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Shipping basics

DDP vs DAP: who pays duty and VAT, and which term works for Gulf imports

Under both DAP and DDP the seller delivers to your named place and carries the risk until it arrives; the only difference is import clearance. Under DAP you clear customs and pay duty and VAT; under DDP the seller must do it. In the Gulf a Chinese supplier usually cannot act as importer of record or recover import VAT, so DAP with the buyer clearing in its own name is often the cleaner choice.

8 min readUpdated: Golden Way · Dubai · Guangzhou

Key points

  • DAP and DDP move risk at the same point: the named destination, on the arriving vehicle, ready for unloading.
  • Under DDP the seller pays import duty and VAT and handles all import formalities; under DAP the buyer does.
  • A foreign supplier rarely has a UAE customs code, trade licence or VAT registration, so true DDP is hard to perform.
  • A VAT-registered UAE importer clearing under DAP can use the import VAT reverse charge; that benefit is lost if someone else is importer of record.
  • As of November 2026, Hormuz diversions make the named place and surcharge clauses in D-term contracts more important.

DDP vs DAP in one minute

  • Seller pays freight and carries the risk to the named place, for example your warehouse in Dubai
  • Delivery happens on the arriving vehicle, ready for unloading; you unload
  • You are the importer: you clear customs and pay duty and VAT
  • Works for sea, road, rail or multimodal transport
  • Example: DAP Buyer's warehouse, [address], Dubai, UAE, Incoterms 2020
ItemDAPDDP
Export packing and export clearance in ChinaSellerSeller
Main carriage (sea, truck or rail)SellerSeller
Risk in transitSeller, until arrival at the named placeSeller, until arrival at the named place
Cargo insuranceNot required; seller usually insures its own riskNot required; seller usually insures its own risk
Import clearance and declarationBuyerSeller
Customs duty, import VAT and other import taxesBuyerSeller
Product approvals for import (for example ECAS or SABER)BuyerSeller must obtain them
Unloading at the named placeBuyerBuyer
Storage or demurrage caused by late import clearanceBuyer, if the contract says soSeller, as it controls clearance

Duty and VAT: who pays, who can recover

In the UAE most goods from China pay 5% customs duty on the CIF value and 5% import VAT on CIF plus duty (plus any excise). The same 5% duty applies across the GCC at the first point of entry, while VAT differs: 15% in Saudi Arabia, 10% in Bahrain, 5% in Oman, none in Kuwait and Qatar. The tax itself is the same under DAP and DDP. What changes is whose name is on the declaration, and that decides who can recover the import VAT.

5%GCC customs duty on CIF for most goods
5%UAE import VAT on CIF + duty
15%Saudi Arabia import VAT
0VAT in Kuwait and Qatar
CIF value–
Duty–
VAT–
Duty and VAT–

Most goods from China pay 5% GCC duty on CIF, once, at the first GCC entry. VAT is on CIF + duty. Estimate only.

DDP pitfalls in the Gulf

  • No importer of record: to clear in the UAE the importer needs a trade licence and a customs client code; a Chinese supplier usually has neither, so DDP quietly becomes clearance in someone else's name.
  • Lost VAT recovery: if a third party is importer of record, your company cannot use the reverse charge or claim the import VAT, which may become a pure cost or sit with the wrong party.
  • Saudi Arabia is stricter: foreign companies without a Saudi entity generally cannot be importer of record, and SABER certificates and SFDA registration still have to be in place.
  • Product approvals do not disappear: ECAS, SABER, municipality or other approvals are needed whoever clears, and a supplier far away is badly placed to obtain them.
  • Hidden pricing: a DDP price bundles duty, VAT and local charges, so you cannot see what was declared. Customs looks to the importer of record for any wrong value or description.
  • Less control at destination: you cannot choose the broker, follow the declaration or fix a problem directly while the container sits at the port.
CountryImport VATVAT-registered importer clearing in its own nameDDP from a foreign seller
UAE5%Reverse charge in the VAT return when the customs code is linked to the TRNNeeds a licensed local consignee; VAT benefit usually lost
Saudi Arabia15%Recoverable as input tax; deferment for approved importers under conditionsForeign company generally cannot be importer of record
Oman5%VAT deferment scheme for eligible registered importersNeeds a local importer; check with the team
Bahrain10%Recovery rules apply; confirm with a tax advisorNeeds a local importer; check with the team
KuwaitNoneNo VAT to recover; 5% duty still appliesVAT is not an issue, but a local importer is still needed
QatarNoneNo VAT to recover; 5% duty still appliesVAT is not an issue, but a local importer is still needed

2026: Hormuz diversions and D-terms

As of November 2026 the Strait of Hormuz is effectively closed to container ships, so cargo for Jebel Ali is discharged at Khor Fakkan, Fujairah, Sohar or Jeddah and trucked or fed onward, with emergency surcharges. Since March 2026 several carriers have declared end of voyage or changed the discharge port. Under DAP and DDP the seller bears the risk and cost of getting the goods to the named place, so a supplier selling on D-terms is carrying that diversion cost, and many will price it in or ask to change terms. Our own China to UAE service currently runs by sea to Khor Fakkan with a bonded truck to Jebel Ali, typically 18–30 days door to door.

When to use DAP and when DDP

  1. Check your registrationsIf you have a trade licence, customs code and VAT registration in the destination, DAP lets you clear in your own name and keep VAT recovery.
  2. Consider DDP only for special casesSmall or sample shipments to buyers with no import set-up, or registered e-commerce channels, where the importer of record is clearly identified and legitimate.
  3. Ask who the importer of record will beGet the name, its licence and customs code in writing before agreeing to DDP.
  4. Check product approvalsConfirm ECAS, SABER or other approvals exist before shipment, whichever term you use.
  5. Write the full termRule, exact address and edition, for example DAP Buyer's warehouse, [address], Jebel Ali Free Zone, Incoterms 2020.
  6. Agree the 2026 clausesState who bears diversion, war-risk surcharges and storage if clearance is delayed.

Before you accept a DDP offer

0/8

Test yourself

DDP vs DAP quick check

Under DAP Dubai, who pays the 5% UAE customs duty?
Where does risk pass to the buyer under DDP?
Your UAE company is VAT-registered. Why is DAP usually better than DDP?
Which rule is the only one where the seller must unload at destination?

Tap a card to flip it

Frequently asked questions

What is the main difference between DDP and DAP?

Import clearance. Under DAP the buyer clears customs and pays import duty and VAT; under DDP the seller does. Delivery point and risk transfer are the same for both.

Who pays VAT under DDP?

The seller pays import VAT under DDP. In practice it needs a local importer of record, and the buyer usually cannot recover that VAT.

Is DDP allowed in the UAE?

Yes, it is a valid Incoterms rule, but someone with a UAE trade licence and customs code must clear the goods. A foreign supplier usually needs a licensed local consignee.

Does insurance come with DAP or DDP?

Neither rule requires insurance. The seller carries the risk to the named place, so it normally insures its own exposure. Ask for proof if it matters to you.

Can a Chinese supplier ship DDP to Saudi Arabia?

It is difficult. Foreign companies without a Saudi entity generally cannot be importer of record, and SABER and SFDA requirements still apply. Most buyers clear in their own name under DAP or another term.

Who pays demurrage under DAP if customs clearance is late?

The buyer, when the delay is caused by the buyer's clearance and the contract says so. Spell it out in the sales contract.

Is DDP the same as door-to-door shipping?

No. Door-to-door describes the service route. DAP is also delivered to the door; only DDP adds import duty, VAT and clearance to the seller's job.

Was this article useful?

Sources

  1. ICC – Incoterms rules (official page)
  2. ICC – Incoterms 2020 rules overview
  3. Trade Finance Global – Incoterms 2020 commentary (PDF)
  4. Dubai Customs – Customs Notice 16/2026 (e-commerce goods up to AED 1,000)
  5. UpperSetup – UAE import customs and import VAT in 2026 (customs code, reverse charge)
  6. AGBI – Gulf cargo stuck as shipping calls end of voyage (March 2026)
  7. Lloyd's List Intelligence – Strait of Hormuz Brief, 22 October 2026

General information checked on the date shown. Rules and rates change: our team confirms the details for your shipment.

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