We have discussed earlier the different options to have a licensed company, mainland, free zone, offshore. Now, what is this designated Zone? How does it differ from the others? Here we will also get into the list of designated zones.
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.
Why you should know this
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?
The Designated Zone must be a specific fenced geographic area.
The Designated Zone must have security measures & Customs controls in place to monitor the entry and exit of individuals and the 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
Regulated Financial Services
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
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. If you need more detailed guidance on the tax impact of transactions within the designated zones feel free to contact our expert team for a free 30 minute consultation.
For professional advice on Business consultation, book an appointment with our tax experts.