Are Goods exported from Designated Zone to be treated as Exports?

CA Rajiv HiraCA Rajiv Hira    15 March 2021
Are Goods exported from Designated Zone to be treated as Exports?

Let us first understand the definition of Designated Zone:

Designated Zones are

  • subject to strict control criteria;
  • required to have security procedures in place to control the movement of goods and people to and from the Designated Zone; 
  • required  to have Customs procedures to control the movement of goods into and out of the Designated Zone;
  • and treated as being outside the territory of the UAE for VAT purposes for certain supplies goods. 

The effect for businesses operating in Designated Zones will be that many supplies of goods will be outside the scope of UAE VAT, subject to strict criteria and detailed record keeping. However, supplies of services are subject to the normal UAE VAT rules.

Out of scope transactions

  • Any movement / transfer of goods within Custom Bonded Area will not attract VAT - In same Designated Zone.
  • Movement of Goods "Under Custom Suspension", between Designated Zone - will not attract VAT.
  • Designated Zone Company invoices to Mainland Company (A) and Mainland Company (A) Invoices to Mainland Company (B). Whereas goods remain in Designated Zone "Custom Bonded Warehouse" - will not attract VAT

To summarize the above:

(a) Goods under Customs suspension should be treated as, goods sold from designated zone & hence are generally in the category of "Out of Scope".

(b) Goods where custom duty is paid or, on purchase (from mainland) are not moved into custom suspension, are generally NOT treated as sales from Designated Zone & should be considered under "Export" of goods. This is a general rule, while adopting, other aligned factors should also be considered for implementation.

A video explaining the above can be viewed by clicking here 



Disclaimer: Content posted is for informational & knowledge sharing purposes only, and is not intended to be a substitute for professional advice related to tax, finance or accounting. The view/interpretation of the publisher is based on the available Law, guidelines and information. Each reader should take due professional care before you act after reading the contents of that article/post. No warranty whatsoever is made that any of the articles are accurate and is not intended to provide, and should not be relied on for tax or accounting advice.

You can access Law including Guidelines, Cabinet & FTA Decisions, Public Clarifications, Forms, Business Bulletins for all taxes (Vat, Excise, Customs, Corporate Tax, Transfer Pricing) for all GCC Countries in the Law Section of GCC FinTax

Other articles by CA Rajiv Hira

like  1 Like
views 494

More From Articles