vat in uae ministry of finance explains designated free zones
Last Updated : GMT 05:17:37
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Last Updated : GMT 05:17:37
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VAT in UAE: Ministry of Finance explains designated free zones

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Emiratesvoice, emirates voice VAT in UAE: Ministry of Finance explains designated free zones

Khalifa Port in Abu Dhabi is one of 20 Designated Zones exempt from VAT.
Dubai - Emirates Voice

Ministry of Finance has clarified some details on designated free zones for the purposes of VAT.

According to the law and Cabinet decisions, a designated free zone is a specific fenced geographic area that has security measures and customs controls in place to monitor entry and exit of individuals and movement of goods to and from the area, the ministry said in a report carried by WAM.

Although designated free zones are part of the UAE territory, for VAT purposes, they are to be treated as being outside the UAE.

VAT is imposed on goods and services supplied or imported into the UAE. This means that if a supply is treated as not taking place in the UAE, then levies should not be charged.The Ministry said the place of supply is generally determined by looking at the location of the goods, activities or the parties to a transaction.

However the VAT Executive Regulation said certain types of supplies should be treated as if they are taking place in the UAE:

provision of water services
All forms of energy goods sold for use or consumption
Goods that arrive into a designated free zone from outside the UAE are not treated as imported into the UAE. Therefore, no VAT is charged on such arrival of the good, the ministry added. That said, a transfer or sale of goods into a Designated Zone from a place in the UAE which is not a Designated Zone is not an export for VAT purposes, and therefore will not give rise to zero-rated VAT treatment.

Transfer and movement of goods

The Ministry said the transfer of goods between designated zones will not be subject to VAT if both of the following conditions are met:

The goods, or parts of the goods, are not released, used or altered during the transfer between the Designated Zones
The transfer is undertaken in accordance with the rules for customs suspension according to GCC Common Customs Law
Where goods are moved between Designated Zones, the Federal Tax Authority may request the owner of the goods to provide a guarantee in respect of the VAT in case the conditions for the movement of goods are not met.

The sale of goods between designated free zones will be treated as outside the scope of the UAE VAT, if the goods are not for consumption.

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vat in uae ministry of finance explains designated free zones vat in uae ministry of finance explains designated free zones

 



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vat in uae ministry of finance explains designated free zones vat in uae ministry of finance explains designated free zones

 



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