Dubai Customs publishes policy on voluntary disclosures

Executive summary

On 12 June 2024, Dubai Customs issued Customs Policy No. (58/2024) (pdf) on the Voluntary Disclosure System (VDS) to encourage disclosures by importers and exporters in Dubai. The policy is a significant development for the trading community in Dubai as it outlines a structured approach to voluntarily disclose customs violations, designed to encourage compliance and transparency while providing a framework for rectifying past errors.

Detailed discussion

Background

Based on the Common Customs Law, which allows for the partial or full exemption from customs fines when importers and exporters voluntarily disclose violations, Dubai Customs' initiative reflects a commitment to fostering a transparent and cooperative environment between the customs authorities and businesses. By facilitating voluntary disclosures, Dubai Customs aims to streamline the process of compliance and reduce the adversarial nature of customs enforcement.

Highlights of the VDS

• The objective of the VDS is to provide Dubai importers and exporters with an opportunity to report to Dubai Customs any unintentional errors or breaches that occurred during the customs clearance and declaration processes. This system is designed to encourage transparency and compliance with customs regulations.

• Importers and exporters in Dubai who take advantage of the VDS may be eligible for a full or partial waiver of customs fines for any violations they disclose voluntarily before those violations are detected by Dubai Customs. This incentive aims to promote self-regulation and integrity among importers and exporters.

• To submit a voluntary disclosure request, Dubai importers and exporters are required to fill out the voluntary disclosure form electronically and submit it through the self-audit submission service available on the electronic customs systems. The form must be accompanied by any supporting documents that are relevant to the disclosure.

• Once Dubai Customs issues a financial claim notification, Dubai importers and exporters have a period of 30 days to settle any outstanding customs duties. If the customs duties due are not settled within this timeframe, the voluntary disclosure request will be considered invalid, and Dubai Customs may proceed with further enforcement actions.

• If Dubai Customs identifies additional violations that were not included in the Dubai importers' and exporters' voluntary disclosure, these will be handled separately. This means that any undisclosed violations may still be subject to fines and penalties, as they fall outside the scope of the voluntary disclosure.

Voluntary disclosure applies to:

• Import and export violations

• Customs declaration violations

• Transit violations

• Warehouse violations

• Violations in areas supervised by customs

• Temporary import violations

• Re-export violations

• Any other customs violation

Regulations and requirements

Upon discovering an error or violation, it is imperative that importers and exporters in Dubai immediately notify Dubai Customs of the error or violation by submitting a voluntary disclosure request. This request must be comprehensive, duly signed by the responsible individual, affixed with the company's seal, and detailing the nature of the violation, supported by all necessary documents.

Voluntary disclosure requests will not be entertained from Dubai importers and exporters that are the subject of ongoing post-clearance customs audits or from those who have been notified of an upcoming inspection, investigation or audit. Further, Dubai importers and exporters are required to follow through with any subsequent actions mandated under the VDS, in collaboration with the relevant authorities.

Implications

Businesses engaged in the trade and logistics sectors in Dubai should assess the implications of this new policy on their business operations and consider availing themselves of any relevant advantages under the VDS. At the same time, importers and exporters in Dubai should consider any improvements to their risk management strategies to facilitate compliance with customs requirements and mitigate any potential penalties for noncompliance.