List of Designated Zones in UAE
A Free Zone refers to specific trade areas designed to encourage foreign ownership of businesses. Companies operating within these zones must adhere to the rules and regulations set by the respective free zone authorities. Under UAE law, these areas are officially recognized as Designated Zones. The criteria for a designated zone, as outlined in Article 51 of the Executive Regulations, include several key factors.
These zones must be clearly defined geographic areas, typically fenced, with security and customs controls to monitor both people and goods entering or leaving. Additionally, these zones have established procedures for managing, storing, and processing goods.
The operators within a designated zone are required to follow the guidelines set by the Federal Tax Authority (FTA). Any Free Zone that meets these criteria and is included in the list of designated zones in UAE will be officially recognized as a designated zone. To clarify, the list of designated zones in UAE outlines which areas are recognized as free zones, offering businesses certain tax benefits and operational freedoms.
What is a designated zone?
A designated zone is a specific area in the UAE that is treated as outside the UAE territory for VAT purposes. While VAT is generally applied to supplies of goods and services within the UAE, certain free zones are exempt from this tax. However, not all free zones are excluded from VAT—only those listed in a cabinet decision as having special VAT regulations are considered designated zones. These zones are exempt from VAT on supplies made within or from them, although there may be a few exceptions.
VAT Considerations for Businesses Operating in Designated Zones
Businesses operating within designated zones in the UAE must follow similar VAT rules as those outside these zones. According to UAE VAT Law, companies in designated zones are required to register for VAT and are eligible to join the group VAT system. For VAT purposes, the transfer of goods within these designated zones is tax-free.
This includes purchases, sales, and sometimes resales of goods, as well as goods supplied or attached to another item within the same zone, provided that the other goods are not consumed within the designated zone. Goods used in the production process in the designated zone can also be supplied without VAT, as long as they are not consumed within the zone itself. However, as per the VAT provisions, consumption is generally not considered in the context of designated zones.
There are some exceptions to these rules, such as a consumption-based tax at the standard rate for all goods sold within the designated zones. Additionally, energy costs within the zones are subject to VAT, and companies in designated zones must register for VAT if their turnover exceeds the threshold.
The list of designated zones in the UAE is crucial for businesses to understand their VAT obligations, as companies operating in these areas must ensure they are compliant with all relevant VAT laws and regulations. The list of designated zones in the UAE is also a vital reference for companies looking to navigate VAT registration and other tax-related processes.
How to Know if a Free Zone is a Designated Zone in the UAE
Not every free zone in the UAE enjoys special VAT treatment. Only certain ones qualify as designated zones, which means they are treated as if they’re outside the UAE for VAT purposes. To be classified this way, the area must tick off some key boxes as outlined in the VAT laws and executive regulations.
A zone needs to be physically fenced, have tight customs checks and security at its entry and exit points, and follow strict internal procedures for how goods are stored, handled, and moved. On top of that, the zone operator must follow all rules set by the Federal Tax Authority.
Even if a free zone is mentioned in the official list of designated zones in UAE, it still has to meet all these conditions to enjoy the benefits.
Companies in these zones have to play by the book and keep their paperwork in order to prove they qualify. You can always refer to the most up-to-date list of designated zones in UAE published by the Cabinet to check whether your zone is eligible.
What are the Designated Zones in UAE
| Abu Dhabi |
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| Dubai |
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| Sharjah |
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| Ajman |
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| Umm Al Quwain |
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| Ras Al Khaimah |
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| Fujairah |
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How AHG helps you
AHG provides reliable accounting and VAT services for free zone companies across Dubai and the UAE. As a trusted auditing and tax consultancy firm, we support businesses in handling various tax-related needs, including:
- VAT registration and ensuring full compliance.
- Filing VAT returns on time and handling refunds when needed.
- Preparing books of accounts that meet FTA standards.
- Identifying VAT challenges and offering smart, tailored solutions that suit your business model and goals.
- Helping with financial statements and records to keep your business compliant with UAE VAT regulations.
- Supporting VAT deregistration when it’s time to close or change the business setup.
conclusion
In a nutshell, navigating VAT rules in the UAE can be tricky, especially for businesses operating within designated zones or free zones. That’s where AHG steps in to make things easier. Whether it’s handling VAT registration, filing returns, or staying compliant with FTA regulations, our experienced team is here to help you stay on track. With the right guidance and support, your business can avoid penalties, make the most of tax recovery opportunities, and focus on what matters most — growing your operations smoothly and successfully.
Managing finances as an influencer in the UAE can get complicated, but AHG makes it easier. With our experience in influencer accounting, we handle everything from tax compliance to financial planning, so If you need any tax services or tax consultancy, you won’t find better than AHG Legal Accounts. Each of our teams has extensive experience in this field and will provide you with the best services in a professional manner. Please feel free to contact us today, we are always waiting for your request to be fulfilled!
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