Landed cost is more than the supplier invoice. It is the cost of moving goods from the supplier to the place where the importer can use or sell them, expressed in one currency and on a useful unit basis. Building the estimate before commitment helps procurement compare routes and suppliers while choices are still open.
This guide explains a general method, not personalised tax or customs advice. UAE treatment depends on the goods, HS classification, origin, importer, customs procedure, emirate and transaction. Confirm the live treatment with the relevant authority or a qualified customs and tax adviser before filing.
List every cost and its source
- Product purchase price.
- Origin inland transport and export charges.
- International freight and marine insurance.
- Destination port and handling charges.
- Customs duty and other applicable customs charges.
- Import VAT where applicable.
- Transport from the port or zone to the destination.
- Broker, finance, banking and payment costs.
- A clearly identified contingency for uncertain costs.
Record the currency and exchange-rate source for every line. Do not silently treat an unknown currency as US dollars. Check the Incoterm so freight or insurance already included in the supplier price is not added again. Keep the formula visible and save the assumptions used for the estimate.
Treat customs duty and VAT as separate calculations
Dubai Customs states that its general customs duty rate is 5% of CIF value, with exceptions, and explains that CIF includes cost, insurance, freight and relevant charges up to import. This is a general rule, not the rate for every product. The exact treatment follows the tariff classification and any applicable exemption, origin rule or special measure. Use the official Dubai Customs Integrated Customs Tariff and confirm the classification when needed. The Dubai Customs FAQ explains the general CIF basis and rate.
VAT is a different tax. The Federal Tax Authority says imports are generally subject to VAT and that the accounting method depends on the importer's registration status. Its official import VAT FAQ explains payment or reverse-charge treatment. The FTA's E-Commerce VAT Guide states that imported goods are generally subject to 5% import VAT unless the goods would be zero-rated or exempt if supplied in the UAE. It also states that the import VAT value uses the customs value, including insurance and freight, plus any customs fees and excise tax paid on import.
A customs-duty exemption does not automatically create a VAT exemption. The FTA states this directly in its VAT exemption FAQ. A calculator therefore needs separate duty and VAT decisions, not one free-zone or exemption switch.
A free zone is not automatically a VAT designated zone
VAT treatment depends on whether the place is a formally designated zone and whether the conditions for the movement or supply of goods are met. The FTA's Designated Zones VAT Guide explains that certain movements from outside the UAE into a designated zone can be outside UAE VAT, while moving goods from a designated zone into mainland UAE is treated as an import and import VAT is payable by the importer.
Transfers between designated zones also have conditions. The goods must not be released into circulation, used or altered during transfer, and customs rules must be followed. Other transactions in or connected with a zone can have different results. Customs suspension, customs duty and VAT must each be checked on their own terms. That is why an automatic rule that zeros both duty and VAT for every free-zone shipment is unsafe.
Work through an illustrative mainland import
Assume goods cost AED 100,000, freight is AED 6,000 and insurance is AED 1,000. The illustrative CIF value is AED 107,000. Assume, only for this example, that the confirmed tariff is 5% and no relief applies. Customs duty would be AED 5,350.
If the import is subject to 5% VAT and the simplified example base is CIF plus customs duty, the indicative VAT is 5% of AED 112,350, or AED 5,617.50. The subtotal becomes AED 117,967.50 before destination handling, inland transport, broker, finance and other costs. Real VAT valuation can include other customs fees or excise tax, and the importer must confirm the filing treatment. This example is arithmetic training, not a quote or tax determination.
Make the result traceable
Show the HS code used, classification source, customs procedure, rate, value base, exchange rates and each derived formula. Flag missing inputs instead of guessing. Preserve the version behind an approved purchase decision, because rates and rules can change after an estimate is created.
A tool can help compare two suppliers, routes or Incoterms, but it should not hide judgement. The reviewer should be able to see why a charge appears, which official reference was checked and which point still needs broker or authority confirmation.