Incoterms UAE and Saudi Arabia: Which Rule Should Importers Use?

Incoterms decide who pays for each leg of a shipment, who carries the risk, and who clears customs. For anyone checking Incoterms UAE and Saudi import contracts, the practical choice is usually between FCA or FOB (you control freight), CPT, CIP, CFR or CIF (the supplier books freight), and DAP or DDP (delivery to your door). Under every rule except DDP, you as buyer clear import customs and pay duty and VAT.

Here is what each rule means for a GCC importer, which ones suit Jebel Ali, Dammam and Jeddah, and how DDP and DAP differ on duty and VAT.

Incoterms UAE basics: what the 11 rules do

The Incoterms® rules are published by the International Chamber of Commerce. The current edition, Incoterms® 2020, has eleven three-letter terms. They set out the tasks, costs and risks between seller and buyer. They are not a full sales contract: price, payment terms and ownership still need to be agreed in your purchase order or sales contract.

The rules fall into two groups:

• Any mode of transport: EXW, FCA, CPT, CIP, DAP, DPU, DDP.
• Sea and inland waterway only: FAS, FOB, CFR, CIF.

The most important split for an importer is where risk passes:

• Under F and C rules, risk passes at origin, when the goods are handed to the carrier or loaded on board. Under C rules, the seller pays freight to your port, but you carry the risk during the voyage.
• Under D rules, risk passes at destination: DAP and DDP when goods are ready for unloading, DPU after unloading.

Comparison table: who does what

The clearance and "who pays tariffs" columns come from the ICC's April 2025 guidance note on tariff risk.

Which terms suit imports into Jebel Ali, Dammam and Jeddah

Most GCC imports from Asia and Europe arrive by container at ports such as Jebel Ali, King Abdulaziz Port in Dammam or Jeddah Islamic Port, or by air. Four questions decide the term.

1. Do you want to control the freight?

If you have a forwarder in Dubai or Riyadh with good rates, buy on an F term and book freight yourself. You see the costs and choose the routing.

For containers, ICC Academy says FCA is well suited because cargo is usually handed to the carrier at a container terminal, not loaded on board by the seller. FOB is meant for sea or inland waterway shipments where the seller loads the goods onto the vessel, such as bulk cargo. FOB on a container is common, but the seller hands the container over at the terminal and still carries the risk until it is on board, while the carrier, not the seller, controls it. FCA puts the handover where control actually changes.

2. Is the supplier better placed to book freight?

CFR or CIF (sea) and CPT or CIP (any mode, including containers) let the supplier book and pay freight to your port. Remember that risk still passes at origin. If the container is damaged at sea, you are the one claiming.

On insurance, check local rules first. ICC's January 2025 report on national regulatory barriers lists:

• UAE: foreign transport insurance is allowed for CIF until the point of entry, but not for CIP or for onward transport into the country.
• Saudi Arabia: foreign transport insurance is allowed for CIF and CIP until the point of entry, but not for onward transport into the country.

3. Do you want delivery to your warehouse?

DAP gets the goods to your named place, for example your warehouse in Dubai Industrial City or a Riyadh distribution centre. You clear customs and pay duty and VAT. DPU is the same, but the seller also unloads.

4. Who should be importer of record?

This is where DDP gets difficult. See the next section.

DDP vs DAP: who pays duty and VAT

Under DAP, the buyer handles import clearance and pays import duty and taxes. ICC Academy's DAP or DDP explainer puts it plainly: the buyer manages and pays for all import clearance formalities.

Under DDP, the seller clears the goods for import and pays duty and import taxes. ICC's tariff note calls DDP the only rule where the seller pays tariffs. Unless the contract says otherwise, that includes import VAT.

Here is what that means in each market.

In the UAE

• Customs duty is usually 5% of the CIF value for goods from outside the GCC, but check the rate for your HS code.
• Import VAT is 5%. The FTA's VAT Import Declaration User Guide says non-registered importers must pay VAT before goods are cleared. A foreign seller selling DDP, with no UAE VAT registration, would usually pay that VAT in cash and may not be able to recover it.
• Under DAP, a VAT-registered UAE buyer can usually account for import VAT through the reverse charge on its VAT return.

In Saudi Arabia

• Duty rates are set per HS code in ZATCA's Integrated Customs Tariff.
• ZATCA's import guideline says 15% VAT is paid with the duty on the customs declaration. The importer must be licensed to import into the Kingdom, and its tax ID must be on the declaration.
• A foreign DDP seller therefore needs a licensed Saudi importer of record, or it cannot clear the goods at all. Regulated consumer products also need SABER certificates before Fasah will clear them.

ICC's barriers report makes the general point: some countries do not let foreign entities carry out import formalities, and even where they can, compliance is costly. In those cases ICC suggests DAP or DPU instead. For most GCC import flows, DAP with the local buyer as importer is simpler than DDP.

Common Incoterms mistakes GCC importers make

1. No named place. "FOB China" is not a term. Write "FOB Shanghai" or, better, "FCA [terminal], Shanghai".
2. No version. Write "Incoterms® 2020" after the term.
3. CIF price, but freight booked again. Your forwarder quotes ocean freight on goods the supplier already paid freight for.
4. DDP accepted without asking who the importer is. The goods can sit at the port while you find a licensed importer.
5. Assuming the term covers payment. A letter of credit, deposit or open account is agreed separately.
6. Forgetting the customs value. Whatever the Incoterm, both UAE and Saudi customs value the goods on a CIF basis. An FOB invoice still needs freight and insurance added for the customs declaration.

Putting the term to work

Once the term is agreed, your forwarder's quote and your landed-cost sheet should follow it. Under FCA or FOB, you need an origin-to-door freight quote. Under CIF, you only need destination charges and clearance. If you run freight for importers, Quickship's Freight Management Module keeps the inquiry, quote, job, vendor bookings and invoice together, so the Incoterm agreed at quote stage carries through to the job.