Challenging UAE, Saudi Arabia revises import rules

The latest revision in the rules is aimed to omit merchandise made in free zones or using Israeli input from preferential tariff concessions – in a challenge to the United Arab Emirates (UAE) as the region’s trade and business hub.

Despite being close associates, the Kingdom and the neighbouring UAE are contending to appeal the investors and businesses.

Furthermore, Saudi Arabia – the biggest importer in the region – is trying to expand its economy and decrease its reliance on oil, while providing more jobs for its citizens, a point also covered by the rule changes stated over the weekend.

After the development, Saudi Arabia will hereafter exclude from the GCC tariff agreement goods made by companies with a workforce made up of less than 25 per cent of local people and industrial products with less than 40 per cent of added value after their transformation process.

The ministerial decree available on the Saudi official gazette Umm al-Qura said all goods made in free zones in the region will not be considered locally made.

According to the decree, goods that contain a component made or produced in Israel or manufactured by companies owned fully or partially by Israeli investors or by companies listed in the Arab boycott agreement regarding Israel will be disqualified.

The ministerial decree said companies with a local workforce of between 10 per cent and 25 per cent of the total could compensate for the difference by increasing the industrial added value in their products and vice versa.

The added value should not be less than 15 per cent, in any case, to benefit from the preferential tariff agreement, it added.

Saudi Arabia’s latest rule changes even though the UAE is its second-biggest trade partner after China in terms of import value, based on recent Saudi trade data.