VAT Designated Zone - Whether designated zone is outside UAE?

An area might be identified as a Designated Zone (DZ), but it is not automatically treated as outside UAE for VAT purposes.

For a DZ to be outside UAE for VAT purpose, the below conditions must be satisfied:

i. DZ must be specific fenced geographic area

ii. DZ must have security and customs control in place

iii. DZ must have internal procedures in place regarding method of keeping, storing and processing of goods

iv. Operation of DZ to comply with procedures set by FTA

APPLICABILITY OF VAT

1. Supply of Services - Supply of Service made within DZ is treated in same manner as supply of service in rest of UAE i.e. liable to VAT at standard rate. When services are exported, then the service may be Zero-rated.

2. Supply of Goods - As stated above, a DZ may be treated as outside UAE for VAT, if above conditions are met. Thus, supply of goods within DZ is outside UAE, so no VAT.

TRANSFER OF GOODS INTO A DESIGNATED ZONE

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.