New VAT Free Zones in UAE VAT
Introduction to New VAT Free Zones
The Federal Tax Authority (FTA) of UAE has announced three new VAT free zones which are known as Designated Zones in VAT Law. With the announcement of three new free zone, the number of designated zones are increased to 23. This is indeed a good news for the businesses located in those zones. Because VAT at 5% will not applicable to the transactions done within the new Designated Zones barring few exceptions.
List of New VAT Free Zones in UAE VAT
|Designated Zone Name||Emirate|
|Al Ain International Airport Free Zone||Abu Dhabi|
|Al Butain International Airport Free Zone||Abu Dhabi|
|International Humanitarian City – Jebel Ali||Dubai|
Among the latest addition, Al Ain International Airport Free Zone and Al Butain International Airport Free Zone are the two new Designated Zone added in Abu Dhabi and International Humanitarian City – Jebel Ali in Dubai.
Effective Date of New Free zone
The new VAT free zone or the designated zones (Al Ain International Airport Free Zone, Al Butain International Airport Free zone and International Humanitarian City – Jebel Ali) will be effective from 18th June, 2018. This implies that from 18th June, 2018 onwards, the businesses located in these new VAT free zones need to understand the VAT treatment on supplies carried out by them, assess the impact of VAT on their business and accordingly plan. To know more about the VAT treatment on Designated Zone supplies, please read VAT Computation on Goods Supplied from Designated Zone in UAE
Business Benefits for Businesses located in the New VAT Free Zones
The announcement of new VAT free zones provides major relief to the businesses located in those zones. This because, Designated Zone is a VAT free Zone which is considered to be outside the State of UAE for the purpose of VAT. As a result, on any transfer of goods between Designated Zones, VAT will be not be levied. The following are few benefits available for the business located in the Designated Zone.
- Any transfer of goods between Designated Zones will not be taxable.
- Export of goods from Designated Zone to oversee countries will not be taxable.
- Supply of goods from Designated zone to other GCC countries will not be taxable
- Similarly, import of goods from other GCC countries or overseas countries will be non-taxable
While the designated zones offer various benefits, it is important for businesses to note that they have to comply with the certain prescribed conditions which determine their eligibility. Also, there are few supplies which are taxable even when supplied inside the Designated Zone. To know more about the conditions and tax treatment on different types of supplies, please read our article VAT on Designated Zone in UAE
Updated List of Designated Zone in UAE VAT
|Abu Dhabi||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|
|Ajman||Ajman Free Zone|
|Umm Al Quwain||Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port|
|Umm Al Quwain Free Trade Zone on Sheikh Mohammed Bin Zayed Road|
|Ras Al Khaimah||RAK Free Trade Zone|
|RAK Maritime City Free Zone|
|RAK Airport Free Zone|
|Fujairah||Fujairah Free Zone|
|FOIZ (Fujairah Oil Industry Zone)|
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