You must have heard of economic zones in the Emirates; they are quite popular among the masses. But do you know about designated zones in the UAE? We bet you haven’t. Even if you have heard of them from a friend or colleague of yours, you still wouldn’t be able to learn about them completely. If that is true, this piece of writing is here to the rescue. We will cover all the necessary information about designated free zones in UAE and provide you with all the relevant details to give you an idea of what they are. So without any further ado, let’s dive in.
What are Designated Zones in UAE?
The cabinet decision of the UAE has specified an area that matches the strict conditions issued by the Executive Regulation of the country. This area is known as Designated Free Zones of the UAE.
Now, you must be asking yourself, what’s so unique about them? Don’t fret, we got you covered. These zones are territories that are designated to provide amazing tax incentives to small and big businesses if they fulfill some conditions.
These areas are outside the country’s territory for Value Added Tax purposes. These zones are free from VAT. Besides these zones, all other free zones are valid for VAT.
VAT applies to the supplies of all types of services and goods in the Emirates.
Supplies that are manufactured in the designated zone or outside of it are free of VAT (with a few dedicated exceptions). Furthermore, VAT is not levied on the transfer of goods between these zones.
Conditions for identifying the UAE Designated Zones
For benefiting from proposed tax incentives, the following conditions must be fulfilled:
Tax Compliance
There is a set of legal demands that FTA (Federal Tax Authority) has introduced. The administration officials of the Designated Zone need to comply with these needs.
Fenced Lands
Proper fencing should be done around designated zones. It should be fenced off in a way that it is safe for goods to be taken inside and outside and for the entry and exit of the masses from the zones. In addition to that, all the safety measures and steps necessary for the protection of people should be taken accordingly.
Goods Processing Policy
The designated zone should own an internal methodology for perfectly keeping, storing, and processing the goods. It is to ensure the goods are in the right shape and ready to be delivered.
List of Designated Zones in UAE
Following is the list of VAT designated free zones in UAE that are currently active and functional in the Emirates:
List of Designated Zones in Dubai
- Free Zone Area in Al Qusais
- Dubai Aviation City
- Jebel Ali Free Zone (North-South)
- Dubai Cars and Automotive Zone (DUCAMZ)
- Dubai Textile City
- Free Zone Area in Al Quoz
- Dubai Airport Free Zone
- International Humanitarian City – Jebel Ali
List of Designated Zones in Sharjah
- Sharjah Airport International Free Zone
- Hamriyah Free Zone
List of Designated Zones in Abu Dhabi
- Khalifa Industrial Zone
- Al-Ain International Airport Free Zone
- Al Butain International Airport Free Zone
- Free Trade Zone of Khalifa Port
- Abu Dhabi Airport Free Zone
List of Designated Zones in Ras Al Khaimah
- RAK Free Trade Zone
- Al Hamra Industrial Zone – Free Zone
- Al Ghail Industrial Zone – Free Zone
- Al Hulaila Industrial Zone – Free Zone
- RAK Maritime City Free Zone
List of Designated Zones in Umm Al Quwain
- Umm Al Quwain Free Trade Zone on Sheikh Mohammed Bin Zayed Road
- Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port
List of Designated Zones in Ajman
- Ajman Free Zone
List of Designated Zones in Fujairah
- Fujairah Free Zone
- Fujairah Oil Industry Zone (FOIZ)
Goods Supply Within Designated Free Zones in UAE
VAT is not levied on the supply of goods inside any designated free zone in the UAE. It is so because the area where goods are supplied is believed to be out of the country’s territory. Of course, the rule does not apply to all situations, it depends.
If the supply of goods is made inside a designated zone to an entrepreneur who plans to use goods for meeting his/her needs or any other personal purpose. In this kind of scenario, the area of supply is assumed to be within the territory of the Emirates and standard VAT is applied to the supply of goods.
In a case when a businessman decides to use the bought goods to produce various other goods, or resell them, the supply of goods falls outside the vicinity of VAT.
Goods supply is also considered to be crossing the boundary of VAT when the buyer buys goods inside a designated zone and integrates them with other goods in the same territory in such a way that both create a part of the final product.
Supply of Services Within VAT Designated Zones in UAE
Under the predefined VAT rules, supply of services is considered to take place in the Emirates only when the territory of supply for supply of services is a designated zone. This shows that almost every kind of service will be valid for VAT to be applied at the standard rate.
But if a service is exported, or we can say designed for a person who is residing outside the GCC countries and is a resident of the UAE, the services can be defined as zero-rated supplies.
Business Setup in Free Zones of UAE with Riz and Mona
Setting up your business in any of the free zones of UAE is not a hassle or complex process anymore, thanks to the expertise of Riz and Mona Consultancy. We will take you through the complete journey of establishing your business in Dubai, UAE. All you need to do is to get in touch with us for a free consultation. We will make sure to handle the complete process from start to end to set up your company in the UAE.
