The 20 designated free zones are exempt from VAT. The designated zones are special zones for VAT purposes, which are generally considered outside of the UAE in terms of value-added taxation. While VAT applies throughout the UAE, in the designated 20 free zones VAT generally does not apply. The selected 20 free zones from 45 free zones in the country qualifies for transfer of goods between them not be subject to tax. As expected, important free zones such as Jafza, Dafza and Kizad are on the list.
Also Read: Your Ultimate Guide to Free Zones in Dubai in 2021
According to tax experts, acquisition of goods within a designated zone for incorporation into another unconsumed good located within the same designated zone will not be subject to UAE. Goods may also be transferred between Designated Zones without being subject to tax if the goods are not used or altered during the transfer process.
Also Read: How VAT Affects The Companies In Uae
Free Zones Which Are Exempt From VAT in UAE
In 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
In Abu Dhabi
- Free Trade Zone of Khalifa Port
- Abu Dhabi Airport Free Zone
- Khalifa Industrial Zone
In Sharjah
In Ajman
In 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
In Ras Al Khaimah
In Fujairah
Also Read : How do Free Zones Help in Setting up a Business in Dubai?
Freezones are an excellent opportunity to start a business, contact us soon to grab your opportunity today!
Conclusion
Designated free zones in the UAE offer significant VAT advantages, making them highly attractive for businesses involved in trading and logistics. With exemptions on certain transactions and tax-free movement of goods between designated zones, companies can benefit from reduced operational costs and improved cash flow. However, understanding the specific VAT rules and compliance requirements is essential to fully utilize these benefits.
Frequently Asked Questions (FAQs)
1. How many Free Zones in the UAE?
There are 45 Free Zones in the UAE.
2. Are all Free Zones are VAT Designated Zones in the UAE?
No, Only the Cabinet of UAE decides which can be designated Zones.
3. Is VAT applied on the Goods which are exported from outside of the UAE?
It is taken as zero-rated, and VAT will not be applied.
4. How many Designated Free Zones in Dubai ?
They are Six Designated Free Zones
(a) Jebel Ali Free Zone (North-South)
(b) Dubai Cars and Automotive Zone (DUCAMZ)
(c) Dubai Textile City
(d) Free Zone Area in Al Quoz
(e) Free Zone Area in Al Qusais
(f) Dubai Aviation City
(g) Dubai Airport Free Zone
(h) International Humanitarian City – Jebel Ali
5. Is VAT applicable on the goods that are transferred from one Designated Zone to another?
No, VAT does not apply to the movement of goods from one Designated Zone to another.
6. Any new Designated Free Zones added in the UAE?
In Dubai - International Humanitarian City – Jebel Ali.
In Abu Dhabi - Al Ain International Airport Free Zone, Al Bateen International Airport Free Zone.
In Ras Al Khaimah - Al Hamra Industrial Zone, Al Ghail Industrial Zone, Al Hulaila Industrial Zone.
7. What is the cheapest freezone in the UAE?
The freezones with least to most expensive:
1. Ajman Media City Free Zone (Ajman)
2. International Free Zone Authority (Dubai)
3. Ras Al Khaimah Economic Freezone (Ras Al Khaimah)
4. Umm Al Quwain Free Trade Zone (Umm Al Quwain)
8. How much will it cost to start up a business in Dubai freezone?
Depending on the nature of the business, the costs may vary from 5700 AED to 22500 AED (Excluding VAT)
9. Is it necessary to register a freezone company in the UAE for an online business?
Online companies must be registered under the mainland of UAE or freezone.
10. What is the difference between an LLC and a Freezone company in the UAE?
Businesses registered under freezones can offer their business to the public only in the freezone space or outside UAE. However, businesses that are registered as LLC, can run their business anywhere in and outside UAE without restrictions.
✎ Author
Askar Ali Sheik
Company Formation (Mainland & Free Zone) Business Setup Advisory Licensing Visa Processing Compliance Coordination.
Business Development and Corporate Services professional based in Dubai, supporting company formation, licensing, visa processing, and compliance. Focused on delivering efficient, transparent solutions that help entrepreneurs and businesses establish and grow in the UAE market.
