Landed Cost Calculation for UAE and Saudi Imports

A landed cost calculation adds up everything you pay to get goods from the supplier into your warehouse: the product price, freight, insurance, customs duty, unrecoverable taxes and every fee in between, divided by the units received. For UAE and Saudi imports, duty is charged on the CIF value (goods plus freight and insurance to the port of import), so an EXW quote and a CIF quote must both be rebuilt to that same basis before you compare them. Do that, and the "cheap" supplier is often not the cheaper one.

What is landed cost?

Landed cost is the full cost of one unit sitting on your shelf in Dubai, Abu Dhabi, Riyadh or Jeddah, ready to sell. It is the number your margin, your marketplace price on Amazon.ae, Amazon.sa or Noon, and your reorder decisions should be built on. The supplier's unit price is only the first line.

The gap between the two depends mostly on the Incoterm. Under EXW the supplier's price covers the goods at its gate and you pay everything after that. Under CIF the supplier also pays sea freight and minimum insurance to the named port, such as Jebel Ali, Dammam or Jeddah Islamic Port. ICC's Incoterms 2020 keep Institute Cargo Clauses (C) as the default minimum cover under CIF, and the parties can agree more (ICC: Incoterms 2020). Our Incoterms guide for UAE and Saudi importers covers who carries risk and cost under each rule, so this post sticks to the arithmetic.

The landed cost formula

The landed cost calculation itself is simple. The discipline is in not missing a line.

Landed cost = goods + origin costs + main freight + insurance + customs duty + unrecoverable import VAT + destination charges + clearing fees + local delivery

Landed cost per unit = landed cost ÷ units received in sellable condition

Two GCC-specific rules shape how the middle of that formula works:

1. Duty is charged on the CIF value. Dubai Customs states that duty is 5% of the CIF (cost, insurance, freight) value, except for alcohol and cigarettes, and that the customs value for goods imported to Dubai is based on CIF (Dubai Customs FAQ). The 5% figure is the GCC Customs Union's rate "on all foreign goods imported from outside the Union" (ICP: Customs Union for GCC States). Individual tariff lines can differ, so always check your HS code.
2. Import VAT is charged on top of duty. The FTA says import VAT is calculated on the value of the goods inclusive of any customs duty and excise tax due (FTA: VAT Import Declaration User Guide). ZATCA applies the same structure in Saudi Arabia: customs value plus excise, customs duties and other charges, excluding VAT (ZATCA: Imports and Exports under VAT).

Foreign currency is converted at the exchange rate on the day the customs declaration is submitted, according to the same Dubai Customs FAQ. For the full duty and VAT mechanics, see customs duty and VAT on imports in the UAE.

Landed cost components: a checklist table

Use this table as the column list for your costing sheet. "In CIF value?" tells you whether the line attracts duty.

The last row is the one most sheets forget: bank fees and the exchange margin on a USD or CNY transfer.

How to do a landed cost calculation, step by step

1. Get comparable quotes. Ask each supplier for the same quantity, packaging and HS code. Note the Incoterm and the named place on every quote.
2. Price the missing legs. For an EXW quote, get a forwarder's rate for pickup, export clearance, freight and insurance to your port. For a CIF quote, those are in the price.
3. Build the CIF value in AED or SAR. Goods + origin costs + freight + insurance, converted at a realistic rate.
4. Apply duty. CIF value × the duty rate for your HS code.
5. Work out import VAT. (CIF value + duty) × 5% in the UAE or 15% in Saudi Arabia. Decide whether it is recoverable for your business.
6. Add destination costs. Terminal charges, delivery order, clearing agent and trucking. Ask your forwarder or agent for these in writing, because they vary by port, carrier and shipment.
7. Divide by sellable units. Use units received, not units ordered. Shortages and damage raise the per-unit cost.

Worked example: EXW vs CIF supplier in AED (hypothetical)

Every number below is invented to show the method. It is not a market rate.

Say a Dubai retailer, registered for VAT, needs 1,000 units of a kitchen product. Supplier A quotes USD 10.00 per unit EXW its factory. Supplier B quotes USD 11.80 per unit CIF Jebel Ali. At first glance A is about 15% cheaper per unit. The forwarder quotes Supplier A's missing legs at USD 400 for pickup and export clearance, USD 1,800 for sea freight and USD 60 for insurance. We use a conversion rate of AED 3.67 per USD and assume a 5% duty rate for this HS code.

Destination charges are also hypothetical: AED 1,500 for Supplier A's shipment through the retailer's own forwarder, and AED 2,100 for Supplier B's, where the carrier the supplier chose bills its own destination charges. Get these figures quoted before you decide; they are a common blind spot with CIF.

In this hypothetical, the supplier with the higher unit price lands AED 1,172.61 cheaper, about AED 1.17 per unit. The EXW buyer is paying retail freight on a small shipment, and paying duty on that freight too. Change one input, such as a better freight contract or a larger order, and the answer can flip. That is why the landed cost calculation should be run for every sourcing decision, not once.

Import VAT sits below the line for a registered importer. The FTA guide says registered importers bringing taxable goods into the mainland pay the VAT due when they file their VAT return, where it can then be recovered as input tax under the normal rules. A non-registered importer has to pay VAT before the goods are cleared, so for them it is part of the cost.

How the same calculation changes for Saudi Arabia

The method is identical for a shipment into Dammam or Jeddah, priced in SAR. Three things change:

• VAT is 15%, not 5%. ZATCA states that VAT at 15% is imposed on all goods imported into the Kingdom, regardless of the customs duty rate or a duty exemption (ZATCA guideline). The FTA's VAT page shows the UAE rate as 5% (FTA: VAT).
• VAT is paid at clearance. ZATCA's guideline says the VAT due must be paid together with customs duties and other fees stated in the customs declaration before clearance. A registered business can deduct it later as input tax, but the cash leaves first, and at 15% that is a real working-capital line.
• Check the Saudi tariff line. The GCC common rate is 5%, but Saudi Arabia's integrated tariff sets the rate per HS code, so confirm yours rather than assuming. ZATCA's free Customs and Tax Calculator gives an estimate, and our guide to customs duty in Saudi Arabia explains the tariff and SABER steps.

Hypothetically, Supplier B's goods at a rate of SAR 3.75 per USD give a CIF value of SAR 44,250.00. With 5% duty (SAR 2,212.50), import VAT at 15% would be SAR 6,969.38, against roughly 5% of the base in the UAE. That cash is tied up until you recover it.

Common landed cost mistakes

• Comparing quotes on different Incoterms. An EXW price and a CIF price are not the same product. Bring both to CIF, then to your door.
• Leaving freight out of the duty base. Duty is on CIF, so EXW freight costs you freight plus 5% of it.
• Counting recoverable VAT as cost, or the opposite: forgetting it when you are not registered.
• Ignoring destination charges. A CIF price says nothing about what the carrier bills you at Jebel Ali or Jeddah.
• Dividing by units ordered. Short-shipped or damaged units still carry their share of freight and duty.

Keep the costing next to the purchase order

A landed cost sheet is only useful if it stays with the order it belongs to, so the forwarder's invoice, the duty paid and the units received can be checked against what you assumed. Quickship's Sourcing Module compares supplier quotes side by side on price, minimum order, lead time and terms, then turns the chosen quote into a purchase order you can follow through customs into stock. If you are still collecting quotes, our note on the RFQ process for UAE businesses helps you ask suppliers for figures you can actually compare.