Import Customs and Logistics

Group Policy & Procedure	Document No.	P-POL-025
Group Supply Chain	Ver. No. | Rev Date	0.4 | 08 APR 2026
Title: Import, Customs & Logistics	Effective Date	08 April 2026

BUKHATIR GROUP

Strength through Diversity

Group Policy and Procedure

Group Supply Chain (GSC)

Import, Customs & Logistics

Incoterms, Customs Clearance & Freight Management

Document No: P-POL-025

Copyright © 2026 Bukhatir Group

Revision Control

This document is issued under the authority of Bukhatir Group and applies when carrying out the activities described. Revisions may be issued as necessary under the authority of the Group Head of Procurement. Revision history is recorded below with every revised policy.

Revision History

Ver. No.	Effective Date	Description
02	September 2016	Original Procurement Policy
0.3	March 2026	Procurement Policy – Import, Customs & Logistics
0.4	08 April 2026	Redesign, content modernization & flowcharts – Import, Customs & Logistics

Revision Sign-Off

Approving Committee	Name	Signature
Endorsed by — Group Head of Supply Chain	Mohamad Koussa
Reviewed by — BIIL CEO	Mr. Ayman Ismail
Reviewed by — Group Chief Financial Officer	Mohamad Adnaan Sait
Approved by — Group Vice Chairman & Group CEO	Mr. Salah Bukhatir

Distribution List

#	Departments
1	Business Unit Procurement Departments
2	Group Supply Chain (GSC)
3	Finance, Legal, Compliance, Internal Audit
4	Business Unit Management

1. Purpose & Objective

This policy manages international procurement logistics, customs clearance, freight and documentation. It optimizes Incoterms selection, ensures UAE customs compliance and minimizes import delays and costs.

2. Scope

Applies to all cross-border procurements involving import into the UAE, whether to mainland or free zones.

3. Incoterms 2020 Policy & Preferred Terms

Bukhatir Group standardizes on Incoterms 2020 (International Commercial Terms) to clearly allocate risk, cost and responsibility. The following terms are preferred based on transport mode:

Incoterm	Applicability	When to Use	Risk Transfer Point	Typical Freight Cost Allocation
FOB (Free On Board)	Sea freight only	Ocean shipments, CIF preferred	Vessel side at port of loading	Group pays freight; supplier pays origin costs
FCA (Free Carrier)	Air, land, sea	Air freight, multimodal	When goods delivered to carrier	Group pays freight; supplier pays origin costs
DDP (Delivered Duty Paid)	Any mode	Local suppliers or nearby regions	Point of delivery at BU location	Supplier pays all costs including customs/duty

Deviations from preferred terms (e.g., CIF, CIP) require BU Procurement and GSC joint approval. The decision matrix below guides selection:

Scenario	Recommended Incoterm	Rationale
Established suppliers (tier-1, low-risk)	FOB/FCA	Leverage cost control; manage freight directly
New / emerging market suppliers (higher risk)	DDP	Transfer documentation and customs risk to supplier
Small orders, routine consumables	DDP	Simplify administration; supplier bears overhead
Strategic long-lead items, large qty	FOB	Negotiate freight separately; gain visibility into costs

4. Freight Management

Consolidation & Carrier Selection

• Small shipments (< 1 CBM) are consolidated with other BU orders for the same region to reduce per-unit freight cost.

• GSC maintains preferred freight carriers (sea, air, land) based on cost, reliability and insurance ratings.

• Ocean freight: preferred carriers are 3–4 major lines (via forwarder agreements).

• Air freight: negotiated rates with major carriers; used only for emergency or high-value express shipments.

Rate Benchmarking

• Freight rates are benchmarked quarterly against market rates for comparable lanes.

• Savings or cost overruns vs. benchmark are tracked and discussed in carrier performance reviews.

5. Customs Clearance & HS Code Classification

All imports are processed through UAE Federal Customs Authority (FCA). Key steps:

1. HS Code Classification: Supplier provides accurate 8-digit Harmonized System (HS) code on commercial invoice and packing list.

2. Duty Calculation: Customs duty is calculated as: Dutiable Value × Duty Rate (varies by commodity, 0–100%).

3. Clearance Documentation: Customs entry filed by licensed customs broker; commercial invoice, packing list, certificate of origin required.

4. Inspection: FCA may inspect shipment; GSC or BU coordinates physical inspection if required.

5. Duty Payment: Duty is paid by Group (FOB/FCA terms) or supplier (DDP terms); payment timing reflects Incoterm.

6. Import Documentation

The following documentation is mandatory for customs clearance and must be provided by supplier:

Document	Purpose	Responsibility
Commercial Invoice	Proof of value and goods description; used for duty valuation	Supplier
Packing List	Itemized list of goods, weights, dimensions, HS codes	Supplier
Certificate of Origin (COO)	Proves country of manufacture; determines duty eligibility (e.g., GCC preference)	Supplier or Chamber of Commerce
Bill of Lading (Ocean) / AWB (Air)	Proof of shipment; transport document required for claim	Freight forwarder
Insurance Certificate	Required for CIF / CIP terms; proof of insurance in transit	Supplier or insurance broker

7. Restricted & Prohibited Items

Certain items are restricted or prohibited by UAE Federal Customs Authority. Procurement teams must verify:

• Prohibited goods: Narcotics, counterfeit items, weapons, certain chemicals (per UAE CITES and hazmat regulations).

• Restricted goods: Alcohol, certain electronics (sanction-related), used vehicles (age restrictions), food/animal products (health certifications required).

• Hazardous materials: Subject to special permits, IATA/IMDG documentation (per UAE Civil Aviation Authority and Maritime Authority).

Procurement teams must declare restricted items before import; failure to do so results in seizure and legal consequences. GSC maintains a Prohibited Goods List updated quarterly.

8. Free Zone vs. Mainland Import Procedures

Bukhatir Group operates from multiple locations (mainland, JAFZA, DAFZA free zones). Different procedures apply:

Location Type	Customs Clearance	Duty Assessment	Re-Export Capability
Mainland (Dubai, Abu Dhabi)	Subject to FCA inspection	Full customs duty applies	Requires export permit
Free Zone (JAFZA, DAFZA)	Simplified entry; no FCA inspection unless flagged	Duty-free (if for zone operation)	Unrestricted; no export permits

Goods imported to free zones for Group use must be re-imported to mainland with duty payment. Cost-benefit analysis is required when selecting import location.

9. Duty Exemption Certificates & Incentive Programs

UAE government offers duty exemption and incentive programs in select sectors:

• National Preference Program (>50% GCC content): 0% duty if commodity meets GCC origin threshold.

• Industrial Development Exemptions: Certain manufacturing equipment eligible for 0% duty (filed by procurement/finance).

• Government Tenders: Goods for certain government projects may be duty-exempt if agreement includes this benefit.

BU Procurement and Finance jointly determine eligibility; approved exemption certificates are obtained and filed with customs entry.

10. Logistics Provider Selection & Management

Freight forwarders and logistics providers are selected and managed as follows:

• Approved Logistics Partners: GSC maintains a list of 3–5 preferred customs brokers and freight forwarders.

• Performance KPIs: Customs clearance time, damage rate, cost accuracy (invoiced vs. estimate).

• Annual Review: Logistics partners are evaluated annually; poor performers are replaced.

11. Import Logistics KPIs

The following KPIs measure import efficiency, tracked monthly:

KPI	Definition	Target
Customs Clearance Time	Days from shipment arrival to customs release	< 3 days
Freight Cost Variance	Actual vs. budgeted freight cost	≤ 5% variance
Damage Rate	% of shipments received with damage	< 0.5%
Documentation Accuracy	% of shipments with zero customs queries	≥ 95%

Input Tax Credit (ITC) Compliance — FTA Decision No. 13 of 2026

Effective 1 October 2026, import transactions where Input Tax is recoverable must comply with the ITC verification requirements under FTA Decision No. 13 of 2026 and P-POL-032.

• All overseas suppliers from whom imports are conducted must undergo ITC Supplier Verification (Form F-ITC-01) including identity verification and address/place of business checks.

• Verify the authenticity and origin of imported goods, and confirm the supplier's ownership or right to dispose of the goods, per Article 4.3(c) of the FTA Decision.

• For import transactions involving intermediaries or agents, ensure the commercial justification for their role is documented per Article 4.3(d).

• Payment for imports must be made by electronic means. Document the commercial justification if payment is made to a bank account outside the supplier's country of incorporation.

12. Reference Forms

• Form — Import Customs Entry Checklist

• Form F-IMP-02 — Hazardous Material Declaration

• Form F-IMP-03 — Duty Exemption Certificate Application

• Form F-ITC-01 — Supplier ITC Verification Checklist

• Form F-ITC-02 — Supply ITC Verification Checklist

13. Definitions & Acronyms

Acronym / Term	Definition
AWB	Airway Bill
BL	Bill of Lading
BU	Business Unit
CIF	Cost, Insurance & Freight
CIP	Carriage & Insurance Paid
DDP	Delivered Duty Paid
FCA	Free Carrier
FOB	Free On Board
GSC	Group Supply Chain
HS	Harmonized System (tariff codes)
IATA	International Air Transport Association
IMDG	International Maritime Dangerous Goods
UAE	United Arab Emirates