The New Common Customs Law of the Gulf Countries Council of 2021 and the GCC Unified Tariff List of 2022 The GCC Customs Union is one of the main aims of the GCC Economic Agreement of 2001 (the “GCC EA”). The GCC Customs Union was established on 1 January 2003, and as stated in article (1) of the GCC EA, it works to achieve, at a minimum, the following:
Unified standard customs tariff towards the outside world (non-GCC member states);
Unified standard custom rules and regulations;
Single point of entry where customs duties are collected;
Free transit of goods between GCC member states without any custom or non-custom restrictions subject only to usual veterinary and agricultural quarantine regulations and any banned/restricted goods regulations; and
Goods produced in any member state shall be treated on an equal basis with national products.
The major achievement of the GCC Customs Union is the issuance of the 2003 GCC Common Customs Law which was repealed by the GCC Supreme Council and a new amended version in 2021 was issued (the “Amended GCC Common Customs Law”). The Amended GCC Common Customs law does not make any material alterations but it introduces legal instruments to enhance the trade environment in the region. For example, article (29 repeated) of the Amended GCC Common Customs law introduces a new concept; called advanced ruling which is a manual issued by the GCC in order to provide importers/exporters with guidance and clarification on vague customs-related matters (the “Advanced Ruling”) which helps traders/investors to protect their tenders/contracts against unexpected future changes. The customs authority may, at the request of the person concerned, issue an advance decision/ruling relating to the classification of goods and the basis of calculating the value for the customs purposes mentioned in the executive regulations. The Advanced Ruling enables investors/traders to have a wider certainty on the future changes in the goods classifications and the relevant customs tariff. Abu Dhabi Customs is one of the first customs authorities in the UAE that offers Advanced Ruling to its customers.
The Amended Common Customs Law comprises (17) sections and (188) articles containing comprehensive provisions which mostly cover all aspects of customs processes, operations, requirements, obligations, violations and related penalties, including but not limited to the following:
Customs control, i.e., customs procedures at all points of entry (land, sea and air).
Import and export operations.
Application of customs tariffs and the collection mechanism.
Clearance process and requirements for goods.
Exemptions and temporary admission of goods.
Treatment of free zones and duty-free shops treatment.
Customs brokerage and clearing agents.
Smuggling offenses.
The Amended Common Customs Law became more up-to-date in the sense that it allows accepting electronic copies instead of original documents, in support of this, article (17) of the Amended Common Customs Law states:“The administration may accept electronically the required clearance documents, in line with the applied conditions, and the electronic copies enjoys the same validity of the original documents”
The Amended GCC Customs Law includes new flexibilities for violators compared with the 2003 GCC Customs Law, such as waving penalties that do not exceed AED1,000 for smuggling offenses and penalties in case of voluntary disclosure of the violation. Article (141) of the Amended GCC Customs Law encourages voluntary disclosures by granting the customs general manager or the authorized officer a flexible authority to waive penalties; completely or partially, in case of voluntary disclosure of the violation related to customs declarations so companies which choose to follow the voluntary disclosure approach will be subject to reduced exposure of liability and penalties, compared with the usual approach followed by the relevant customs authority in the event of any violation, a fine in the range of 10 % (over the total value of the goods/products/ commodities) will be implemented in addition to the applicable customs duty which falls in the range of 0% -100%.
In addition, the Amended GCC Customs Law includes directions in article (150) in which customs authorities are to issue new guidelines for available conciliation requests, which can be read in the favor of the offenders as this may create new flexible tools offered to the offenders by the customs authorities.
At this time, only the UAE and Saudi Arabia have ratified and implemented the Amended GCC Customs Law, while the other GCC states, namely Bahrain, Kuwait, Oman and Qatar, are yet to publish any ratification for the Amended GCC Customs Law.
The GCC Unified Tariff List Goods imported into a country are subject to the customs taxes “duties” (or “tariffs”) specified in the Unified Customs Tariff, and the other applicable service fees, excluding those exempted under the provisions of the Amended GCC Customs Law.
In its efforts to enhance the GCC Customs Union, the GCC issued a Unified Tariff List that includes a list of goods and classification codes (HS Codes) in line with the Harmonized Classification System. In 2017, the GCC issued a version of the Unified Tariff List; in 2022, a new edition was issued in line with the Amended GCC Customs Law. The new list includes new/modified HS Codes, and it cancels some old HS Codes.
The purpose of the Unified Tariff List is to provide a list of the agreed rates of customs tariffs, prohibited goods, and special goods. The rates of customs tariff vary from up to 100% exemption of the value of the shipment. The majority of the rates of customs tariff are 5%. The Unified Tariff List includes unified rates of customs duties among goods except for those, which are classified as “special goods”, for which each GCC member state may apply a different rate.
In summary, the Amended GCC Customs Law keeps pace with the technological developments and contributes to creating an investment environment in the region as it supports the stability of the domestic trade sector which depends mainly on import and export operations in line with international trade standards, in a way that enhances the investment orientation and attracts investments to the region.
