Free Zone Goods Consumption: New Declaration Type for Dubai-Based FZ Companies

Dubai Customs introduced a new declaration type "Goods Consumption within FZ" in the MIRSAL 2 system, effective October 25, 2020 (Customs Notice 17/2020). This guide explains everything free zone companies need to know about this important customs procedure.

What is the Free Zone Consumption Declaration?

This declaration type allows Dubai-based free zone companies to properly declare goods consumed within the free zone, with clear guidelines on when customs duties apply and when exemptions are available.

Who Can Submit This Declaration?

Dubai Free Zone Companies directly

Customs Brokers acting on behalf of FZ Companies

Declaration Details

Regime Type: Import

Declaration Type: Goods Consumption within FZ

Registration Fees

AED 70 per dutiable declaration

AED 80 per duty-exempt declaration

Declaration Purposes and Duty Applicability

The declaration purpose is mandatory and determines whether customs duties apply:

Duty Exempted Purposes:

Company Own Facility Construction - Building equipment and materials used in construction projects

Use for Establishing Company - Office equipment, supplies, laboratory devices for scientific research and training

Operational Use - Petrol, oil, lubricants, machinery, equipment, and spare parts for operations

Maintenance of Projects and Facilities - Equipment and spare parts for facility maintenance

Use in Production or Service - Packaging materials, materials used in manufacturing, worn/damaged materials unsuitable for sale

To Perform Company Activity - Office equipment, supplies, laboratory devices for company activities

Duty Applicable Purposes:

Retail Sale - Items sold to local market by licensed companies (electronics, tires, glasses, perfumes, foodstuffs) whether retail or wholesale

Other - Damaged/worn materials and manufacturing waste suitable for sale, use, or recycling (oil residues from vessels/factories, recyclable waste)

IT Service Charges

If Declaration Purpose is 'Retail Sale' or 'Others': IT service charge applies for IT-related commodities where applicable

If Declaration Purpose is duty-exempt: IT service charge is auto-exempted

Declaration Processing

Declarations are auto-approved unless:

Duty or IT Service Charge is exempted due to consumption purpose

Risk factors are identified

Exceptions are found on the declaration

VAT and Excise Tax

Declaration data is sent to Federal Tax Authority (FTA)

VAT and Excise Tax apply in the same manner as IM2 (Import to Local from FZ) declarations

Tax treatment follows current FTA guidelines

Document Requirements

Physical hard copy submission is NOT required

Documents must be uploaded online before declaration submission

Mandatory Documents:

Consumption Request Letter

Consumption Invoice

Consumption Purpose Mapping Guide

To help declarants select the correct purpose, here is the detailed mapping:

Building Equipment and Materials for Construction: Select "Company Own Facility Construction"

Packaging Materials: Select "Use in Production or Service"

Machinery, Equipment, Spare Parts for Operations: Select "Operational Use" or "Maintenance of Projects and Facilities"

Petrol, Oil, Lubricants for Operations: Select "Operational Use" or "Use in Production or Service"

Office Equipment, Lab Devices for Research/Training: Select "Use for Establishing Company" or "To Perform Company Activity"

Worn/Damaged Materials Not Suitable for Sale: Select "Use in Production or Service"

Items Sold to Local Market (Electronics, Tires, Food, etc.): Select "Retail Sale"

Damaged Materials Suitable for Sale/Recycling: Select "Other"

Key Benefits

Streamlined Process: Auto-approval for compliant declarations

Cost Savings: Duty exemptions for operational consumption

Paperless: Online document upload eliminates physical submissions

Clear Guidelines: Defined purposes eliminate ambiguity

Integration: Seamless connection with FTA for tax purposes

Compliance Tips

Ensure accurate consumption purpose selection

Upload all required documents before submission

Verify duty applicability based on intended use

Maintain records of consumption for audit purposes

Contact Dubai Customs for guidance on unclear classifications