business flows, intra-EU flows and goods above EUR 150. After 1 July 2028 these flows fall under the common customs tariff.
Reused from market guide claim fr-trade-g11.
A CBP interim final rule effective 24 June 2026 indefinitely suspends the de minimis administrative exemption for imports valued at 800 US dollars or less arriving by any mode other than the international postal network, so these shipments must use formal or informal entry. Federal, 19 CFR 10.151(b). CBP states it acts under its own statutory authority and that the rule does not in practice change the existing suspension. A companion rule suspends de minimis for postal shipments from 24 July 2026 and creates a postal informal entry process for mail valued at 2,500 US dollars or less (Federal Register document 2026-12669).
Read on the FederalRegister.gov web edition, which describes itself as unofficial; the official text is the Federal Register PDF on govinfo.gov. Reused from market guide claim us-trade-g12.
Questions on this topic
11 statements on customs valuation and delivery terms
