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.
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
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