The UAE’s Federal Tax Authority has revealed the 20 designated zones which would be exempt from the recently-implemented five per cent VAT in the country.
Is vat applicable for free zone companies in UAE?
The decision has been welcomed by various firms and companies in the Zones. In addition, Cabinet has approved a zero VAT on the supply of certain medications and medical equipment registered with Ministry of Health (MoH).
The decision works retroactively from January 1, 2018.
Mayank Sawhney, the director, MaxGrowth Consulting, said that quite a large number of invoices need to be corrected as VAT would have been applied on certain imports and sales in the designated zones and on medical supplies. Unduly invoiced VAT is not deductible.
VAT on Free Zones in UAE
Below is the list of the designated zones across the seven emirates that are free from the VAT.
Dubai: Dubai Airport Free Zone; Dubai Aviation City; Dubai Textile City; Free Zone Area in Al Quoz; Jebel Ali Free Zone (North-South); Dubai Cars and Automotive Zone (Ducamz); and Free Zone Area in Al Qusais
Ras Al Khaimah: RAK Free Trade Zone; RAK Airport Free Zone; RAK Maritime City Free Zone
Sharjah: Sharjah Airport International Free Zone; Hamriyah Free Zone
Abu Dhabi: Abu Dhabi Airport Free Zone; Free Trade Zone of Khalifa Port; and Khalifa Industrial Zone
Fujairah: Fujairah Oil Industry Zone (FOIZ); Fujairah Free Zone
Umm Al Quwain: Umm Al Quwain Free Trade Zone on Sheikh Mohammed Bin Zayed Road; Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port
Ajman: Ajman Free Zone
All these areas are free of the VAT, except for the certain healthcare and medical services which will be taxed at zero rates.
- VAT in UAE: What Are Zero-Rated Supplies under VAT
- VAT in UAE: What Are Exempt Supplies under VAT
- The zero-rated and exempt supplies under VAT in UAE
- FTA UAE – 20 Designated Zones Exempt From VAT
- List of Items taxed or exempted under VAT in UAE