Business | Economy
Gulf to replace import duty system
The six-nation Gulf Cooperation Council plans to end its system of charging import duty for the country of final destination and may replace it with a simpler mechanism, a UAE official said.
- Bloomberg
- Published: 23:21 August 18, 2008
Dubai: The six-nation Gulf Cooperation Council plans to end its system of charging import duty for the country of final destination and may replace it with a simpler mechanism, a UAE official said.
The new system will be in place and all issues concerning a GCC customs union will be completed by the end of this year, Saeed Khalifa Saeed Al Merri, deputy director general of the UAE's federal customs authority, said in an interview in Abu Dhabi on Monday.
The customs union has been beset by problems that have stopped it from being fully implemented since it was first introduced in 2003. A proposed Gulf single currency is dependant upon the formation of a Gulf common market, which, in turn, relies on the successful implementation of the customs union.
"It took some time to understand the concept of customs union for both governments and traders," said Al Merri.
"There has been huge progress. We are using the same tariff, and we are using the same point of entry for everyone."
The customs union stipulates that goods coming into the Gulf are charged at a consistent tariff of five per cent and can move around freely among the six member states. Under the current system, import duty is collected at the port of entry and is forwarded to the country of final destination.
The UAE, Saudi Arabia, Oman and Kuwait are backing a proposal to allow the country where the goods arrive to keep 95 per cent of the duty paid and distribute the remaining 5 per cent to the other Gulf states based on a pre-determined formula, Al Merri said. Approximately three per cent of GCC customs duties are currently redistributed under the final destination system, he said.
The UAE paid Dh2.1 billion ($570 million) to its GCC neighbours under the final destination system in 2007, up from Dh136 million in 2003, according to federal customs data.
Other outstanding issues, such as a list of goods on which countries can charge more than five per cent tariff, will be completed by the end of the year, Al Merri said.
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