20 Free Zones in UAE to be exempt from VAT

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UAE’s Federal Tax Authority on Wednesday announced 20 designated zones which would be exempt from the recently-implemented five per cent VAT in the country, bringing a major relief and clarity for the companies operating in the free zones.

According to the UAE VAT law, a designated zone is an area specified by the Cabinet decision. A designated zone that meets the conditions specified in the Executive Regulation of VAT law shall be treated as being outside the State.

The 20 designated zones selected from 45 free zones in the country qualifies for transfer of goods between them not be subject to tax.

Here’s the complete list of Designated Zones as per the Annex to the Cabinet Decision No (59) of 2017 No. Designated Zones.

Abu Dhabi

1. Free Trade Zone of Khalifa Port

2. Abu Dhabi Airport Free Zone

3. Khalifa Industrial Zone

Dubai

4. Jebel Ali Free Zone (North-South)

5. Dubai Cars and Automotive Zone (DUCAMZ)

6. Dubai Textile City

7. Free Zone Area in Al Quoz

8. Free Zone Area in Al Qusais

9. Dubai Aviation City

10. Dubai Airport Free Zone

Sharjah

11. Hamriyah Free Zone

12. Sharjah Airport International Free Zone

Ajman

13. Ajman Free Zone

No. Designated Zones (Umm Al Quwain)

14. Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port

15. Umm Al Quwain Free Trade Zone on Shaikh Mohammad Bin Zayed Road

Ras Al Khaimah

16. RAK Free Trade Zone

17. RAK Maritime City Free Zone

18. RAK Airport Free Zone

Fujairah

19. Fujairah Free Zone

According to tax experts, acquisition of goods within a designated zone for incorporation into another unconsumed good located within the same designated zone will not be subject to UAE VAT, Gulf News reported.

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“Goods may also be transferred between Designated Zones without being subject to tax if the goods are not used or altered during the transfer process, and the transfer is undertaken in accordance with the rules for customs suspension per GCC Common Customs Law,” the reporte added.

The Cabinet decision is effective from January 1, 2018.

Published on 10 January 2018

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