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 –
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*
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 *
Hamriyah Free Zone
Sharjah Airport International Free Zone
Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port
Umm Al Quwain Free Trade Zone on Sheikh Mohammed Bin Zayed Road
RAK Free Trade Zone
RAK Maritime City Free Zone
RAK Airport Free Zone
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.
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