Being a company in UAE, it is important to follow the local laws, which include the tax laws. If the special tax laws are not followed within a designated zone properly then it will attract penalties. This will impact the company's performance.
Designated Zones are special areas where special VAT rules apply. The most important VAT application is that for certain transactions no VAT needs to be charged, mostly revolving trading of goods. These transactions will be out of scope of VAT.
A general way to look at it is that, all designated zones are free zones, but not all free zones are designated zones.
So what are the special characteristics of a designated zone?
These are as follows:
- The Designated Zone must be a specific fenced geographic area.
- The Designated Zone must have security measures and Customs controls in place to monitor the entry and exit of individuals and movement of goods to and from the Designated Zone.
- The Designated Zone must have internal procedures regarding the method of keeping, storing and processing of goods within the Designated Zone.
- The operator of the Designated Zone must comply with the procedures set out by the FTA.
Now that we know what qualifies as a designated zone, let us get into to the list of qualified designated zones in UAE, where these special tax rules will apply –
Abudhabi
Free Trade Zone of Khalifa Port |
Abu Dhabi Airport Free Zone |
Khalifa Industrial Zone |
Al Ain International Airport Free Zone* |
Al Butain International Airport Free Zone* |
Dubai
Jebel Ali Free Zone (North-South) |
Dubai Cars and Automotive Zone (DUCAMZ) |
Dubai Textile City |
Free Zone Area in Al Quoz |
Free Zone Area in Al Qusais |
Dubai Aviation City |
Dubai Airport Free Zone |
International Humanitarian City – Jebel Ali * |
Sharjah
Hamriyah Free Zone |
Sharjah Airport International Free Zone |
UAQ
Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port |
Umm Al Quwain Free Trade Zone on Sheikh Mohammed Bin Zayed Road |
RAK
RAK Free Trade Zone |
RAK Maritime City Free Zone |
RAK Airport Free Zone |
Fujairah
Fujairah Free Zone |
FOIZ (Fujairah Oil Industry Zone) |
It is important to understand that not all transactions in the designated zone are out of scope of VAT.
Need Help?
All you need to know about Tax Groups | 9% UAE CT| Public Consultation Document
Here we will discuss the concept of tax groups in the UAE CT (corporate tax) regime as explained in the consultation document, released by the
What are some of the Non-Deductible Expenses & Loss offsetting rules | 9% UAE CT| Public Consultation Document
Here we will discuss the aspects of the CT (corporate tax) consultation document, released by the MOF that discusses, non-deductible expenses, offsetting losses, and the
Exempt Income | 9% UAE corporation tax | UAE Public Consultation Document
We have discussed the basis of the taxable income calculation earlier, now we can get into what income can be exempt from this calculation on
Calculation of Taxable Income | 9% UAE corporation tax | UAE Public Consultation Document
From the consultation document released by the MOF, we have been given a basic understanding of the calculation of the taxable income. We need to
Residents & Non-Residents Corporate Tax | UAE Public Consultation Document
The corporate tax public consultation document provides details on the basis of the taxation. 9% corporation taxation is something we expect to come into effect
Free zone Corporate Tax | UAE Public Consultation Document
Corporate tax impact on Freezone companies will need a lot of discussions. There are many Free zone entities in the UAE as stand-alone companies and